World Council Submits Comment Letter regarding FATF’s Guidance on Recommendation 25

World Council recently submitted a letter to the Financial Action Task Force (FATF) with comments regarding its Risk-Based Guidance on Beneficial Ownership (Recommendation 25). Recommendation 25 is additional guidance to help prevent the misuse of legal arrangements for money laundering or terrorist financing.

World Council expressed its support for strong anti-money laundering practices and the additional guidance to aid national-level implementation related to beneficial owners of certain accounts. However, World Council urged FATF to include stronger language ensuring individual countries create and maintain reliable registries for credit unions and other financial institutions to readily identify beneficial owners. World Council provided additional information regarding credit unions and the nature of their services. World Council's letter also requests clearer guidance to more specifically direct individual jurisdictions to take a proportional risk-based approach to establishing implementation requirements, specifically for credit unions.

Click here to read the full letter submitted by World Council.


FATF Issues Targeted Update on Implementation of FATF Standards on Virtual Assets

The Financial Action Task Force has issued its Targeted Update on the Implementation of FATF Standards on Virtual assets calling for all countries to rapidly implement measures on virtual assets (VA) and virtual asset service providers (VASPs).

In 2019, FATF extended its anti-money laundering and counter-terrorist financing (AML/CFT) measures to VA and VASPs to prevent criminal and terrorist misuse of the sector. Since then, FATF has produced three reviews on implementation of its standards on VAs and VASPs. This report provides an update on country compliance with FATF’s Recommendation 15 and its Interpretative Note (R.15/INR.15), including the Travel Rule, and updates on emerging risks and market developments, including on Decentralized Finance (DeFi), Peer-to-Peer transactions (P2P), and Non-Fungible Tokens (NFTs), unhosted wallets, and stablecoins.

FATF's report finds that jurisdictions continue to struggle with fundamental requirements such as undertaking a risk assessment, enacting legislation to regulate VASPs, and conducting a supervisory inspection. Based on 98 FATF mutual evaluation and follow-up reports since the revised R.15/INR.15 was adopted, 75% of jurisdictions are only partially or not compliant with the FATF’s requirements. In addition, jurisdictions have made insufficient progress on implementing the Travel Rule, which is a key AML/CFT measure. Of the 151 jurisdictions that responded to FATF’s 2023 Survey, more than half still have not taken any steps towards implementing the Travel Rule. This is a serious concern as the risks posed by VAs and VASPs continue to increase and that the lack of regulation creates significant loopholes for criminals to exploit. This demonstrates an urgent need for jurisdictions to accelerate implementation and enforcement of R.15/INR.15 to mitigate criminal and terrorist misuse of VA and VASPs.

FATF’s report acknowledges collaboration among the private sector members to improve industry compliance with R.15/INR.15 including the Travel Rule and highlights that all players need to have appropriate risk identification and mitigation measures and continue to work towards fully compliant Travel Rule compliance tools.

While DeFi and unhosted wallets including P2P do not account for a large share of transactions, they are at risk of misuse, including by sanctioned actors. The FATF will therefore continue to monitor the illicit financing risks and developments in this sector.

The FATF calls on all countries to rapidly implement the FATF’s Standards on VAs and VASPs, including the FATF’s Travel Rule. In February 2023, the FATF adopted a roadmap to improve implementation of R.15. In line with this roadmap and to address the findings of this report, the FATF will:

  •  Continue to conduct outreach and provide assistance to low-capacity jurisdictions
  • Identify and publish steps FATF member jurisdictions and other jurisdictions with materially important VASP activities have taken towards implementing R.15/INR.15
  • Facilitate sharing of finding, experiences, and challenges including relating to DeFi, unhosted wallets, and P2P and monitor market trends in this area for material developments that may necessitate further FATF work
  • Continue to engage with member countries and the private sector on progress and challenges
  • Conduct a further review on progress and remaining challenges for implementation by June 2024

 A copy of the report can be viewed here.


