[Federal Register Volume 74, Number 138 (Tuesday, July 21, 2009)]
[Rules and Regulations]
[Pages 35767-35769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17312]



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Rules and Regulations
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Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules 
and Regulations

[[Page 35767]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 741, 748 and 749

RIN 3133-AD56


Credit Union Reporting

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is amending its reporting procedures and record retention 
requirements to conform regulatory provisions to its new, Web-based 
reporting system. The rule incorporates into the regulation a statutory 
requirement on reporting changes in senior officials resulting from 
election or appointments and clarifies requirements on when a credit 
union files reports with NCUA online. The rule also provides 
alternative reporting methods for credit unions unable to submit online 
reports.

DATES: The rule is effective September 1, 2009.

FOR FURTHER INFORMATION CONTACT: Amber Gravius, Risk Management 
Officer, Office of Examination and Insurance, (703) 518-6360; or 
Moisette Green, Staff Attorney, the Office of General Counsel, (703) 
518-6540, National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314.

SUPPLEMENTARY INFORMATION:

Background

    NCUA has replaced the software used to submit financial and other 
reports with an integrated, Web-based information management system. 
The online system makes reporting more efficient and cost effective, 
and enhances the accuracy of credit union data. The implementation of 
the new online system requires revisions to current reporting 
regulations.
    The Federal Credit Union Act (Act) grants NCUA broad authority to 
require federally insured credit unions (FICUs), including corporate 
credit unions, to submit financial data and other information as 
required by the NCUA Board (Board). 12 U.S.C. 1761, 1766, 1781, and 
1782. NCUA has implemented this authority in various regulatory 
provisions. NCUA requires FICUs to submit financial reports, reports of 
officials, and other reports. 12 CFR 704.1, 741.6, and 748.1. Section 
741.6(a) prescribes the requirements for financial, statistical, and 
other reports and, currently, requires natural person credit unions to 
file a Financial and Statistical Report quarterly, also referred to as 
a Call Report and identified as NCUA Form 5300. The provisions in Sec.  
741.6 currently do not specify the form corporate credit unions use; 
corporate credit unions file Call Reports monthly using NCUA Form 5310. 
Further, FICUs must file a Report of Officials, NCUA Form 4501, with 
NCUA annually after the election of officials. 12 CFR 748.1(a). In 
addition to information about a credit union's main location and 
branches, hours of operation, and identity of and contact information 
for senior officials, NCUA Form 4501 also contains a certification of 
FICU compliance with the requirements of Part 748, which includes 
catastrophic act reporting, suspicious activity reporting, and security 
program and Bank Secrecy Act requirements. Id. The front page of the 
NCUA Form 4501 states the Report of Officials must be filed with the 
regional director no later than 10 days after the election of 
officials.
    Appendix A to Part 749 sets out guidelines for record retention and 
identifies key operational records FICUs should retain permanently. 12 
CFR Part 749, Appendix A, para. E.2. NCUA Form 5300 or its equivalent 
is currently identified as an example of these key operational records. 
Id. at para. E(2)(b).
    In March 2009, NCUA proposed revisions to Sec. Sec.  741.6 and 
748.1, and Appendix A to Part 749 to clarify online reporting 
procedures and record retention requirements, conform regulatory 
provisions to the new online system, and incorporate into the 
regulation a statutory requirement on reporting changes in senior 
officials. 74 FR 13139 (March 26, 2009).

Online Reporting Process

    NCUA is interested in increasing efficiency, reducing costs, 
enhancing accuracy of data, and providing a secure, single access 
portal where credit unions can submit, edit, and view data NCUA 
collects. The new information management tool allows FICUs to submit 
financial reports, information regarding officials, and other 
information to NCUA through a secure, Web-based system. Credit unions 
have access to the online system via the internet from NCUA's Web site 
at http://www.ncua.gov. For credit unions to use the online system, 
they must have a computer, Internet connectivity, Internet Explorer 6.0 
or higher, and a valid e-mail address. All users of the online system 
must use a login and password to access the system, and credit union 
users only have access to their own credit union's confidential 
information. The public may obtain non-confidential information without 
a login or password.
    To ensure information is protected, users identify themselves using 
an authentication process requiring a unique login and password. 
Authenticated users may only access the information they are authorized 
to view. Additionally, the transmission of sensitive information 
between credit unions and NCUA is encrypted using the industry-standard 
Secure Sockets Layer (SSL) technology to prevent others from 
intercepting and accessing confidential, credit union information.
    NCUA will no longer issue software to submit data; the online 
system permits credit unions to submit data to NCUA from any computer. 
Additionally, the online system eliminates mailing and printing delays, 
missing information, and damaged software CDs. The online system 
provides real-time warnings throughout the input process to ensure data 
integrity. NCUA is currently implementing the new system for natural 
person credit unions and anticipates implementing it for corporate 
credit unions in 2010.
    All credit union data will be submitted and viewed through the 
online Credit Union Profile and Call Report. The online profile 
includes information NCUA maintains about a credit union that 
infrequently changes, for example, the credit union address(es), phone 
number(s), list of officials, hours of operation, etc. It has

[[Page 35768]]

additional information such as disaster recovery information, and 
information systems and technology information. After profile data are 
entered, subsequent input is only required for additions, deletions, or 
changes to the data.
    For efficiency and to make reporting less burdensome, credit unions 
may have multiple users to enhance the likelihood that profile 
information is accurate and updated when necessary and ensure the Call 
Report is submitted timely. Additionally, multiple users may access the 
system and complete different sections of the Call Report and profile 
simultaneously. Credit unions unable to use the online system will use 
a manual process to submit their information on a paper form.

