Podcast
Questions and Answers
What is the primary difference between a credit union and a traditional bank?
What is the primary difference between a credit union and a traditional bank?
- Range of services offered
- Type of customers served
- Size of operations
- Profit motive (correct)
What is a typical requirement for membership in a credit union?
What is a typical requirement for membership in a credit union?
- Minimum account balance
- Referral from an existing member
- Credit score
- Shared characteristic or affiliation (correct)
Which of the following services are credit unions typically not equipped to provide?
Which of the following services are credit unions typically not equipped to provide?
- Checking and savings accounts
- International branch operations (correct)
- Wealth management
- Mortgage loans
How do credit union members control the institution?
How do credit union members control the institution?
What is a benefit of choosing a credit union over a conventional bank?
What is a benefit of choosing a credit union over a conventional bank?
What do credit unions adhere to in terms of regulatory guidelines?
What do credit unions adhere to in terms of regulatory guidelines?
What is unique about the governance structure of credit unions compared to traditional banks?
What is unique about the governance structure of credit unions compared to traditional banks?
What is the primary reason why credit unions are required to implement AML and CFT regulations?
What is the primary reason why credit unions are required to implement AML and CFT regulations?
Which of the following is NOT a characteristic of credit unions that makes them less susceptible to money laundering?
Which of the following is NOT a characteristic of credit unions that makes them less susceptible to money laundering?
Why do small credit unions find it easier to monitor transactions and report suspicious activities?
Why do small credit unions find it easier to monitor transactions and report suspicious activities?
What is the primary reason why credit unions may accept individuals who do not meet conventional bank eligibility criteria?
What is the primary reason why credit unions may accept individuals who do not meet conventional bank eligibility criteria?
What type of documentation may serve as verification for individuals who lack proper identification?
What type of documentation may serve as verification for individuals who lack proper identification?
What is the primary function of Credit Union Centrals?
What is the primary function of Credit Union Centrals?
Which of the following services is NOT provided by Credit Union Centrals?
Which of the following services is NOT provided by Credit Union Centrals?
What is the primary benefit of Credit Union Centrals to individual credit unions?
What is the primary benefit of Credit Union Centrals to individual credit unions?
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Study Notes
Credit Union Overview
- A credit union is a non-profit, member-owned financial institution governed by its customers, who are referred to as members
- Credit unions provide various financial services and products, similar to banks, but typically on a smaller scale
Membership and Governance
- Membership is based on shared characteristics, such as employment, affiliation, or other linked associations
- Members control the institution through a democratically elected board of directors, deciding on policies, interest rates, and financial plans
- Credit unions are known for their democratic style of governance, which sets them apart from traditional banks
Benefits of Credit Unions
- Exclusive membership conditions
- Customized personal services
- Higher returns on investments
- Lower fees
- More favorable terms on loans
Regulatory Guidelines
- Credit unions adhere to similar standards as banks in areas like liquidity, risk management, and documentation
- They are obligated to implement AML and CFT regulations, overseen by entities like the National Credit Union Administration in the U.S.
- Credit unions need to enforce stringent AML/CFT policies due to their specific regulatory demands
Credit Union Centrals
- Credit Union Centrals support individual credit unions by providing crucial services, beneficial for both commercial and not-for-profit goals
- Services include collective product strategies, back-office services, capital liquidity assistance, and legislative advocacy
- Additional services include staff training programs, credit card processing, printing and office supplies, ATM network management, and shared service facilities
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