FATF Finalizes Guidance On Beneficial Ownership of Legal Persons

The Financial Action Task Force finalized its guidance to provide tougher global beneficial ownership standards in its Recommendation 24 by requiring countries to ensure that competent authorities have access to adequate, accurate and up-to-date information on the true owners of companies. This guidance will help implement the revised Recommendation 24.  If implemented properly by national-level authorities, it will provide efficient and rapid access to the information for use by financial institutions including credit unions to help with their AML/CFT responsibilities with respect to legal entities. 

WOCCU advocated for this approach which should help ease regulatory burdens associated with opening accounts and doing business with legal entities.  The guidance will help countries identify, design and implement appropriate measures in line with the revised Recommendation 24 to ensure that beneficial ownership information is held by a public authority or body functioning as a beneficial ownership registry, or an alternative mechanism is readily available for use by credit unions.  Further,  the Standard will help prevent the organised criminal gangs, the corrupt and sanctions evaders from using anonymous shell companies and other businesses to hide their dirty money and illicit activities.

A copy of the finalized standard can be viewed here.


WOCCU Applauds FATF Strengthening of Beneficial Ownership Standards

The Financial Action Task Force made amendments to FATF Recommendation 24 and its Interpretive Note to strengthen the international standards on beneficial ownership of legal persons to ensure greater transparency about the ultimate ownership and control of legal persons.  This not only will mitigate the risks of their misuse, but will require Countries to have a public authority or body function as a beneficial ownership registry (or alternative mechanism) that can provide efficient access to adequate, accurate and up-to-date beneficial ownership information by competent authorities.

If implemented properly, these changes have the potential to reduce the regulatory burden for credit unions at account opening when performing due diligence for purposes of their AML/CFT requirements.  Obtaining beneficial ownership information often present numerous challenges for credit unions and at times can prevent access to legitimate financial transactions or services.

Further, the rules will address the significant misuses of legal persons for money laundering, terrorist financing, and also for proliferation financing in many jurisdictions. 

WOCCU has consistently called for such a database to be maintained by national authorities that credit unions can rely on when performing their AML/CFT obligations. 

A copy of the release by FATF can be viewed here.


International Advocacy at World Council Releases 2022 Global Regulatory Update

This week the International Advocacy team at the World Council of Credit Unions (World Council) released the 2022 Global Regulatory Update. The update highlighted the leading regulatory issues currently affecting credit unions including sustainable finance, proportionality, financial inclusion, anti-money laundering and countering the financing of terrorism (AML/CFT), payments and digitization. With sustainable finance as the feature of the report, it was noted that we should look forward to regulations that will encourage investments in environmentally responsible products as well as related regulations that govern procedure, including disclosures and reporting requirements.

The updated further underlined other key regulatory factors, including:

  • Proportionality and financial inclusion: G20 and international regulators are beginning to home in on the value of proportionate standards, understanding that reduced regulatory burden will ultimately help to address concerns related to financial inclusion.
  • AML/CFT: AML/CFT regulations continue to place regulatory and compliance burdens on credit unions; however, inter-governmental bodies such as the Financial Action Task Force (FATF) are in line with objectives to alleviate these burdens in order to support financial inclusion by providing a risk-based and proportionate approach to regulation.
  • Payments: Payment reforms are a double-edged sword bringing both disruption and opportunities to credit unions.
  • Digitalization: Evolving regulations surrounding digitization will most likely affect credit unions down the line. As credit unions become more technologically advanced, regulations may prove to be overburdensome; and eventually, credit unions that have not advanced in the digital arena may still find themselves subject to digitization requirements. In the course of time, credit unions will presumably need to jump on the digital bandwagon.

The entire 2022 Global Regulatory Update is available here; and episode 9 of the Global Credit Union Podcast featuring its authors, World Council's Senior Vice President of International Advocacy and General Counsel, Andrew Price, and Assistant General Counsel of International Advocacy, Panya Monford , is available here.


