Compliance Update: What Credit Unions Need to Know About New Washington Driver’s Licenses

The card issuance system is responsible for the production of all Washington driver’s license and ID card documents, including the enhanced cards. The newly designed driver licenses and ID cards are aimed to better protect residents from identity theft.  The state will roll-out the new cards over several months, beginning at its licensing office in Shelton.

The Washington State Department of Licensing is rolling out new driver’s licenses.

The new card features include:

  • Color headers distinguish the standard driver’s license from ID cards: driver’s licenses will have blue headers and ID cards will have violet headers;
  • An image relief of a mountain in the background, rather than a picture;
  • Additional security features that are not on current cards;
  • An image of the State Seal on the back of the cards; and
  • Better readability of the driver’s signature.

Temporary licenses issued in the driver’s licensing offices will now be printed on a full sheet of paper instead of a paper copy of the actual license. The new temporary license will also no longer bear a photo or require a signature.  Credit unions will want to keep in mind the BSA verification. Documents under 31 CFR 1020.220 provide this description, “For an individual, unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a driver’s license or passport

You can access a bulletin about the new Driver’s Licenses on the DFI’s website.

Compliance Question of the Week

Can a credit union use directly deposited Social Security and SSI benefits to offset overdrafts and overdraft fees?

Yes and no.

Under 42 U.S. C. § 407, a recipient of Social Security is protected against attachment of those funds.

There have been several lawsuits on this topic with varying outcomes. However, the underlying message in the court decisions is that a financial institution may not exercise its right to offset for a delinquent loan or account if the funds are from Social Security or are SSI. The one caveat is that if the funds are directly deposited to an account that is overdrawn at the time of the direct deposit, and the member had a reasonable ability to direct the funds elsewhere if they chose to do so—this isn’t considered a prohibited offset.

Notably, in Lopez v. Washington Mutual, the court upheld the financial institution’s right to use Social Security funds to bring a negative account positive. However, it is important to note that the reasons for ruling in Washington Mutual’s favor on this case had to do with proper disclosures regarding the institution’s overdraft practices and the fact that the Social Security funds were directly deposited to the overdrawn account in question.

Related Links:

42 USC 407

Lopez v. Washington Mutual

FRB Compliance Alert

 

Legal Briefs

 

National Credit Union Administration (NCUA)

The NCUA announced that its March 16th Board Meeting has been cancelled.

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Consumer Financial Protection Bureau (CFPB)

The CFPB announced its release of a proposal to delay the effective date of the Prepaid Account Rule. The proposed extension would delay the current October 1, 2017 effective date by six months.

The CFPB released a guide on preparing the short form disclosure for prepaid accounts.

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Federal Trade Commission (FTC)

The FTC released tips and a video aimed at helping inform businesses on how to respond if they are impersonated as part of a phishing scam.

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Federal Deposit Insurance Corporation (FDIC)

The FDIC announced the availability of its Winter 2016 Supervisory Insights. This issue features information on credit risk trends.

The FDIC announced that it will host a town hall titled Money Smart for Small Business. The town hall is available via dial in or webinar on Thursday, March 23, 2017 at 2 p.m. EST.

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Financial Crimes Enforcement Network (FinCEN)

FinCEN released Issue 3 of its SAR Stats publication.

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Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of February 23, 2017. The last update prior to this was February 16, 2017.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance News.