WASHINGTON (1/15/13)--More detailed guidance from the Financial Action Task Force would help reduce confusion regarding when risk-based policies and procedures for anti-money laundering and countering the financing of terrorism are appropriate, and better ensure consistency in application of the Risk-Based Approach (RBA) to anti-money laundering compliance from jurisdiction to jurisdiction, the World Council of Credit Unions wrote this week.
The WOCCU letter is a response to FATF consultative document, RBA Questions for the Private Sector on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).
Michael Edwards, World Council vice-president and chief counsel, said the FATF should revise its RBA high level principles guidance paper, which was released in 2007.
Many credit unions have reported that the risk-assessment process can be subjective and that individual credit union examiners may not have a consistent view of the level of risk presented by a particular service or type of business, Edwards said. He also aid many small and mid-sized credit unions would welcome additional guidance on the likely risks of many common credit union and banking activities, up to and including standardized risk-assessments for particular products and services. "Detailed guidance on specific ML/TF risks would help credit union managers and examiners conduct risk-assessments and better understand the RBA on a practical level," he noted.
However, Edwards also encouraged FATF to limit regulatory burden in general, and said that the introduction of new technologies does not necessarily mean that significant changes to existing AML/CFT compliance rules are needed.
"Many situations involving new technologies are analogous to longstanding credit union products or customer profiles--e.g., reloadable pre-paid debit cards are in many ways similar to a current account or checking account at a credit union, virtual currency companies are often similar to other types of money services businesses," he wrote. New risks can often be addressed using preexisting AML/CFT compliance solutions such as robust customer due diligence or enhanced monitoring of account activity, Edwards said.
For the full World Council letter, use the resource link.