80 FR 58314 - Agency Information Collection Activities: Submission to OMB for Revision of a Currently Approved Information Collection, Credit Union Service Organizations; Comment Request

NATIONAL CREDIT UNION ADMINISTRATION

Federal Register Volume 80, Issue 187 (September 28, 2015)

Page Range		58314-58315
FR Document		2015-24478

The NCUA intends to submit the following information collection to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). This information collection is published to obtain comments from the public. NCUA previously amended its credit union service organization (CUSO) regulation to increase transparency and address certain safety and soundness concerns. The final rule extends certain requirements of the CUSO regulation to federally insured, state-chartered credit unions and imposes new requirements on federally insured credit unions (FICUs). Under the amended rule, FICUs with an investment in, or loan to, a CUSO must obtain a written agreement with the CUSO addressing accounting, financial statements, audits, reporting, and legal opinions. The rule limits the ability of a ``less than adequately capitalized'' FICU to recapitalize an insolvent CUSO. All CUSOs are required to annually provide basic profile information to NCUA and the appropriate state supervisory authority (SSA). CUSOs engaging in certain complex or high-risk activities are also required to report more detailed information, including audited financial statements and customer information.

Federal Register, Volume 80 Issue 187 (Monday, September 28, 2015)

[Federal Register Volume 80, Number 187 (Monday, September 28, 2015)]
[Notices]
[Pages 58314-58315]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-24478]


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NATIONAL CREDIT UNION ADMINISTRATION


Agency Information Collection Activities: Submission to OMB for 
Revision of a Currently Approved Information Collection, Credit Union 
Service Organizations; Comment Request

AGENCY: National Credit Union Administration (NCUA).

ACTION: Request for comment.

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SUMMARY: The NCUA intends to submit the following information 
collection to the Office of Management and Budget (OMB) for review and 
clearance under the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 
U.S.C. Chapter 35). This information collection is published to obtain 
comments from the public. NCUA previously amended its credit union 
service organization (CUSO) regulation to increase transparency and 
address certain safety and soundness concerns. The final rule extends 
certain requirements of the CUSO regulation to federally insured, 
state-chartered credit unions and imposes new requirements on federally 
insured credit unions (FICUs). Under the amended rule, FICUs with an 
investment in, or loan to, a CUSO must obtain a written agreement with 
the CUSO addressing accounting, financial statements, audits, 
reporting, and legal opinions. The rule limits the ability of a ``less 
than adequately capitalized'' FICU to recapitalize an insolvent CUSO. 
All CUSOs are required to annually provide basic profile information to 
NCUA and the appropriate state supervisory authority (SSA). CUSOs 
engaging in certain complex or high-risk activities are also required 
to report more detailed information, including audited financial 
statements and customer information.

DATES: Comments will be accepted until October 28, 2015.

ADDRESSES: Interested parties are invited to submit written comments to 
the NCUA Contact and the OMB Reviewer listed below:

NCUA Contact: Joy Lee, National Credit Union Administration, 1775 Duke 
Street, Alexandria, Virginia 22314-3428, Fax No. 703-837-2861, Email: 
OCIOPRA@ncua.gov.
OMB Reviewer: Office of Management and Budget, ATTN: Desk Officer for 
the National Credit Union Administration, Office of Information and 
Regulatory Affairs, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Requests for additional information, a 
copy of the information collection request, or a copy of submitted 
comments should be directed to:

NCUA Contact: Joy Lee, National Credit Union Administration, 1775 Duke 
Street, Alexandria, Virginia 22314-3428, Fax No. 703-837-2861, Email: 
OCIOPRA@ncua.gov.

