NAFCU, CUNA Supportive of FinCEN Database

NAFCU and CUNA have come out in support of a new beneficial ownership database proposal from the Financial Crimes Enforcement Network (FinCEN).

The Corporate Transparency Act (CTA), a section of the Anti-Money Laundering Act passed in 2020, requires entities report beneficial owner and company application information directly to FinCEN.

In separate letters FinCEN this week, the credit union trade organizations urged Network officials to align reporting requirements with the Bank Secrecy Act (BSA) and anti-money laundering/countering the financing of terrorism (AML/CFT) in which credit unions regularly operate.

According to the letter sent by CUNA Senior Director of Advocacy and Counsel Elizabeth Sullivan, she stated, “Credit unions hope the database envisioned in the CTA will provide significant and important relief from the burden created by the CDD Final Rule. The likelihood of that outcome is dependent on FinCEN establishing a database that aligns with CDD requirements and a framework that includes appropriate safe harbors to ensure financial institutions that access it are obtaining accurate and useful information more efficiently.”

In NAFCU’s letter from Regulatory Affairs Counsel Aminah Moore, the association urged FinCEN to adopt shorter reporting timeframes for existing companies and ensure verification of information provided.

“It is important that FinCEN provide beneficial ownership information to those credit unions with the consent of a reporting company in a timely and efficient manner, as credit unions must conduct CDD analysis at account opening. Any delay in the transfer of beneficial ownership information will frustrate the new account opening process and may cause credit unions to duplicate efforts, collecting the same information and only furthering compliance burdens.”

Both groups stated they’d like FinCEN to slow down on implementing its proposed requirements until more work is done on the actual language of the rule.

“CUNA strongly urges FinCEN to wait to finalize the language for these reporting requirements until it has first promulgated revisions to the CDD regulations to bring both rules into alignment. FinCEN should wait until the comment period on that proposal has run, and FinCEN has thoroughly digested comments from affected financial institutions. Only once FinCEN has considered the implications from the perspective of both reporting entities and financial institutions subject to CDD requirements can it confidently create a functional, cohesive framework that will operate efficiently and effectively.”

NAFCU added other recommendations for the agency to address before implementing the proposal. The recommendations included:

• Ensure that examination and supervisory expectations are consistent with those of other federal regulators;
• Establish data security protocols; and
• Maintain clarity and simplicity in its communications.