By The Way

The By The Way newsletter is a great way to keep Kentucky credit unions informed of the latest updates in governmental affairs, compliance and regulations, education and training.  In addition, By the Way highlights the difference credit unions are making on a daily basis.

League Updates

CUNA Announcements

Annual Meeting Recap

Educational Opportunities

Credit Union Announcements

Compliance Updates


Congressman Andy Barr has served as the U.S. Representative for Kentucky’s Sixth Congressional District since January, 2013.  He is a member of the House Financial Services Committee, and is the Chairman of the Monetary Policy and Trade Subcommittee.  

Q: What motivates you to run for office?

“No reason other than to make a difference – especially when it comes to the economy and prosperity for citizens in my district.  Condition of birth shouldn’t privilege or hinder anyone.  I believe free enterprise contributes to upward mobility allowing more Kentuckians more opportunities to escape poverty.”

Q: What is your favorite part about being a US Congressman?

“The people.  There are few jobs that give you the opportunity to meet as many people as I get the opportunity to meet in this job.  Meeting dignitaries is nice but in this job, I get to meet the people living and working in my district and my neighborhood.  I wouldn’t have the friends I have today if it weren’t for this opportunity.  I get to hear real life stories, real challenges people are facing, goals they have set for themselves and I get to hear firsthand the great things they are doing.”

Q: What is the most challenging part about being a member of Congress?

“The inefficiency of government.  On the one hand, I appreciate the checks and balances and I appreciate the structure of our constitution.  On the other hand, when I see a problem and the solution is right in front of me I can’t solve it right away because of the process.  S. 2155 is a great example of a long, arduous process but in the end the product is worth it.  I want to get things done.  I’m practical and conservative but want to solve problems.  I want my time to be productive.  It’s frustrating when politics and partisanship gets in the way.”

Q: Tell us about your highest accomplishment to date while serving in Congress.  

“I believe it’s the core accomplishments of the work of the House Financial Services Committee – regulatory relief.  Why?  It’s important to the economy, credit unions, community financial institutions, your members, and communities as a whole.  Regulatory relief has national implications for the health of our financial markets.  It’s going to make a difference in lives of home owners, businesses, farmers and entrepreneurs.  I am very proud that I had a hand in writing some of the language, sponsoring and cosponsoring bills that give meaningful relief.”

Q: Your main focus has been your work on the House Financial Services Committee; however, I know there’s another issue that you are passionate about.   Can you tell us about that?

“Absolutely, the work we’ve done to combat the opioid crisis.  Again, I’ve been honored to author a bill and amendments that are now law that aid in the prevention, detection and recovery of opioid addiction.”

Q: You are Chairman of the Subcommittee on Monetary Policy and Trade– what is the role of the committee and what areas of jurisdiction fall under this committee?  

“The first role of the committee is the oversight of the Federal Reserve System.  The subcommittee carries out extensive oversight of the Federal Reserve System and its conduct of monetary policy, including assessing its effectiveness in promoting maximum employment, stable prices, and moderate long-term interest rates consistent with its legislative mandate. The subcommittee plays an active role in overseeing the production, distribution and circulation of the nation’s circulating coinage and currency, as well as commemorative coins and medals.

Second, the subcommittee oversees U.S. participation in the international financial institutions, including the International Monetary Fund, the World Bank and the regional development banks. The subcommittee has oversight responsibility over trade negotiations as they relate to market access issues with respect to the financial services sector, and is responsible for overseeing the Export-Import Bank, an agency whose mission is to create U.S. jobs through supporting exports.

The subcommittee conducts oversight of the implementation of the nation’s anti-money laundering and anti-terrorism financing statutes and activities related to the administering of U.S. economic sanctions.”

Q: If you weren’t doing this, what would you be doing? 

“Teaching.  Before I got elected, along with practicing law, I taught at the University of Kentucky and Morehead.  I love to teach.”

Q: Tell us about your family. 