FATF Acknowledges Burden of AML/CFT Requirements on the Advancement of Financial Inclusion

The Financial Action Task Force released their, “Cross-Border Payments Survey Results on Implementation of the FATF Standards”, in response to survey created to identify conflicts between AML/CFT rules and implementation, and cross-border payments. According to FATF, “The survey results highlight, among others, that lack of risk-based approach and inconsistent implementation of the AML/CFT requirements increases cost, reduces speed, limits access and reduces transparency.” 

WOCCU commented on to this survey, and to our avail, the FATF report included our assertion that AML/CFT requirements often are not tailored to smaller credit unions and are prohibitive of allowing credit unions into the payments systems. They recognized that “…some jurisdictions restrict the type of customer or product that can be considered lower risk, and whether SDD can be applied, without consideration of ML/TF risks posed in individual situations…”

FATF further acknowledged our concerns that AML/CFT requirements present many problems for credit unions in the payments space including CDD/Member Due Diligence requirements, verifying the identity of beneficial owners, receiving, and sharing customer and transaction information, and the difficulties of having correspondent banking relationships. “CDD requirements, including documentation required should be tailored to the type of client and exercised using a risk-based approach instead of a prescriptive approach. In this scenario, the costs remain disproportionately high to the level of risk posed by, for example, low value transactions (and customers) in certain regions. It can also exclude access for those without the ability to provide certain documents or information, usually the ones at most need of financial inclusion. 

WOCCU will continue to monitor improvements to AML/CFT and cross-border reconciliations.


FATF Identifies Lack of Proportionality as Barrier to Financial Inclusion

The Financial Action Task Force (FATF) published its High-Level Synopsis of the Stocktake of the Unintended Consequences of the FATF Standards.  WOCCU commented on this consultation urging focus on the link between proportionality and financial inclusion and further commenting on the issue of De-Risking as they relate to national-level implementation of AML/CFT requirements which are often costly and burdensome for smaller community-based financial institutions such as credit unions.

In their synopsis and recommendations, FATF included the following language:

In general, the misapplication of the FATF Standards, and in particular the failure to use the proportionality that is central to the risk-based approach, can lead to or compound financial exclusion.

WOCCU applauds the acknowledgment and focus on proportionality as it relates to AML/CFT requirements.  WOCCU noted in its comment letter a failure by national-level regulators to apply a risk-based and proportional approach to regulation, especially when given instruction to do so, threatens the ability of financial institutions such as credit unions who provide necessary services to underserved communities.

FATF noted in its synopsis that the failure to properly apply the FATF Standards, and in particular, the failure to use the proportionality that is central to the risk-based approach can lead to financial inclusion. For example, the risk-based tools within the Standards (such as exemptions and simplifications) are underutilised by the countries needing them the most to expand financial inclusion. Secondly, the FATF’s Standards, evaluation and other activities do not adequately encourage authorities, the private sector and assessment teams to understand the impact of financial exclusion on ML/TF risks. 

FATF also noted the problem of De-risking which is “the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid, rather than manage, risk in line with the FATF’s risk-based approach.”  De-risking can result in increased costs of payments and concentration for correspondent banking and remittance services and prevent credit unions from having access to affordable and necessary financial services.

FATF reiterated its commitment to continue to work on what more can be done to mitigate these unintended consequences.  This may entail additional guidance, best practices, training, and possible revisions to the FATF’s Methodology, Procedures and Standards, as well as continuing engagement on the FATF’s work with key external stakeholders.

A copy of the Synopsis can be viewed here.


FATF Releases Report on Opportunities and Challenges of New Technologies for AML/CFT

The Financial Action Task Force (FATF) released a report entitled, Opportunities and Challenges of New Technologies for AML/CFT, identifying emerging and available technology-based solutions. The purpose of the report, “highlights the necessary conditions, policies and practices that need to be in place to successfully use these technologies to improve the efficiency and effectiveness of AML/CFT”, as well as roadblocks to implementation of new technology including “innovative skills, methods, and processes that are used to achieve goals relating to the effective implementation of AMLCFT requirements or innovative ways to use established technology-based processes to comply with AML/CFT obligation.” World Council applauds FATF’s incorporation of financial inclusion into the report, and their acknowledgment that financial inclusion can mitigate AML/CFT risks.

