Credit unions are not police departments and they have limited resources to enforce the web of money-laundering and Bank Secrecy Act requirements, Faith Lleva Anderson, senior vice president and general counsel for the American Airlines Federal Credit Union told a House subcommittee Wednesday.
"Credit unions are deeply committed to the fight against crime, but it is important to recognize we are not law enforcement agents and we have certain fundamental limitations," Anderson told the House Financial Services Subcommittee.
"While credit unions support laws and regulations that prevent terrorists and criminals from using their institutions to launder money or otherwise engage in illegal activity, the compliance burden of the current regulatory environment often unnecessarily takes away from our ability to serve our members," said Anderson, whose credit union is headquartered in Fort Worth, Texas and an asset size of $6.5 billion.
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Subcommittee Chairman Blaine Luetkemeyer (R-Mo.) said he is concerned that financial institutions are having to take on law enforcement duties. "I think we need to put everybody back in their own pew," he said.
He added, "Well-intentioned regulation has spiraled out of control."
Anderson said that the federal government must balance the compliance costs to financial institutions with the benefits of BSA and AML programs.
Anderson said that CUNA supports regulatory and legislative changes to "address the redundancies, unnecessary burdens and opportunities for efficiencies" in the BSA/AML regime.
She said her credit union is required to conduct annual BSA/AML training for all of its 600 employees, with the training customized based on the employee's role at the credit union.
She said that CUNA supports providing additional flexibility based on the type of financial institutions, curtailing the regularly enhanced customer due diligence requirements, increasing the currency transaction reporting threshold, and allowing for increased regulatory and examination consistency among regulators.
Anderson also said that the requirements for credit unions to identify the true beneficial owners of various entities, has placed an enormous burden on credit unions.
The regulatory burden also is increased because BSA officers can now be held personally liable for violations and be required to pay stiff penalties.
However, one witness warned that Congress should not make piecemeal changes to the laws.
Congress should conduct a detailed review of anti-money laundering data before making any policy changes, said Heather Lowe, legal counsel and director of government affairs at Global Financial Integrity, a research organization that pushes for tight financial law enforcement.
"Money laundering and the technology that can help us combat it are both evolving and, in light of this, it is appropriate to consider whether changes to our regulatory structure should be made," she said.
Lowe said that criminals even use small financial institutions, citing the case of example, North Dade Community Development Federal Credit Union.
The credit union was servicing multiple money servicing businesses outside their field of membership.
Lowe said that Congress should be careful of not being caught up in the fervor of deregulation.
"Deregulation for the sake of deregulation in the AML area is most certainly not in the public's interest," she said.
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