Code of Virginia

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Code of Virginia
Title 6.2. Financial Institutions and Services
Chapter 13. Credit Unions
4/20/2024

Article 1. General Provisions.

§ 6.2-1300. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Capital" means the sum of share accounts, reserves, and undivided earnings of a credit union.

"Corporate credit union" means a credit union whose field of membership consists primarily of other credit unions.

"Credit union" means a cooperative, nonprofit corporation organized under the laws of the Commonwealth and authorized to do business under this chapter for the purposes of encouraging thrift among its members, creating a source of credit at fair and reasonable rates of interest, providing an opportunity for its members to use and control their own money on a democratic basis in order to improve their economic and social condition, and conducting any other business, engaging in any other activity, and providing any other service that may be of benefit to its members, consistent with the provisions of this chapter and any regulations adopted by the Commission under this chapter.

"Credit union service organization" means any organization, corporation, or association, if (i) the membership or ownership, as the case may be, of such organization, corporation, or association is primarily confined or restricted to credit unions or organizations of credit unions and (ii) the purpose for which such organization, corporation, or association is organized is to strengthen or advance the development of credit unions or credit union organizations.

"Household" means those individuals who are related by blood, marriage, or other recognized family relationship and who live in the same house or other place of residence.

"Immediate family" means the individuals in a household who are related by blood, marriage, or other recognized family relationship. "Immediate family" also includes, regardless of their place of residence, the children, grandchildren, grandparents, parents, siblings, and spouse of an individual.

"Insuring organization" means an organization that provides aid and financial assistance to credit unions that are in the process of liquidation or are incurring financial difficulty in order that the share accounts in the credit unions shall be protected or guaranteed against loss up to a specified limit for each account, such as the National Credit Union Administration Share Insurance Fund, a corporation organized under Article 5 (§ 6.2-1331 et seq.), or any other share insurance provider approved by the Commission.

"Member," with respect to a credit union, or "credit union member," means any person holding a share account in accordance with standards specified by the credit union. "Member" may also be used to refer to an individual or other entity that is included within a group or a community, or to an individual who is part of a household or family.

"Reserves" means the total of allowances for loan losses, regular, special, and any other type of funds held in reserve.

"Retained earnings" means undivided earnings, regular reserve, reserve for contingencies, supplemental reserves, reserves for losses, and other appropriations from undivided earnings as designated by management or the Bureau.

"Share account" means a balance held by a credit union and established by a member in accordance with standards specified by the credit union, including balances designated as shares, share certificates, share draft accounts, or other names.

"Shares" means the interest of a member having an account in a credit union.

1990, c. 373, § 6.1-225.2; 1999, c. 63; 2010, c. 794; 2013, cc. 16, 92.

§ 6.2-1301. Effect of ownership of a share account.

Ownership of a share account confers membership and voting rights as set forth in the credit union bylaws and represents an interest in the capital of the credit union upon dissolution or conversion to another type of institution.

1990, c. 373, § 6.1-225.2; 1999, c. 63; 2010, c. 794; 2022, cc. 675, 676.

§ 6.2-1302. Powers.

In addition to the powers specified or implied elsewhere in this chapter or in the laws of the Commonwealth, a credit union shall have the power to:

1. Enter into contracts;

2. Sue and be sued;

3. Adopt, use, and display a corporate seal;

4. Receive savings from and make loans and extend lines of credit to its members;

5. Individually or jointly with other credit unions acquire, lease as lessor or lessee, hold, assign, pledge, exchange, repair, mortgage, hypothecate, sell, discount, or otherwise dispose of property or assets, either in whole or in part, as necessary or incidental to its operations, including any property or assets obtained as a result of defaults under obligations owing to it;

6. Borrow from any source, provided that (i) a credit union shall notify and obtain prior approval of the Commissioner if the total borrowings will exceed 50 percent of the credit union's outstanding shares and (ii) in no event shall the borrowings exceed 90 percent of the credit union's outstanding shares;

7. Sell all or substantially all of its assets or purchase all or substantially all of the assets of another credit union, subject to the approval of the Commission;

