By Donya Parrish, MCU VP- Risk Management
Credit unions have an obligation to turn over property when there has been no activity for a period of time (generally 5 years under Montana law). That includes deposit accounts and any funds within them. It can be tempting to wait until the deadline is near to start looking closely at the accounts, but there is risk in not regularly monitoring them. Since these are accounts a consumer is not using, or may have forgotten about, they are ripe for manipulation if there is a lack of oversight or weak internal controls.
TruStage recently sent a RISK Alert detailing possible risk mitigation steps a credit union can take to monitor the activity and ensure they are not used by an employee fraudulently. A few possible steps for your supervisory committee to consider include ensuring that your credit union:
- Flags the accounts for a period of time (i.e., 12 months) that is shorter than the state’s period of dormancy;
- Generates and review reports of activity on previously inactive accounts quarterly;
- Ensures employees are not allowed access to dormant accounts if not appropriate to their level of authority, or without a management override;
- Tests a sampling of dormant accounts to ensure the activity flows through properly to reports;
- Validates the address of the member on file; or
- Reviews accounts that come off the dormant account report to validate the activity was made with member permission or direction.
NCUA’s Supervisory Committee Guide also discusses steps you can take (page 21) to monitor these accounts and ensure your credit union has the appropriate controls in place to keep funds from being diverted fraudulently. Having a strong process in place should not be time-consuming, but can be important. If your credit union is using a software (like Verafin), it may also have functionality to assist in this endeavor and any reports or processes within it should be reviewed with your committee.