Newsroom

May 4, 2012 – NAFCU on Thursday urged the Financial Crimes Enforcement Network to withdraw its advance notice of proposed rulemaking establishing a customer due diligence requirement under the Bank Secrecy Act, noting it would greatly increase credit unions' regulatory burden without yielding much benefit.

"While fully appreciating the importance of Bank Secrecy Act (BSA) requirements to national security, NAFCU opposes the ANPR and urges FinCEN to discontinue the rulemaking," wrote Tessema Tefferi, NAFCU's regulatory affairs counsel "Ultimately, the ANPR would impose far too much burden and cost on credit unions while providing very little economic or other benefits."

The ANPR discusses the concept of a customer "due diligence" program that would involve new sets of BSA-related regulatory requirements. Under such a program, credit unions could be required to:

• conduct due diligence and verify the identity of customers when opening accounts;
• understand the purpose and intended nature of the account;
• identify and verify the beneficial owner(s) of all customers pursuant to a risk-based approach; and
• monitor the customer relationship and undertake further due diligence as needed.

"For credit unions, the BSA and implementing regulations already impose significant amount of burden and cost," Tefferi wrote. " Allocating the resources necessary to comply with the already large amount of regulations has cost credit unions and their members an exorbitant amount of funds that could have been used to further member services."

Tefferi said the ANPR also appears to represent "exactly the type of regulation that President Obama sought to address in two executive orders, both issued in 2011, establishing a reasonable, but firm, standards that both executive and independent agencies should meet before issuing regulations."

Tefferi was referring to Executive Orders 13563 and 13579, which specifically direct executive and independent agencies to conduct careful analysis of the likely consequences of regulation, including the cost and benefits.