reglab/statecodes huggingface dataset:
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-19 - Leasing › Section 13-03-19-04 - Lease policy required

Current through Supplement No. 393, July, 2024
The board of directors of the credit union will formulate and
				  maintain a written lease policy. At a minimum, the lease policy should address
				  the following:
1. Identify acceptable
				lease servicers and lessors, for purchased leases only.
2. Establish aggregate volume of paper to be
				purchased from approved servicers and lessors, for purchased leases only.
3. Identify the geographic area
				where the credit union will consider purchasing or originating leases.
4. Establish lease portfolio
				diversification standards.
5. Set
				appropriate terms and conditions by type of leases.
6. Establish lease approval and origination
				procedures.
7. Establish prudent
				underwriting standards.
8.
				Establish lease administration procedures.
9. Establish appraisal and evaluation
				programs.
10. Monitor the lease
				portfolio and provide timely reports to the board of directors.
11. Set forth permitted exceptions to policy.
12. Require an independent credit
				analysis of the lessee.
13.
				Require the credit union to obtain collateral values, lien status, lease
				agreements, participation agreements, and title documentation within forty-five
				calendar days from the date of inception with original documentation to be
				maintained in the credit file.
14.
				Require a credit union officer or an independent third-party appraiser to
				conduct at inception, and annually thereafter, an inspection of the leased
				tangible property for all leases greater than one hundred thousand dollars and
				to document the credit file with the inspection report.
15. Require rental payments to be made on a
				periodic basis no less frequently than annually.
16. Require the term of the lease not to
				exceed seven years.
17. Require an
				annual analysis of the financial condition of the leasing company or lease
				servicer. This will include the review of an annual opinion audit by a
				certified public accountant.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-19 - Leasing › Section 13-03-19-05 - Limitations

Current through Supplement No. 393, July, 2024
A credit union's investment in purchased leases from a single
				  leasing company or affiliated leasing companies shall not exceed ten percent of
				  the net worth of the credit union.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-19 - Leasing › Section 13-03-19-06 - Appeal to state credit union board

Current through Supplement No. 393, July, 2024
A credit union may appeal to the state credit union board for
				  an increase in the limitation in purchased leases under section 13-03-19-05.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-20 - Participation Loans › Section 13-03-20-01 - Definitions

Current through Supplement No. 393, July, 2024
For purposes of this section:
1. "Associated borrower" means any other
				person or entity with a shared ownership, investment, or other pecuniary
				interest in a business or commercial endeavor with the borrower. This means any
				person or entity named as a borrower or debtor in a loan or extension of
				credit, or any other person or entity, such as a drawer, endorser, or
				guarantor, engaged in a common enterprise with the borrower, or deriving a
				direct benefit from the loan to the borrower. Exceptions to this definition for
				partnerships, joint ventures, and associations are as follows:
a. If the borrower is a partnership, joint
				venture, or association, and the other person with a shared ownership,
				investment, or other pecuniary interest in a business or commercial endeavor
				with the borrower, is a member or partner of the borrower, and neither a direct
				benefit nor a common enterprise exists, such other person is not an associated
				borrower.
b. If the borrower is a
				member or partner of a partnership, joint venture, or association, and the
				other entity with a shared ownership, investment, or other pecuniary interest
				in a business or commercial endeavor with the borrower is the partnership,
				joint venture, or association and the borrower is a limited partner of that
				other entity, and by the terms of a partnership or membership agreement valid
				under applicable law, the borrower is not held generally liable for the debts
				or actions of that other entity, such other entity is not an associated
				borrower.
c. If the borrower is a
				member or partner of a partnership, joint venture, or association, and the
				other person with a shared ownership, investment, or other pecuniary interest
				in a business or commercial endeavor with the borrower is another member or
				partner of the partnership, joint venture, or association, and neither a direct
				benefit nor a common enterprise exists, such other person is not an associated
				borrower.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-20 - Participation Loans › Section 13-03-20-03 - Waivers