“My wife Carol and I have been married for 10 years.  We have two amazing daughters, Eleanor and Mary Clay.  Eleanor is in the second grade and loves ballet.  Mary Clay is 5 years old and loves dance and gymnastics.  They keep us pretty busy.” 

Q: What else would you like our readers to know about you? 

“I have appreciated the relationships that I have established with the Kentucky Credit Union League.  I have a new knowledge and appreciation of your business, your members and the products and services you offer.  Credit Unions represent a very, very important component of the financial services eco system.  You fill gaps and give options to lots of families – you build personal relationships.”



Congressman Trey Hollingsworth Visits Park Community Credit Union’s New Albany Branch

Park Community CU hosted a meet and greet with Congressman Trey Hollingsworth on Monday, October 29, 2018 at their New Albany location.  The Congressman was very interested in meeting the people behind the credit union movement in Indiana.  There were representatives from Park CCU, Centra Credit Union and L&N FCU as well as the One Southern IN Chamber of Commerce and Greater Louisville Inc Chamber of Commerce.  Representatives from both the Kentucky and the Indiana Leagues were also in attendance.  Discussion ranged from the BCFP (also known as the CFPB) and regulatory relief to how the average citizen can be engaged in the legislative process.  Congressman Hollingsworth sits on the House Financial Services Committee and represents the 9th Congressional District of Indiana.


Kentucky CUs Now Have Access to a Free Employment Law Hotline

Through a new partnership with Woods Rogers’ Labor and Employment Attorneys, our member credit unions now have access to a FREE EMPLOYMENT LAW HOTLINE.

As a member credit union, you can now contact the Woods Rogers law firm for daily human resource issues.

The free hotline service is a dues-supported function of the Kentucky Credit Union League and kicks off November 1, 2018.

Contact the firm at 800.552.4529 for answers to your basic human resource management questions. The primary areas of concern for credit unions contacting Woods Rogers include, but are not limited to:

  • Terminations
  • Discipline
  • FMLA
  • FLSA
  • ADA Compliance
  • Attendance Control Issues

About Woods Rogers

Woods Rogers’ labor and employment attorneys help employers find solutions to workplace issues. They are ranked by U.S. News & World Report as a Tier 1 Metro Area Law Firm in the following areas: Employment Law–Management; Labor Law–Management; Litigation–Labor & Employment; and Employee Benefits (ERISA) Law. They are also well-versed in federal contracting rules that apply to credit unions, as well as the issues human resources professionals encounter daily—from evaluating employee performance fairly and lawfully, to document retention policies, social media use guidelines, and more.

Daniel C. Summerlin III
Principal & President
Dan’s experience covers a scope of law from administrative and regulatory, with an emphasis on environmental, to labor and employment and litigation. He is an active member of the Labor & Employment practice group. His employment clients call upon him to provide training to their supervisors and workforce, provide guidance on human resource issues that arise during daily operations including discipline and termination advice and compliance issues with FLSA, ADA, Title VII, NLRA, and FMLA. Dan is listed among the Best Lawyers in America and is ranked as a Legal Elite by Virginia Business magazine.


Do you want to Crash the GAC? Then you're in the right place!

Crashers are credit union young professionals (35 & under, or "35 at heart") who are sponsored to attend a conference at a lower cost and with additional content designed especially for YPs. Applications are easy, and the entire experience is career-changing!

The 2019 CUNA Governmental Affairs Conference (GAC) is March 10 - 14. The Cooperative Trust, CUNA, and your League are joining forces to get at least 1 Crasher per state and D.C. represented at this year’s GAC.

Crashers receive free conference registration from CUNA. Travel, lodging, and food costs are the responsibility of the Crasher and their credit union.

Take a deep dive into the world of credit union advocacy with more than 50 other Crashers at the biggest event of the year - your career will never be the same!

Submit your application by 11:59pm CST on November 30, 2018. Any questions? Email [email protected] Good luck!


