CUNA urges review of Bank Secrecy requirements

WASHINGTON -In a comment letter to Treasury Secretary Paul O’Neill, CUNA offered up its “strongest support” for the proposed review of the compliance burdens associated with the Bank Secrecy Act (BSA) and the regulation promulgated under it. According to CUNA Associate General Counsel Mary Dunn, CUNA has been asking for review of BSA law and regulations since they came into existence. “We feel there are a number of steps that could be taken to reduce the costs of meeting Bank Secrecy requirements for credit unions and other financial institutions, without jeopardizing the objectives of the anti-money laundering statute,” CUNA’s comment letter read. The letter was spurred by comments made by O’Neill in an interview with the Wall Street Journal last week, and CUNA felt it was important to emphasize that credit unions are just as affected by these regulations as the banks. “In many instances,” Dunn explained, “we feel the regulation really views financial institutions as part of the federal government and tries to make financial institutions their police people in terms of monitoring and in terms of reporting currency transactions that are reportable under the Bank Secrecy Act.” The act requires credit unions and other financial institutions to report to Treasury any transaction over $10,000 using a Currency Transaction Report (CTR). It also requires financial institutions to report suspicious activities over $5,000 on a Suspicious Activity Report (SAR) and record keeping for transactions over $3,000. While CUNA notes in its letter the trade association’s support for the federal government’s efforts to crack down on money laundering, it feels the cost has never been weighed against the benefits of the system. “[W]e do not believe that financial institutions should be required to serve as the government’s policers in implementing anti-money laundering policies, which diverts them from their primary purpose, of providing financial services to consumers,” CUNA’s letter read. “Also, to our knowledge, the Treasury has never made available to the public-particularly to financial institutions that they have to comply with Bank Secrecy Act requirements-the extent to which the requirements under its regulations help curtail money laundering.” Dunn reiterated this point, remarking that Treasury should be held accountable for demonstrating to financial institutions that the work they are doing in this area is helping the anti-money laundering effort. “As we have had experience with Bank Secrecy the regulations and the requirements have just become much more complicated and comprehensive, and yet we still don’t have from the Treasury any information as to whether these police activities that are required of financial institutions really help in catching and pursuing so-called money launderers,” Dunn said. “We don’t feel a serious consideration has ever been given of the burden that it places on financial institutions by these regulations under the Bank Secrecy Act….It’s never been documented; its never been reported.” Though CUNA could not provide any specific numbers on the expense to credit unions of the BSA related regulations, Dunn said that their economists are in the process of working out those numbers. While sister trade association NAFCU supports a review, the trade group did not comment on the BSA review issue to Treasury. NAFCU Communications Manager John Zimmerman told Credit Union Times that the trade association does not receive many complaints from their members about the compliance burden. “We support any review that ends up reducing regulations or burden,” he commented. He added, “The questions we get are operational, but we haven’t heard a lot of complaints from our members.” [email protected]