What is a Credit Union Service Organization (CUSO)?

The term “CUSO” means that the business entity is qualified for and has a credit union investment.  A CUSO must be a Subchapter-C corporation, limited liability company or limited partnership in which a credit union has an investment or loan.  A CUSO cannot be a Subchapter-S corporation as the IRS Rules require that all owners of a Subchapter-S corporation be natural persons.  The other requirements are that the CUSO provide a service that is approved by the regulations and primarily serve credit unions or members of the CUSO owners or clients.

What services can a CUSO offer?

CUSOs can offer a variety of financial and operational services.  The specific permitted services for federally chartered credit unions are listed in Part 712.5 of the NCUA Regulations.  Most states permit state chartered credit unions to engage in the same activities as federally chartered credit unions. Some states have their own regulations for state chartered credit unions and may permit services not permitted by NCUA.  The list of NCUA pre- approved services is as follows:

(1) Checking and currency services:

(a) Check cashing;

(b) Coin and currency services;

(c) Money order, savings bonds, travelers checks, and purchase and sale of U.S. Mint commemorative coins services; and

(d) Stored value products.

(2) Clerical, professional and management services:

(a) Accounting services;

(b) Courier services;

(c) Credit analysis;

(d) Facsimile transmissions and copying services;

(e) Internal audits for credit unions;

(f) Locator services;

(g) Management and personnel training and support;

(h) Marketing services;

(i) Research services;

(j) Supervisory committee audits; and

(k) Employee leasing services.

(3) Business loan origination , including the authority to buy and sell participation interests in such loans;

(4) Consumer mortgage loan origination , including the authority to buy and sell participation interests in such loans;

(5) Electronic transaction services:

(a) Automated teller machine (ATM) services;

(b) Credit card and debit card services;

(c) Data processing;

(d) Electronic fund transfer (EFT) services;

(e) Electronic income tax filing;

(f) Payment item processing;

(g) Wire transfer services; and

(h) Cyber financial services.

(6) Financial counseling services:

(a) Developing and administering Individual Retirement Accounts (IRA), Keogh, deferred compensation, and other personnel benefit plans;

(b) Estate planning;

(c) Financial planning and counseling;

(d) Income tax preparation;

(e) Investment counseling;

(f) Retirement counseling; and

(g) Business counseling and consultant services.

(7) Fixed asset services:

(a) Management, development, sale, or lease of fixed assets; and

(b) Sale, lease, or servicing of computer hardware or software.

(8) Insurance brokerage or agency:

(a) Agency for sale of insurance;

(b) Provision of vehicle warranty programs;

(c) Provision of group purchasing programs; and

(d) Real estate settlement services.

(9) Leasing:

(a) Personal property; and

(b) Real estate leasing of excess CUSO property.

(10) Loan support services:

(a) Debt collection services;

(b) Loan processing, servicing, and sales;

(c) Sale of repossessed collateral;

(d) Real estate settlement services;

(e) Purchase and servicing of non-performing loans; and

(f) Referral and processing of loan applications for members whose loan applications have been denied by the credit union