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WOCCU makes recommendations on FATF AML standards
MADRID  (9/18/12)--The World Council of Credit Unions (WOCCU) last week made recommendations to the Financial Action Task Force (FATF) regarding how to limit regulatory burdens on credit unions in the FATF's forthcoming guidance papers about anti-money laundering (AML) standards.

Click to view larger image The Banco de Espana in Madrid, Spain, hosted a Financial Action Task Force conference on new anti-money laundering standards last week. The World Council of Credit Union presented on behalf of the international credit union movement.
The new standards will expand the international AML definition of politically exposed persons (PEPs) to include domestic and international organization PEPs, said WOCCU. They also will update existing FATF guidance on new payment methods (NPMs).

National AML authorities are expected to issue regulations to implement the new guidance next year. At that time, credit unions will be required to assess whether new and existing credit union members include high-ranking national, provincial or local politicians and civil servants, or high-ranking officials at international organizations such as the United Nations, World Bank and International Monetary Fund.

Credit union AML compliance procedures regarding NPMs, such as prepaid debit cards, mobile payments and remittances will also need to adjust to the new standards.

In February, FATF issued a revised set of its International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, better known as the "40 Recommendations," which expanded the definition of PEPs to include domestic and international organizations.

Before the update, the definition had applied only to foreign PEPs--high-ranking officials in foreign governments--and credit union common bond requirements generally limited credit unions' PEP-related compliance burdens.

World Council of Credit Unions' Michael Edwards made recommendations on how the new anti-money laundering guidance could ease regulatory burdens on credit unions. (Photos provided by the World Council of Credit Unions)
Under the new standards, even high-ranking local government officials such as mayors or members of local government councils are likely to be considered PEPs. The anticipated FATF guidance papers will clarify in detail the high-level principles on PEPs and NPMs.

Although many larger banks and credit unions currently use expensive software and vendor lists to determine who is a PEP, we related to FATF that many credit unions would be well aware of the high-ranking political officials in their local communities without needing to invest in possibly unaffordable vendor products," said Michael Edwards, WOCCU chief counsel and vice president for advocacy and government affairs.

Edwards  represented credit unions at the FATF conference on the new AML standards  Sept. 13-14 at the Baco de Espana in Madrid, Spain.

While at the conference, he shared the credit union perspective on using new payment methods to promote financial inclusion as part of an effective risk-based approach to AML compliance, which focuses on payments with the highest risk of being related to criminal activity, terrorism or nuclear proliferation.

"World Council participates in forums such as these to advocate for streamlined anti-money laundering procedures for credit unions," said Brian Branch, World Council president/CEO. "Our goal is to help credit unions provide wider access to financial services and to reduce their regulatory burden for serving the underserved."

FATF is the international standard-setting body for rules to combat money laundering and the financing of terrorism and nuclear proliferation.

WOCCU contributed its remarks during a FATF conference, which was part of FATF's private sector outreach in preparation for issuing new guidance on PEPs and NPMs in early 2013.
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