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World Council Participates in Financial Action Task Force (FATF) Consultative Forum in Paris - April 13, 2012

Number 2
April 13, 2012

The World Council participated in a “consultative forum” held by the Financial Action Task Force (FATF), the international standard setting body for international anti-money laundering (AML) and anti-terrorist financial rules, at the headquarters of the Organization for Economic Co-operation and Development in Paris, France on April 3-4th.

The FATF held this public consultation in order to gauge industry response to its revised international AML “40 Recommendations” that the organization issued in February 2012. More information about the FATF as well as a copy of the revised AML “40 Recommendations” can be accessed at this link: http://www.woccu.org/policyadvocacy/standardsetters

Chief Counsel and VP for Advocacy and Government Affairs Michael Edwards and Credit Union Central of Canada President and CEO David Phillips represented the World Council at the FATF consultative forum.

The World Council representatives voiced strong support for the option under the revised “40 Recommendations” for “Simplified Customer Due Diligence (CCD) measures.” Under interpretive note 21 (“Simplified CCD measures”) to new Recommendation 10 (“Customer Due Diligence”), AML regulators at the national level have the option to allow simplified CCD measures for low-risk customers. Examples of simplified CCD measures listed in the document include:

  • “Verifying the identity of the customer and the beneficial owner after the establishment of the business relationship (e.g. if account transactions rise above a defined monetary threshold).”
  • “Reducing the frequency of customer identification updates.”
  • “Reducing the degree of on-going monitoring and scrutinising transactions, based on a reasonable monetary threshold.”
  • “Not collecting specific information or carrying out specific measures to understand the purpose and intended nature of the business relationship, but inferring the purpose and nature from the type of transactions or business relationship established. “

World Council asked the FATF representatives to consider issuing additional guidance regarding “simplified CCD measures,” especially because credit unions are only permitted do business with their members and credit union members generally have lower AML risk profiles than other types of financial institutions’ customers (e.g., credit union members must come from within the credit union’s common bond, and credit union members are usually natural, physical persons rather than legal persons such as corporations).

In response to the World Council’s comments and request for further guidance, FATF Co-Chairman Richard Chalmers responded that – although simplified CCD measures could not be applied on an institution-wide basis – he recognized the generally lower-risk profile of credit union members for AML purposes and said that the FATF would likely issue additional guidance on this issue in the future.

For more information about the World Council’s participation in the FATF consultative forum, follow this link: http://www.woccu.org/newsroom/releases/World_Council_Supports_Revisions_to_Global_Anti-money_Laundering_Regulations

World Council’s “Summary and Request for Comment” on the U.S. IRS’s FATCA Proposed Tax Regulation

On February 8, 2012 the Internal Revenue Service (IRS), the United States tax authority that is a U.S. Treasury Department bureau, proposed a regulation that will affect non-U.S. credit unions as well as U.S. credit unions. The IRS proposed rule would implement the Foreign Account Tax Compliance Act (FATCA) which the U.S. Congress enacted in March 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. Congress enacted FATCA in order to make it harder for U.S. taxpayers to avoid U.S. income taxation by placing funds in overseas accounts. The proposed rule is 388 pages long in 12 point type.

The World Council has created a comprehensive “Summary and Request for Comment” in order to provide our members with detailed information about the proposed regulation and to help facilitate feedback for the World Council’s comment letter to the IRS. You can access a copy of the World Council’s 30 page Summary and Request for Comment (as well as the World Council’s 7 page “short summary” of the FATCA proposal issued February 15th) at this URL: http://www.woccu.org/policyadvocacy/srcs

The IRS comment deadline is April 30, 2012. Please provide the World Council with your comments by Thursday, April 26th (if not sooner) so that we can use your input to help form our comment letter on this very important issue. Please submit your comments to Chief Counsel and VP for Advocacy and Government Affairs Michael Edwards at medwards@woccu.org. Please also feel free to contact Michael if you have questions about this proposal.

Michael S. Edwards
Chief Counsel and VP for Advocacy & Government Affairs
World Council of Credit Unions (WOCCU)
+1-202-508-6755 (office) | medwards@woccu.org | www.woccu.org
+1-215-668-5240 (mobile)


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