Annual Meeting & Convention Recap

Thank you to all of the attendees, sponsors, exhibitors, and special guests who made the 84th Annual Meeting and Convention a success!  This year's event brought in 118 attendees from 29 credit unions and showcased 43 vendors in the Exhibit Hall. 

Please save the date for the 85th Annual Meeting & Convention on October 2-4, 2019 at the Hyatt Regency Lexington. 

Golf Outing
The golf outing was held at Valley View Golf Club in Floyds Knobs, IN.   

1st Place

(l-r) Nancy Towery, Dale Towery, Derrick Herndon, Tim Williams (Your Hometown Federal CU)

2nd Place

 (l-r) Tom White (3SI Security), Josh Landers (3SI Security); Penny Haseker (Beacon Community CU), Ron Haseker

3rd Place

Jonathan Mays (Commonwealth CU), Jon Jeffreys (Callahan & Associates), Tim Taylor (Callahan & Associates), Mark Fucci (Culiance)

Other Categories:


Longest Drive
John Longhran, Autotruck Financial CU

Longest Putt
Greg Baker, UK Federal CU

Closest to pin
Jeff Hertweck, CO-OP Financial Services


CUNA Awards Ceremony

Dora Maxwell Social Responsibility Community Service Award Winners

$50 - $250 Million Asset

Tom Anonson accepts award for Class Act Federal CU

$250M - $1 Billion Asset

David Shadburne accepts award for Park Community CU

More than $1 Billion Plus Asset

Marvin Hawk accepts award for Fort Knox Federal CU


Louise Herring Philosophy in Action Member Service Award Winners

$250M - $1 Billion Asset

David Shadburne accepts award for Park Community CU

More than $1 Billion Plus Asset

 Marvin Hawk accepts award for Fort Knox Federal CU 


Dejardins Youth Award

$50 - $250 Million Asset

Jon Ulincy accepts award for Ashland CU

$250M - $1 Billion Asset

 David Shadburne accepts award for Park Community CU

More than $1 Billion Plus Asset

Bobby White accepts award for Commonwealth CU


Dejardins Adult Award

$50 - $250 Million Asset

Tiffany Black and David Deborde accept award for Members Choice CU

$250M - $1 Billion Asset

 David Shadburne accepts award for Park Community CU


More than $1 Billion Plus Asset

 Bobby White accepts award for Commonwealth CU



Chapter Awards

CU in Attendance

Linda Baughman accepts award for Blue Grass Chapter

Most Effective Chapter

David Deborde accepts award for Ashland Chapter


Other Awards

Frank Moore Outstanding Professional Award

Gary Lord, L&N Federal CU

Steve Brody Outstanding Volunteer Award

 Ray Jacobi, Beacon Community CU

Wayne R. Woodward Philosophy in Action Award

Park Community CU Employees


Mapother Lifetime Achievement Award
The Mapother Lifetime Achievement Award was established to honor an individual who has dedicated his/her life to promoting the credit union philosophy and has provided leadership that has had a significant and lasting impact on the Kentucky credit union movement.

Wendell Lyons began his credit union profession in 1976 when he was hired as the Repossession Manager for Fort Knox Federal Credit Union, where he soon after became their Marketing Director.  In 1985, Wendell moved to the Kentucky Credit Union League, serving as the Vice President of Governmental Affairs until he was promoted to President/CEO in January of 2000.

During his illustrious career that spans over 30 years at the League, Wendell has been a proponent of credit union membership and a staunch advocate for credit unions, both on the state and national level.  He led the successful charge in Kentucky to defend the Home Federal Savings and Loan lawsuit, which attempted to preclude credit union membership based on a geographic common bond.

Because of the rapport Wendell has built with both state and federal elected officials, credit unions have been successful defending our tax status and other legislative efforts that threaten credit unions’ ongoing viability.  Wendell has a close relationship with State Majority Leader Mitch McConnell and counts many other Congressmen as credit union friends.

