Compliance Center: Examining Gun Trusts
May 9, 2016
May 9, 2016
What is a gun trust?
It’s a trust created to receive (or purchase) and manage certain federally restricted, but legal-to-own weapons referred to as Title II firearms. Title II firearms, include, for example, machine guns, sawed-off shotguns, silencers, bombs, grenades, rocket launchers, and other especially lethal weapons. The trustees and beneficiaries of the gun trust may use the firearms owned by the trust under conditions described in the trust document, as well as conditions required by federal, state, and local firearms laws.
What are the benefits of a gun trust?
Like any trust there are estate planning benefits. But in the case of gun trusts there are also benefits when transferring ownership of these firearms. Transferring these weapons without complying with all of the National Firearms Act requirements can result in serious fines, jail time or both. A trust may help with the compliance of these strict regulations.
In order to transfer a Title II firearm, the weapon must be registered with the National Firearms Registration and Transfer Record. Under existing rules, if an individual wants to transfer a firearm, he or she must:
- Register an application with the state;
- Complete a transfer form;
- Attach a photograph and two sets of fingerprints for an extensive background check;
- Purchase a $200 tax stamp; and
- Get the signature of a Chief Law Enforcement Officer (CLEO).
In contrast, when a gun trust is transferring a Title II firearm, the trust must:
- Complete a transfer form;
- Pay a $200 tax stamp, and
- Provide proof of the existence of the trust.
Effective July 13, 2016, “responsible persons” of trusts will be required to complete a specified form and submit photographs and fingerprints when filing an application to transfer this type of firearm. These documents must also be forwarded to the local CLEO (the requirement for the CLEO’s signature has been eliminated.)
Warning to members: There are a lot of do-it-yourself trust documents online and gun dealers advertise gun trust services, as well. With violations of these regulations possibly resulting in fines of up to $10,000 and up to ten years in prison, it’s important that your member consult legal counsel to ensure their gun trust is set up correctly.
For more information you can review DOJ’s recent regulation here.
Source: CUNA Compliance Blog
Compliance Question of the Week
Do Cashier’s Checks issued to members count towards the Reg D limit?
Regulation D states that savings accounts should be limited to 6 electronic transactions per month. However, it says that if a member were to call in to our call center and request a Cashier’s Check from their account payable to them, that this would not count as a transaction. Can you clarify this?
Savings accounts are limited to six electronic/third party transfers/transactions per month. However, a member may withdrawal cash from the ATM or at the teller window as much as they like (permitted they give you ample notice, if required). A check withdrawal (when done by the credit union and made payable to the member) does not count as a transfer as it is not having funds moved electronically or paid to a 3rd party in the form of a member’s check.
National Credit Union Administration (NCUA)
The NCUA issued a reminder to older Americans about the agency’s online resources aimed at helping them manage their finances and protect against fraud.
The NCUA announced that it will host a Cybersecurity Risk Webinar on Thursday, May 12th. The webinar will cover topics like avoiding or minimizing cybersecurity vulnerabilities, how to prepare for or recover from a cybersecurity event, and how to balance the impact associate with fraud risk and prevention. Credit unions can register for the webinar here.
The NCUA announced that NCUA Chairman Metsger has named Michael Radway as his Chief of Staff.
Consumer Financial Protection Bureau (CFPB)
The CFPB issued a proposed rule that would prohibit mandatory arbitration clauses that prevent consumers from bringing class action law suits against the entity in new contracts. Comments are being accepted for 90 days after the proposed rule is published in the Federal Register.
Federal Reserve Board (FRB)
FRB announced that it approved the joint agency notice of proposed rulemaking regarding the incentive compensation rule.
The FRB released its April 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices. The report focuses on the changes in lending practices, standards, terms, and demand for loans to business and households over the past three months.
The FRB issued a proposed rule that would require U.S. global systemically important banking institutions to amend their contracts for to prevent immediate cancellation of the contracts if the firm enters bankruptcy for a resolution process.
The FRB, in conjunction with the OCC and FDIC, announced they are proposing a rule that would require large banking organizations to maintain a minimum level of stable funding relative to the liquidity of their assets, derivatives, and commitments over a one-year period.
The FRB announced that it will be cosponsoring a public forum that explores the economic trends that affect housing in rural communities.
Federal Deposit Insurance Corporation (FDIC)
The FDIC announced that it is seeking input from financial institutions and other stakeholders on the FDIC’s plan to assess opportunities for mobile financial services to enhance underserved consumers’ banking experiences.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of May 5, 2016. The last update prior to this was May 3, 2016.
Questions? Contact the Compliance Hotline: 1.800.546.4465, email@example.com.