Current through Supplement No. 393, July, 2024
A credit union may seek a waiver from any of the limitations
				  in subdivision f of subsection 1 of section 13-03-20-02. A credit union shall
				  submit a written request to the commissioner containing an explanation for the
				  purpose of the waiver. The commissioner may request the credit union provide
				  documentation in support of its request. Upon receipt of the written request
				  and all supporting documentation the request must be brought before the state
				  credit union board for consideration. The board shall consider all relevant
				  information related to the request including the safety and soundness of the
				  credit union. If approved, the waiver application must be forwarded to the
				  national credit union administration for consideration. Approval by the state
				  credit union board is contingent on approval by the national credit union
				  administration.
General Authority:
NDCC  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-21 - Purchase, Sale, and Pledge of Eligible Obligations › Section 13-03-21-01 - Definitions

Current through Supplement No. 393, July, 2024
For purposes of this section:
1. "Eligible obligation" means a loan or group of loans.
2. "Student loan" means a loan granted to finance the borrower's
				  attendance at an institution of higher education or at a vocational school,
				  which is secured by and on which payment of the outstanding principal and
				  interest has been deferred in accordance with the insurance or guarantee of the
				  federal government, of a state government, or any agency of either.
3. "Unimpaired capital and surplus" means the total of a credit
				  union's net worth and member shares.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-21 - Purchase, Sale, and Pledge of Eligible Obligations › Section 13-03-21-02 - Authorizations

Current through Supplement No. 393, July, 2024
1.
Purchase.
a. A credit union may purchase, in whole or
				in part, within the limitations of the board of directors' written purchase
				policies:
(1) Eligible obligations of its
				members, originating from any source in the United States, if either they are
				loans it is empowered to grant or they are refinanced with the consent of the
				borrowers, within sixty days after they are purchased, so that they are loans
				it is empowered to grant;
(2)
				Eligible obligations of a liquidating credit union's individual members, from
				the liquidating credit union;
(3)
				Student loans, from any source, if the purchaser is granting student loans on
				an ongoing basis and if the purchase will facilitate the purchasing credit
				union's packaging of a pool of such loans to be sold or pledged on the
				secondary market; and
(4) Real
				estate-secured loans, originating from any source, if the purchaser is granting
				real estate-secured loans on an ongoing basis and loans will be sold to the
				secondary market in the same manner as loans to the credit union's members, and
				loans sold include a substantial portion of loans to the credit union's
				members.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-03 - Prohibited investments

Current through Supplement No. 393, July, 2024
A credit union cannot invest in the following types of
				  investments:
1. Any privately issued
				collateralized mortgage obligation or real estate mortgage investment
				conduit.
2. Any zero coupon
				investment with a maturity date that is more than ten years from the settlement
				date.
3. Any mortgage servicing
				rights as an investment but may perform mortgage servicing functions as a
				financial service for a member as long as the mortgage loan is owned by the
				member.
4. Any stripped
				mortgage-backed securities, residual interests in collateralized mortgage
				obligations or real estate mortgage investment conduits, or residual interests
				in small business-related securities.
5. Any commercial mortgage-related security
				that is not permitted by  chapter 13-03-03.
General Authority:
NDCC 6-01-04
Law Implemented:
NDCC
					 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-04 - Permissible investment activities

Current through Supplement No. 393, July, 2024
1. Regular way
				settlement and delivery versus payment basis. A credit union may only contract
				for the purchase or sale of a security as long as the delivery of the security
				is by regular way settlement and the transaction is accomplished on a delivery
				versus payment basis.
2. Federal
				funds. A credit union may sell federal funds to an institution described in
				subsection 4 of North Dakota Century Code section 6-06-06 and credit unions, as
				long as the interest or other consideration received from the financial
				institution is at the market rate for federal funds transactions.
3. Investment repurchase transaction. A
				credit union may enter into an investment repurchase transaction so long as:
a. Any securities the credit union receives
				are permissible investments for state-chartered credit unions; the credit
				union, or its agent, either takes physical possession or control of the
				repurchase securities or is recorded as owner of them through the federal
				reserve book entry securities transfer system; the credit union, or its agent
				receives a daily assessment of their market value, including accrued interest;
				and the credit union maintains adequate margins that reflect a risk assessment
				of the securities and the term of the transaction; and
b. The credit union has entered into signed
				contracts with all approved counterparties.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-05 - Prohibited investment activities - Adjusted trading or short sales

