NEW YORK — Chuck Brown found out his credit union was on a FinCEN watch list at the same time as nearly everyone else in the world did — when he read about it in the news.
Brown serves as director of development at Actors FCU here, one of about
"I was surprised that they had an unpublished report," Brown said, referring to the Wall Street Journal's report. "Based on what they explained the report was about, which was [Currency Transaction Report] CTR and [Suspicious Activity Report] SAR analysis, we were not surprised that we were on [FinCEN's list of credit unions], because we understand: we file a whole lot of CTRs. That's exactly what we're supposed to be doing."
Though the report was confidential, the WSJ story identified Actors FCU and New York-based Bethex FCU as two credit unions on the list. Representatives from Bethex did not return calls from Credit Union Journal seeking comment.
The common denominator for many of the CUs named in the study was that they serve money services businesses (MSBs) such as check cashing firms or remittances businesses, but Brown said Actors FCU thoroughly vets those members.
"Our practices, to our knowledge, are not being called into question here," he said. "We're examined by NCUA so carefully and specifically in this department; we work very closely with the regulators. We have a seat on FinCEN's BSA Advisory Group. We are in touch with FinCEN all the time. And we are very thorough and very careful. We've been doing this line of business for a long time. We're always enhancing our compliance program [and] finding new ways of doing things. But we're not going to be changing any practices as a result of hearing that we're named in a report."
Brown said Actors turns down far more MSBs for memberships than it approves, and in an interview with Credit Union Journal he explained that they often deny those accounts because of what the credit union deems to be insufficient compliance resources on the applicant's behalf.
"We may not necessarily have judged them as shady or complicit in any kind of illegal activity, but they have not applied the resources and document their program carefully enough for us to feel completely comfortable," he said.
Brown praised NCUA's AML and BSA examination procedures and noted that in instances when credit unions have failed at banking MSBs, "the reports of what they were lacking are very, very clear."
Not only is guidance available from NCUA and FFIEC, he said, but credit unions need to have their own programs reviewed independently by MSB experts as well.
"It's an industry that has a lot of legal resources and there are a lot of people out there willing to come in and look at how you structure your program and help you improve it every step of the way," he said. "A credit union wishing to go into this area should proceed with caution — and proceed with their eyes wide open."