8. Offer related financial services, including electronic fund transfers, share draft accounts, safe deposit boxes, leasing of tangible personal property to its members, and correspondent arrangements with other financial institutions;

9. Hold membership in other credit unions organized under this chapter or other applicable law, and in associations and organizations controlled by or fostering the interest of credit unions, including a central liquidity facility organized under state or federal law;

10. Contract with any licensed insurance company or society to insure the lives of its members to the extent of their loans and share accounts, in whole or in part, and to pay all or a portion of the premium therefor;

11. Engage in activities or programs as requested by any governmental authority, subject to the approval of the Commissioner;

12. Invest its funds, operate a business, manage or deal in property when such actions are reasonably necessary to avoid loss on a loan or investment previously made or an obligation previously created in good faith. Such property or business shall not be held or operated by the credit union for a period longer than is reasonably required to protect the interest of the credit union, unless specifically authorized by the Commissioner;

13. Make contributions to any nonprofit civic, charitable, or service organizations;

14. Make loans to its members and to other credit unions;

15. Engage in virtual currency custody services in the manner and to the extent provided in § 6.2-1302.1;

16. Engage in any additional activity, service, or other practice that is authorized for a federally chartered credit union and that has not otherwise been authorized for a state-chartered credit union by the provisions of this chapter or by Commission regulation, including regulations adopted pursuant to subsection B of § 6.2-1303, provided that (i) at least 45 calendar days prior to engaging in any such activity, service, or practice the credit union provides the Commissioner with written notice along with any additional information relating to the activity, service, or practice that the Commissioner may require and (ii) the credit union engages in the activity, service, or practice subject to the same terms, conditions, and limitations that are applicable to a federally chartered credit union. The Commissioner may at any time, based upon supervisory, legal, or safety and soundness considerations, prohibit or further restrict the activity, service, or practice. "Activity, service, or other practice" does not include credit union field of membership or field of membership expansion under §§ 6.2-1327 and 6.2-1328 and any related regulations; and

17. Undertake such other activities relating to the purposes of the credit union as its charter or bylaws may authorize, provided such activities are not inconsistent with this chapter.

Code 1950, § 6-209; 1966, c. 584, § 6.1-200; 1968, c. 560; 1987, c. 622, § 6.1-330.64; 1990, c. 373, § 6.1-225.21; 2006, c. 753; 2010, c. 794; 2022, cc. 606, 607; 2023, c. 303.

§ 6.2-1302.1. Virtual currency custody services.

A. As used in this section:

"Custody services" means the role of a credit union in the safekeeping and custody of various customer assets.

"Virtual currency" has the same meaning as provided in § 6.2-818.1.

B. A credit union may provide its customers with virtual currency custody services so long as the credit union has adequate protocols in place to effectively manage risks and comply with applicable laws and, prior to offering virtual currency custody services, the credit union has carefully examined the risks in offering such services through a methodical self-assessment process. If a credit union engages in virtual currency custody services, the credit union shall:

1. Implement effective risk management systems and controls to measure, monitor, and control relevant risks associated with custody of digital assets such as virtual currency;

2. Confirm that it has adequate insurance coverage for such services; and

3. Maintain a service provider oversight program, to the extent that the credit union engages with a service provider to provide virtual currency custody services, to address risks to service provider relationships as a result of engaging in virtual currency custody services.

C. A credit union may provide virtual currency custody services in a fiduciary or nonfiduciary capacity. In providing such services in a nonfiduciary capacity, the credit union shall act as a bailee, taking possession of the customer's asset for safekeeping while legal title remains with the customer, such that the customer retains direct control over the keys associated with his virtual currency. To provide such services in a fiduciary capacity, the credit union shall obtain approval from the Commission as required by subsection D. In providing virtual currency custody services in a fiduciary capacity, the credit union shall receive control of the customer's virtual currency, and new private keys shall be created to be held by the credit union. If approved by the Commission to provide virtual currency custody services in a fiduciary capacity, a credit union shall have authority to manage virtual currency assets as it would any other type of asset held in such capacity.

