World Council Urges AML/CFT Reg Burden Relief
Volume 6, Number 4
August 8, 2017
World Council Urges AML/CFT Reg Burden Relief
World Council of Credit Unions on July 31st urged the Financial Action Task Force to reduce anti-money laundering/countering the financing of terrorism (AML/CFT) compliance burdens in our comment letter on the FATF’s Draft Guidance for Private Sector Information Sharing. The Task Force, which is based at the headquarters of the Organization for Economic Co-operation and Development in Paris, France, is the international standard setting body for AML/CFT rules.
We argued that the Task Force should focus on reducing paperwork burdens on cooperative financial institutions as well as establish safe harbors, eliminate legal barriers to information sharing between unaffiliated financial institutions, and increase opportunities for compliance efficiencies. “Information sharing can play a vital role in allowing financial institutions, supervisors and law enforcement to combat money laundering, but regulators need to focus on finding efficiencies and reducing costs on credit unions” said Andrew Price, regulatory counsel for World Council.
Our comments also urged the Task Force to incorporate its “Request for Information” framework established by its recent guidance on Correspondent Banking Services into its information sharing rules. Referencing the “Request for Information” framework will help credit unions more easily establish and maintain correspondent bank accounts by reducing the perceived compliance, examination and enforcement risks associated with correspondent banking activities.
New Guidance Strives to Make Reg Burdens More “Proportional”
Reduced compliance burdens for community-based financial institution are closer to reality with new guidance on “proportional” regulation from the Bank for International Settlements. The Financial Stability Institute, the arm of Bank for International Settlements that promotes regulatory consistency across jurisdictions, on August 3rd issued new guidance clarifying when supervisors are allowed to deviate from international financial rules in order to reduce burdens on community-based financial institutions.
The guidance shows the range of approaches used to achieve “proportional” regulation in Brazil, the European Union, Hong Kong, Japan, Switzerland and the USA. “National-level supervisors are supposed to apply international financial regulatory standards ‘proportionally’ to smaller, less complex institutions like credit unions, but it was not always clear what ‘proportional’ meant in practice” said Michael Edwards, vice president and general counsel of World Council. “This new guidance provides national-level regulators with examples of compliance burden reduction ‘proportionality’ in six G20 economies that supervisors have discretion to adopt in any jurisdiction.” Concurrently, the Financial Stability Institute also issued new guidance on cyber-risk.
Michael S. Edwards
VP & General Counsel
World Council of Credit Unions (WOCCU)
601 Pennsylvania Ave., NW, Washington, DC 20004-2601 USA
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