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.