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WOCCU Comments on New Global PEPs and Payments AML Standards
Tuesday, April 30, 2013 4:40 AM

The World Council of Credit Unions last week made recommendations to the Financial Action Task Force (FATF) on how to limit regulatory burdens on credit unions in the FATF's forthcoming guidance papers on anti-money laundering (AML) standards for politically exposed persons (PEPs) and new payment products and services (NPPS). Michael Edwards, World Council vice-president and chief counsel, and Sabrina Kellenberger, Credit Union Central of Canada senior manager of regulatory policy, represented credit unions at the FATF private sector consultative forum, which was held at HSBC's London headquarters on Canary Wharf.  

In February 2012, the FATF issued a revised set of International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, better known as "40 Recommendations," which expanded the definition of PEPs to include domestic and international organizations and provided new risk-based NPPS standards. In February 2013, FATF issued a detailed guidance paper on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, which is similar in scope to its upcoming NPPS and PEPs guidance papers.  

On Monday, the World Council followed up the comments made at the London consultative forum with a written comment letter to the FATF regarding its draft NPPS guidance paper. The comment letter supported the FATF's approach in general but urged several technical changes to the NPPS guidance in order to help credit unions continue to promote financial inclusion of the unbanked using NPPS such as prepaid debit cards, mobile payments, workers' remittances and Internet-based payments. The FATF may release the NPPS guidance as early as this summer. Credit union AML compliance procedures regarding NPPS will need to adjust to the new standards once national regulators issue rules to implement the international guidance.  

The forthcoming FATF guidance paper on PEPs will provide a framework for expanding the international AML definition of PEPs to include domestic and international organization PEPs. The PEPs guidance paper may be released by the end of 2013. When national authorities issue rules to implement the expanded PEPs definition, credit unions will likely need to assess whether new and existing credit union members include high-ranking national, provincial or local politicians and civil servants or high-ranking officials at international organizations such as the United Nations, World Bank and International Monetary Fund.  

"World Council's advocacy efforts help credit unions and their members all over the world," said Brian Branch, World Council president and CEO, "since through our work, international financial regulatory standards have already been subject to consultation with the credit union movement by the time they trickle down to the national level."