Read more at the Washington Credit Union Daily
National Credit Union Administration examiners are too picky in their Anti-Money Laundering/Bank Secrecy Act enforcement and are citing financial institutions for small technical violations, credit union trade groups have told the agency.
“Many of our members have indicated that prudential examiners are too heavily focused on auditing absolute compliance with certain technicalities,” Ann Kossachev, director of regulatory affairs at the National Association of Federally-Insured Credit Unions, said in a letter to the NCUA.
Luke Martone, senior director of advocacy and counsel at the Credit Union National Association, had a similar complaint. “Intentional non-compliance or a pattern of negligence with the essential and substantive requirements should be subject to zero tolerance, but the occasional clerical error, such as failing to check a box on a complex form, should be afforded more leniency,” he said.
He added that an error such as recording a Post Office Box as an address can lead the agency to issue a document showing the credit union is out of compliance with the law.
The two trade group officials outlined their views in letters to the agency as part of the NCUA’s annual regulatory review process. Each year, the NCUA reviews a third of its regulations and solicits public comments on whether they need to be updated. The agency’s money laundering rules are on the list this year.
Martone said that federal law requires credit unions to have an effective process for evaluating whether a Suspicious Activity Report should be filed on a particular transaction. However, he added that the actual decision about whether to file a report on an individual transaction is “inherently subjective” and as long as a credit union follows its policy, it should not be sanctioned for that decision.
Kossachev said that the NCUA should coordinate with FinCEN in order to ensure that sensible regulation and exams are tailored to actual risks.