SUPPLEMENTARY INFORMATION: 

I. Abstract and Request for Comments

    NCUA is revising the currently approved collection of information, 
OMB Control Number, 3133-0149, to reflect amendments to 12 CFR part 
712. Part 712 implements authority in the Federal Credit Union Act \1\ 
relating to FICU lending or investment activity with a CUSO. The rule 
addresses NCUA's safety and soundness concerns for activities conducted 
by CUSOs and imposes certain recordkeeping obligations on FICUs that 
have investment or lending relationships with, or conduct operations 
through, CUSOs. Certain reporting obligations are imposed on natural 
person credit union CUSOs and corporate CUSOs as a result of the rule.
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    \1\ 12 U.S.C. 1756, 1757(5)(D), 1757(7)(I), 1766, 1782, 1785, 
and 1786.
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    Specifically, under the amended rule, FICUs with an investment in, 
or loan to, a CUSO must obtain a written agreement with the CUSO (or 
revise any current agreement the FICU has with a CUSO) to provide that 
the CUSO will: (1) Account for all its transactions in accordance with 
generally accepted accounting principles (GAAP); (2) prepare quarterly 
financial statements and obtain an annual financial statement audit of 
its financial statements by a licensed certified public accountant; (3) 
provide complete access to the books and records of the CUSO; and (4) 
annually report directly to NCUA and the appropriate state supervisory 
authority (SSA) certain financial and other information prescribed by 
the rule. 12 CFR 712.3(d).
    The report (CUSO Registry) must contain basic registration 
information, including the CUSO's name and address, point of contact, 
services offered, the names and charter numbers of credit unions 
investing in, lending to, or receiving services from the CUSO, and 
investor and subsidiary information. In addition, for any CUSO engaged 
in complex or high-risk activities, as defined in the rule, the report 
must contain additional, enhanced, more detailed information, including 
audited financial statements and more specific customer information. 12 
CFR 712.3(d)(4). NCUA plans to implement secure online technology for 
the CUSOs' direct submission of financial and other reports. 
Development of the CUSO Registry is underway, which will provide fully 
electronic reporting by CUSOs.
    A FICU and a CUSO must be operated in a manner that demonstrates to 
the public the separate corporate existence of the FICU and the CUSO. 
Section 712.4(b) requires that prior to investing in a CUSO, the FICU 
must obtain a written legal opinion confirming the CUSO is established 
in a legally sufficient way to limit the FICU's exposure to loss of its 
loans or investments in the CUSO. 12 CFR 712.4(b).
    The amendments also require that a FICU that is, or as a result of 
recapitalizing an insolvent CUSO, will become less than adequately 
capitalized must, under certain circumstances, obtain NCUA (or SSA, if 
applicable) approval to recapitalize a CUSO that has become insolvent. 
12 CFR 712.2(d).
    NCUA previously requested comments in response to a notice on 
``Information Collection Activities: Submission to OMB for Revision of 
a Currently Approved Information Collection, Credit Union Service 
Organizations'' due September 4, 2015. (80 FR 38475, July 6, 2015). 
NCUA received a few comments in response to this sixty-day notice. 
Staff carefully reviewed and considered these comments.
    In particular, with regard to concern about confidentiality, the 
rule addresses documents, such as an agreement

[[Page 58315]]