Current through Supplement No. 393, July, 2024
A credit union may not engage in adjusted trading or short
				  sales.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-06 - Investment policies

Current through Supplement No. 393, July, 2024
A credit union's board of directors must establish written
				  investment policies consistent with North Dakota Century Code chapter 6-06,
				  this part, and other applicable laws and regulations and must review this
				  policy at least annually. These policies may be a part of a broader
				  asset-liability management or similarly functioning policy. Written investment
				  policies must address the following:
1. The purposes and objectives of the credit
				union's investment activities;
2.
				The characteristics of the investments the credit union may make, including the
				issuer, maturity, index, cap, floor, coupon rate, coupon formula, call
				provision, average life, and interest rate risk;
3. How the credit union will manage interest
				rate risk;
4. How the credit union
				will manage liquidity risk;
5. How
				the credit union will manage credit risk, including specifically listing
				institutions, issuers, and counterparties that may be used, or criteria for
				their selection, and limits on the amounts that may be invested with
				each;
6. How the credit union will
				manage concentration risk, which can result from dealing with a single issuer
				or related issuers, lack of geographic distribution, holding obligations with
				similar characteristics like maturities and indexes, holding bonds having the
				same trustee, and holding securitized loans having the same originator,
				packager, or guarantor;
7. Who has
				investment authority and the extent of that authority. Those with authority
				must be qualified by education or experience to assess the risk characteristics
				of investments and investment transactions. Only officials or employees of the
				credit union may be voting members of an investment-related
				committee;
8. The broker-dealers
				the credit union may use;
9. The
				safekeepers the credit union may use;
10. How the credit union will handle an
				investment that, after purchase, is outside of board policy or fails a
				requirement of this part; and
11.
				How the credit union will conduct investment trading activities, if applicable,
				including addressing:
a. Who has purchase and
				sale authority;
b. Limits on
				trading account size;
c. Allocation
				of cashflow to trading accounts;
d.
				Stop loss or sale provisions;
e.
				Dollar-size limitations of specific types, quantity, and maturity to be
				purchased;
f. Limits on the length
				of time an investment may be inventoried in a trading account; and
g. Internal controls, including segregation
				of duties.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-07 - Recordkeeping and documentation requirements

Current through Supplement No. 393, July, 2024
1.
				Credit unions must comply with all generally accepted accounting principles
				applicable to reports or statements required to be filed with the national
				credit union administration.
2. A
				credit union must maintain documentation for each investment transaction for as
				long as it holds the investment and until the documentation has been examined
				in accordance with North Dakota Century Code section 6-06-08. The documentation
				should include, when applicable, bids and prices at purchase and sale and for
				periodic updates, relevant disclosure documents or a description of the
				security from an industry-recognized information provider, financial data, and
				tests and reports required by credit union's investment policy and this
				chapter.
3. A credit union must
				maintain documentation its board of directors used to approve a broker-dealer
				or a safekeeper for as long as the broker-dealer or safekeeper is approved and
				until the documentation has been examined in accordance with North Dakota
				Century Code section 6-06-08.
4. A
				credit union must obtain an individual confirmation statement from each
				broker-dealer for each investment purchased or sold.
General Authority:
NDCC 6-01-04
Law Implemented:
NDCC
					 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-08 - Discretionary control over investments

Current through Supplement No. 393, July, 2024
A credit union must retain discretionary control over its
				  purchase and sale of investments. A credit union has not delegated
				  discretionary control to an investment adviser when the credit union reviews
				  all recommendations from investment advisers and is required to authorize a
				  recommended purchase or sale transaction before its execution.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-09 - Credit analysis required

Current through Supplement No. 393, July, 2024
A credit union must conduct and document a credit analysis on
				  an investment and the issuing entity before purchasing it, except for
				  investments issued or fully guaranteed as to principal and interest by the
				  United States government or its agencies, enterprises, or corporations or fully
				  insured (including accumulated interest) by the national credit union
				  administration or the federal deposit insurance corporation. A credit union
				  must update this analysis at least annually for as long as it holds the
				  investment.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-10 - Notice of noncompliant investments

