WASHINGTON--America’s Credit Unions filed comments Tuesday addressing three separate anti-money laundering/countering the financing of terrorism (AML/CFT) proposals.
Sharing support for all three proposals, each comment letter provided specific recommendations.
The Financial Crimes Enforcement Network (FinCEN) proposal aims to modernize Bank Secrecy Act (BSA) and AML/CFT program requirements by focusing on effectiveness, risk-based compliance, and the allocation of resources toward higher-risk activity. In the comment letter, America’s Credit Unions emphasizes that FinCEN should:
- Clarify that an effective AML/CFT program does not mean a perfect program, and that isolated, technical, or quickly corrected issues should not be treated as program failures
- Scale expectations for risk assessments, documentation, controls, testing, staffing, and technology to a credit union’s size, complexity, and risk profile
- Provide clearer guidance on key terms and timing expectations
- Allow credit unions to focus resources on higher-risk activity without being pressured to adopt costly technology or analytics that may not fit their operations
NCUA (and other regulators) proposed to modernize AML/CFT program requirements and align supervision with a more risk-based approach. America’s Credit Unions said it called on NCUA and regulators to:
- Avoid creating conflicting or more burdensome examination standards for credit unions
- Ensure examiners focus on serious or systemic AML/CFT program issues, not minor ones
- Keep FinCEN consultation focused on serious AML/CFT issues, not routine matters corrected during an exam
- Utilize a clear and practical FinCEN consultation process that does not delay exams, create duplicate reviews, or leave credit unions unsure which regulator is responsible for the final decision
- Use strong confidentiality and privilege protections for information shared with FinCEN, including attorney-client, work-product, bank-examination, and confidential supervisory information protections
FinCEN and the Office of Foreign Asset Control have proposed AML/CFT and other anti-financial crime obligations for permitted payments stablecoin issuers (PPSIs) America’s Credit Unions said it believes are in line with the unique risks involving blockchain. America’s Credit Unions recommended additional clarity on:
- Obligations and expectations for an effective BSA and sanctions compliance program for the decentralized finance landscape
- A delineation of compliance responsibilities between credit union parent companies and their PPSI subsidiaries and identification and elimination of duplicative obligations
- Additional know your customer (KYC) and transaction monitoring control details
- How examiners will assess program effectiveness
- Expectations for validation, oversight, and reliance on third-party providers
- Compliance obligations for services other than issuance, such as custodial services, on-ramp/off-ramp operations, or aggregation platforms
America’s Credit Unions also recommended FinCEN provide illustrative examples and interpretive guidance around controls and monitoring tools and address how a PPSI or insured depository institution evaluates a redemption request made by a foreign holder of a permitted payment stablecoin.