Wendell’s impressive list of accomplishments on the national level includes serving on the CUNA Board for 4 years, serving on the AACUL Board for 9 years, and as Chair of CULAC for 2 years.  Wendell should also be quite proud that he was on the Search Committee responsible for hiring CUNA President Jim Nussle. 

Wendell is a founding member of The Raiffeisen Group, a collaboration of 7 State Leagues whose mission is to use their collective efforts to bring efficient and innovative best of class products and services to credit unions.

Wendell’s legacy to Kentucky credit unions and to the industry is immense.  He is passionate about what he believes in and is always looking out for the best interest of credit unions.  In a world of passive leaders, Wendell has distinguished himself as proactive, courageous, spirited, determined, and unwavering in his support and promotion of credit unions.

Congratulations Wendell Lyons!

Conference Close

Governmental Affairs Breakfast
The final day of the Annual Meeting & Convention kicked off with a governmental affairs breakfast with Governor Matt Bevin as the Keynote Speaker.  Commissioner Charles Vice also presented during the general session. 

Emerging Leaders Closing Session
We are proud to sponsor the Emerging Leaders Program — a program designed to bring up-and-coming credit union professionals to the next level and prepare them for leadership roles within the credit union movement.

The 2018 Emerging Leaders Program began in March with participants from seven credit unions. Participants attended (4) one-day sessions on topics specifically geared towards credit union history and philosophy, financials, professionalism and leadership, and political advocacy.  In addition, participants contributed to a service learning project that combined leadership skills with corporate responsibility and presented their final projects during the Closing Session at the Annual Meeting & Convention followed by a completion ceremony. 

Congratulations to the 2018 Emerging Leaders Class!


Save the Date: IRA Training

February 12 - 13, 2019 | League Office

Educational Investment: $239 per person per day

The Only Sure Thing about IRA Change.

Day 1: IRA Essentials
9:00 a.m. – 4:30 p.m.

IRA Essentials gives attendees a solid foundation of IRA knowledge.  Exercises are included throughout the day to help participants apply information to job-related situations.  Attendees will leave this session able to work with IRA owners and process basic IRA transactions with confidence.  This is a beginner’s session; no previous IRA knowledge is assumed.

Introduction and Establishing IRAs

  • Identify the tax differences of a Traditional and Roth IRA
  • Examine the process for establishing an IRA and the required documents
  • Differentiate between the types of beneficiaries

IRA Funding

  • Learn about the Traditional and Roth IRA eligibility requirements
  • Identify the contribution limit and deadline
  • Communicate contribution reporting deadlines

IRA Distributions

  • Identify federal income tax withholding requirements
  • Examine IRS penalties and penalty exceptions
  • Summarize the tax consequences of IRA distributions
  • Communicate distribution reporting deadlines

IRA Portability

  • Differentiate between a rollover and a transfer
  • Recognize rollovers between IRAs and employer- sponsored retirement plans

Who Should Attend?

You should attend this seminar if you:

  • need to learn the basics of Traditional and Roth IRAs or
  • want an updated, general refresher on IRA rules.

Day 2: Advance IRAs
9:00 a.m. – 4:30 p.m.

Advanced IRAs builds on the attendees’ basic knowledge to address more complex IRA issues their financial organizations may handle.  This is an advanced session; previous IRA knowledge is assumed.  The instructor uses real-world exercises to help participants apply information to job-related situations.

IRA Update

  • Explain the recent changes affecting IRA owners.
  • Discuss the Roth modified adjusted growth income limits.
  • Recognize how recent changes may affect your financial organization. 

Required Minimum Distributions

  • Calculate a required minimum distribution (RMD).
  • Discuss the RMD rules and reporting requirements.

Beneficiary Options       

  • Describe beneficiary distribution options.
  • Recognize the differences for spouse, nonspouse, and nonperson beneficiaries.
  • Explain beneficiary payment deadlines.