Current through Supplement No. 393, July, 2024
A credit union's board of directors must receive notice as
				  soon as possible, but no later than the next regularly scheduled board meeting,
				  of any investment that either is outside of board policy after purchase or has
				  failed a requirement of this chapter. The board of directors must document its
				  action regarding the investment in the minutes of the board meeting, including
				  a detailed explanation of any decision not to sell it. The credit union must
				  notify in writing the commissioner of the department of financial institutions
				  of an investment that has failed a requirement of this chapter within five days
				  of the board meeting.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-11 - Broker-dealers

Current through Supplement No. 393, July, 2024
1. A credit union may purchase and sell
				investments through a broker-dealer as long as the broker-dealer is registered
				as a broker-dealer with the securities and exchange commission under the
				Securities Exchange Act of 1934 [
				 15 U.S.C. 781  et seq.] or is a depository institution
				whose broker-dealer activities are regulated by a federal or state regulatory
				agency.
2. Before purchasing an
				investment through a broker-dealer, a credit union must analyze and annually
				update the following:
a. The background of
				any sales representative with whom the credit union is doing business;
b. Information available from
				state or federal securities regulators and securities industry self-regulatory
				organizations, such as the national association of securities dealers and the
				North American securities administrators association, about any enforcement
				actions against the broker-dealer, its affiliates, or associated personnel; and
c. If the broker-dealer is acting
				as the credit union's counterparty, the ability of the broker-dealer and its
				subsidiaries or affiliates to fulfill commitments, as evidenced by capital
				strength, liquidity, and operating results. The credit union should consider
				current financial data, annual reports, reports of nationally recognized
				statistical rating agencies, relevant disclosure documents, and other sources
				of financial information.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-12 - Safekeeping of investments

Current through Supplement No. 393, July, 2024
1. A credit union's
				purchased investments and repurchase collateral must be in the credit union's
				possession, recorded as owned by the credit union through the federal reserve
				book entry system, or held by a board-approved safekeeper under a written
				custodial agreement that requires the safekeeper to exercise at least ordinary
				care. The written custodial agreement will also include a provision that the
				safekeeper cannot use the credit union's securities for collateral on any
				borrowings of the safekeeper.
2.
				Any safekeeper used by a credit union must be regulated and supervised by
				either the securities and exchange commission, a federal or state depository
				institution regulatory agency, or a state trust company regulatory agency.
3. A credit union must obtain and
				reconcile monthly a statement of purchased investments and repurchase
				collateral held in safekeeping.
4.
				Annually, the credit union must analyze the ability of the safekeeper to
				fulfill its custodial responsibilities, as evidenced by capital strength,
				liquidity, and operating results. The credit union should consider current
				financial data, annual reports, reports of nationally recognized statistical
				rating agencies, relevant disclosure documents, and other sources of financial
				information.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-13 - Valuing securities

Current through Supplement No. 393, July, 2024
1. Before
				purchasing or selling a security, a credit union must obtain either price
				quotations on the security from at least two broker-dealers or a price
				quotation on the security from an industry-recognized information provider.
				This requirement to obtain price quotations does not apply to new issues
				purchased at par or at original issue discount.
2. At least monthly, a credit union must
				determine the fair value of each security it holds. It may determine fair value
				by obtaining a price quotation on the security from an industry-recognized
				information provider, a broker-dealer, or a safekeeper.
3. At least annually, the credit union's
				supervisory committee or its external auditor must independently assess the
				reliability of monthly price quotations received from a broker-dealer or a
				safekeeper. The credit union's supervisory committee or external auditor must
				follow generally accepted auditing standards, which require either
				recomputation or reference to market quotations.
4. If a credit union is unable to obtain a
				price quotation required by this section for a particular security, then it may
				obtain a quotation for a security with substantially similar characteristics.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-14 - Monitoring securities

