WASHINGTON–A credit union executive testified before a House subcommittee that the ever-growing regulatory burden is effecting its ability to serve members, and outlined specific ideas for reducing some of the paperwork CUs are filling out everyday.
Faith Lleva Anderson, SVP/general counsel with American Airlines FCU, told the House Financial Services Subcommittee on Financial Institutions and Consumer Credit that even though the $6.5-billion AAFCU is large for a CU, it is significantly strained by regulations, especially related to Bank Secrecy Act and Anti-Money Laundering. “While credit unions support laws and regulations that prevent terrorists and criminals from using their institutions to launder money or otherwise engage in illegal activity, the compliance burden of the current regulatory environment often unnecessarily takes away from our ability to serve our members, said Anderson. “Since the 2008 economic crisis and the resulting regulations that followed, credit unions have been required to devote more resources for regulatory and legal compliance particularly for mortgage loans and other consumer products, services, and protections. Given these new requirements, it has become difficult for credit unions to absorb their current total compliance burden. The new regulatory regime makes Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulatory compliance even more daunting.”
Anderson urged legislation and regulatory changes move forward that would address the redundancies, unnecessary burdens, and opportunities for efficiencies within the BSA/AML statutory framework, most especially the duplication of the same or similar information and the simplification of Suspicious Activity Reports (SARs) that have “limited usefulness to law enforcement.”
Noting that since 2008, credit unions have been subject to more than 200 regulatory changes from over a dozen federal agencies that total nearly 8,000 Federal Registerpages, “and counting,” Anderson said all the new regulations are interfering with the ability to serve members and further provided the subcommittee with specific opportunities to reduce those regulations and laws.
Moreover, she pointed to the shrinking number of credit unions and said there is “an indisputable connection between both the dramatically higher regulatory costs and their higher attrition rates.”
In her own credit union, Anderson said increasing BSA requirements, have led it to split its BSA department into two separate sections – one section to work on the investigative side and one section to work on the risk side. “Overall, it takes my credit union three to five days to process an average SAR for one case from beginning to end, and we have 30 - 45 SAR filings per month,” she said. “It would be helpful to the industry if the SAR and CTR forms – the two forms used for reporting – were combined into one form and submitted to the same place…This relatively minor change in paperwork would greatly ease compliance burden and ensure mistakes are not made during reporting, without compromising efforts to prevent criminal activity.”
Anderson added it would be helpful if financial institutions received detailed information about relevant law enforcement cases and results due to reporting, which would allow credit unions to more effectively implement BSA/AML compliance programs if they better understood how their reports are helpful to law enforcement and how they have prevented any criminal activity.
Anderson’s full testimony can be found in CUToday.info’s The Gov.