“FATF has reiterated its commitment to the proportionate risk-based adoption of its Standards with a view to protecting the most vulnerable and supporting the reach of AML/CFT safeguards. Its publication of FATF Guidance on AML/CFT measures and financial inclusion, with a supplement on customer due diligence sought to raise awareness of the issue as well as “encourage countries to make use of the FATF Recommendations’ flexibility to provide sound financial services to the financially excluded. (Vyjayanti T Desai et al., 2018[7])”

World Council has previously commented on the unintended risks associated with FATF standards such as the effects of overburdensome regulation and its impact on financial inclusion. World Council will continue to advocate for proportional regulation that will foster financial inclusion by providing right-sized regulation for credit unions, which are essential to the financial inclusion of underserved communities.

More information on the Opportunities and Challenges of New Technologies for AML/CFT is available here.


FATF President Supports Financial Inclusion at G20 Central Bank Governors and Finance Ministers Meeting

Financial Action Task Force President, Marcus Pleyer, spoke at the G20 Finance Ministers and Central Bank Governors Meeting on February 26, 2021. The FATF President commended the Italian G20 Presidency on their priorities regarding digitalization, and “people, planet and prosperity”; as well as their objective for “a resilient, inclusive and sustainable recovery”. The FATF President ensured that, “FATF stands ready to help [protect] our economies from illicit funds”, and made a commitment to contribute to financial inclusion, digitalization in financial services, and the G20’s Roadmap for Enhancing Cross-Border Payment.

President Pleyer highlighted three of FATF’s achievements in digitalization and assured that FATF will continue to align these achievements with the G20 Presidency’s objectives. They include:

  • FATF’s guidance on digital ID as an “important resource for ensuring access to essential and secure financial services- especially during the pandemic.”
  • FATF’s “adopted standards on virtual assets and stablecoins as the first international standard setter and the launch of a second review of the global implementation of these standards.” An update to the G20 will be provided during the year.
  • FATF currently analyzing “the opportunities and challenges of digital transformation for anti-money laundering”, with an offer to share insights from their work on data protection, privacy and responsible innovation.

The FATF President also expressed FATF’s commitment “to support the G20 through work on environmental and climate crime, such as illegal deforestation and illegal wildlife trade”; and “ensuring transparency of beneficial ownership is critical for everything from a fair tax system to stopping money laundering.” Notably, FATF’s President implored the G20 to implement FATF standards to combat illicit financial flow.

President Pleyer’s full speech can be found here.


WOCCU Applauds FATF’s Risk-Based/Proportional Approach in Guidance for AML/CFT Supervision

On March 4, 2021, the Financial Action Task Force published its Guidance for Applying a Risk-Based Approach to AML/CFT Supervision. According to FATF, the Guidance helps supervisors address a broad range of risks while using resources to tackle higher risk areas; and notable for World Council is that an objective of the Guidance is to create a risk-based approach that supports financial inclusion by creating a regulatory environment that is “less burdensome on lower risk sectors or activities”. The Guidance further includes proportionality language throughout the document and advises that, “Supervisors should also consider transparency, consistency and proportionality in applying remedial actions or sanctions…”

The guidance is comprised of three parts:

  • “Part 1 – The high-level guidance on risk-based supervision, which explains how supervisors should assess the risks their supervised sectors face and prioritise their activities, in line with the FATF Standards’ risk-based approach.
  • Part 2 – Strategies to address common challenges in risk-based supervision & jurisdictional examples, including examples of strategies for supervising non-financial businesses and professions and virtual asset service providers.
  • Part 3 – Country examples from across the global network, of supervision of the financial sector, virtual asset service providers and other private sector entities.”

World Council commends FATF’s risk-based and proportionate approach to AML/CFT Supervision and looks forward to FATF’s continued efforts to improve financial inclusion.