Current through Supplement No. 393, July, 2024
1. At least
				monthly, a credit union must prepare a written report setting forth, for each
				security held, the fair value and dollar change since the prior month-end, with
				summary information for the entire portfolio.
2. At least quarterly, a credit union must
				prepare a written report setting forth the sum of fair values of all fixed and
				variable rate securities held, including deposits in other financial
				institutions, that have one or more of the following features:
a. Embedded options;
b. Remaining maturities greater than three
				years; or
c. Coupon formulas that
				are related to more than one index or are inversely related to, or multiples
				of, an index.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-15 - Application required

Current through Supplement No. 393, July, 2024
A state-chartered credit union may invest in any other
				  investment or engage in any other investment activity that a federal-chartered
				  credit union may invest in or engage in subject to an application to the state
				  credit union board and approval from the state credit union board, subject to
				  any limitations the state credit union board may place on the credit union.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-16 - Derivatives

Current through Supplement No. 393, July, 2024
1. A state-chartered credit union may enter
				into derivatives that:
a. Are for the purpose
				of managing interest rate risk;
b.
				Denominated in United States dollars;
c. Based on domestic interests; and
d. Not used to create structured liability
				offerings for members or nonmembers.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-22 - Investment Activities › Section 13-03-22-17 - Charitable donation accounts

Current through Supplement No. 393, July, 2024
Credit unions may invest in charitable donation accounts
				  provided:
1. The charitable donation
				account is structured as a hybrid charitable and investment vehicle used to
				provide charitable contributions and donations to a qualified
				charity.
2. The maximum book value
				of investment in all charitable donation accounts is limited to five percent of
				credit union net worth. Any credit union in violation of this limit must bring
				the investment into compliance with this limit within thirty days of the
				violation.
3. The charitable
				donation accounts will be held as a segregated custodial account or special
				purpose entity and must be specifically identified as a charitable donation
				account.
4. Any trust established
				for the charitable donation account must be regulated by a state or federal
				financial regulatory agency, and any trustee or persons making investment
				decisions for the charitable donation account must be a registered investment
				advisor or regulated by a state or federal agency.
5. The board of directors of the credit union
				has established policies governing the account consistent with the requirements
				of this section and safe and sound business practices.
6. The terms and conditions of the written
				agreement between the parties to the charitable donation account must:
a. Be consistent with the provisions of this
				section and safe and sound business practices.
b. Require the charitable donation account to
				make charitable contributions and donations only to charities named that are
				exempt from taxation under section 501(c)(3) of the Internal Revenue
				Code.
c. Document the investment
				strategies and risk tolerances the administrator must follow.
d. Require all aspects of the account,
				including distributions and liquidations be accounted for in accordance with
				generally accepted accounting principles.
e. Identify the frequency of distributions to
				qualified charities.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-01 - Authority to invest in credit union service organizations or subsidiary credit union service organizations

Current through Supplement No. 393, July, 2024
State credit unions may invest in credit union service
				  organizations or subsidiary credit union service organizations, subject to the
				  limitation provided for in this chapter and subject to approval by order of the
				  board.
General Authority:
NDCC  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-02 - Definitions

Current through Supplement No. 393, July, 2024
Unless the context otherwise requires, terms in this chapter
				  have the following meanings:
1.
				"Affiliated" means those credit unions that have either invested in or made
				loans to a credit union service organization.
2. "Credit union service organization" means
				a financial service organization created by a credit union or group of credit
				unions or a league service organization to provide services not available from
				credit unions themselves.
3.
				"Immediate family member" means a spouse or other family member living in the
				same household.
4. "Net worth"
				means the retained earnings balance of the credit union at quarter end as
				determined under generally accepted accounting principles. Retained earnings
				consist of undivided earnings, regular reserves, and any other appropriations
				designated by management or regulatory authorities. For low income-designated
				credit unions, net worth also includes secondary capital accounts that are
				uninsured and subordinate to all other claims, including claims of creditors,
				shareholders, and the national credit union share insurance fund. For any
				credit union, net worth does not include the allowance for loan and lease loss
				account.
5. "Officials or senior
				management employees" means members of the board of directors, supervisory
				committee, or credit committee; chief executive officer (typically this
				individual holds the title of president or treasurer or manager); any assistant
				chief executive officers, e.g., assistant president, vice president, or
				assistant treasurer or manager; and the chief financial officer or
				comptroller.
6. "Subsidiary credit
				union service organization" means any entity in which a credit union service
				organization has an ownership interest of any amount, if that entity is engaged
				primarily in providing products or services to credit unions or credit union
				members or credit union service organizations.
General Authority:
NDCC  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-03 - Application