Advanced Portability

  • Summarize the restrictions on the movement between IRAs.
  • Recognize the options available when moving from an employer-sponsored retirement plan to an IRA.
  • Explain the result of violating the portability restrictions.
  • Roth IRA Conversion Contributions
  • Describe a conversion.
  • Explain the effect of withholding on a conversion.
  • Report a conversion.
  • Define the consequences of an ineligible conversion.

IRA Owners Tax Forms and You

  • Determine which tax forms an IRA owner must complete when certain IRA activity occurs.
  • Understand which IRS penalty taxes may apply to IRA owners.

Who Should Attend?

You should attend this seminar if you:

  • are an IRA administrator or member service representative who has working knowledge of basic IRA operations and wish to expand your expertise;
  • are a compliance specialist with procedural oversight of IRA policies and practices; or
  • are support personnel responsible for promotional materials that describe the services provided by your credit union.



Hosted by Volunteer Corporate Credit Union

Date & Location:
November 7, 2018 at
Churchill Downs, Paddock Gate
700 Central Avenue
Louisville, KY 40208

Educational Investment: 
$150 per person
Handouts, continental breakfast, buffet lunch 
and refreshments included

Register Here!

New Parking and Gate Information for 2018!
Please park in Black or Green Lot and enter at the Paddock Gate. 
View Map Here.

Conference Leader: Mike Schenk, CUNA
Mike Schenk has 35 years of experience in the financial services industry. In 1992 he joined CUNA where he is currently Deputy Chief Advocacy Officer for Policy Analysis and Chief Economist conducting economic research and supporting CUNA’s public relations and advocacy efforts. He serves on the board of the $3 billion Summit Credit Union in Madison, Wisconsin which has over 160,000 members. He also serves as Board Chair and has Chaired the credit union’s ALM and Risk Management/Internal Audit Committees. 

Conference Schedule: 

  • Registration/Continental Breakfast: 8:30 a.m. – 9:00 a.m.
  • Economics Strategy Workshop: 9:00 a.m. – 10:15 a.m.
  • Conclusion of Program: 10:30 a.m. – 11:30 a.m.
  • Buffet Luncheon: 12:00 p.m. – 2:00 p.m.
  • Live Racing: 1:00 p.m. – 5:00 p.m.

Afternoon at the Races
Don’t miss this chance to network with your peers after participating in the Wednesday morning program. Churchill Downs will be the setting for the afternoon. More Information >>



Class Act FCU Attends Junior Achievement Inspire

Class Act Federal CU was thrilled to be at JA Inspire again this yearJA Inspire is an interactive career exploration event for 8th and 9th grade students where we hosted an interactive and intriguing career station and had the opportunity to mentor more than 11,500 students showcasing jobs at Class Act FCU.  Staff volunteers provided banking career advice to help the students learn in time to plan their high school coursework.  We engaged students with hands-on career exploration – in a fun way - and promoted our Academy.

Students in attendance were from ten county school districts including: Jefferson, Bullitt, Hardin, Spencer, Nelson and Meade.  In addition, several parochial schools were also in attendance.  Southern Indiana counties of Harrison, Clark and Floyd also sent students.  There were even more businesses than last year that had career stations with over 400 mentors in attendance.

Students at the Class Act station were able to play the “Game of Life” where they quickly visited four fun and interactive stations as follows: 1) Cash Machine Grab 2) Plinko-Like Game 3) Credit Union Careers and 4) Reward Center.  The station provided hands-on fun while also allowing students to learn about careers at the credit union and how money impacts our everyday. Each student received a small prize and an informational flyer for participating in Class Act’s “Game of Life”. The students were excited to participate in the activities and Class Act learned a lot about what they want to do with their life when they get out of school!

Here’s a quick snapshot of the event:



Commonwealth is a Frankfort Favorite

The weather in Kentucky is always unpredictable, but recently it has been raining awards at Commonwealth Credit Union.

