Final Rule: AML Requirements for Privately Insured CUs

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The Financial Crimes Enforcement Network (FinCEN) issued a final rule last week which establishes minimum standards for anti-money laundering (AML) programs for privately insured credit unions.

Although privately insured credit unions have been exempt from FinCEN’s requirement to “establish an anti-money laundering program,” they have been subject to Bank Secrecy Act (BSA) reporting requirements, the Customer Identification Program, and the Beneficial Ownership Rules. State credit union regulators generally require BSA policies, management oversight, personnel training and internal compliance reviews. Consequently, FinCEN’s new regulation for privately insured credit unions most likely will require very few changes to privately insured credit unions’ existing BSA/AML programs.

The final rule details the AML program requirements specific to financial institutions that “lack a federal functional regulator” (e.g. state-chartered credit unions and privately insured), which are to:

  • Establish and implement an AML program that meets specific minimum standards.
  • Obtain approval of their AML program by their board of directors.
  • Make the AML program available to FinCEN upon request.

Minimum requirements privately insured credit unions must include in their AML compliance program include:

  • A system of internal controls to assure ongoing compliance.
  • Independent testing for compliance.
  • Designation of an individual or individuals responsible for coordinating and monitoring day-to-day compliance.
  • Training for appropriate personnel.
  • Appropriate risk-based procedures for conducting ongoing member due diligence — to include, but not be limited to: 1) Understanding the nature and purpose of member relationships for the purpose of developing a member risk profile; and 2) Conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update member information. Member information must include information regarding the beneficial owners of legal entity accounts.

The final rule is effective Nov. 16 of this year and has a compliance date of March 15, 2021.

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