BRUSSELS, Belgium — The World Council of Credit Unions (WOCCU) discussed credit unions' concerns about the so-called “de-risking” phenomenon with the Financial Action Task Force here.
De-risking is a byproduct of efforts to fight money laundering and the financing of terrorism, and affects credit unions when they face regulatory pressures not to have money services businesses (MSBs) or similar enterprises as members, as well as when they have trouble maintaining correspondent relationships with banks that are concerned about their customers' AML/CFT risks.
WOCCU Vice President and General Counsel Michael Edwards represented the global credit union movement at the FATF consultative meeting.
"We applaud the FATF's efforts to address financial institution customer de-risking," said World Council president and CEO Brian Branch said in a statement. "Our members have told us that their credit unions often face pressure from examiners not to provides services to MSBs, and also that it has become increasingly difficult for credit unions to open and maintain bank accounts in recent years. We believe that clearer guidance on credit unions' and banks' AML/CFT compliance responsibilities regarding clients that are financial businesses will significantly reduce regulatory burdens on credit unions and help them provide better services to their members."
The FATF is likely to issue guidance on the credit unions' and banks' AML/CFT compliance responsibilities with respect to MSBs within the next year, and is also considering issuing guidance on client de-risking in the banking sector in general. The FATF also incorporated statements discouraging unreasonable client de-risking into its Guidance for a Risk-Based Approach to the Banking Sector paper issued in October 2014 that World Council recommended in an April 2014 comment letter.
The World Council said that other issues discussed at the FATF consultative forum included AML/CFT concerns related to virtual currencies like bitcoin and how best to leverage financial innovations that promote financial inclusion while maintaining a safe and sound AML/CFT compliance program.