Protect Your Corporate Customers from Account Takeovers

Produced by Ann Davidson, VP of Risk Consulting at Allied Solutions

Manage Your RiskWere you aware that your corporate account holders are at an increasing risk of being targeted by cybercriminals?

Corporate accounts are especially vulnerable to account takeover attacks due to the fact that large wire and automated clearing house (ACH) transfers are frequently performed through these accounts, making fraudulent outgoing wire transfers or ACH credit requests harder to detect.

Additionally, these corporate accounts do not always have the most up-to-date or robust authentication layers in place on transactional activities, which makes it that much easier for criminals to obtain private credentials and take over these accounts.

To help combat these attacks, your credit union should have dynamic authentication methods in place for all consumer and business accounts, and should implement the following loss prevention recommendations:

  • Validate all account holder information when a wire transfer or ACH credit is requested
  • Pay special attention to new accounts performing large outgoing wire transfer or ACH credit requests, as these might be “money mule” accounts
  • Limit the dollar amount on outgoing wire transfers and ACH credit requests
  • Only offer in-person outgoing wire transfers and ACH credit requests
  • Have account holders sign an agreement that specifies that they will be assigned a confidential individual PIN and requires that they answer a security question prior to submitting an outgoing wire transfer or ACH credit request
  • Call back account holders’ listed phone number(s) to confirm their identities prior to performing requested outgoing wire transfer or ACH credit
  • Inform your corporate account holders that they have to do their part to stay protected from these attacks, such as:
    • Implementing anti-virus software on all company owned computers
    • Requiring password protection on all of their employees’ computers, cell phones, landlines, business accounts, and software applications
  • Continue to monitor reliable sources for updated information on risk exposures

To find out more about recommended authentication measures that can help your credit union and account holders remain more protected from this and other types of cyber crime, register for Allied Solutions webinar, Top Authentication and Identification Methods to Protect Your Credit Union.

 

Allied Solutions LogoAllied Solutions is the NAFCU Services Preferred Partner for Insurance – Bond, Creditor Placed (CPI), Guaranteed Asset Protection (GAP), and Mechanical Breakdown (MBP); and rateGenius. More educational resources and contact information are available at www.nafcu.org/allied.

Compensation and Severance Plan Rule Changes May Impact Your Credit Union

By Kirk D. Sherman and James S. Patterson, Sherman & Patterson, Ltd.

457(f) Compensation RegulationsAfter almost eight years and several false alarms, the IRS may finally issue the new Section 457(f) regulations addressing nonqualified deferred compensation plans and severance plans. Two IRS attorneys speaking at separate events have expressed hope that the regulations will be released by this summer.

Credit unions at greatest risk of having to modify their plans are those that sponsor:

  • Nonqualified deferral plans (other than 457(b) eligible plans) that allow elective deferrals,
  • Nonqualified deferral plans that use noncompete restrictions as substantial risks of forfeiture, and
  • Severance plans providing severance benefits greater than two times compensation.

For other credit unions, the new regulations may be a non-event.

What Should Your Credit Union Do Now?

  • While awaiting the new 457(f) regulations, credit union boards and management can determine whether the credit union sponsors 457(f) plans that use noncompetes or elective deferrals, and whether it has promised severance greater than the two-times limit.
  • Having identified such plans, the credit union (and its advisers) will quickly be able to determine if and how the new rules impact the credit union’s arrangements and what, if any, changes are required.

Understanding the Tax Implications of 457(f) Rule Changes

In 2007, the IRS first announced its intent to change the 457(f) rules.  If the rules are issued as the IRS anticipated, elective deferrals and deferrals subject to noncompete restrictions would no longer defer taxes.  Instead, taxes would be deferred only if the deferrals were non-elective and subject to cliff vesting (i.e., the benefit is forfeited if the executive quits before the specified vesting date).

