A leaked report from the Treasury Department's Financial Crimes Enforcement Network (FinCEN) was the topic of a high-profile report on Tuesday by the Wall Street Journal, which said the agency is scrutinizing more than 50 credit unions that may be particularly vulnerable to potential money laundering.
The confidential FinCEN report did not accuse any credit unions of wrongdoing, according to the Wall Street Journal, but it did highlight increasing relationships with check-cashing companies and other firms FinCEN calls money-services businesses. Criminal groups and drug trafficking organizations could be targeting credit unions via MSBs to gain access to the formal financial system, it reported.
The $209 million Actors Federal Credit Union, which is headquartered in New York City, was cited in the article as one of the credit unions on FinCEN's list. The $15.6 million Bethex Federal Credit Union, which is headquartered in the Bronx, was also cited. Neither were accused of wrongdoing.
"Financial services today are filled with complex challenges to which credit unions are not immune, and NAFCU supports sensible regulation and exams that are tailored to actual risks," NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt said. "The NCUA, jointly with FinCEN and other financial regulators, has issued clear guidance relative to money-service businesses to identify and address potential risks."
According to FinCEN, which is part of the Treasury Department, people or businesses doing at least $1,000 per person per day worth of currency exchange, or dealing, check cashing or issuing or redeeming travelers' checks or money orders, must register with the U.S. Treasury as MSBs. Money transmitters of all sizes must register as well.
This is not the first time FinCEN has looked into money laundering at credit unions. In November, the Treasury Department fined the now-closed North Dade Community Development FCU $300,000 for failing to adequately monitor, detect and report suspicious transactions by 56 money-services businesses that were members of the credit union. Those MSBs were in what FinCEN called "high-risk jurisdictions far outside its field of membership." In that case, 90% of the credit union's annual revenue in 2013 was from those accounts, FinCEN said. The credit union had $4 million in assets and five employees but did $1.01 billion in outgoing wires for MSBs in 2013, as well as $984 million in remotely captured deposits, FinCEN said.
FinCEN has not said whether it is investigating the leak to the Wall Street Journal.
"I can't comment on any specific investigation, but I can confirm that we take the security of BSA information very seriously and there are criminal penalties for unauthorized disclosure of BSA information," a FinCEN spokesperson told CU Times. "When disclosures occur, we refer those cases to the appropriate law enforcement agencies for potential criminal investigation."
Read more about the leaked FinCEN report in the June 10, 2015 issue of CU Times.
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