15 Questions
What is the primary difference between a credit union and a traditional bank?
Profit motive
What is a typical requirement for membership in a credit union?
Shared characteristic or affiliation
Which of the following services are credit unions typically not equipped to provide?
International branch operations
How do credit union members control the institution?
Through a democratically elected board of directors
What is a benefit of choosing a credit union over a conventional bank?
Lower fees
What do credit unions adhere to in terms of regulatory guidelines?
Similar standards as traditional banks
What is unique about the governance structure of credit unions compared to traditional banks?
Board of directors is democratically elected
What is the primary reason why credit unions are required to implement AML and CFT regulations?
Because they are financial institutions, as identified by the Financial Action Task Force
Which of the following is NOT a characteristic of credit unions that makes them less susceptible to money laundering?
Complex operations
Why do small credit unions find it easier to monitor transactions and report suspicious activities?
Due to their limited size and simpler operations
What is the primary reason why credit unions may accept individuals who do not meet conventional bank eligibility criteria?
To provide access to banking services to underserved populations
What type of documentation may serve as verification for individuals who lack proper identification?
A letter from an employer or educational institution
What is the primary function of Credit Union Centrals?
To support individual credit unions by providing crucial services
Which of the following services is NOT provided by Credit Union Centrals?
Financial auditing services
What is the primary benefit of Credit Union Centrals to individual credit unions?
Leveraging pooled resources and collective bargaining
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
A credit union is a non-profit, member-owned financial institution providing various financial services and products to its members.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
