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NAFCU urges FinCEN to engage with FIs on convertible virtual currency proposal, highlights compliance burden
In response to the Financial Crimes Enforcement Network's (FinCEN) notice of proposed rulemaking on the requirements for certain transactions involving convertible virtual currencies (CVCs) or legal tender digital assets (LTDA), NAFCU Monday urged the agency to ensure engagement with financial institutions and stakeholders.
"NAFCU understands the pressing need to obtain the information that would be provided under the proposed recordkeeping and reporting requirements; however, the expedited 15-day comment period is far too short for public stakeholders to provide substantive comments on potential ramifications," argued NAFCU Senior Regulatory Affairs Counsel Kaley Schafer.
Schafer also asked FinCEN to mitigate compliance burdens on financial institutions by "ensuring consistency, as much as possible, with current reporting and recordkeeping requirements and providing a reasonable implementation period given the proposed expansion of BSA/AML compliance requirements."
The proposal comes as a result of the FinCEN Exchange meetings in 2020 and 2019 geared toward cryptocurrency and aims to close anti-money laundering (AML) regulatory gaps for CVC and digital asset transactions. As proposed, the rule would require banks and money services businesses (MSBs) to submit reports of transactions involving CVC and digital assets with legal tender status over $10,000.
In the letter, Schafer noted that credit unions that have hosted wallet accounts will be impacted by this proposal, highlighting that by increasing the level of necessary compliance it could have future implications on a credit union's decision to provide financial services for CVCs/LTDAs.
"Credit unions play an important role in identifying and mitigating risks to our financial system; however, BSA/AML compliance continues to be burdensome," wrote Schafer. "According to NAFCU’s 2020 Federal Reserve Meeting Survey, over 52 percent of respondents expect to increase the number of full-time equivalent staff members devoted to BSA/AML compliance."
Schafer also shared NAFCU's recommendation that FinCEN should provide a reasonable implementation period due to the proposed expansion of the BSA/AML requirements and asked the agency to continue to monitor the trends and impacts of the proposal.
NAFCU recently shared support for defining an overall “effective and reasonably” designed AML program in a letter sent in response to FinCEN’s proposed rulemaking gathering feedback on potential improvements to AML programs.
NAFCU will continue to share credit union feedback and work closely with FinCEN to ensure credit unions are aware of regulatory changes and trends.