WASHINGTON — America’s Credit Unions has urged federal regulators to take a more flexible, risk-based approach to anti-money laundering and countering the financing of terrorism (AML/CFT) requirements, while also seeking additional guidance on how such rules would apply to emerging payment stablecoin activities.
In three separate comment letters submitted to federal regulators, the trade group expressed support for efforts to modernize Bank Secrecy Act (BSA) and AML/CFT compliance requirements but cautioned against regulatory approaches that could create unnecessary burdens for credit unions.
Letter to FinCEN
In comments to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), America’s Credit Unions backed a proposal designed to modernize AML/CFT program requirements by emphasizing effectiveness, risk-based compliance and directing resources toward higher-risk activities.
The organization said regulators should make clear that an effective AML/CFT program does not require perfection and that isolated technical issues or deficiencies that are promptly corrected should not be treated as evidence of a failed compliance program.
America’s Credit Unions also called on FinCEN to tailor expectations regarding risk assessments, documentation, internal controls, testing, staffing and technology to a credit union’s size, complexity and risk profile.
The group further requested clearer guidance on key regulatory terms and implementation timelines, while warning against expectations that would pressure smaller institutions to adopt expensive technology or analytics tools that may not be appropriate for their operations.
Letter on AML/CFT
In a separate letter addressing a joint proposal from federal financial regulators, including the National Credit Union Administration, America’s Credit Unions urged agencies to ensure supervisory standards remain aligned with FinCEN’s risk-based framework.
The organization said regulators should avoid creating examination requirements that are more burdensome than FinCEN’s standards and should focus examinations on serious or systemic AML/CFT program deficiencies rather than minor compliance issues.
Among its recommendations, America’s Credit Unions asked regulators to:
- Limit FinCEN consultation requirements to significant AML/CFT concerns rather than routine issues corrected during examinations.
- Establish a clear consultation process that avoids delays, duplicate reviews and uncertainty over which agency has final authority.
- Preserve confidentiality protections for information shared with FinCEN, including attorney-client privilege, work-product protections, bank examination privilege and confidential supervisory information safeguards.
Letter on PPSIs
The trade group also submitted comments jointly to FinCEN and the Treasury Department’s Office of Foreign Assets Control regarding proposed AML/CFT obligations for permitted payment stablecoin issuers, or PPSIs.
America’s Credit Unions said unique risks associated with blockchain technology warrant tailored compliance expectations but argued that regulators should provide additional clarity before finalizing requirements.
Specifically, the organization requested further guidance on compliance expectations for BSA and sanctions programs operating within decentralized finance, or DeFi, environments. It also called for clearer delineation of compliance responsibilities between credit union parent organizations and any stablecoin-issuing subsidiaries to avoid duplicative requirements.
Additional Recommendations
Additional recommendations included greater detail regarding know-your-customer and transaction-monitoring expectations, clearer standards for how examiners will assess program effectiveness, and guidance on oversight of third-party service providers.
The organization also asked regulators to clarify compliance obligations for activities beyond stablecoin issuance, including custodial services, on-ramp and off-ramp operations, and aggregation platforms.
America’s Credit Unions further urged FinCEN to provide illustrative examples and interpretive guidance related to monitoring tools, compliance controls and how institutions should evaluate redemption requests submitted by foreign holders of permitted payment stablecoins.
