WASHINGTON—The World Council of Credit Unions (WOCCU) is reporting that during 2021 it was able to successfully advocate before international standard setting bodies on behalf of the global financial cooperative movement.
WOCCU said its top international advocacy success stories of the year include:
G20 Reaffirms Support on Proportionality and Financial Inclusion
“The G20 reaffirmed its support for a WOCCU advocated position that national-level regulators put a greater focus on proportionality in the newly released G20 Rome Leaders’ Declaration, which embraces a commitment to enhancing the financial inclusion of vulnerable and underserved segments of society that credit unions should now have an even greater opportunity to serve,” WOCCU said.
WOCCU said the G20 endorsed the G20 Menu of Policy options focused on digital financial literacy and financial consumer protection, and reiterated its support for the G20 2020 Financial Inclusion Action Plan.
“This accomplishment was due to efforts by WOCCU and its respective G20 members (Australia, Brazil, Canada, South Korea and United States), which engaged in outreach with their individual country’s finance ministers,” WOCCU’s Andrew Price said. “It resulted in favorable language being included in the G20 directive to international standard setting bodies.”
WOCCU Call for COVID-19 Flexibility Heeded by Basel Committee
WOCCU said the Basel Committee on Banking Supervision responded favorably to its call for flexibility in the withdrawal of COVID-19 related relief measures.
FATF Supports Proportionality
WOCCU noted the Financial Action Task Force (FATF) issued its Risk-Based Supervision Guidance, which contains a risk-based approach and guidance on proportionality. Price said WOCCU advocated for the inclusion of proportionality in this guidance, which contains a risk-based approach, principles of proportionality and direction on financial inclusion. “A highlighted box on supervising lower risk sectors and entities and supporting financial inclusion contained specific proportionality and financial inclusion language,” WOCCU noted.
WOCCU Advocated Proportionality Included in Basel Committee Guidance
WOCCU noted two guidance documents issued by the Basel Committee concerning Operational Resilience, including the Principles of Operational Resilience and Revisions to the Principles for the Sound Management of Operational Risk, featured language on proportionality. The guidance included the WOCCU recommended principled approach, which allows for a risk-based and proportional application to any requirements implemented, Price said.
Bank of Italy (G20 Host Country) Supports WOCCU Financial Inclusion Efforts
WOCCU said that it and its G20 members (Australia, Brazil, Canada, South Korea and the United States) made efforts with the G20 to link financial inclusion to proportionality and the role that credit unions can play in expanding those inclusion efforts. During the G20 process (led in 2021 by Italy), Ignazio Visco, the Governor of the Bank of Italy at the 2021 IIF G20 Conference, noted that digitalization may lead to new forms of exclusion, but the outcome was dependent on the development and accessibility of digital infrastructures, the degree of financial and digital literacy, and the adequacy of governance—especially in the field of supervision and regulation, Price said.
Price added The Bank of Italy also corresponded with WOCCU in indicating that it supported many of its measures and that they were under consideration by the Finance Ministers as part of the G20 process. Some of those measures were included in the ultimate Leaders’ Declaration, WOCCU added.
WOCCU Advocated Proportionality Included in FATF Stocktake on the Unintended Consequences of the FATF Standards
WOCCU commented to FATF on this consultation on the unintended consequences of their standards. As a result, FATF published its High-Level Synopsis of the Stocktake of the Unintended Consequences of the FATF Standards, which included recognition of several issues highlighted by WOCCU.
FATF Acknowledges Burden of AML/CFT Requirements on the Advancement of Financial Inclusion in Cross-Border Payments
WOCCU noted it also commented on the FATF survey on Cross-Border Payments. Upon the release of its subsequent report, “Cross-Border Payments Survey Results on Implementation of the FATF Standards.”
The FATF noted “the survey results highlight, among others, that lack of risk-based approach and inconsistent implementation of the AML/CFT requirements increases cost, reduces speed, limits access and reduces transparency,” WOCCU stated.
FATF also noted that the failure to implement proportionality “can also exclude access for those without the ability to provide certain documents or information, usually the ones at most need of financial inclusion,” Price added.
WOCCU/ENCU Advance Credit Unions in the European Union
The European Network of Credit Unions (ENCU), comprised of WOCCU and eight European credit union associations, conducted outreach throughout the year with various representatives from the offices of Members of the European Parliament (MEPs), representatives from Member States in the Council of the European Union and various other offices in the European Union, the World Council said.
It noted ENCU urged policymakers to apply proportional treatment to credit unions on various items coming up in the European Parliament’s legislative term.
“What is important is that the international standard setting bodies are recognizing the importance of tailoring regulations for smaller, community-based financial institutions, such as credit unions, so that burdensome regulations do not deny someone access to responsible financial services,” said Price, who is WOCCU SVP-advocacy and general counsel. “This focus on proportionality, which allows the credit union cooperative model to function, is a key element in achieving financial inclusion.”