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Banks close CU accounts.

As many as 30 credit unions in West Virginia and Ohio have been scrambling to establish new correspondent vendors after a regional and national bank terminated their accounts over the past few weeks.

The $1.4 billion Volunteer Corporate CU and the $3.7 billion Corporate One FCU both reported the closed accounts, and in both cases said members reported the banks cited Bank Security Act and money laundering risk.

Charlie Thomas, VolCorp's senior vice president of West Virginia operations, said the Nashville, Tenn.-based corporate first became aware of the terminated correspondent relationships in late March when a member called, asking for assistance. He said the two banks were the Columbus, Ohio-based Huntington Bank and New York-based Chase Bank.

Corporate One FCU, also based in Columbus, has heard the same thing from members in Ohio, said Vice President of Marketing Paul Hixon. He said the corporate didn't keep count of affected members, but said several had contacted Corporate One, including some that had first contacted the Ohio Credit Union League. Like in West Virginia, the affected Ohio credit unions had banked with Huntington and Chase, and Hixon said another member in Florida reported receiving a similar letter from Bank of America.

Thomas said a letter he'd seen from Huntington to a credit union said the decision to terminate the business relationship was the result of regulatory requirements, "some of which may be new or been amended since the credit union opened its account." The decision reflected a change in bank wide strategy, and was not a reflection on the credit union, the letter added.

Hixon reported similar language communicated to Ohio credit unions and added, "something clearly happened, that all these banks have closed these account at the same time."

CUNA Senior Vice President Mary Dunn said the trade association has heard about the closed accounts, but it appears to be limited to just Ohio and West Virginia.

Maureen Brown, Huntington Bank's public relations director, said she had investigated the closed account reports but could not comment on customer relationships per bank policy. Calls to Chase were not returned.

The Federal Reserve Board, which shares BSA regulator duties with the Office of Comptroller of the Currency, issued a consent order against JPMorgan Chase in February that requires the bank to take corrective action to improve its internal procedures for managing BSA and money laundering compliance. There have been no consent orders issued against Huntington Bank.

The Fed said it would not comment on whether the two banks had been directed to close the accounts.

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Title Annotation:REGULATIONS
Author:Anderson, Heather
Publication:Credit Union Times
Geographic Code:1U3OH
Date:Apr 24, 2013
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