Compliance: New BSA rule affects non-federally insured CUs

September 21, 2020

The Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule last week amending Bank Secrecy Act/Anti-Money Laundering regulations for non-federally insured credit unions. The rule is effective Nov. 16 of this year and has a compliance date of March 15, 2021.

While non-federally insured credit unions had been exempt from the AML program requirements, they have been subject to BSA reporting requirements, the Customer Identification Program and Beneficial Ownership rules. In addition, state regulators generally require BSA policies, management oversight, personnel training and internal compliance reviews.

The final rule details the AML program requirements specific to financial institutions that “lack a federal functional regulator,” which are to:

  • Establish and implement an AML program that meets specific minimum standards;
  • Obtain approval of their AML program by their board of directors; and
  • Make the AML program available to FinCEN, upon request.

Minimum requirements non-federally insured credit unions must include in their AML compliance program include:

  • A system of internal controls to assure ongoing compliance;
  • Independent testing for compliance;
  • Designation of an individual or individuals responsible for coordinating and monitoring day-to-day compliance;
  • Training for appropriate personnel; and
  • Appropriate risk-based procedures for conducting ongoing member due diligence, to include, but not be limited to:
    • Understanding the nature and purpose of member relationships for the purpose of developing a member risk profile; and
    • Conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update member information. Member information must include information regarding the beneficial owners of legal entity accounts.

Additional analysis on the rule can be found on CUNA’s CompBlog.