World Council of Credit Unions (WOCCU) urged the Financial Action Task Force (FATF) to embrace proportionality in the application of anti-money laundering/countering the financing of terrorism (AML/CFT) regulations at the group’s Private Sector Consultative Forum, held May 6-7 at the United Nations Office on Drugs and Crime. FATF is the global standard setting body for AML/CFT rules and conducts periodic “mutual evaluations” of national-level AML/CFT supervision.
Specifically, World Council urged FATF to provide clear guidance on the use of digital identities so responsibilities surrounding their use are clearly defined without imposing undue regulatory burden. Likewise, with respect to responsibilities such as determining the Beneficial Ownership of legal entities for “know-your-member” regulations, WOCCU urged FATF to encourage national-level regulators to use a tiered approach that distinguishes between lower-risk and higher-risk members. Such proportional tailoring could greatly reduce the regulatory burden for credit unions that typically serve less-complex legal entities, are smaller in size and have field-of-membership restrictions.
“Credit unions and other financial cooperatives often report the costs and regulatory burdens associated with AML/CFT regulations are barriers to serving their members. If well-structured and with proper proportional tailoring, the regulations should lend themselves to allowing credit unions to utilize new technologies—such as digital identities— to effectively serve marginalized and unbanked members without compromising the ability to combat money laundering and the financing of terrorism,” said Andrew Price, World Council regulatory counsel.
The FATF Private Sector Consultative Forum is an annual event featuring panel discussions with key financial regulatory experts from across the globe.
