In an effort to provide clarity to credit unions on applying a risk-based approach to BSA due diligence for charities and nonprofit organizations, FinCEN, in conjunction with the Federal Banking Agencies, has issued a fact sheet for reference.
FinCEN was clear that the fact sheet does not alter existing BSA/AML legal or regulatory requirements, nor does it establish new supervisory expectations. The document provides considerations for a risk-based approach to due diligence and, especially during the COVID-19 crisis, for practices that allow legitimate charities and nonprofits access to financial services and “legitimate and transparent” funds transmission.
“FinCEN appreciates the critical role of those charities and NPOs who are on the front lines of the COVID-19 pandemic,” said FinCEN Director Kenneth A. Blanco. “FinCEN demonstrates in this communication our joint resolve and the importance of ensuring their access to banking services, while at the same time protecting our national security, keeping our citizens safe from harm, and safeguarding our financial system.”
FinCEN reminds credit unions that, in general, nonprofits do not present a “uniform or unacceptably high” risk for money laundering, terrorist financing (ML/TF); however, just as with any industry, the risk varies by organization and each warrants a risk-based approach.
The fact sheet outlines information credit unions may find useful in their due diligence efforts and in determining a specific ML/TF risk profile, and the US Treasury has provided additional information within their website’s resource center.
ARB’s Credit Union Services Group is dedicated to your industry. We are available to assist with understanding new and changing considerations and guidelines. Contact us for more information, and visit our COVID-19 Financial Resource and Tax Center for additional information on related matters.
by Sam Pedersen, CPA