A stipulation and consent to cease and desist order from late February between a federal credit union in Michigan and its federal regulatory agency requires numerous improvements in the institution’s suspicious activity monitoring in compliance with rules implementing the Bank Secrecy Act (BSA).
This order has been widely reported to be the first of its kind between a financial institution and a federal regulator regarding pot banking. Finalized Feb. 22 between the National Credit Union Administration (NCUA) and the $69 million-in-assets Live Life Federal Credit Union of Fraser, Mich., the order provides that the credit union would, among other things, immediately cease opening new marijuana-related business (MRB) accounts, cease its money services business (MSB) and related activity, and immediately catch up its suspicious activity reporting.
Additionally, it provides that the credit union would:
- By April 30, 2021, implement an automated system to effectively monitor and identify all transactions for suspicious activity in accordance with federal anti-money laundering (AML) rules that, among other things, includes functions to support compliance with Financial Crimes Enforcement Network (FinCEN) requirements for marijuana-related businesses (MRBs) (including monitoring FinCEN “red flags”).
- Engage a third party to validate the credit union’s automated compliance and suspicious activity monitoring system simultaneously with the implementation of this system.
- Develop and implement a system to ensure all suspicious activity reports (SARs) are filed accurately, completely, and on time by March 31, 2021.
- Immediately develop and implement a system to ensure all currency transaction reports (CTRs) are filed accurately in accordance with federal CTR requirements.
- Engage a qualified third party to perform a retrospective review of the credit union’s MSB activity to determine the existence of suspicious activity warranting a SAR filing by March 15, 2021. This provision of the order states that the review, at a minimum, must evaluate the criteria outlined in FIN- 2019-A003, “Advisory on Illicit Activity Involving Convertible Virtual Currency.” It also states the credit union would file any SARs recommended by the third party.
The NCUA published the order but did not post a news release on it. Meanwhile, the agency has slated a webinar for April 14 on Bank Secrecy Act and anti-money laundering compliance.