On Compliance: NCUA second chance rule expands credit unions’ talent pool

Candidates whose past offenses meet the criteria for being ‘de minimis’ may now be hired.

In November 2019, the National Credit Union Administration finalized an updated interpretive ruling and policy statement called the Second Chance IRPS. This liberalizes the ability of federally insured credit unions to hire individuals who have been convicted of “de minimis” (trivial) offenses involving “dishonesty” or “breach of trust”—or who entered pretrial diversion programs for such offenses—without prior NCUA Board approval.

The Second Chance IRPS interprets the employment restrictions applicable to federally insured credit union “institution affiliated parties” under Section 205(d) of the Federal Credit Union Act. Section 205(d) also requires credit unions to do a reasonable investigation into the background of any potential “institution affiliated party.”

In addition, the Second Chance IRPS clarifies that federally insured credit unions can hire individuals who committed non-“de minimis offenses” involving dishonesty or breach of trust with the prior approval of the NCUA Board, unless the offense was a violation of a federal criminal law involving a financial institution, such as bank theft or embezzlement committed within the past 10 years.

 

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