Bank Secrecy Act Program Rule

•The Association generally supports the NCUA Board's proposal because it emphasizes the risk-based approach to Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) compliance. Most credit unions already follow a risk-based approach to AML/CFT pursuant to NCUA guidance. We are concerned, however, that the requirement for credit unions to implement an "effective, risk-based, and reasonably designed AML/CFT program…" is both vague and redundant. We urge the Board to clarify that an "effective" and "reasonably designed" AML/CFT program means one that is compliant with the other requirements of this regulation. •For most credit unions, a risk-based approach in theory reduces compliance burdens because credit unions' risk-profiles are limited by their field of membership restrictions on who can join the credit union. We request clarification, however, that the credit union should only be required to update its AML/CFT risk-assessment when there are material changes to the AML/CFT risks it faces. Periodic updates should not be required. •We are concerned that the proposed requirement for credit unions and banks to "consider" the Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) in their risk assessments may, in practice, be overly prescriptive and result in unwarranted paperwork burdens. Since SARs must be reported to the credit union's board of directors, we request clarification that the "consideration" of reports can be based on the review of board meeting minutes on SARs, as opposed to reviews of all of the institutions' individual SARs and CTRs per se. Review of board meeting minutes should be sufficient to identify trends or patterns of SARs for purposes of the risk assessment process. •The Association strongly supports the clarification that the credit union's periodic independent review and testing of its AML/CFT compliance program can be "conducted by qualified bank [or credit union] personnel" as an alternative to requiring an external AML/CFT audit. We believe the credit union's supervisory committee or audit committee should be able to conduct this independent review in collaboration with the credit union's AML/CFT officer. •The Association supports the proposal for the credit union's board of directors to be responsible for credit union's AML/CFT compliance program because this board responsibility is already the status quo for credit unions pursuant to NCUA rules. •We believe having the credit union's AML/CFT officer be based within the "United States" is reasonable, however, we request clarification that "United States" includes the District of Columbia as well as territories of the United States such as Puerto Rico and Guam. There are numerous federal credit unions headquartered in the District of Columbia, Puerto Rico, and Guam, as well as other credit cooperatives based in Puerto Rico. These jurisdictions are part of the United States. It would be an unreasonable compliance burden for those institutions to have to hire an AML/CFT officer based in a U.S. state simply because these jurisdictions are not "states."