Final Rule Fidelity Bonds [Parts 704, 713]

The Board adopted a final rule on fidelity bonds under Part 704 for corporate credit unions and Part 713 for natural person credit unions. Specifically, the final rule:

  • Strengthens a board of directors’ oversight of a FICU’s fidelity bond coverage;
  • Ensures an adequate period to discover and file fidelity bond claims following a FICU’s liquidation;
  • Codifies a 2017 legal opinion that permits a natural person credit union’s fidelity bond to include coverage for certain CUSOs; and
  • Addresses Board approval of bond forms.

The final rule includes the following changes from the proposed rule aimed at reducing regulatory burden:

  • Does not require a credit union’s supervisory committee to review its fidelity bond renewal;
  • Reduced the mandatory discovery period from two years to one year following a credit union’s involuntary liquidation; and
  • Provides increased flexibility to the provision that sunsets Board approval of fidelity bond forms.

The final rule will be effective 90 days following publication in the Federal Register.

Need help interpreting new rules and regulations? Contact NJCUL’s Nicola Foggie at nfoggie@njcul.org.