Comments on the Proposal

    NCUA received comments from one credit union and two trade 
associations. The credit union supported the proposed changes, but 
raised concerns about data security. It suggested using electronic 
tokens or other multi-factor authentication method in conjunction with 
strong passwords to ensure data submitted through the online system is 
not compromised. The credit union also recommended giving credit unions 
up to 12 months instead of 30 days to update the online Reports of 
Officials information.
    This final rule does not address data security. Credit unions can 
be sure NCUA will maintain the online system in accordance with federal 
computer security standards for the management of automated information 
resources. See Office of Management and Budget Circular No. A-130. 
Additionally, NCUA will encrypt sensitive information during 
transmission using industry-standard Secure Sockets Layer (SSL) 
technology to prevent others from intercepting and accessing 
confidential, credit union information.
    The Board believes 30 days is a reasonable time for FICUs to update 
changes to the information regarding their officials in the online 
profile. Under the Act, federal credit unions must file the names and 
addresses of senior management officials and volunteer officials with 
NCUA within 10 days after their election or appointment. 12 U.S.C. 
1761(b). NCUA needs up-to-date credit union information for many 
reasons, for example, member complaint resolution, examination 
completion, and disaster and emergency preparedness. Accordingly, 
credit unions must ensure their profiles contain accurate information.
    One trade association supported the proposed adoption of an 
internet-based reporting system, but requested NCUA conduct a 
comprehensive review of the content of the reports credit unions must 
submit to reduce the reporting burden. Another trade association 
supported the objective to increase efficiency and ease of reporting 
information to NCUA, but expressed concern about the training required 
for credit union staff to use the new online system. It urged NCUA to 
allow sufficient time for implementation of the new system and to 
permit credit unions to make necessary logistical changes and train 
staff.
    The Board expects the online system will reduce the burden on 
credit unions and make reporting more efficient. NCUA reviewed the 
information it collects from credit unions during the development of 
the online system and has reduced the redundancy associated with the 
various reporting requirements. Information that had previously been 
reported in multiple forms or reports has been consolidated in the 
online profile.
    To assist credit unions with the transition to the online system, 
NCUA will host training sessions, including Webcasts, workshops, and 
seminars, throughout summer 2009. Information regarding the training 
sessions will be posted in the Upcoming Events section of NCUA's Web 
site, http://www.ncua.gov. Additionally, frequently asked questions are 
answered on NCUA's Web site at http://www.ncua.gov/DataServices/OnlineFAQ.pdf.

The Final Rule

    NCUA is adopting the amendments to Parts 741, 748, and 749 as 
proposed without change. Section 741.6 clarifies when FICUs must update 
their Credit Union Profiles and addresses corporate credit unions and 
the NCUA Form 5310. Additionally, the rule amends Sec.  748.1 to 
clarify the compliance report filing requirements for FICUs using the 
online system and for FICUs filing reports manually. FICUs that cannot 
certify compliance online must certify compliance in writing on the new 
Credit Union Profile form, NCUA Form 4501A. Finally, the rule updates 
the record retention guidelines in Appendix A of Part 749 and includes 
the new Credit Union Profile form as a key operational record that 
should be retained permanently.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact any regulation may have on 
a substantial number of small entities. 5 U.S.C. 603(a). For purposes 
of this analysis, NCUA considers credit unions having under $10 million 
in assets as small entities. Interpretive Ruling and Policy Statement 
03-2, 68 FR 31949 (May 29, 2003). As of March 31, 2009, out of 7,749 
natural person, federally insured credit unions, 3,168 had less than 
$10 million in assets. NCUA estimates out of 28 corporate credit 
unions, one is a small entity. This rule directly affects all small 
FICUs. Therefore, NCUA has determined this rule will have an impact on 
a substantial number of small entities.
    NCUA has determined, however, the economic impact on entities 
affected by the rule will not be significant. The rule will reduce the 
regulatory burden on FICUs that submit their financial reports, Credit 
Union Profile, and other information online. NCUA is also proposing 
alternate methods for FICUs without internet access to submit 
information. Additionally, NCUA's Office of Small Credit Union 
Initiatives has reviewed the rule and concluded it would have a 
moderate impact on small credit unions, but contained sufficient 
provisions to mitigate the impact and would result in greater 
efficiencies for all credit unions. Further, NCUA invited comment on 
the economic impact the rule would have in its proposal and requested 
suggestions on how to minimize it. 74 FR 13139, 13141 (March 26, 2009). 
The Board received no comments on this issue. Accordingly, NCUA 
certifies the rule would not have a significant economic impact on 
small entities.

