Compliance: GAO report makes BSA/AML recommendations to NCUA

December 16, 2019

A new report from the Government Accountability Office (GAO) addresses the Bank Secrecy Act (BSA)  and Money Transmitter Accounts. It also includes a recommendation to NCUA on improving examiners’ ability to evaluate Bank Secrecy Act/Anti-money Laundering (BSA/AML) controls.

According to that Treasury’s Financial Crimes Enforcement Network (FinCEN), money transmitters are “any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or (B) [a]ny other person engaged as a business in the transfer of funds.”

Specifically, the GAO recommends, “the Chairman of the National Credit Union Administration should, in coordination with the other federal banking regulators, and with input from BSA/AML examiners and other relevant stakeholders, take steps to improve examiners' ability to evaluate the effectiveness of [credit unions'] BSA/AML compliance controls with respect to money transmitter accounts. Steps may include providing updates to examination procedures, examiner training, or a combination of methods.”

In response, per the report, NCUA said, “even though credit unions may not have participated in de-risking, we stand ready to collaborate with the other federal banking regulators to enhance training and knowledge within the BSA/AML supervisory space as it pertains to money transmitters.”

Examiners interviewed for the study said the FFIEC Examiner’s Manual is unclear as to “how much due diligence is reasonable to expect banks to conduct for their money transmitter customers.”

GAO recommended and the federal banking regulators conduct a retrospective review of BSA regulations and their implementation, with a focus on how banks’ regulatory concerns may affect their decisions to provide services.

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