World Council applauds coming AML 'de-risking' MSBs guidance

April 1, 2015
BRUSSELS (4/2/15)--The World Council of Credit Unions applauded the Financial Action Task Force's (FATF) efforts to address financial institution customer "de-risking" during a forum held in Brussels last week.

The FATF is a Paris-based organization that writes standards at the global level for anti-money laundering and countering the financing of terrorism (AML/CFT).

Most AML/CFT rules and guidance for credit unions and banks issued by the U.S. Treasury's Financial Crimes Enforcement Network under the Bank Secrecy Act are based on FATF standards.

De-risking involves financial institutions making the decision not to serve customers that present higher AML/CFT risks, including money services businesses (MSBs) or other financial businesses, usually as a result of the institution's concerns about compliance risks or because of perceived pressure from regulators.

De-risking can affect credit unions by making it harder for them to open and maintain bank accounts and also can impact credit unions that would like to have MSBs and similar companies as members.

The FATF is likely to issue guidance within the next year on financial institutions' responsibilities when it comes to MSBs and is also considering issuing guidance on member de-risking in the banking sector in general.

"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," said Brian Branch, president/CEO of the World Council.

"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," he said.

The World Council made oral comments at the forum urging the FATF to issue guidance discouraging "unreasonable" de-risking. The FATF incorporated similar comments made by World Council  in an April 2014 comment letter into the FATF's paper, "Guidance for a Risk-based Approach to the Banking Sector," which was issued in October 2014.

Last week's FATF forum also included consultations on AML/CFT concerns related to virtual currencies and how to best leverage innovations that promote financial inclusion while maintaining a safe and sound AML/CFT compliance program.