Analyst Says Many CUs Remain 'Behind Curve' On Compliance

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Every credit union has been directed to "know your member." The problem is, for many it's just "not very well."

The question has become for how long will examiners make exceptions for credit unions when it comes to Bank Secrecy Act, PATRIOT Act and other compliance requirements. Bob Coford, president of Churchton, Md.-based BANKDetect, said his experience has shown that many credit unions remain "behind the curve" on compliance.

"The Federal Financial Institution Examinations Council (FFIEC) is not going to differentiate between Bank of America and the smallest credit union," said Coford during BAI's Retail Delivery Show. "It all depends on how the regulators are going to act."

BANKDetect offers a variety of compliance solutions, including RiskTracker AML (Anti-Money Laundering), RiskTracker-ID/CIP (Customer Identification Program), RiskTracker-A3 (account activity analysis), RiskCheck (compares daily check deposits against 12-million known accounts to detect non-paying items), and RiskTracker-OFAC (which compares names and addresses against government watch lists).

Coford acknowledged BANKDetect's anti-fraud solutions have been priced out of range of most credit unions, but said in 2006 it will "get down price-wise into something credit unions can afford." "Once you get to the point of a few-thousand transactions per day it becomes more complex and becomes a trade off between the expertise of human analysis and what software can do."

Coford said that among the questions he has gotten from credit unions is whether Social Security Numbers can be used as member ID numbers. The answer is a resounding "No!" "Credit unions tell me their IT people say it would be too hard to convert over (to new member numbers)," said Coford. "I tell them to change IT people."

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