WASHINGTON-On June 3, NCUA Chairman JoAnn Johnson made her first appearance before Congress in her new post as part of a panel of regulators testifying on Bank Secrecy Act compliance. She testified before the Senate Banking Committee that most federally insured credit unions are in compliance with the BSA with just 3.5% found to be in violation last year. In 2003, Johnson told the committee, 334 BSA violations were discovered in 261 credit unions. The most common violations were inadequate written policy (63%), inadequate customer identification program (8%), and inadequate currency transaction reporting procedures (7%). NCUA’s examiners review credit unions for BSA compliance at each examination and the agency’s risk-focused examination will also steer examiners toward these and other problems, Johnson said. She noted that NCUA has also issued a number of Regulator Alerts and Letters to Credit Unions related to BSA issues like money laundering and terrorist financing. In instances of extreme violations, NCUA has a variety of options for resolution ranging from a letter to the credit union from the regional director to conservatorship. Johnson also noted that the agency does not have any authority over privately insured credit unions and does not review their examinations for BSA compliance. She pointed out that because nearly half of credit unions are under $10 million in assets and one-third have single sponsors, they typically have a better feel for their members’ transactions. “Consequently, money laundering has not been a major problem for credit unions,” Johnson’s written testimony said. She continued, “Nevertheless, much has changed since the terrorist attacks of September 11th. There is increased recognition that denying terrorists the ability to launder funds through the nation’s financial system is an essential part of winning the war on terrorism. NCUA recognizes that as some federally-insured credit unions increase in asset size, offer more complex financial services, and expand their fields of membership, the possibility increases that they may be targeted by individuals or groups seeking to launder money. NCUA is mindful of our responsibility in this area.” Into the future, Johnson’s statement read, “Looking forward, NCUA is committed to maintaining a dynamic examination program that will assure federally-insured credit unions have effective programs in place to minimize the risk of money laundering. NCUA will continue to provide guidance to federally insured credit unions regarding compliance with the BSA.” [email protected]

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