Kenneth Rijock

Kenneth Rijock

Wednesday, April 8, 2015

SHOULD CREDIT UNIONS AVOID TRANSACTIONS WITH MONEY SERVICE BUSINESSES DUE TO AML ISSUES ?


In the aftermath of the North Dade Community Development Federal Credit Union scandal, credit unions should seriously consider whether it is wise to conduct any business with, or for, money service businesses. The North Dade case has succinctly illustrated some of the dangers involved, and the NCUA itself, back in December, issued a Supervisory Letter on the subject.

Titled Identifying and Mitigating Risks of Money Service Businesses*, it should be required reading for all compliance officers working at credit unions. Frankly, the primary duty of a credit union is to service its customers, in a safe manner, and allowing any MSB to access the global financial structure through your credit union, and exposing it to money laundering, and terrorist financing, is neither wise, nor part of your core business plan. North Dade did it for greed, which is never appropriate.

I do not buy the argument that a credit union can use an MSB to offer additional services to its members; credit unions can access those services on their own, without incurring the risk of servicing some of the MSBs dodgy customers. Focus on customers, not on maximizing profits by working with MSBs that may, or may not, be in full compliance with the law.
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*http://www.ncua.gov/Resources/cus/pages/LCU2014-10.aspx

  

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