Disproportionate Compliance Burdens Mean Less Focus on Members, CUNA Tells Senate Banking Leadership

Credit unions take Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance seriously, but when resources are disproportionately spent on compliance, fewer safe and affordable products are available, CUNA wrote to Senate Banking Leadership Tuesday. The committee conducted a hearing Tuesday on combating illicit financing and the Treasury’s Financial Crimes Enforcement Network (FinCEN) customer due diligence (CDD) rule.

“While implementation of the changes necessary to comply with the CDD Rule were challenging, the two-year implementation period as well as several exemptions included in the final CDD Rule have provided some relief for credit unions on an on-going basis. We urge this Committee to continue to encourage FinCEN to work with the industry on compliance issues as they arise. Doing so will continue to allow the financial industry to meet the compliance requirements of the rule while at the same time aiding FinCEN in achieving the objectives of the rule, including in the area of anonymous shell companies.”

CUNA also notes that while is supports efforts to track money laundering and terrorist financing, it is important to strike the right balance between costs to credit unions and benefits to law enforcement.

“The reality is the cost of technology for monitoring and ensuring compliance with BSA/AML laws and regulations is disproportionately burdensome on smaller and less complex institutions, such as credit unions. Often, credit unions choose not to serve certain markets because of the complexities of compliance,” the letter reads. “Money Service Businesses are a prime example of where many credit unions have difficulty providing needed services because of the BSA and AML ongoing due diligence requirements associated with serving these businesses.

“Nevertheless, our government can ease the compliance burden for smaller or less complex financial institutions, such as credit unions, while maintaining the protections needed,” it adds.

CUNA supports changes to:

  • Minimize the duplication of the same or similar information;
  • Provide additional flexibility based on the reporting institution type or level of transactions;
  • Curtail the continually enhanced CDD requirements;
  • Increase the threshold requiring Currency Transaction Reports (CTRs);
  • Reduce and simplify the reporting requirements of Suspicious Activity Reports (SARs) that have limited usefulness to law enforcement; and
  • Allow for greater regulatory and examination consistency among regulators, including NCUA and state credit union regulators, in order to help with interpretations of BSA requirements and guidance and to minimize regulatory overlap.