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World Council Suggests Basel AML Guidance Changes
WASHINGTON (9/30/13)--The World Council of Credit Unions on Friday urged the Basel Committee on Banking Supervision to clarify elements of its draft guidance on Anti-Money Laundering (AML) and Terrorist Financing to help limit regulatory burdens on credit unions, including with respect to financial inclusion and compliance software.

"The Basel proposal is relevant to U.S. credit unions because the Basel Committee's anti-money laundering rules are one of the international standards that influence U.S. credit unions' Bank Secrecy Act compliance requirements," World Council Chief Counsel Michael Edwards wrote.

The World Council's comment supported the Basel Committee's proposed "risk-based approach," which would allow credit unions to focus their AML compliance resources on the members and business activities that present the highest risk for money laundering or terrorist financing and depart from past "check-the-box" style AML compliance approaches.

World Council also asked for other changes to the proposal to help reduce regulatory burdens on credit unions, such as asking that the Basel Committee clarify that it is not mandatory for credit unions to use expensive vendor-created compliance software and lists, such as lists of Politically Exposed Persons (PEPs), when the cost of such systems outweighs the potential benefits based on the credit union's field of membership and AML risk profile.

The proposed Basel Committee guidance document would revise guidelines for combatting money laundering and financing of terrorism in several areas, including:
  • Essential requirements for a comprehensive anti-money laundering and combating the financing of terrorism (AML/CFT) program;
  • Risk assessments;
  • Customer Due Diligence (CDD) requirements;
  • CDD performed by third parties; and
  • Ongoing monitoring and reporting of suspicious activities and transactions.
Specifically, the World Council asked the Basel Committee to:
  • Make clear that financial inclusion of the "unbanked" remains important even when most members of the "general public" in a jurisdiction are not "financially or socially disadvantaged"; and
  • Clarify that it is not mandatory for credit unions to use expensive vendor-created compliance software and lists, such as PEPs lists and AML monitoring software, when the cost of such systems outweigh the potential benefits based on the institution's complexity and AML/CFT risk assessments.
For the full World Council comment letter, use the resource link.
Other Resources

World Council Letter
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