Current through Supplement No. 393, July, 2024
An application to establish, make an initial investment, or
				  increase the amount of an investment in a credit union service organization
				  must be submitted to the commissioner in writing and must contain the
				  following:
1. A full explanation and
				complete documentation of the proposed credit union service
				organization;
2. A listing of
				proposed management and their qualifications;
3. A proposed business plan with financial
				projections for at least three years;
4. The amount of investment authority
				requested; and
5. Any additional
				information as requested by the board or commissioner.
Once an application
				  is determined to be complete by the commissioner, it must be submitted to the
				  board for consideration. The board shall issue an order to either approve or
				  disapprove the application. Upon notice of disapproval, the applicant has
				  fifteen days to petition for a hearing before the board.
General Authority:
NDCC
					  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-04 - Hearing

Current through Supplement No. 393, July, 2024
A public hearing by the board may be required on applications
				  to invest in credit union service organizations whenever the board or
				  commissioner determines that it is in the public interest to hold such a
				  hearing or whenever a credit union or party requests an opportunity to be heard
				  is granted. Notice of hearing on an application will be issued at least thirty
				  days prior to the hearing on the application.
General Authority:
NDCC
					  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-05 - Permissible services and activities

Current through Supplement No. 393, July, 2024
1. A state credit
				union, upon being granted authority under section 13-03-23-03, and complying
				with all applicable state licensing requirements, may invest in those credit
				union service organizations or subsidiary credit union service organizaitons
				that provide one or more of the following services and activities:
a. Checking and currency services:
(1) Check cashing;
(2) Coin and currency services;
(3) Money order, savings bonds, travelers
				checks; and purchase and sale of United States mint commemorative coins
				services; and
(4) Stored value
				products;
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-06 - Limitations on investments in and loans to credit union service organizations or subsidiary credit union service organizations

Current through Supplement No. 393, July, 2024
The following limitations apply to state credit unions for
				  investments in credit union service organizations or subsidiary credit union
				  service organizations:
1. A credit
				union may not invest in shares, stocks, or obligations of credit union service
				organizations or subsidiary credit union service organizations in an amount
				exceeding ten percent of its net worth.
2. Credit unions may not make loans to a
				credit union service organization or subsidiary credit union service
				organizations in which it is affiliated in an amount exceeding ten percent of
				its net worth.
General Authority:
NDCC  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-07 - Conflict of interest

Current through Supplement No. 393, July, 2024
Individuals who serve as officials or senior management
				  employees of an affiliated state credit union, and immediate family members of
				  such individuals, may not receive any salary, commission, investment income, or
				  other income or compensation from a credit union service organization, or
				  subsidiary credit union service organization, either directly or indirectly, or
				  from any person being served through the credit union service organization or
				  subsidiary credit union service organization. This provision does not prohibit
				  an official or senior management employee of a state credit union from
				  assisting in the operation of a credit union service organization or subsidiary
				  credit union service organization, provided the individual is not compensated
				  by the credit union service organization or subsidiary credit union service
				  organization. Further, the credit union service organization or subsidiary
				  credit union service organization may reimburse the state credit union for the
				  services provided by the individual.
General Authority:
NDCC  6-01-04
Law Implemented:
NDCC
					  6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-08 - Examinations

