What Credit Unions Face

In today’s regulatory environment, many financial rules are set at the international level.

National regulators often have limited discretion to deviate from international standards once they are finalized. Much of this framework is designed to address the needs of large and internationally active banks, and is not intended for smaller institutions such as credit unions. The framework often does not contemplate the not-for-profit cooperative structure. 

This is important because the incentives of each institution are quite different. Credit unions are inherently less risky and do not need the sophistication of regulation that the large banks require.

Therefore, many of the regulations adopted for large banks are not appropriate or necessary for smaller, domestic credit unions.

What We Do

World Council of Credit Unions is the only trade association advocating on behalf of credit unions in front of key international standard setting bodies, including the: 

• Basel Committee on Banking Supervision (Basel Committee);
• Financial Action Task Force (FATF) oversees AML/CFT regulations;
• International Accounting Standards Board (IASB);
• Financial Stability Board (FSB); and
• International Association of Deposit Insurers (IADI).

World Council's International Advocacy work has succeeded in reducing regulatory burdens for credit unions in the areas of prudential regulation, anti-money laundering, taxation and accounting standards.

A Record of Success

Our recent policy successes include:

• Achieving increased Basel III regulatory capital flexibility for cooperative financial institutions from the Basel Committee.
• Obtaining clearer guidance on correspondent banking anti-money laundering requirements from the Financial Action Task Force.
• Exempting non-internationally active financial institutions from the Basel Committee’s Interest Rate Risk, External Auditing, and Total Loss Absorbing Capacity rules, among others.
• Removing unfounded criticisms of co-operative governance from Basel Committee standards.
• Attaining a “practical expedient” from the International Accounting Standards Board that limits the regulatory burdens of International Financial Reporting Standard 9 (IFRS 9) on smaller financial cooperatives.
• Reducing the Basel III reserves required to hold term deposits made by financial cooperatives in other financial institutions, so that financial cooperatives can achieve better yields on their term deposit investments.
• Carving out community-based financial cooperatives from the Foreign Account Tax Compliance Act (FATCA).
• Gaining new exemptions from Basel III for credit unions in the European Union.