UK Credit Unions Not Required to Check Member Ids

London, UK – The Financial Services Authority (FSA), the regulatory body for United Kingdom credit unions, said CUs will not have to conduct a special review of their members’ identities. This does not exempt credit unions from establishing and maintaining “effective systems and controls for countering the risk that their products and services might be used to facilitate money laundering,” the FSA announced in a press release. The decision was reached after Pricewaterhouse-Coopers conducted a cost benefit analysis. The decision affects all types of financial service bodies that the FSA regulates besides credit unions. Although the FSA is not putting this requirement into practice, it still expects credit unions and other organizations under its jurisdiction to follow the rules of the Money Laundering Sourcebook which includes having an officer overseeing the precautions, training, internal and external reports. Although no credit union has come under fire to date, the FSA just levied a 1.25 (US$2.4) million fine on Northern Bank for their lack of controls. The FSA said, “The senior management of each firm must satisfy itself that its systems are appropriate for dealing with money-laundering risks arising if they have not identified existing customers adequately. For a number of firms the right approach will be for them to conduct a risk-based review of all or some of their existing customers. We fully support proactive risk-based action by firms that have done this, including the large UK retail banks and many others.” Unlike many of the other types of financial institutions which can include multi-national banks, insurance companies, etc, regulated by the FSA, UK credit unions are often small (a few hundred members) and totally run by volunteers. The FSA plans to release a discussion paper on money laundering problems that should help credit unions of all sizes understand their responsibilities. -