Current through Supplement No. 393, July, 2024
A credit union shall allow the commissioner or the
				  commissioner's examiner, at the commissioner's discretion, to inspect or
				  examine all the books or records of the credit union service organization and
				  subsidiary credit union service organization for the purpose of determining
				  compliance with this chapter and to determine the value of the credit union's
				  investment or loans. In order to accomplish the forgoing, each credit union
				  must have a written agreement in place with the credit union service
				  organization and any subsidiary credit union service organization, prior to
				  investing in or lending to the credit union service organization or subsidiary
				  credit union service organization, and prior to the credit union service
				  organization investing in or lending to the subsidiary credit union service
				  organization, providing that the credit union service organization and
				  subsidiary credit union service organization will:
1. Provide the department with the right to
				inspect or examine all records of the credit union service
				organization;
2. Account for all
				its transactions in accordance with generally accepted accounting
				principles;
3. Prepare quarterly
				financial statements and provide the credit union with a copy of these
				statements within forty-five days of the quarter end;
4. Obtain an annual financial statement audit
				of its financial statements by a licensed certified public accountant in
				accordance with generally accepted auditing standards. A wholly owned credit
				union service organization is not required to obtain a separate annual
				financial statement audit if that wholly owned credit union service
				organization is included in the annual consolidated financial statement audit
				of the investing credit union; and
5. Comply with applicable federal, state, and
				local laws.
General Authority:
NDCC  6-01-04
Law Implemented:
NDCC  6-01-04,  6-01-09,
					  6-06-06,  6-06-08
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-23 - Credit Union Service Organizations › Section 13-03-23-09 - Structure of a credit union service organization and subsidiary credit union service organization

Current through Supplement No. 393, July, 2024
1. A credit union
				and a credit union service organization or subsidiary credit union service
				organization must be operated in a manner that demonstrates to the public the
				separate corporate existence of the credit union and the credit union service
				organization or subsidiary credit union service organization. Good business
				practices dictate each must operate so that:
a. Its respective business transactions,
				accounts, and records are not intermingled;
b. Each observes the formalities of its
				separate corporate procedures;
c.
				Each is adequately financed as a separate unit in the light of normal
				obligations reasonably foreseeable in a business of its size and
				character;
d. Each is held out to
				the public as a separate enterprise;
e. The credit union does not dominate the
				credit union service organization or subsidiary credit union service
				organization to the extent the credit union service organization or subsidiary
				credit union service organization is treated as a department of the credit
				union; and
f. Unless the credit
				union has guaranteed a loan obtained by the credit union service organization
				or subsidiary credit union service organization, all borrowings by the credit
				union service organization or subsidiary credit union service organization
				indicate that the credit union is not liable.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-24 - Fidelity Bond and Insurance Coverage of Credit Unions › Section 13-03-24-01 - Fidelity bond required

Current through Supplement No. 393, July, 2024
All credit unions are required to have a fidelity bond for
				  credit union employees and officials and for other insurance coverage for
				  losses such as theft, holdup, vandalism, and similar losses caused by persons
				  outside the credit union.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-24 - Fidelity Bond and Insurance Coverage of Credit Unions › Section 13-03-24-02 - Annual review required

Current through Supplement No. 393, July, 2024
1. The board of
				directors of each credit union must at least annually review its fidelity and
				other insurance coverage to ensure that it is adequate in relation to the
				potential risks facing the credit union and the minimum requirements set by the
				state credit union board.
2. The
				board of directors shall review all applications for purchase or renewal of its
				fidelity bond coverage. The board shall pass a resolution approving the
				purchase or renewal of fidelity bond coverage and delegate one member of the
				board, who is not an employee of the credit union, to sign the purchase or
				renewal agreement and all attachments; provided, however, that no board members
				may be a signatory on consecutive purchase or renewal agreements for the same
				fidelity bond coverage policy.
General Authority:
NDCC 6-01-04
Law Implemented:
NDCC
					 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-24 - Fidelity Bond and Insurance Coverage of Credit Unions › Section 13-03-24-03 - Acceptable bond forms