Two of the counties Commonwealth serves recently held their “Franklin Faves” and “Best of Anderson” contests to determine which businesses stand out in their respective counties.

In Anderson County, Commonwealth Credit Union won for Best Bank/Credit Union and also Best Customer Service. 

In Franklin County, Commonwealth Credit Union won for Best Bank/Credit Union, Best Mortgage Provider, and Best Place to Work. 

“We are extremely proud of all of these awards and the communities we serve! We feel these honors speak to the culture we have worked hard to create in our organization. We are truly humbled and strive to not only build on these awards, but to also better the lives of each of our members, every day.” – Karen Harbin, President/CEO 


Fort Knox Federal Named Favorite Mortgage Lender & Financial Institution

Fort Knox Federal Credit Union was selected as the “Favorite Mortgage Lender” and “Favorite Financial Institution” in Hardin County through The News-Enterprise 2018 Reader’s Choice Awards survey.  This is the 6th year in a row the Credit Union was named either “Best Credit Union” or “Favorite Financial Institution” and its second time being named “Best Mortgage Company/Favorite Mortgage Lender.”  

Fort Knox Federal offers a wide range of affordable mortgage solutions and has grown to become the largest member-owned financial institution in Kentucky by providing money-saving financial products and services that help improve members’ financial lives.

“Our team of dedicated professionals works hard to help members turn their financial dreams into reality,” said Ray Springsteen, Fort Knox Federal President and CEO. “Whether that means buying a new home, saving for a child’s education or retirement, the credit union is often able to provide lower fees and better rates because we are a local, not-for-profit financial cooperative.”


Metro Loves Lucy

Metro Employees CU loves Lucy Long!  Lucy is a Member Service representative and has worked for Metro for nine years.  She is also a breast cancer survivor and has been cancer-free for nine years!  In support of Lucy, and to help raise money to find a cure, the employees of Metro purchased Breast Cancer Awareness t-shirts from the Lexington Fire Department. 



Nearly Three Tons of Paper Shred at Service One’s Community Shred Day

On Saturday, September 22, 2018, Service One Credit Union hosted its 5th annual community shred day at the 1609 Campbell Lane Branch. This three-hour event was open to the community. It was well attended, with the community securely shredding nearly 3 tons of paper.  The paper shredded was recycled, saving hundreds of mature trees, several gallons of oil and water and 10 cubic yards of landfill space.  Paper disposal services were provided by Land Shark Shredding

Minimum donations of $10 were requested to benefit The Center for Courageous Kids; a non-profit center based in Scottsville, KY which supports children with life-threatening illnesses. This event raised $1280 for this great organization. Service One supplemented the donations received to contribute a total of $1,500 to The Center for Courageous Kids.

“Surprisingly, the rain did not keep folks from coming out to Service One Credit Union’s successful shred day,” said Rebecca Stone, Service One President/CEO.  “Service One shred day is just another way to live our purpose of a better life experience….one person at a time.”

The Center for Courageous Kids (or CCK) welcomes children with life-threatening conditions from all across the country for a week or weekend of medically supervised fun, friendship, respite, and silliness – all free of charge. Operating solely on donations, the tremendous opportunities that CCK provides each child living with medical challenges are made possible by generous contributions and donations from individuals, corporations, healthcare partners, foundations, and the community at large.  Find out more information about CCK by visiting:



FFIEC Launches New BSA/AML InfoBase Site

The FFIEC has launched its redesigned Bank Secrecy Act/Anti-Money Laundering (BSA/AML) InfoBase website, which is provided for sharing bank examination procedure information with examiners, financial institutions, the public, and other stakeholders. The InfoBase was redesigned to improve the overall experience for users. It includes improved site navigation, enhanced search capabilities, mobile-friendly capability, and new functionality that allows users to download various sections of the FFIEC BSA/AML Examination Manual.