WOCCU Recommended Proportionality Included in FATF Proliferation Financing Guidance

The Financial Action Task Force adopted amendments to Recommendations 1 and 2 and their Interpretive Notes that require countries and the private sector to identify, and assess the risks of potential breaches, non-implementation or evasion of the targeted financial sanctions related to proliferation financing, as contained in FATF Recommendation 7, and to take action to mitigate these risks, as well as to enhance domestic co-ordination.  

WOCCU commented on these amendments and urged clear direction to national-level regulators to tailor these regulations proportionately for credit unions.

FATF responded by encouraging countries to implement the new requirements in a manner that is consistent with these objectives and apply measures proportionate to the risk of the relevant institutions.

FATF further reiterated its strong support to financial inclusion goals. Ensuring that financially excluded or under-served groups have access to regulated financial or non- financial services without compromising the measures that exist for the purpose of AML/CFT/CPF is a key policy priority.

A copy of the press release and corresponding amendment can be viewed here.


FATF Releases Business Bulletin Updates

The Financial Action Task Force (FATF) released its Business Bulletin for July 2020 highlighting priorities for FATF under the German Presidency for the years 2020-2022 and FATF objectives under the Chinese Presidency. The bulleting also highlighted their Covid-19 webinar on the money laundering risk landscape.

FATF’s priorities for the first two-year Plenary period during German Presidency include:

  • Digital Transformation of anti-money laundering and counter terrorist financing (AML/CFT)
  • Financing of ethnically or racially motivated terrorism
  • Money laundering and migrant smuggling
  • Environmental crime
  • Illicit arms trafficking

FATF outlined the following program objectives planned under the Chinese Presidency regarding money laundering and terrorist financing (ML/TF) risks, including:

  • Virtual Assets and Virtual Asset Service Providers (VASPs), Guidance for a Risk-Based Approach,
    12-Month Review of Revised FATF Standards and FATF Report to the G20 on So-called Stablecoins
  • A landmark paper on the use of Digital I D
  • Best Practices Paper on Beneficial Ownership
  • Strategic Review, agreeing on the future direction and framework for FATF mutual evaluations and follow-up processes
  • Supervisors' Forums to improve the effectiveness of supervision
  • A new e-learning platform for the Global Network membership
  • Report on Money Laundering and the Illegal Wildlife Trade
  • Responses to COVI D-19

FATF Issues Guidance on COVID-19 AML/CFT Risks

The Financial Action Task Force (FATF) issued a paper identifying challenges, best practices, and policy responses to the unprecedented global challenges emerging as a result of the COVID-19 pandemic.  Increased COVID-19 related crimes, including fraud, cybercrime, misdirection or exploitation of government funds or international financial assistance are all creating new avenues of illicit crimes. 

Emerging risks and vulnerabilities are identified in the paper that could result in criminals finding ways to:  

  • Bypass customer due diligence measures;
  • Increase misuse of online financial services and virtual assets to move and conceal illicit funds;
  • Exploit economic stimulus measures and insolvency schemes as a means for natural and legal persons to conceal and launder illicit proceeds;
  • Increase use of the unregulated financial sector, creating additional opportunities for criminals to launder illicit funds;
  • Misuse and misappropriation of domestic and international financial aid and emergency funding;
  • Exploit COVID-19 and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business in developing countries.
FATF also conducted its first webinar on this topic that can be viewed here. A copy of the paper can be viewed here.

WOCCU Urges Proportionality for Credit Unions in FATF Digital Identity Guidance

In a comment letter to the Financial Action Task Force (FATF) regarding their Draft Guidance on Digital Identity, WOCCU urged (FATF) to implement further guidance to national-level regulators to focus on an effective system that avoids imposing overly burdensome requirements and provide some flexibility for the unique structure of credit unions and cooperative financial institutions. WOCCU responded to four questions posed by FATF regarding the role of digital identity in relation to money laundering and terrorist financing, financial inclusion, due diligence and transaction monitoring, and record keeping requirements. WOCCU concurs with FATFs risk-based approach to digital identify for customer due diligence as well as their endeavors to support financial inclusion, however, WOCCU emphasized the need to implement " guidance directing supervisors to consider some high level principles such as whether an institution has cross-border operations, the asset size, the institutions interconnectedness with the financial system, the degree to which they report to multiple prudential supervisors, the mix of business activities, the average level of transactions that occur in any account and that further corresponds to the size, and the complexity and risk of a financial institution."

