America's Credit Unions is supporting the Treasury Department's plan to phase out paper checks for federal payments while also welcoming new federal guidance designed to strengthen fraud detection across the financial system.
In a comment letter submitted to Treasury, the trade group endorsed implementation of Executive Order 14247, Modernizing Payments To and From America's Bank Account, which directs the federal government to transition federal disbursements to electronic payments wherever permitted by law.
The organization said electronic fund transfers offer significant advantages over paper checks, including faster payment delivery, reduced operational burdens for credit unions, and enhanced fraud protections. According to the letter, electronic payments eliminate many of the manual processes associated with handling paper checks, including receiving, scanning, reconciling and returning payments. The group also noted that paper checks remain vulnerable to theft, alteration and forgery.
While supporting the transition, America's Credit Unions urged Treasury to monitor the impact on populations that continue to rely on paper checks and to publish demographic data that could help credit unions target financial education and outreach efforts.
Separately, the organization praised updated guidance from the Financial Crimes Enforcement Network expanding information-sharing protections under Section 314(b) of the USA PATRIOT Act.
"Fraudulent activity often involves multiple financial institutions," said Andrew Morris, director of innovation and technology at America's Credit Unions. "FinCEN's updated guidance regarding information sharing across institutions will allow credit unions to more easily act when fraud is detected."
The revised guidance clarifies that financial institutions may share information related to fraud because fraud offenses can serve as specified unlawful activities underlying money laundering investigations. America's Credit Unions said the clarification reflects recommendations previously submitted by its Fraud Task Force and will help institutions collaborate more effectively to identify and prevent suspicious activity.
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