between a credit union and its CUSO, and legal opinions, which are and 
would remain credit union property. There is no requirement that the 
documents be made public. CUSO reports may contain or consist of trade 
secrets and commercial or financial information which relate to the 
business, personal, or financial affairs of a person or organization, 
are furnished to NCUA, and are privileged or confidential. With regard 
to concern of data security measures, at a minimum NCUA information 
systems adhere to the National Institute of Standards and Technology 
(NIST) security controls and guidelines at the moderate level. In 
addition, with regard to concern about duplication, currently, NCUA 
collects CUSO related information on the NCUA Form 5300 Call Report and 
the NCUA Form 4501A Online CU Profile (OMB Control No. 3133-0004). Upon 
successful implementation of the CUSO Registry, NCUA plans to eliminate 
the duplicate information collected on the Call Report and Online CU 
Profile.
    In summary, Part 712 contains the following information collection 
(IC) requirements:
    (IC 1.) Obtain Written Agreement. Before making a loan to, or 
investment in, a CUSO, a FICU must obtain a written agreement from the 
CUSO (or revise any current agreement the FICU has with a CUSO) that 
the CUSO will: Follow generally accepted accounting principles (GAAP); 
prepare financial statements at least quarterly and obtain an annual 
opinion audit from a licensed certified public accountant; provide 
access to its books and records to NCUA and the appropriate SSA; and 
file financial and other reports directly with NCUA and the appropriate 
SSA;
    (IC 2.) Obtain Written Legal Opinion. A FICU must obtain a written 
legal opinion confirming the CUSO is established in a legally 
sufficient way to limit the credit union's exposure to loss of its 
loans to, or investments in, the CUSO;
    (IC 3.) Obtain Regulatory Approval. Any FICU that is or, as a 
result of recapitalizing an insolvent CUSO will become, less than 
adequately capitalized, must seek NCUA approval before recapitalizing 
an insolvent CUSO; and
    (IC 4.) CUSO Reporting. A CUSO with an investment or loan from a 
FICU must annually submit a report directly to NCUA and the appropriate 
SSA that contains financial and other information prescribed in the 
rule. All CUSOs are required to provide basic profile information to 
NCUA and the appropriate SSA. CUSOs engaging in certain complex or 
high-risk activities are also required to report more detailed 
information, including audited financial statements and customer 
information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    NCUA requests that you send any comments on the information 
collection requirements for Credit Union Service Organizations, 12 CFR 
part 712, to the locations listed in the ADDRESSES section. Your 
comments should address: (a) The necessity of the information 
collection for the proper performance of NCUA, including whether the 
information will have practical utility; (b) the accuracy of our 
estimate of the burden (hours and cost) of the collection of 
information, including the validity of the methodology and assumptions 
used; (c) ways we could enhance the quality, utility, and clarity of 
the information to be collected; and (d) ways we could minimize the 
burden of the collection of the information on the respondents such as 
through the use of automated collection techniques or other forms of 
information technology. It is NCUA's policy to make all comments 
available to the public for review.

II. Data

    Title: Credit Union Service Organizations, 12 CFR part 712.
    OMB Number: 3133-0149.
    Form Number: None.
    Type of Review: Revision to a currently approved collection.
    Description: NCUA amended Part 712 to increase transparency and 
address safety and soundness concerns about activities conducted by 
CUSOs and imposes certain recordkeeping obligations on FICUs that have 
investment or lending relationships with, or conduct operations 
through, CUSOs.\2\ The final rule extends certain requirements of the 
CUSO regulation to federally insured, state-chartered credit unions and 
imposes new requirements on FICUs. Under the amended rule, a FICU with 
an investment in, or loan to, a CUSO must obtain a written agreement 
with the CUSO addressing accounting, financial statements, audits, 
reporting, and legal opinions. The rule limits the ability of a ``less 
than adequately capitalized'' FICU to recapitalize an insolvent CUSO. 
All CUSOs are required to annually provide basic profile information to 
NCUA and the appropriate SSA. CUSOs engaging in certain complex or 
high-risk activities are also required to report more detailed 
information, including audited financial statements and customer 
information. These reporting obligations are imposed on natural person 
credit union CUSOs and corporate credit union CUSOs as a result of the 
rule.
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    \2\ 78 FR 72537 (Dec. 3, 2013).
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    Respondents: Federally insured credit unions and credit union 
service organizations.
    Estimated No. of Respondents: 4,116.
    Frequency of Response: One-time, on occasion, and annual.
    Estimated Burden Hours per Response: Varies based on type and 
frequency of response.
    Estimated Total Annual Burden Hours: 11,558.5 hours.
    Estimated Total Annual Cost: $76,177.2

    By the National Credit Union Administration on September 22, 
2015.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2015-24478 Filed 9-25-15; 8:45 am]
BILLING CODE 7535-01-P

Document Created: 2018-02-26 10:21:53
Document Modified: 2018-02-26 10:21:53

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Request for comment.
Dates		Comments will be accepted until October 28, 2015.
Contact		Requests for additional information, a copy of the information collection request, or a copy of submitted comments should be directed to:
FR Citation		80 FR 58314