NCUA writes CUs on new BSA/AML rule on beneficial ownership, notes limits of its own lenience for good-faith efforts in ’18

A letter outlining examination expectations under the Financial Crimes Enforcement Network’s (FinCEN) beneficial ownership rule was issued Monday by the National Credit Union Administration and indicates the agency’s examiners will accept reasonable, good faith efforts to comply for the remainder of 2018.

Even so, that leniency by the NCUA will not protect credit unions against potential penalties from FinCEN for noncompliance with the Bank Secrecy Act/anti-money laundering (BSA/AML) requirement, the letter says.

The FinCEN rule, which took effect this May, codifies BSA/AML customer due diligence (CDD) requirements and adds a new requirement to identify and verify the identity of individuals (the beneficial owners) who own or control certain legal entity members (subject to a number of exclusions and exemptions). The requirement, finalized in 2016, took effect May 11.

“The NCUA recognizes that some credit unions may need additional time to implement changes and to fully comply with the new requirement,” NCUA Board Chairman J. Mark McWatters states in the letter to credit unions (No. 18-CU-02). “The NCUA examiners have been instructed to accept a credit union’s reasonable and good faith efforts to comply with the new rule throughout 2018. However, credit unions should understand that the NCUA’s acceptance of good faith efforts for supervision purposes does not shield a credit union from FinCEN penalties that could arise from failing to comply with all BSA/AML requirements.”

NCUA’s letter includes several attachments, including a supervisory letter setting out examination expectations provided to the NCUA examiners regarding the review of a credit union’s compliance with BSA/AML requirements. This includes new examination procedures that will be incorporated into the Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering Examination Manual.

Also attached are the BSA questionnaire to guide examiners through their reviews, an overview of the CDD requirements and exam procedures, and an overview of the beneficial ownership rule.

The letter instructs credit unions to contact their regional office of state supervisory authority if they have questions about the letter.

NCUA Letter to Credit Unions (18-CU-02) and Supervisory Letter No. 18-01 – Bank Secrecy Act Customer Due Diligence and Beneficial Ownership Rules

FinCEN rule: Customer Due Diligence Requirements for Financial Institutions

NCUA BSA Resources

Exceptive relief (certain auto-rollover accounts) through Sept. 8