Washington DCU Bulletin Provides Guidance on Additional Investment Authorities

The investment authorities were granted to Washington State-chartered credit unions under House Bill 1247 during the 2019 legislative session.

10/20/2020

The Division of Credit Unions for the Washington State Department of Financial Institutions (DCU) released bulletin B-20-03, which provides guidance on the additional investment authorities, which were granted to Washington State-chartered credit unions under House Bill 1247, during the 2019 legislative session. Credit unions will need to ensure they are compliant with the additional investment requirements when they use the expanded investment authorities.

The bill included two additions to investment authorities that are granted to Washington-state chartered credit unions:

  • For any credit union that is an approved public depository, any securities listed in RCW 39.58.050 can be used as eligible collateral for public deposits; and
  • Investment of the type in which may invest state funds pursuant to RCW 43.84.080.

RCW 39.58.050(5) & (6) list the eligible securities which an approved public depository may invest. As of Sept. 30, there were 16 state-chartered and five federal-chartered credit unions that had been approved as public depositories. The list is straightforward, and the bulletin does not provide any additional guidance.

RCW 43.84.080 lists the types of investments in which the State Treasurer may invest the state’s funds. With the enactment of H1247, state credit unions are permitted to invest in the instruments listed in RCW 43.84.080. The DCU bulletin provides additional and clarifications on these types of investments.

Question of the Week

Q. What is the Address Confidentiality Program? How do we handle CIP in this case?

A. Idaho, Oregon and Washington are among the 30 states that offer Address Confidentiality Programs (ACP). The goal of these important programs is to help crime victims (specifically domestic violence, sexual assault, trafficking, and stalking) stay safe. ACP is designed to prevent offenders from using state and local government records to locate their victims. These programs act as mail forwarding services. The participants give out the “substitute” address of the ACP instead of the address at which they live. The ACP staff then repackages and forwards the participant’s mail to the address on file with the ACP.

The rules implementing the Bank Secrecy Act (BSA) require Credit Unions (CU) to implement a Customer Identification Program (CIP). The program is designed to ensure that a credit union forms a reasonable belief that it knows the true identity of its members. The rules also require that a credit union obtain from an individual member a residential or business street address. If the member does not have a residential or business street address, the rules permit the member to provide a “residential or business street address of next of kin or of another contact individual.”

The U.S. Department of the Treasury provided guidance, FIN-2009-R003, concerning CIP and Address Confidentiality Programs. In the guidance, FinCEN authorizes the establishment of an exception to the requirement that credit unions obtain a member’s residential of business street address. The exception is: “a customer who participates in a state-created ACP shall be treated as not having a residential or business street address and a secretary of state, or other state entity serving as a designated agent of the customer consistent with the terms of the ACP, will act as another contact individual for the purpose of complying with FinCEN’s rules. Therefore, a credit union should collect the street address of the ACP sponsoring agency for purposes of meeting its CIP requirement.”

Related Links

WA Address Confidentiality Program
Oregon Address Confidentiality Program
Idaho Address Confidentiality Program

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Guidance on Additional Investment Authorities
The DCU issued DCU Bulletin B-20-03 to provide guidance on additional investment authorities which were granted to Washington State-chartered credit unions under House Bill 1247 in 2019.

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Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].