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Samantha: Hello, this is Samantha Shares.

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This episode covers N C U A’s Advanced
Notice of Proposed Rulemaking on

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Records Preservation Program and
Appendices – Record Retention Guidelines;

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Catastrophic Act Preparedness Guidelines

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The following is an audio version of
that A N P R and the press release.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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Forty years of National Credit

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We assist our clients with N C
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If you are worried about a recent,
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can assist at Mark Treichel DOT COM.

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Also check out our other podcast called
With Flying Colors where we provide tips

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on how to achieve success with N C U A.

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And now the A N P R.

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Records Preservation Program and
Appendices – Record Retention Guidelines;

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Catastrophic Act Preparedness Guidelines

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SUMMARY: The National Credit Union
Administration Board  is issuing this

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advance notice of proposed rulemaking
(A N P R) to solicit comments on ways

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the agency can improve and update its
records preservation program regulations

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and accompanying guidelines in Part 7 4
9 of the AGENCY regulations (Part 7 4 9).

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The Board is particularly interested
in obtaining stakeholder input on the

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content of Part 7 4 9, which has not been
updated in 15 years and may be outdated

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or at odds with current best practices.

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The Board is also interested in
feedback on the structure of Part

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7 4 9 which may be confusing as it
currently contains a combination of

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regulatory requirements and guidance.

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SUPPLEMENTARY INFORMATION:

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I.

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Background

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II.

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Current Standards and Request for Comment

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III.

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Legal Authority

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I.

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Background

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In 2023, the AGENCY received
feedback that Part 7 4 9 and its

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appendices are burdensome and unclear.

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Based on this feedback and other factors
described below, the AGENCY has identified

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the need to review Part 7 4 9 to see if
any changes or improvements are necessary.

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The Board recognizes the AGENCY’s
regulations in this area, which were

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last updated many years ago, may be
outdated or unclear for some credit

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unions, which ultimately may have
adverse effects on their members.

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Thus, the Board is seeking advance
comment on whether there is a need

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to update Part 7 4 9, and if so, what
should be updated and how, to ensure

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that credit unions continue to properly
preserve records vital to their business

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operations, the AGENCY’s supervisory
needs, and the needs of their members.

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II.

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Current Standards and Request for Comment

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Part 7 4 9 requires all federally
insured credit unions (credit unions) to

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maintain a records preservation program
to identify, store, and reconstruct

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vital records in the event that a
credit union’s records are destroyed.

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Part 7 4 9 requires a vital records
preservation program to be in writing

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and contain certain procedures for
maintaining duplicate vital records

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at an offsite vital records center.

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The regulation defines the term
‘vital records’ as: (a) a list of

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share, deposit, and loan balances for

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each member’s account as of the close of
the most recent business day that shows

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each balance individually identified by
a name or number; lists multiple loans

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of one account separately; and contains
information sufficient to enable the

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credit union to locate each member, such
as address and telephone number; (b)

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a financial report, which lists all of
the credit union’s asset and liability

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accounts and bank reconcilements, current
as of the most recent month-end; (c)

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a list of the credit union’s accounts
at financial institutions, insurance

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policies, and investments along with
related contact information, current

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as of the most recent month-end; and
(d) emergency contact information for

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employees, officials, regulatory offices,
and vendors used to support vital records.

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At the same time, Appendix A – which
is included in Part 7 4 9 as suggested

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guidelines for record retention – advises
that the following additional sets of

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records should be retained permanently: 1.

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Official records of the credit union:
(a) Charter, bylaws, and amendments;

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(b) Certificates or licenses to operate
under programs of various government

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agencies, such as a certificate to act
as issuing agent for the sale of U.S.

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savings bonds.

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2.

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Key operational records:

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(a) Minutes of meetings of the membership,
board of directors, credit committee,

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and supervisory committee; (b) One
copy of each financial report, AGENCY

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Form 5300 or 5310, or their equivalent,
and the Credit Union Profile report,

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AGENCY Form 4501, or its equivalent
as submitted to the AGENCY at the end

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of each quarter; (c) One copy of each
supervisory committee comprehensive

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annual audit report and attachments;
(d) Supervisory committee records of

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account verification; (e) Applications
for membership and joint share account

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agreements; (f) Journal and cash record;
(g) General ledger; (h) Copies of the

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periodic statements of members, or

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the individual share and loan
ledger; (i) Bank reconcilements; and

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(j) Listing of records destroyed.

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Credit unions have expressed confusion
regarding the interaction between

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Part 7 4 9’s requirements and Appendix
A, and between Part 7 4 9 and other

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parts of the AGENCY’s regulations that
have record retention requirements

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not referenced in Part 7 4 9.

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Under Part 7 4 9, certain supervisory
committee documents are not vital records

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and are subject to periodic destruction;
yet under § 7 1 5 point 8 the supervisory

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committee must retain the records of
each verification of members’ passbooks

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and accounts until the completion of
the next member account verification.

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The Board seeks comment on all aspects of
Part 7 4 9 and the Appendices, including

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how they can be modernized, streamlined,
and clarified, and other provisions

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in the AGENCY’s regulations that
contain record retention requirements.

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The Board also encourages credit
unions and other stakeholders that

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have developed well-functioning records
preservation programs to comment on

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what works for them and share their best
practices in response to this notice.

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In addition, the Board
specifically requests feedback

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addressing the following areas:

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A.

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PART 7 4 9 DEFINITIONS

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Questions:

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1)	Does the definition of vital records
in t CwelveFR 7 4 9 point 1 contain

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all, and only those, records you would
consider to be vital for credit unions?

