BRUSSELS, Belgium — The World Council of Credit Unions has expressed its concerns over the phenomenon of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) customer "de-risking" with the Financial Action Task Force (FATF) at an FATF consultative forum held in Brussels late last week.
WOCCU explained that "de-risking" impacts credit unions when they face regulatory pressures to block serving money service businesses (MSBs) or similar enterprises as members, and also when they have trouble maintaining correspondent relationships with banks that are concerned about their customers' AML/CFT risks.
"We applaud the FATF's efforts to address financial institution customer de-risking," said World Council President and CEO Brian Branch in a statement. "Our members have told us that their credit unions often face pressure from examiners not to provide 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."
WOCCU also noted 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.
Further, 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, as the World Council recommended in an April 2014 comment letter.
Other subjects 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.