FinCEN to require non-federally insured CUs to meet new BSA/AML requirements

In a final rule effective Nov. 16, the Financial Crimes Enforcement Network (FinCEN) will require financial institutions that lack a functional federal regulator to meet new anti-money laundering (AML) requirements very similar to those that apply to other federally regulated institutions. This final rule mandates a compliance date of March 15, 2021.

Under the new rules, these credit unions must:

• Establish and implement an AML program that meets specific minimum standards;
• Obtain approval of their AML program by their board of directors; and
• Make the AML program available to FinCEN, upon request.

AML programs must include, at a minimum:

• A system of internal controls to ensure ongoing compliance;
• Independent testing for compliance to be conducted by credit union personnel or by an outside party;
• Designation of an individual or individuals responsible for coordinating and monitoring day-to-day compliance;
• Training for appropriate personnel; and
• Appropriate risk-based procedures for conducting ongoing member due diligence, to include:
  • Understanding the nature and purpose of member relationships to develop a member risk profile; and
  • Conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update member information. Member information must include information regarding the beneficial owners of legal entity accounts.

Non-federally insured credit unions, which insure deposits through a private insurer, are not backed by the National Credit Union Share Insurance Fund (NCUSIF) but offer similar guarantees to members on deposited funds. Private insurance can offer some flexibility, up to and including terms that offer more than NCUSIF’s limit of $250,000 per account, and the benefit of less regulation from federal entities.

Private share insurance is available to state-chartered credit unions in a small list of states, which includes Texas.

View FinCEN’s final rule in the Federal Register.

Thanks to CUNA’s CompBlog for the summary of changes. Read the original post.