Custodial deposit services acceptable, NCUA opines

April 6, 2016 -- Custodial services of deposits are acceptable for federal credit unions, under certain conditions, NCUA has written in a recent comment letter, and summarized by NASCUS.

The summary is available on the NASCUS website (members only).

The agency was asked if an FCU has the authority to place a member’s funds, which have been initially deposited in the FCU, in a deposit account at a depository institution account that is insured by the Federal Deposit Insurance Corporation (FDIC) and to serve as custodian for that FDIC-insured account. The office of general counsel stated in the letter that an FCU does have that authority, engaging in activities that are “incidental” to its business.  An incidental activity is one that is necessary or requisite to enable an FCU to effectively carry out the business for which it is incorporated.

For more details, see the NASCUS summary

LINK:
NASCUS summary, NCUA OGC legal opinion 15-1124 (members only)