12 CFR 713.3 – What bond coverage must a federally insured credit union have?
(a) At a minimum, your bond coverage must:
Terms Used In 12 CFR 713.3
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
- Fraud: Intentional deception resulting in injury to another.
(1) Be purchased in an individual policy from a company holding a certificate of authority from the Secretary of the Treasury;
(2) Cover fraud and dishonesty by all employees, directors, officers, supervisory committee members, and credit committee members;
(3) Include an option for the liquidating agent to purchase coverage in the event of an involuntary liquidation that extends the discovery period for a covered loss for at least one year after liquidation; and
(4) In the case of a voluntary liquidation, remain in effect, or provide that the discovery period is extended, for at least four months after the final distribution of assets, as required in § 710.2(c) of this chapter.
(b) The requirement in subsection (a) of this section does not prohibit a federally insured credit union from having a fidelity bond that also covers its credit union service organization (CUSO(s)), provided the federally insured credit union owns more than 50 percent of the CUSO(s) or the CUSO(s) is organized by the federally insured credit union for the purpose of handling certain of its business transactions and composed exclusively of the federally insured credit union’s employees.