Source:  FFIEC



Exceptions to the 3-Day Right of Rescission

The damage or destruction to homes and personal property caused by severe storms, hurricanes, tornadoes and wild fires across the country in recent years has caused “personal financial emergencies” for thousands of individuals.

A provision in Regulation Z which permits the waiver of the three-day rescission period could help some of these individuals receive loan funds faster.  CUNA’s Compliance Blog provides more information on this topic.



Comment Request: NCUA Real Estate Appraisals

The NCUA has issued a proposed rule to amend its real estate appraisal requirements for certain transactions with the intention of increasing clarity and providing regulatory relief to credit unions.

The proposed rule would make the following amendments:

The NCUA proposes various changes to the teams and definitions applicable to Part 722, while also making technical non-substantive amendments to the section.

Proposed Restructure to NCUA Part 722
The NCUA proposes to amend the current § 722.3 in order to help credit unions more readily determine: 

  • Whether the real estate-related financial transaction does not require an appraisal or written estimate of market value under Part 722;
  • When an appraisal required under Part 722 must be prepared by a state-certified appraiser;
  • When an appraisal required under Part 722 may be prepared by either a state-certified or state-licensed appraiser; and
  • When only a written estimate of market value is required.

Appraisal Requirements Regarding Non-Residential Real Estate Transaction
The proposed § 722.3(b)(1) increases the threshold at which non-residential real estate-related financial transactions are exempt from appraisal requirements from $250,000 to $1 million. The proposal requires an appraisal performed by a state-certified appraiser for transactions that are not exempt under § 722.3 (a) and the transaction value is $1 million or more. The NCUA believes the intention of this proposed increase would reduce regulatory burden by providing credit unions greater flexibility in commercial lending. 

For commercial real estate-related financial transactions with transaction values below $1 million, credit unions would be able to use their judgment, consistent with safe and sound lending practices, to determine whether to use an appraisal or a written estimate of market value. 

Exemption from Appraisals of Real Property Located in Rural Areas

The proposed rule amends § 722.3(f) to incorporate the new exemption that was included in the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) – an Act that was signed into law by President Trump on May 24, 2018. S. 2155 implements the Section 103 provision exempting from the appraisal requirements certain federally related, rural real-estate transactions valued below $400,000 if no state-certified or state-licensed appraiser is available.

The exemption provided in S. 2155 is self-implementing, so credit unions may avail themselves of the statute's exemption immediately, provided the transaction meets all of the requirements under Section 103.

Comments are due on December 3, 2018. 

Click here for more information.


Compliance: Reg. CC Rule Includes Presumption of Alteration

The Federal Reserve has published a final rule amending subpart C of Regulation CC (Availability of Funds and Collection of Checks) to address check alteration disputes when the paper check is unavailable for inspection.

The rule adopts a presumption of alteration for disputes between financial institutions over whether a substitute check or electronic check contains an alteration or is derived from an original check that was issued with an unauthorized signature of the drawer. 

The final rule recognizes that, in today’s check collection environment, original paper checks may be unavailable for inspection in disputes between financial institutions.

Currently, In the case of an altered check under the Uniform Commercial Code, the institutions that received the check during forward collection, including the paying institution, have warranty claims against the banks that transferred the check.

In the case of a forged check, the USS places the responsibility on the paying institution for identifying the forgery.

Therefore, this generally leads to the depository institution bearing the loss related to an altered check, whereas the paying institution bears the loss related to a forged check.

The amendments to Regulation CC include a presumption of alteration in certain cases of doubt, such as disputes between institutions, but only when one has transferred an electronic or substitute check to the other.

The amendments also clarify that the presumption does not apply if its contrary to another statute or regulation, such as the Treasury’s rules regarding U.S. Treasury checks.

The rule becomes effective Jan. 1, 2019.

In addition to CompBlog, CUNA’s Compliance Community contains discussion boards and a number of other resources for credit union compliance professionals around the country.