The United States may have the world’s largest credit union system, but that doesn’t mean there’s not plenty of lessons to be learned from CUs all over the globe.
That was the message from Michael Edwards, VP for advocacy and general counsel at the World Council of Credit Unions, speaking after WOCCU’s 2018 conference in Singapore this summer.
Australians struggle with financial crime and fraud just like American credit unions – the difference, said Edwards, is that “In Australia they are using a know-your-customer utility with blockchain.”
The KYC utility doesn’t include any personal identifying information about the member, aside from basic data such as the consumer’s name, noted Edwards. “But every time a financial institution opens an account for that individual, they put a cryptographic stamp in the blockchain that signifies the account was opened,” he explained.
While KYC utilities do not remove the need for a credit union or other institution to require traditional identification such as a license, other participating institutions – such as an insurance company – would be able to see that the member was approved after authentication due diligence was levied.
“In the bank-secrecy area that is a big thing, and it is being done in Australia and they are working on it Europe and potentially the U.S. might have it, too,” said Edwards. He added that under the USA Patriot Act, organizations like credit unions and insurance companies can share member information.
“The legal framework is there in the U.S. and there has been talk about it, but I’m not aware of any systems being put together right now,” said Edwards.
Cryptocurrency and credit unions
While most people associate cryptocurrency with bitcoin, Edwards said, U.S.-based credit unions – along with CUs in other nations – have have provided banking services to bitcoin exchanges, but most often the credit union was used as a bank account.
The WOCCU conference included discussions on whether cryptocurency can be used as an international payments system, said Edwards.
“The upside of blockchain is that your get payments and settlements happening at the same time,” he told CU Journal. “Bitcoin has not be used as much like that and as originally advertised because of high transaction costs.”
The consensus at the conference was that cryptocurrency still has a lot of potential, but from a U.S. perspective, Edwards said, bitcoin doesn’t have the best reputation with regulators.
“American credit unions in attendance were interested in the bitcoin potential, but the KYC topic seemed to gain the most interest from the U.S. attendees because that deals with Bank Secrecy Act compliance,” said Edwards.
CUs around the world
More than 1,350 credit union professionals from 58 countries gathered at the Suntec Convention Center in Singapore in mid-July for the 2018 World Credit Union Conference. Among topics covered were blockchain technology, cybersecurity, fintech leadership and emerging trends.
“Singapore is a big technology hub—it’s a small country but very technologically oriented,” said Edwards. “There is a big fintech sector there, so it was an interesting place to have the conference.”
The conference was co-hosted by Singapore National Co-operative Federation (SNCF). Edwards explained that Singapore has 50 credit union-like organizations referred to as financial cooperatives.
Along with educational sessions, the conference also included a welcome from World Council Chair Brian McCrory, a board member and former president of the Irish League of Credit Unions, who congratulated delegates on what the movement’s success and the benefits it can provide to consumers worldwide.
“We must be innovators, social entrepreneurs and skilled business leaders with the ability to run efficient businesses, while deeply rooted in the philosophy of the cooperative spirit and a commitment to service,” noted McCrory.