  • Most credit union 457(f) plans already use cliff vesting, and elective 457(f) deferrals are rare.  Therefore, we expect few credit unions to have to modify their 457(f) plans.
  • The guidance is also expected to address what qualifies as a bona fide severance benefit for purposes of 457(f). Compensation paid under a bona fide severance plan would be taxed as received. Compensation in excess of the bona fide severance limits would be taxed in a lump sum at termination.
  • We expect the bona fide plan limit to be the lesser of two times the executive’s annual total compensation or two times the qualified plan compensation limit (two times $265,000 in 2015).  Credit unions can still pay severance in excess of the two times limit, if fair and reasonable, but the taxation may be different.
  • As with 457(f) plans, we expect that few changes to severance plans will be required to comply with the new rules.
  • For noncompliant 457(f) or severance plans, we expect the new rules to provide a process for transitioning to compliant designs.  Grandfathering of noncompliant arrangements seems unlikely.

What Should Your Credit Union Do When the IRS Issues the Guidance?

After the IRS issues the new 457(f) guidance, and especially if it expands the guidance beyond what is expected, your credit union should check with its advisors to make sure you address any modifications to your nonqualified deferral or severance plans that may be required at that time.

Watch the recent webinar, “Attracting and Retaining Executive Talent with Fair and Reasonable Compensation,” presented by Kirk Sherman, Dr. Loretta Dodgen of Human Capital Solutions Group, and Chris Burns-Fazzi of Burns-Fazzi, Brock to learn more about executive compensation trends and challenges.

Burns-Fazzi, Brock (BFB) LogoBurns-Fazzi, Brock (BFB) is the NAFCU Services Preferred Partner for Executive Compensation and Benefit Consulting. Burns-Fazzi, Brock engages the law firm of Sherman & Patterson to advise on regulatory and tax compliance matters. Sherman & Patterson, located in Minneapolis, MN, has consulted with and represented tax-exempt organizations with their executive compensation needs for the past 30 years. They work closely with NCUA and state credit union regulators, and frequently write and present on these topics.

For more information and educational resources, visit http://www.nafcu.org/BFB.

Your Members Can Protect What Matters During Disability Insurance Awareness Month

If your credit union member is unable to work due to a disabling injury or illness what would happen to their ability to make their loan payment?

No Time to Waste - May is Disability Insurance Awareness MonthMay is Disability Insurance Awareness Month. And, it’s the perfect opportunity to talk to your members about the importance of protecting against the unexpected risk of a disabling illness or injury.

An Underestimated Issue

“According to recent industry studies many employees think their odds of becoming disabled for at least three months are only 1%1. It’s an underestimated issue. More than 25% of today’s 20 year olds will become disabled before they retire2,” says Ryan Frantzen, National Sales Director, Securian Financial Institution Group.

“There is a major disconnect between what people think their risk of disability is and reality. That’s why we feel it is important for us to help credit unions make members aware of the risk.”

Consider the Gap

  • A recent U.S Department of Labor employee benefits survey revealed only one in three workers have access to a disability insurance plan through work3.
  • Nearly 90% of disabilities are not work related and therefore are not covered by workers’ compensation.4
  • Of those who qualified for benefits, approximately 35% of disabled men and 56% of disabled women received less than $1,000 per month in Social Security disability income.5

Take Action

You can help reduce your member’s financial burden in the event of an unexpected disability with credit protection programs that include disability benefits. And, members can protect their credit rating by helping ensure their loan will not end up in default, if they are unable to work due to a disabling injury or illness.

Start the conversation by asking your member to imagine their life without their paycheck as they try to pay for their daily living expenses, medical bills, and their loan with your credit union.

To help you promote national Disability Insurance Awareness Month, Securian Financial Group has developed marketing materials to use at your credit union. Request these complimentary materials by contacting Karen Thompson at Karen.thompson@securian.com or 651-665-3695.

Securian LogoSecurian is the NAFCU Services preferred partner for credit insurance and debt protection solutions for credit unions. For additional information and educational resources from Securian, visit http://www.nafcu.org/securian.

