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CUNA CUs must assess FinCEN cross-border rule impact
WASHINGTON (10/5/10)—The Credit Union National Association recommends that credit unions analyze the Financial Crimes Enforcement Network’s (FinCEN) recent cross-border electronic fund transmittal proposal to determine how it applies to their business activities. FinCEN recently proposed rules to require some depository institutions and money services businesses (MSB) to "affirmatively provide records to FinCEN of certain cross-border electronic transmittals of funds (CBETF). FinCEN has acknowledged that a final rule on CBETFs cannot be issue until the systems needed to accept the required reports are in place. According to the proposal, such systems may not be in place before 2011, and a final rule may not be issued until January of 2012 . While CUNA cannot say how many credit unions would be subject to the rule, CUNA Federal Compliance Counsel Nichole Seabron said it is estimated that approximately 300 financial institutions would be impacted. The World Council of Credit Union's (WOCCU) recently said that neither the proposed rule nor the potential final rule would impact its remittance programs. (See related story: FinCEN plan won't affect CU remittances, WOCCU says, Sept. 30) The FinCEN CBETF reporting requirement does not apply to all financial institutions, only those that transmit the electronic funds transfer instructions directly to a foreign financial institution ("last-out financial institution") or that receive the electronic funds transfer instructions directly from a foreign financial institution ("first-in financial institution"). According to FinCEN, the proposal will likely impact larger institutions that utilize centralized message systems like SWIFT, Fedwire and CHIPS. Reporting credit unions would be required to file reports on all CBETF transactions and such reports would need to be filed with FinCEN no later than five business days after issuing or receiving the transmittal notice or advice. Under the FinCEN proposal, credit unions and other financial institutions may file the reports directly or have them filed by a third party. However, the financial institution will be ultimately responsible for compliance with the reporting obligation. The proposal exempts from reporting funds transfers that are conducted and messaged entirely through a bank/credit union's proprietary systems. Also, CBETF reporting requirements do not apply when there is no third party consumer to the transaction, i.e. where the transmitter and recipient of a funds transfer are both either credit unions or banks. There is also an annual taxpayer ID reporting requirement under the proposal that is designed to help flesh out instances of money laundering and tax evasion. This requirement would apply to all banks/credit unions that maintained a consumer account that was debited or credited in relation to a CBETF. Institutions are required to provide FiNCEN with the consumer's account number and tax ID for all accounts that originated or received CBETFs in the previous calendar year. Comments must be received by FinCEN no later than December 29. For the full FinCEN proposal, use the resource link.
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