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2)	Are there additional types of
documents not listed as a “vital

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record” that you think should be
as they are critical for business

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operations and to properly serve members?

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3)	Are there other industry standards
or methodologies outside of Part 7

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4 9 that the agency should consider
for preserving vital records, for

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defining what vital records are, and for
determining minimum retention periods?

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4)	The primary focus of the
records retention guidance in

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Appendix B relates specifically
to catastrophic act preparedness.

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Are there any terms, definitions,
or standards that the Board should

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consider updating in Appendix B?

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5)	Are there any other changes to
Appendix B that you would recommend?

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B.

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RECORDS RETENTION PRACTICES

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Understanding current credit union
retention practices would be helpful in

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determining whether Part 7 4 9 is properly
serving its purpose which is for a credit

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union to identify, store, and reconstruct
vital records in the event that the

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credit union’s records are destroyed.

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Questions:

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6)	How long, and in what format, does
your credit union store its vital records?

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7)	Does your credit union maintain
and store any vital records in a

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physical format due to a regulatory
requirement or supervisory expectation?

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8)	What impediments, including
estimated costs, does your credit union

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encounter with storing vital records?

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9)	What records do you deem vital
for business operations that a

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credit union should be required to
keep permanently for the purpose

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of restoring vital member services?

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10)	Other than for records that must
be kept permanently, are there specific

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timeframes you would recommend that
other vital records be retained?

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11)	What are the pros and cons of
storing vital records physically,

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electronically, or in other formats,
such as cloud computing storage?

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12)	Does your credit union rely on
third-party vendors to accurately

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maintain vital records, and if so,
what are some of the challenges

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that these arrangements present?

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13)	How would you suggest the agency
create a more effective framework for

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credit unions to preserve vital records?

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14)	What are some challenges for
smaller credit unions, defined as

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credit unions with total assets of
$100 million or less, in maintaining

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vital records, and what has worked?

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15)	What additional support, training,
or technical assistance could the AGENCY

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provide, if any, to assist credit unions
with both understanding and implementing

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records retention requirements?

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C.

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ADDITIONAL GUIDANCE

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The issuance of guidance in this
area has been a long-standing agency

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practice to assist credit unions with
their record preservation obligations.

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As noted in an earlier rulemaking
on Part 7 4 9, “there is a need for

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guidance in the area of record retention
based on the frequency of requests

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for assistance from credit unions.”
Additionally, clearer guidance in

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this area would also allow AGENCY to
better execute its supervisory duties.

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As part of meeting this need, the
agency has taken steps over the

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years to clearly state the difference
between regulations and guidance.

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In a prior rulemaking on Part 7 4 9,
the Board attempted to clarify this

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issue by stating, “The Board has weighed
the fact that guidance is available

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from other sources and the potential
for confusion regarding enforceability

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of a regulation versus guidance.

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The Board believes the benefit to credit
unions in having the guidance in the

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appendix to the regulatory requirement
will enhance access to the guidance

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and will facilitate compliance.”10 In
the Part 7 4 9 rulemaking, the Board

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further noted that “including specific
words like ‘recommended’ and ‘guidance’

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means, as a legal matter, that the
guidance is just that—guidance—and

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is not enforceable as a regulation.

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These words clarify and minimize, to
the extent linguistically possible, the

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potential for misinterpretation.” The
AGENCY recently codified this position in

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an interagency rulemaking clarifying the
distinction between a rule and guidance

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whereby the former creates binding legal
obligations, and the latter does not.

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Questions:

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16)	What provisions of Appendix
A or Appendix B do not align

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with the requirements of Part 7
4 9, or are otherwise outdated or

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unclear examples of the types of
records that should be retained?

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For records you consider
outdated, please explain why.

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17)	In terms of the content of any future
guidance, what guidance would be helpful

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to better reflect the types of records
that must be retained under Part 7 4 9?

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18)	What guidance would be
helpful for catastrophic act

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or other disaster preparedness?

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19)	Is there confusion among stakeholders
regarding the enforceability of regulation

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versus guidance concerning Part 7 4 9?

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If so, what should be revised?

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D.

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OTHER AGENCY REGULATIONS

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Questions:

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20)	Are there other provisions in
the AGENCY’s regulations that contain

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record retention requirements that
should be incorporated into Part 7 4 9?

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III.

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Legal Authority

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The Board issues this A N P R pursuant
to its authority under the Federal Credit

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Union Act (FCUA) to prescribe rules and
regulations as it deems appropriate for

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administering the FCUA, including its
recordkeeping requirements for federal

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credit unions.13 Maintaining vital
records is central to a credit union’s

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ability to properly service its members
and to the AGENCY’s ability to fulfill

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its supervisory and enforcement duties.

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Section 209 of the FCUA
is a plenary grant of

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regulatory authority to the Board to
examine and require information and

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reports from credit unions as well as
issue rules and regulations necessary

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or appropriate to carry out its
roles as regulator and share insurer.

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Section 206 of the FCUA requires the
agency to impose corrective measures

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whenever, in the opinion of the
Board, any credit union is engaged in

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or has engaged in unsafe or unsound
practices in conducting its business.

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Accordingly, the FCUA grants the Board
broad rulemaking authority to ensure that

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credit unions, their member owners, and
the National Credit Union Share Insurance

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Fund remain safe, sound and protected.

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This concludes the A N P R.

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If your Credit union could use assistance
with your exam, reach out to Mark Treichel

00:13:05.263 --> 00:13:07.883
on LinkedIn, or at mark Treichel dot com.

00:13:08.463 --> 00:13:11.083
This is Samantha Shares and
we Thank you for listening.