|The Financial Action Task Force (FATF) earlier this month issued new anti-money laundering/countering the financing of terrorism (AML/CFT) Guidance on Private Sector Information Sharing and Guidance on AML/CFT measures and financial inclusion that incorporate World Council of Credit Unions’ (WOCCU’s) recommendations for reducing regulatory burdens on financial cooperatives made in April 2017 and July 2017. The FATF is the global standard setting body for AML/CFT rules. The new FATF guidance should reduce credit unions’ compliance burdens by allowing financial cooperatives to resolve AML/CFT electronic payments red flags more easily as well as reduce barriers for financial cooperatives accepting members who do not have standard identification documents such as a passport.
The FATF’s Guidance on Private Sector Information Sharing significantly increases the ability of unaffiliated financial institutions to share AML/CFT information, such as to resolve red flags. The new FATF guidance allows increased AML/CFT information sharing between unaffiliated financial institutions in five contexts: (1) correspondent banking relationships; (2) relationships with money or value transfer service providers (such as remittance firms); (3) wire transfer remittance information (even when there is no direct correspondent banking relationship between the originating institution and the receiving institution); (4) situations where a bank or credit union is relying on AML/CFT customer due diligence conducted by a third-party; and (5) communications with supervisory agencies.
The FATF’s updated Guidance on AML/CFT measures and financial inclusion also adds a new “Supplement on Customer Due Diligence” that: (a) permits institutions to exempt products and services with a low-risk for money laundering or terrorist financing from some AML/CFT controls; (b) provides numerous examples of simplified approaches to AML/CFT customer due diligence from Australia, Brazil, Canada, the European Union, Mexico, the Netherlands, New Zealand, the United States of America and other jurisdictions; and (c) increases financial institutions’ flexibility to use new or alternative forms of identity documentation, including digital solutions, to conduct customer due diligence.