INTERVIEW
AT : Partnerships within the anti-financial crime ( AFC ) community are important . How can banks and credit unions work together to fight the latest financial crime schemes ?
RH : The one way that banks and credit unions can work together to have a good working relationship regarding compliance with the Bank Secrecy Act ( BSA ) in anti-money laundering ( AML ) laws is for them to follow the examples of the regulators that the NCUA works alongside . We meet monthly , and there are some BSA working groups that are convened by the Financial Crimes Enforcement Network ( FinCEN ). We talk about some of the important matters of the day , especially regarding compliance , the onboarding process and customer due diligence . As banks and credit union regulators work together , there are opportunities for trade groups like the American Bankers Association and more to share best practices . There are also a lot of training opportunities .
I certainly believe in learning about what other countries are doing . For instance , I will be meeting with other regulators worldwide to talk about what they are doing around digital platforms and ongoing education . That said , I am not seeing banks and credit unions sitting together yet , but I am seeing third parties working with both . They are the ones that are coming and providing those solutions .
AT : How are credit unions incorporating cryptocurrency into their AML programs ?
RH : Regarding cryptocurrency , the NCUA guided credit unions , letting them know they can statutorily be a part of digital assets using blockchain or distributed ledger technologies . Today , we see several credit unions working with cryptocurrency to the degree that they would have to complete AML activities regarding suspicious activity report ( SAR ) filings and currency transaction reports . This is an emerging area , notably for our credit unions … but we are not [ yet ] seeing it to such a degree that we have had to look at AML activities .
AML , as you know , is just one risk and compliance area we are dealing with as a whole global economy — not just credit unions . FinCEN is planning on requesting information related to digital assets . They have this on their regulatory agenda , but it has not been mentioned when they will come forward to ask the industry or whether it will be for both banks and credit unions . I want to ensure that our folks adhere to all the tenets of a safe and sound BSA program , especially as it keeps America ’ s homeland safe and ensures that we are not financing terrorist activities and human trafficking and things of that nature . I want to roll up my sleeves to ensure we are doing the right thing .
We have 137 million members of credit unions ; six million of those members came when most of the doors were closed during the pandemic . That means we were able to use digital platforms to do the onboarding and know your customer ( KYC ). I want to make sure that we were using safe , effective approaches to bringing these folks on board .
AT : Can you talk about the strength of an AML program within credit unions ?
RH : What helps define a strong AML program is adhering to the protocols as prescribed by FinCEN . You may be wondering , if we are going to have a third party helping us , what will the NCUA or any other regulator do ? Well , we have very strong protocols around third-party due diligence . We ask our credit unions about any third party working with them for any back-office support activities . They must have a checklist . We tell them to look at their vendors to ensure that they are adhering to cybersecurity . Are they people who are honoring consumer protection and consumer compliance ? The NCUA expects credit unions to do the vetting process and find vendors that can safely provide them with a service .
What helps define a strong AML program is adhering to the protocols as prescribed by FinCEN
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