Happy Thursday, compliance friends! Today’s blog is going to discuss a topic that the Compliance Team at America’s Credit Unions gets quite a few questions about on a weekly basis. That topic? Record retention. Please note, this blog will not attempt to cover every possible record retention requirement. However, it will provide a brief overview of some of the basics.
First, I want to start out by saying that the NCUA guidelines on record retention recommend consulting with local counsel in setting recordkeeping requirements. It’s important to note that different states have different laws regarding how many years someone has to file a lawsuit. As such, record retention can be an important part when it comes to defending the credit union against a lawsuit. Counsel can also help the credit union identify other state law requirements or any other practical concerns that may affect the credit union’s determination when it comes to recordkeeping.
So, with that disclaimer out of the way, what do the NCUA guidelines say? Appendix A to Part 749 states the following with respect to records that should be retained permanently:
“E. What Records Should Be Retained Permanently?
- Official records of the credit union that should be retained permanently are:
(a) Charter, bylaws, and amendments.
(b) Certificates or licenses to operate under programs of various government agencies, such as a certificate to act as issuing agent for the sale of U.S. savings bonds.
- Key operational records that should be retained permanently are:
(a) Minutes of meetings of the membership, board of directors, credit committee, and supervisory committee.
(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.
(c) One copy of each supervisory committee comprehensive annual audit report and attachments.
(d) Supervisory committee records of account verification.
(e) Applications for membership and joint share account agreements.
(f) Journal and cash record.
(g) General ledger.
(h) Copies of the periodic statements of members, or the individual share and loan ledger. (A complete record of the account should be kept permanently.)
(i) Bank reconcilements.
(j) Listing of records destroyed.”
Regarding documents designated for periodic destruction, the Appendix states the following:
“F. What Records Should a Credit Union Designate for Periodic Destruction?
Any record not described above is appropriate for periodic destruction unless it must be retained to comply with the requirements of consumer protection regulations. Periodic destruction should be scheduled so that the most recent of the following records are available for the annual supervisory committee audit and the NCUA examination. Records that may be periodically destroyed include:
(a) Applications of paid off loans.
(b) Paid notes.
(c) Various consumer disclosure forms, unless retention is required by law.
(d) Cash received vouchers.
(e) Journal vouchers.
(f) Canceled checks.
(g) Bank statements.
(h) Outdated manuals, canceled instructions, and nonpayment correspondence from the NCUA and other governmental agencies.”
I do want to reiterate that the above guidelines from NCUA are only guidelines and not requirements. Appendix A also states that “NCUA does not regulate in this area, but as an aid to credit unions it is publishing this appendix of suggested guidelines for record retention.”
Additionally, credit unions will want to look to the various regulations regarding their own specific record retention requirements. While this blog is not a comprehensive record retention guide, here are some other record retention requirements to be aware of:
Related to mortgage servicing, Regulation X, section 1024.38(c), requires:
“Standard requirements –
“(1) Record retention. A servicer shall retain records that document actions taken with respect to a borrower’s mortgage loan account until one year after the date a mortgage loan is discharged or servicing of a mortgage loan is transferred by the servicer to a transferee servicer.”
Under Regulation X, there are also 5-year record retention periods for specific documents. These include documents such as the HUD-1 or HUD-1A, documentation relating to the prohibition against kickbacks and unearned fees, and affiliated business arrangement documents.
Some other key recordkeeping provisions include:
Regulation E, section 1005.13(b), which states:
“(1) Any person subject to the Act and this part shall retain evidence of compliance with the requirements imposed by the Act and this part for a period of not less than two years from the date disclosures are required to be made or action is required to be taken.”
NCUA’s Truth in Savings Regulation, section 707.9(c) states:
“A credit union shall retain evidence of compliance with this regulation for a minimum of two years after the date disclosures are required to be made or action is required to be taken.”
Additionally, Regulation CC has recordkeeping requirements in section 229.21(g), as well as section 229.13(g)(5).
As I mentioned previously, credit unions may want to consult with counsel, and review the applicable regulations, when it comes to record retention concerns. As always, you can contact America’s Credit Unions’ Compliance Team at compliance@americascreditunions.org with questions.