WASHINGTON — The Defense Credit Union Council is supporting federal regulators’ proposed customer identification requirements for payment stablecoin issuers while urging the agencies to ensure the final regulations do not impose duplicative compliance requirements on credit unions.
In comments on a joint proposed rule implementing provisions of the GENIUS Act, DCUC said it supports requiring permitted payment stablecoin issuers, or PPSIs, to comply with Bank Secrecy Act requirements and maintain customer identification programs.
The proposal was issued by the Financial Crimes Enforcement Network, Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp. and NCUA.
“This rulemaking implements the GENIUS Act’s directives to treat permitted payment stablecoin issuers (PPSIs) as financial institutions under the Bank Secrecy Act (BSA) and to require issuers to maintain an effective customer identification program (CIP),” DCUC said in its letter.
Appropriately Tailored ID Requirements
DCUC said appropriately tailored identification requirements are important for protecting the financial system against money laundering, terrorist financing, fraud and other illicit financial activity.
At the same time, the organization said regulators should ensure the final rule is risk-based and operationally practical, particularly for financial institutions already subject to federal or state Bank Secrecy Act and anti-money laundering requirements.
Among its recommendations, DCUC asked regulators to explicitly include both federal and state-chartered credit unions in an exclusion for regulated financial institutions from the PPSI definition of a “customer.”
Flexible ID Standards Backed
DCUC noted credit unions already must comply with extensive BSA and anti-money laundering requirements, including customer identification and customer due diligence rules, making additional identification procedures at stablecoin issuers unnecessary when dealing with credit unions.
The organization also backed flexible, risk-based customer identification standards that would allow stablecoin issuers to tailor their programs based on their size, complexity, products, services, customers and risk profiles.
DCUC recommended regulators allow affiliated entities to use coordinated or enterprise-wide customer identification programs when appropriate. Such an approach could reduce duplicative compliance obligations while maintaining regulatory safeguards, the organization said.
Support for Stablecoin Issuers
The group also supported allowing stablecoin issuers to determine, based on risk, whether to use documentary or non-documentary identity verification methods, or a combination of the two.
DCUC additionally urged regulators to retain a “reasonable period of time” standard for completing identity verification rather than establishing a fixed deadline. The organization said flexibility is necessary to account for differences in verification methods, available information and individual circumstances.
“DCUC appreciates the agencies’ efforts to establish a strong and appropriately tailored CIP framework for PPSIs and looks forward to continued engagement as the regulatory framework develops further,” Chief Advocacy Officer Jason Stverak wrote on behalf of the organization.
