The Basel Committee on Banking Supervision today issued the updated version of its guidelines on Sound management of risks related to money laundering and financing of terrorism, with guides on the interaction and cooperation between prudential and anti-money laundering and combatting the financing of terrorism (AML/CFT) supervisors.
The revisions set out principles and recommendations for information exchange and cooperation in relation to: (i) internal procedures or a bank/credit union; (ii) ongoing supervision; and (iii) enforcement actions. Also, possible mechanisms to facilitate such cooperation in the jurisdictional and international context are provided. The guidelines are consistent and complimentary to those standards issued by the Financial Action Task Force (FATF).
WOCCU commented on this proposal in early 2020 urging reinforcement of the principles of proportionality and risk-based approaches to AML/CFT noting that regulatory burdens often fall disproportionately on credit unions often preventing access to responsible and affordable credit to underserved communities.
The issuance by the Basel Committee includes specifically with respect to AML/CFT burdens should be "proportional and risk-based, informed by banks’ own risk assessment of ML/FT risks." Further, with respect to Member/Customer Due diligence the guidance notes that "It is important that the customer acceptance policy is not so restrictive that it results in a denial of access by the general public to banking services, especially for people who are financially or socially disadvantaged."
WOCCU welcomes this guidance which should provide direction to national-level regulators to properly tailor AML/CFT requirements for credit unions which will in turn promote financial inclusion.
A copy of the newly issued guidance can be viewed here.