Current through Supplement No. 393, July, 2024
At a minimum, the bond coverage must:
1. Be purchased in an individual policy from
				a company holding a certificate of authority from the secretary of the
				treasury.
2. Include fidelity bonds
				that cover fraud and dishonesty by all employees, directors, officers,
				supervisory committee members, and credit committee members. Fidelity bond
				coverage may also cover activities of a credit union service organization
				provided the credit union owns more than fifty percent of the credit union
				service organization or the credit union service organization or it is
				organized by the credit union for the exclusive benefit of the credit union's
				employees.
3. Include an option for
				the liquidating agent to purchase coverage in the event of an involuntary
				liquidation that extends the discovery period for a covered loss for at least
				one year after liquidation.
4. In
				the case of a voluntary liquidation, remain in effect, or provide that the
				discovery period is extended, for at least four months after the final
				distribution of assets.
5. Be a
				bond form that has been approved by the national credit union administration
				board.
General Authority:
NDCC 6-01-04
Law Implemented:
NDCC
					 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-24 - Fidelity Bond and Insurance Coverage of Credit Unions › Section 13-03-24-04 - Required minimum amount of coverage

Current through Supplement No. 393, July, 2024
1. The minimum
				required amount of fidelity bond coverage for any single loss is computed based
				upon a credit union's total assets.
Assets
Minimum Bond
$0 to $4,000,000
Lesser of total assets or $250,000
$4,000,001 to $50,000,000
$100,000 plus $50,000 for each million or fraction
								thereof over $1,000,000
$50,000,001 to $500,000,000
$2,550,000 plus $10,000 for each million or
								fraction thereof over $50,000,000, to a maximum of $5,000,000
Over $500,000,000
One percent of assets, rounded to the nearest
								hundred million, to a maximum of $9,000,000
2.
				This is the minimum coverage required, but a credit union's board of directors
				should purchase additional coverage when circumstances warrant. In making this
				determination, a board of directors should consider its own internal risk
				assessment, its fraud trends and loss experience, and factors, such as its cash
				on hand, cash in transit, and the nature and risks inherent in any expanded
				services it offers, such as wire transfer and remittance services.
3. While the above is the minimum amount of
				bond coverage, credit unions should maintain increased coverage equal to the
				greater of either of the following amounts within thirty days of discovery of
				the need for such increase:
a. The amount of
				the daily cash fund, i.e., daily cash plus anticipated daily money receipts on
				the credit union's premises; or
b.
				The total amount of the credit union's money in transit in any one
				shipment.
c. Increased coverage is
				not required pursuant to this subsection when the credit union temporarily
				increases its cash fund because of unusual events which cannot reasonably be
				expected to recur.
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-24 - Fidelity Bond and Insurance Coverage of Credit Unions › Section 13-03-24-05 - Maximum allowable deductibles

Current through Supplement No. 393, July, 2024
1. The maximum
				amount of allowable deductibles is computed based on a credit union's asset
				size, as follows:
Assets
Maximum Deductible
$0 - $100,000
No deductibles allowed
$100,001 - $250,000
$1,000
$250,001 - $1,000,000
$2,000
Over $1,000,000
$2,000 plus 1/1000 of total assets up to a maximum
								deductible of $200,000; for credit unions that have received a composite
								capital, asset quality, management, earnings, liquidity, and sensitivity to
								market risk rating of "1" or "2" for the last two full examinations and
								maintained a net worth classification of well capitalized for the six
								immediately preceding quarters, the maximum deductible is $1,000,000
2.
				The deductibles may apply to one or more insurance clauses in a policy. Any
				deductibles in excess of the above amounts must receive the prior written
				permission of the state credit union board.
3. A deductible may not exceed ten percent of
				a credit union's net worth.
General Authority:
NDCC 6-01-04
Law Implemented:
NDCC
					 6-06-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-24 - Fidelity Bond and Insurance Coverage of Credit Unions › Section 13-03-24-06 - Additional coverage required

Current through Supplement No. 393, July, 2024
The state credit union board may require additional coverage
				  when the board determines that a credit union's current coverage is inadequate.
				  The credit union must purchase this additional coverage within thirty days.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-01-06
North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-03 - Credit Unions › Chapter 13-03-25 - Supervisory Committee Audits and Verifications › Section 13-03-25-02 - General responsibilities of the supervisory committee

Current through Supplement No. 393, July, 2024
1.
Basic.
The supervisory committee is responsible for ensuring that
				the board of directors and management of the credit union:
a. Meet required financial reporting
				objectives; and
b. Establish
				practices and procedures sufficient to safeguard members' assets.