WASHINGTON — America’s Credit Unions is urging the U.S. Treasury Department to ensure credit unions play a central role as the federal government moves to eliminate paper checks and transition federal disbursements to electronic payments, arguing that the change presents an opportunity to expand financial inclusion and improve access to payment services.
In a comment letter submitted to Treasury regarding its proposed rule on the management of federal agency disbursements, America’s Credit Unions said it supports the administration’s goal of modernizing federal payments and reducing reliance on paper checks, which Treasury has said are more costly and vulnerable to fraud than electronic payments.
According to America’s Credit Unions, credit unions are well-positioned to help facilitate the transition because of their community-based presence and experience serving consumers who may face barriers to accessing traditional banking services.
Support for Electronic Payments
The trade group said it supports Treasury’s efforts to move federal payments to electronic channels and agrees that reducing paper checks can enhance security, lower costs and improve payment efficiency.
However, America’s Credit Unions cautioned that the transition should not create hardships for consumers who lack access to financial services, broadband connectivity or digital tools needed to receive electronic payments.
The organization said Treasury should ensure exceptions remain available for individuals who are unable to use electronic payment methods and should continue working to prevent vulnerable populations from being excluded from receiving federal benefits and other government payments.
Role for Credit Unions
America’s Credit Unions said credit unions can serve as an important partner in helping consumers receive federal payments electronically, particularly in rural and underserved communities.
The organization noted that credit unions provide affordable transaction accounts and financial services to millions of Americans and argued that policymakers should recognize the role credit unions can play in helping consumers access electronic payment systems.
According to the letter, expanding awareness of credit union services and ensuring credit unions are included in outreach and implementation efforts would help support the government’s modernization objectives.
Financial Inclusion Concerns
America’s Credit Unions said policymakers should pay particular attention to individuals who are unbanked or underbanked and may face challenges transitioning away from paper checks.
The organization told Treasury that access to electronic payments depends on consumers having reliable access to financial accounts and payment infrastructure. It said any transition plan should be designed to avoid unintended consequences for consumers who lack those resources.
America’s Credit Unions also emphasized the importance of maintaining consumer choice and ensuring recipients have access to secure and affordable options for receiving federal payments.
Treasury Proposal
Treasury’s proposed rule follows Executive Order 14247, which directs federal agencies to transition away from paper checks for government disbursements where permitted by law. Treasury has said the move is intended to reduce fraud, lower administrative costs and improve the efficiency and security of federal payments. Comments on the proposal were due June 15.
In its letter, America’s Credit Unions said it supports the modernization effort but urged Treasury to implement the changes in a way that preserves access, protects vulnerable consumers and leverages credit unions as partners in expanding electronic payment adoption.
Response to FinCEN Guidance
Separately, after FinCEN released guidance update expanding the fraud information sharing program under section 314(b) of the Patriot Act, America’s Credit Unions Director of Innovation and Technology Andew Morris issued a statement saying, “Fraudulent activity often involves multiple financial institutions. FinCEN’s updated guidance regarding information sharing across institutions will allow credit unions to more easily act when fraud is detected. This change reflects recommendations made by America’s Credit Unions Fraud Task Force to FinCEN to clarify and expand the scope of the information safe harbor in the PATRIOT Act. Credit unions welcome FinCEN’s updated guidance and we encourage FinCEN to continue supporting voluntary mechanisms for proactive data sharing between both government and private sectors when suspicious activity occurs.”
Task Force Discussion
America’s Credit Unions said its Fraud Task Force has discussed the need to expand the scope of the protections afforded by the information safe harbor in 314(b).
The association noted the section of FinCEN’s guidance reads “Can a financial institution or association of financial institutions share information related to fraud under section 314(b)?
It said the answer is “Yes. Fraud offenses are SUAs for money laundering offenses,” which directly responds to recommendations made in the fraud RFI issued to banking regulators.
