ARLINGTON, Va.–The National Association of State Credit Union Supervisors (NASCUS) has submitted comment letters to NCUA and Financial Crimes Enforcement Network (FinCEN) outlining the potential effects on the state credit union system as it applies to reporting requirements for CUSOs, as well as granting access to a Beneficial Ownership database for state regulators.
Addressing NCUA’s CUSO rule, NASCUS said it believes the issue could influence state credit unions, as some state-owned CUSOs may now provide many products and services authorized under state law free of restrictions in place for federal credit unions (FCU) CUSOs – and, in some cases, states already have the authority NCUA is proposing now for FCU CUSOs. Furthermore, NASCUS said it opposes the extension of any additional reporting requirements to the state system resulting from an expansion of the federal system.
“Many of the changes proposed by NCUA, while expansive in some respects for FCUs, are not unprecedented,” NASCUS stated in its comment letter. “In some states, CUSOs are already authorized to engage in many of the lending activities of their credit union owners and clients. In addition, while CUSOs must serve primarily credit union members, they are not currently required to serve credit union members exclusively.”
Recommendations Made
In its letter, NASCUS proposed the following recommendations to the CUSO rule:
- A limited amount of FCU investment in a state CUSO without triggering agency limitations on the state credit union CUSO.
- Continued evaluation of changes that enhance a credit union’s ability to serve and engage members in the marketplace.
- Continued partnership with NASCUS and state regulators to leverage supervisory oversight of CUSOs and third-party service providers.
Beneficial Ownership
Meanwhile, as it applies to Beneficial Ownership, NASCUS said its position to FinCEN articulates that state regulators must have access to the same Beneficial Ownership database information that was granted to federal agencies in 2020.
The Beneficial Ownership ANPR seeks initial public input on the implementation of the Corporate Transparency Act (CTA) and the establishment of standards and procedures for covered entities to submit information to FinCEN about their beneficial owners.
“State regulators play an important role in the administration of the Bank Secrecy Act/anti-money laundering (BSA/AML) framework, conducting an overwhelming majority of the BSA/AML examinations in the 2,020 state credit unions nationwide,” NASCUS stated. “It is the Reports of Examinations prepared by the state regulatory agencies upon which the federal regulator and FinCEN rely to identify shortcomings in BSA/AML compliance in the state credit union system. To maintain a seamless and effective oversight of the BSA/AML, FinCEN must include state regulators in the implementation of the CTA to the same extent as federal agencies. State regulators must also have access to FinCEN’s Beneficial Ownership data to the same extent as federal agencies.”
Need to Ease Requirements
NASCUS said it believes designing the Beneficial Ownership Database in a manner that eases related customer due diligence requirements would allow financial institutions to re-allocate resources to monitoring and other BSA/AML obligations resulting in a more secure financial system.
The trade group said it is committed to working with FinCEN as the Beneficial Ownership Database is developed and the CTA implemented.
Copies of the NASCUS comment letters are available here:
- CUSO: https://www.nascus.org/wp-content/uploads/2021/05/NASCUS-Comments-on-Proposed-Rule-Credit-Union-Service-Organizations-RIN-3133-AE95.pdf
- Beneficial Ownership: https://www.nascus.org/wp-content/uploads/2021/05/NASCUS-Comments-on-Beneficial-Ownership-Information-Reporting-Requirements.pdf