WASHINGTON—CUNA has sent four different letters to Congress related to money laundering, diversity in the boardroom, cannabis banking, and appraisals.
In a letter to the Senate Banking Committee leadership prior a hearing in which it will discuss draft legislation, CUNA said redit unions support efforts to track money laundering and terrorist financing, but also believe it is important to strike the right balance between the compliance costs and benefits to the federal government.
“We are encouraged by draft legislation the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act This draft bill addresses the redundancies, unnecessary burdens, and opportunities for efficiencies within the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) statutory framework,” the letter reads.
Issues Addressed in Draft Legislation
CUNA said it appreciates several areas addressed in the draft legislation, including:
- Title I:
- Requires that Treasury establish national exam and supervision priorities intended to supplement and guide financial institutions, financial regulators, and law enforcement on handling AML-CFT (combatting the financing of terrorism) threats
- Establishes a Treasury financial institution liaison to seek and receive comments from financial institutions regarding AML-CFT rules and regulations and examinations, including regarding the banking regulators
- Title II:
- Requires annual reports from DOJ to Treasury on the use of BSA reporting by law enforcement
- Requires periodic law enforcement feedback to financial institutions on their suspicious activity reports. This periodic feedback shall also be coordinated and conducted in the presence of financial regulators
- Reviews and streamlines reporting requirements to ensure a “high degree of usefulness” for CTR/ SAR filings, including a review of reporting fields, as well as a review of appropriate ways to promote financial inclusions and avoid unnecessary de-risking
- Requires Treasury and the Attorney General to review the CTR and SAR thresholds and determine whether any changes are necessary
- Requires a formal review of all AML-CFT regulations and guidance with public comment to remove outdated or unnecessary regulations and guidance
- Title III:
- Establishes a path for financial institutions to share de-identified AML-CFT information for purposes of identifying suspicious activity
Other Concerns
The letter also notes concern with at least one provision in the bill that CUNA said it believes could cause examination issues for some small credit unions.
“In Title III, we support the objective of the provision regarding transaction monitoring software intended to improve the risk-based system of tracking individual transactions,” the letter reads. “However, regardless of the Rule of Construction, it has been our experience that some examiners will expect the credit unions to comply with such ‘recommendations.’ We are concerned that ‘approved’ transactions monitoring software could cause a significant financial burden.”
Letter on Cannabis Banking
Separately, CUNA sent a letter to the House Committee on Small Business ahead of its hearing on the cannabis banking bill. CUNA noted it has consistently advocated that Congress provide a safe harbor for financial institutions that serve state-sanction cannabis businesses from criminal penalty.
“The simple reality is that the cannabis industry does not operate in a vacuum and is dependent on main street businesses,” CUNA President/CEO Jim Nussle wrote. “These include the office supply company that provides copy paper, the landlord that rents office space, or even the utility company providing electricity and water.”
Without access to mainstream banking services, cannabis businesses are less able to obey the law, pay taxes, and follow state regulations. The public safety risk could be easily mitigated by providing financial services to these businesses, ultimately keeping cash off the streets.
The full letter can be found here.
Letter on Diversity in the Boardroom
Ahead of a hearing by the House Financial Services Committee on “diversity in the boardroom,” CUNA sent a letter saying credit unions “value and embrace diversity, equity and inclusion (DEI),” and that advancing DEI is an “explicit priority” for credit unions.
“Credit unions acknowledge that increasing diversity of credit union boards is critical, and we understand that we must be intentional about increasing diversity and inclusion in the board room in order for credit unions to continue to reach and better serve an increasingly diverse population,” the letter reads.
CUNA further wrote credit unions “lead the way when it comes to Minority Depository Institutions (MDIs), where the majority of board members and current and potential membership are minorities.”
“Despite field of membership restrictions, credit unions have three times as many MDIs as banks (536 credit unions, 149 for banks) and MDI credit unions’ share of total assets is three times as large as MDI banks,” CUNA stated.
The letter also highlights that CUNA initiated efforts to benchmark board diversity in 2018 via its Annual Member Survey. As part of the Survey CUNA asked boards to estimate the racial and ethnic and age diversity of their boards.
Letter on Appraisals
CUNA also sent a letter to the House saying appraisals play a critical role in the home purchase process and a credit union’s assessment of the safety and soundness of providing a home loan.
“The Homebuyer Assistance Act of 2019 would increase uniformity in the federally-backed mortgage loan market by ensuring that the Federal Housing Administration’s appraiser requirements are identical to those currently employed by Fannie Mae and Freddie Mac concerning licensed appraisers,” CUNA said. “As a result, credit unions would be able provide members with more choices for federally-backed loans without having to worry that an appraisal will not satisfy a program’s requirements due to their differing appraiser certification standards.”
The full letter can be found here.