Paperwork Reduction Act

    In accordance with section 3512 of the Paperwork Reduction Act of 
1995, 44 U.S.C. 3501-3521 (PRA), NCUA may not conduct or sponsor, and 
the respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number. NCUA submitted the information collection 
requirements in this rule to OMB for review and approval under section 
3507 of the PRA and Sec.  1320.11 of OMB's implementing regulations. 5 
CFR 1320.11. The proposed rule contained a discussion of the revised 
information collection. 74 FR 13139, 13141 (March 26, 2009). OMB 
approval is pending.

[[Page 35769]]

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996, Public Law 104-121, provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the 
Administrative Procedures Act. 5 U.S.C. 551. The Office of Information 
and Regulatory Affairs, an office within OMB, is reviewing this final 
rule for purposes of SBREFA, and a determination is pending.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. The rule would not have a substantial direct 
effect on the states, on the connection between the national government 
and the states, or on the distribution of power and responsibilities 
among the various levels of government. NCUA has determined this rule 
does not constitute a policy that has federalism implications for 
purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this rule would not affect family well-
being within the meaning of section 654 of the Treasury and General 
Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 
(1998).

List of Subjects

12 CFR Part 741

    Credit unions, Reporting and recordkeeping requirements, Share 
insurance.

12 CFR Part 748

    Credit unions, Reporting and recordkeeping requirements, Security 
measures.

12 CFR Part 749

    Archives and records, Credit unions, Reporting and recordkeeping 
requirements.


    By the National Credit Union Administration Board, on July 16, 
2009.
Mary F. Rupp,
Secretary of the Board.

0
For the reasons stated above, NCUA amends 12 CFR parts 741, 748 and 749 
as follows:

PART 741--REQUIREMENTS FOR INSURANCE

0
1. The authority citation for part 741 continues to read as follows:

    Authority:  12 U.S.C. 1757, 1766(a), 1781-1790, and 1790d; 31 
U.S.C. 3717.


0
2. Amend Sec.  741.6 by removing paragraph (d) and revising paragraph 
(a) to read as follows:


Sec.  741.6  Financial and statistical and other reports.

    (a) Upon written notice from the Board, Regional Director, or 
Director of the Office of Corporate Credit Unions, insured credit 
unions must file financial and other reports in accordance with the 
instructions in the notice. Credit unions with the capacity to do so 
must use NCUA's information management system to submit their data 
online. If a credit union is unable to use the information system, it 
must file written reports in accordance with the instructions.
    (1) Credit Union Profile. Insured credit unions must submit to NCUA 
a Credit Union Profile, NCUA Form 4501 or its equivalent, within 10 
days after an election or appointment of senior management or volunteer 
officials or within 30 days of any change of the information in the 
profile.
    (2) Financial and statistical report. Natural person credit unions 
must file a Call Report with NCUA quarterly in accordance with the 
instructions in the NCUA Form 5300. Corporate credit unions must file a 
Corporate Credit Union Call Report with NCUA monthly in accordance with 
the instructions in the NCUA Form 5310. Credit unions must submit a 
corrected Call Report upon notification or the discovery of a need for 
correction.
* * * * *

PART 748--SECURITY PROGRAM, REPORT OF SUSPECTED CRIMES, SUSPICIOUS 
TRANSACTIONS, CATASTROPHIC ACTS AND BANK SECRECY ACT COMPLIANCE

0
3. The authority citation for part 748 continues to read as follows:

    Authority:  12 U.S.C. 1766(a), 1786(q); 15 U.S.C. 6801 and 
6805(b); 31 U.S.C. 5311 and 5318.


0
4. Amend Sec.  748.1 by revising paragraph (a) to read as follows:


Sec.  748.1  Filing of reports.

    (a) The president or managing official of each federally-insured 
credit union must certify compliance with the requirements of this Part 
in its Credit Union Profile annually. Credit unions that cannot update 
their profile online must certify compliance in writing in accordance 
with the instructions on NCUA Form 4501 or its equivalent. The credit 
union president or managing official must sign and date the written 
certification.
* * * * *

PART 749--RECORDS PRESERVATION PROGRAM AND APENDICES--RECORD 
RETENTION GUIDELINES; CATASTROPHIC ACT PREPAREDNESS GUIDELINES

0
5. The authority citation for part 749 continues to read as follows:

    Authority:  12 U.S.C. 1766, 1783, and 1789; 15 U.S.C. 7001(d).


0
6. Amend Appendix A to Part 749 by revising paragraph E.2.(b) to read 
as follows:

Appendix A to Part 749--Record Retention Guidelines

* * * * *
    E. * * *
    2. * * *
    (b) One copy of each financial report, NCUA Form 5300 or 5310, 
or their equivalent, and the Credit Union Profile report, NCUA Form 
4501, or its equivalent as submitted to NCUA at the end of each 
quarter.
* * * * *
[FR Doc. E9-17312 Filed 7-20-09; 8:45 am]
BILLING CODE 7535-01-P