WOCCU's comment letter to FATF regarding their draft guidance on digital identity can be found here.  

Comment Letter, FATF

Financial Action Task Force Issues Guidance on Best Practices on Beneficial Ownership for Legal Persons

The Financial Action Task Force (FATF) has released its guidance on Best Practices on Beneficial Ownership for Legal Persons. It their executive summary, FATF states that: "The results of FATF Mutual Evaluations indicate that jurisdictions find it challenging to achieve a satisfactory level of transparency regarding the beneficial ownership of legal persons." The guidance seeks to provide solutions to the implementation of FATF Recommendations on AML/CFT.  According to the Guidance, "countries should use one or more of mechanisms (the Registry Approach, the Company Approach and the Existing Information Approach) to ensure that information on the beneficial ownership of a company is obtained by that company and available at a specified location in their country; or can be otherwise determined in a timely manner by a competent authority."   

The guidance also seeks to address the favorable use of a multi-pronged approach to Beneficial Ownership; the keys to an effective system; latest developments and case examples; and suggestions for "ensuring authorities can access getting information on beneficial ownership of overseas entities".

The guidance can be found here.


The Financial Action Task Force Seeks Consultation on Digital Identity

The Financial Action Task Force (FATF) is seeking public consultation on their draft guidance regarding digital identity and its benefit to customer due diligence (CDD). FATF hopes that their guidance will " governments, financial institutions and other relevant entities apply a risk-based approach to the use of digital ID for CDD." In the guidance, FATF explains that the growth of digital financial transactions is an impetus for clarification of what digital identity technologies are currently utilized to identify and verify individuals in digital financial services. Effective authentication of consumer identity is critical for anti-money laundering and counter financing of terrorism (AML/CFT) efforts. 

The areas of focus for the consultation are: 

  • Specific money laundering / terrorist financing risks that arise from the use of digital identity systems for CDD, other than those already mentioned in Section IV of the guidance;
  • The role of digital ID systems in ongoing due diligence or transaction monitoring; 
  • How digital ID systems can support financial inclusion;
  • The use of digital ID systems for CDD and whether it raises distinct issues for implementing FATF record-keeping requirements.
FATF's request for public consultation on digital identity can be found here.

FATF Issues Business Bulletin Noting Several AML/CFT Developments

The November edition of the FATF Business Bulletin provides a brief update on outcomes from the October 2018 FATF plenary meeting.

Of note are the following:

  • Amendments to the FATF Recommendations and Glossary to respond to the increasing use of virtual assets for Money Laundering and Terrorist Financing;
  • The start of a project that will consider the feasibility of expanding the FATF Recommendations applicable to proliferation financing;
  • Future work on Digital Identity to develop guidance for acceptability of digital ID focusing on the reliability and independence features of digital IDs;
  • Developing reports addressing how large internanational financial institutions identify suspicious activity and the other describing the practical considerations in setting up public-private partnerships.

The complete summary of outcomes from the Plenary is available here and the November Business Bulletin can be viewed here.


WOCCU Applauds Efforts to Reduce De-Risking

The Basel Committee on Banking Supervision (Basel Committee), the Committee on Payments and Market Infrastructures (CPMI), the Financial Action Task Force (FATF) and the Financial Stability Board (FSB) announced their endorsement of the Wolfsberg Group’s publication of the Correspondent Banking Due Diligence Questionnaire to help address the decline in the number of correspondent banking relationships. The questionnaire aims to standardize the collection of information that correspondent banks ask from other banks when opening and maintaining these relationships which should alleviate the need for correspondent banks to “de-risk” otherwise viable financial institutions from their customer base.  This “de-risking” has been a source of concern for credit unions and can impact their ability to send and receive international payments or connect to various payment flows. 