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1CDA. 2013 Employer Disability Awareness Study, p.6.

2U.S. Social Security Administration, Fact Sheet February 7, 2013.

3Source: Employee Benefits Survey, U.S. Bureau of Labor Statistics, March 2015

4Facts from LIMRA, 2014 Disability Insurance Awareness month, October 2014

52014 Council for Disability Awareness Long Term Disability Claims Review

Competition Opens for Top Solutions Designed for Credit Union Success

Our annual competition, the Preferred Partner InnovaNAFCU Services Innovation Awards Sealtion Awards, recognizing outstanding innovations that help credit unions thrive in an increasingly saturated financial services market has opened for entries. Entries must be submitted by Tuesday, April 14, 2015.

This year’s solutions will be judged by a committee of industry trade journalists, credit union executives, and marketing professionals. Randy Smith of CUInsights.com, a leading source for connecting the credit union community to vital news and information, will be one of this year’s distinguished judges.

“Recognizing solutions that strengthen credit unions and satisfaction among their members provides incentive for others to innovate within the credit union space,” said Randy Smith, Co-founder and Publisher of CUInsight.com. “I’m excited about helping select this year’s winners to spotlight products and services that ensure the continued success of credit unions.”

Solutions will be evaluated using four major criteria: degree of innovation, impact on credit union (e.g., revenue enhancement, cost reduction), overall contribution to credit union success, and the competitive advantage provided for credit unions. This competition evaluates entries from NAFCU Services Preferred Partners. To earn the distinction of Preferred Partner, providers undergo an extensive qualification process. Last year’s innovation award winners were Allied Solutions; Burns-Fazzi, Brock; DDJ Myers; and Insuritas.

Since their inception, the Preferred Partner Innovation Awards have honored many partners who have leveraged the power of their resources to solve challenges in the credit union industry. Join us at NAFCU’s Annual Conference and Solutions Expo held in Montreal, Canada from June 23 – June 26, 2015 for the announcement of the 2015 award winners.

Credit Unions Get Competitive Compensation Insights from Survey

For the 9th consecutive year, NAFCU and Burns-Fazzi,Woman holding "Pay" sign Brock (BFB) will conduct a comprehensive survey of credit union executive compensation and benefits. The NAFCU-BFB Survey of Executive Compensation and Benefits is the industry’s most comprehensive study of executive compensation.

How can your credit union participate?

  • NAFCU members have been sent an email invitation to complete the online survey.
  • Nonmember credit unions can register to receive the survey by signing up at http://www.nafcu.org/execsurvey.

 Here are the top things you should know about this study:

  • All credit unions are invited to participate.
  • Any participating credit union’s individual responses are completely anonymous.
  • Participating credit unions will receive a complimentary copy of the detailed report about the survey.
  • The deadline for credit unions to complete the survey has been extended to Friday, April 10, 2015. (If you are a NAFCU member and have not received your invitation, please contact Clark Research Associates by email at nafcusurvey@clarkra.com).

Credit union decision-makers use the findings from this annual survey to get a better view into competitive salaries, bonus plan factors, deferred compensation, and health and welfare benefits; all specific and relevant to our industry.

A study like this empowers credit unions to participate and then benefit from the findings.  By using the survey insights, credit unions can more effectively evaluate how their executive compensation program compares with peer institutions,” said NAFCU Services President Randy Salser.”

A credit union’s ability to recruit, reward, and retain leaders depends upon access to trustworthy and relevant data,” said David Frankil, president at Burns-Fazzi, Brock. “This survey helps credit union boards and executives understand current trends in the marketplace and develop a custom compensation philosophy, and we’re thrilled to once again have the opportunity to support it.”

The results of the study will be presented by Burns-Fazzi, Brock at NAFCU’s Annual Conference and Solutions Expo in Montreal, Canada from June 23 – June 26, 2015.