D. No credit union shall provide virtual currency custody services in a fiduciary capacity without first obtaining authorization to do so from the Commission. The Commission shall not grant such authority until it finds that the credit union has satisfied the following requirements:

1. The credit union's capital structure is sufficiently strong to support the undertaking to provide virtual currency custody services;

2. The personnel who will direct the proposed virtual currency custody services have adequate experience, training, and sufficient resources to ensure compliance with laws and regulations and to protect the operations of the credit union; and

3. Granting such authority to the credit union is in the public interest.

E. The Commission may impose conditions on the authority granted to any credit union pursuant to subsection D and may suspend or revoke such authority if it finds that the credit union has failed to comply with any laws or regulations applicable to virtual currency custody services or any existing conditions imposed by the Commission or if the services are otherwise being provided in an unsafe or unsound manner.

2023, c. 303.

§ 6.2-1303. Regulations.

A. The Commission may adopt regulations to implement the provisions of this chapter.

B. In addition to the powers specifically granted to state chartered credit unions by the provisions of this chapter, the Commission may adopt such regulations as may be necessary to permit state chartered credit unions to have powers at least comparable with those of federally chartered credit unions or to effect the purposes of this chapter, regardless of any then existing statute, regulation or court decision limiting or denying such powers to state chartered credit unions. The requirement of a public hearing shall not automatically apply to regulations adopted under this subsection, but the Commission may hold such hearings as it deems appropriate.

C. Before adopting any regulation under this chapter, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to present evidence and be heard, in accordance with the Commission's Rules.

1975, c. 34, § 6.1-200.2; 1988, c. 309; 1990, c. 373, §§ 6.1-225.3, 6.1-225.22; 1997, c. 111, § 6.1-225.3:1; 2010, c. 794.

§ 6.2-1304. Franchise tax exemption.

All credit unions organized under the laws of the Commonwealth and doing business purely as credit unions shall be exempt from the payment of any franchise tax.

Code 1950, § 6-233; 1966, c. 584, § 6.1-225; 1990, c. 373, § 6.1-225.63; 2010, c. 794.

§ 6.2-1305. Making or circulating derogatory statements affecting credit unions; penalty.

Any person who willfully and maliciously makes, circulates, or transmits to another any statement or rumor that is untrue in facts and is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of any credit union doing business in the Commonwealth, or who knowingly counsels, aids, procures, or induces another to start, transmit, or circulate any such statement or rumor, is guilty of a Class 3 misdemeanor.

1991, c. 170, § 6.1-225.64; 2010, c. 794.

§ 6.2-1306. Unlawful use of words "credit union.".

A. It shall be unlawful for any person, other than (i) a credit union organized under the provisions of this chapter, (ii) any entity authorized by any federal law, or (iii) any association or corporation the owners, members or constituents of which consist exclusively of authorized state and federal credit unions or members of authorized state and federal credit unions, to use any name or title which contains the words "credit union."

B. Any person violating the provisions of this section is guilty of a Class 1 misdemeanor and may be enjoined by any court having equity jurisdiction over the unauthorized user.

Code 1950, § 6-203; 1966, c. 584, § 6.1-224; 1990, c. 373, § 6.1-225.19; 1994, c. 13; 2010, c. 794.

§ 6.2-1307. Use of credit union name, logo, or symbol for marketing purposes; penalty.

A. Except as provided in subsection B, no person shall use the name, logo, or symbol, or any combination thereof, of a credit union, or any name, logo, or symbol, or any combination thereof, that is deceptively similar to the name, logo, or symbol of a credit union, in marketing material provided to or solicitation of another person in a manner such that a reasonable person may believe that the marketing material or solicitation originated from or is endorsed by the credit union or that the credit union is responsible for the marketing material or solicitation.

B. This section shall not apply to (i) an affiliate or agent of the credit union or (ii) a person who uses the name, logo, or symbol of a credit union with the consent of the credit union.

C. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 1 misdemeanor.

D. This section shall not affect the availability of any remedies otherwise available to a credit union.

2005, c. 240, § 6.1-225.65; 2010, c. 794.