WOCCU is pleased to see this development as it has long advocated for measures to reduce de-risking including supporting using the Wolfsberg Group Questionnaire (See letter to the Basel Committee from February 2017).  Additionally, WOCCU engaged with FATF (See July 2017 letter, April 2017 letter, and August 2016 letter) for measures to address the issue.  This endorsement is welcome news and should assist credit unions with their correspondent banking relationships.


Financial Inclusion and Information Sharing among Topics at FATF Meeting

The Financial Action Task Force (FATF) and the Financial Action Task Force of Latin America (GAFILAT) are concluding the first Plenary meeting under the Argentinean FATF Presidency (Nov. 1-3) in Buenos Aires, Argentina. The FATF is the international standard setting body for anti-money laundering/countering the financing of terrorism (AML/CFT) rules.  The purpose of the FATF Plenary meeting is to discuss proposed and final standards for international AML/CFT rules.

Those topics pertinent to credit unions being discussed are as follows:

  • Counter terrorist financing: Discussions on a project that identifies how terrorist organizations fund the recruitment of new members, including reviewing progress in the implementation of the FATF operational plan to tackle all sources, techniques and channels of terrorist financing, including updating the knowledge base on ISIL/Da’ech’ financing strategy;
  • Financial inclusion: Reviewing the results of a project aimed at encouraging countries to implement the FATF Recommendations that will allow financially excluded access to the regulated financial sector, while at the same time maintaining effective safeguards against money laundering and terrorist financing. A proposed supplement to the FATF 2013 guidance on financial inclusion will identify customer due diligence models that are compatible with the goal of making financial services accessible and available to all; and
  • Information sharing: Discussions on the draft guidance for private sector information sharing, which will cover information-sharing at group wide level and between financial institutions not belonging to the same group. Better private sector information sharing will improve transparency and access to beneficial ownership and contribute to detecting financial flows in support of terrorism.
WOCCU engaged the FATF regarding information sharing and financial inclusion AML/CFT issues at a FATF Private Sector Participation Group meeting in March of this year at the UN Office on Drugs and Crime in Vienna, Austria, and also filed written comments with the FATF on these issues in April and July.  We urged the FATF to reduce regulatory burdens on credit unions by clarifying how and when different financial institutions can share information about electronic payments transactions, such as to resolve AML/CFT red flags.  We expect the FATF to issue new guidance on AML/CFT information sharing in the near future.

WOCCU’s recent comments to the FATF include:: 

  • July, 2017, Comments on the FATF Draft Information Sharing Guidance Paper.  View the comment letter here.
  • April, 2017 on Information Sharing, Correspondent Banking and Financial Inclusion-related Customer Due Diligence:  View the comment letter here.
  • March, 2017 at the FATF meeting in Vienna hosted by the UN Office on Drugs and Crime. See the press release here.

World Council Urges AML/CFT Reg Burden Relief

World Council of Credit Unions on July 31st urged the  Financial Action Task Force to reduce anti-money laundering/countering the financing of terrorism (AML/CFT) compliance burdens in our comment letter on the FATF’s Draft Guidance for Private Sector Information Sharing.  The Task Force, which is based at the headquarters of the Organization for Economic Co-operation and Development in Paris, France, is the international standard setting body for AML/CFT rules.

We argued that the Task Force should focus on reducing paperwork burdens on cooperative financial institutions as well as establish safe harbors, eliminate legal barriers to information sharing between unaffiliated financial institutions, and increase opportunities for compliance efficiencies.  “Information sharing can play a vital role in allowing financial institutions, supervisors and law enforcement to combat money laundering, but regulators need to focus on finding efficiencies and reducing costs on credit unions” said Andrew Price, regulatory counsel for World Council.

Our comments also urged the Task Force to incorporate its “Request for Information” framework established by its recent guidance on Correspondent Banking Services into its information sharing rules.  Referencing the “Request for Information” framework will help credit unions more easily establish and maintain correspondent bank accounts by reducing the perceived compliance, examination and enforcement risks associated with correspondent banking activities. 

Comment Letter, FATF