This document discusses AML-CTF issues and best practices for credit unions. It begins by providing a real-world example of money laundering through businesses. It emphasizes that the board is responsible for conducting risk assessments to identify high, medium, and low risks, and for ensuring suitable controls are designed and implemented. It also discusses the roles of the AML officer and MLRO, issues around member identification, suspicious transactions, loan applications, training requirements, and good practices like splitting AML/MLRO roles and having clear procedures applied by all staff.

1. AML-CTF issues for Credit
Unions
Daren O'Neill QFA CUA CUC BBS

2. Agenda
 Real World examples
 Board responsibility
 AMLO & MLRO
 Identification
 Suspicious transactions
 Loan Applications
 Training
 Good practice

3. Real World Example
“They have seized documentation showing that
money held by some of Kinahan's associates
based in Dublin was invested and laundered
through a number of businesses, including a
chain of dry-cleaning outlets in the capital.
Gardai believe that a hairdressing and beauty
salon was also used to launder the money while
the extent of a betting racket, which has so far
been shown to have "cleaned" €2.5m, has yet to
be fully determined.”

4. Board Responsibility
 Risk Assessment carried out to identify
High, Medium and Low risks
 Members
 Products
 Delivery Channels
 Geographic Area
 This is then the basis of your Policies
and Procedures

5. Risks in Credit Unions
 Generally low risk compared to other
financial institutions
 High volumes of cash
 “Smurfing”
 Loan repayments
 Pre-1994 Members
 Monitoring will depend on risk profile of each
credit union
 Minor accounts
 Club and Organisation accounts

6. AML-CTF RISK MATRIX
Sample matrix
LOW RISK MEDIUM RISK HIGH RISK
MEMBERS Active members
post 1994
Pre-1994
Dormant
PEPs
PRODUCTS Money Transfer
Bureau de Change
DELIVERY
CHANNELS
Branch Online
GEOGRAPHIC
AREA
Close to a border

7. Board Responsibility
 Suitable controls designed and
implemented
 Policy reviewed at least Annually
 Monthly report to the Board on
systems and procedures.
 Still a reluctance to ‘shop’ their
members for tax or social welfare
issues.

8. Anti-Money Laundering officer
 Director or senior staff member
 Can also be the MLRO
 I recommend that it be a director as it
fits in with the governance / operational
role division
 Strong personality to drive compliance
 Lack of special training for AML officers

9. Money Laundering Reporting
Officer (MLRO)
 Responsible for the Operational side
of AML compliance
 Extra training required
 Essential that time is blocked in their
diary to carry out role
 Often works well where they have
some operational control to oversee
compliance

10. Identification Issues
 All potential Beneficial Owners must be
identified – e.g. Minors, Businesses, Clubs
 True Name
 Passport / Driver's licence
 Birth cert (for minors)
 Date of Birth – careful with PSC cards
 Lack of understanding about PPS
numbers (TIN directive 2003)

11. Suspicious Transactions
 What may be suspicious?
 Unusual sums of cash
 Conflicting information
 Member behaviour – nervous or
aggressive when questioned
 Documentation not in order
 Any information that they are Evading
Tax or defrauding Social Welfare
 If you have to think about it, it’s
probably suspicious!

12. Reporting Suspicious
Transactions
 Staff aversion to querying the source
or purpose of funds
 Receipted reports
 Capturing as much information as
possible
 Everyone in the organisation needs
to be reminded it is not just a teller
role

13. Loan Applications
 Money earned “off the books” or “cash
in hand” can potentially give rise to a
report for tax evasion.
 Advise members such income cannot
be taken into account
 What is the real purpose of the loan?
 Self-employed may be viewed with too
much suspicion

14. Training
 All new officers within a reasonable time
of starting (Induction)
 CU is responsible if an untrained
staff member / volunteer unknowingly
breaches the act.
 All officers at least once a year
 Can be Internal or External
 Maintain records of training

15. Good Practice
 AML & MLRO Split roles
 Monthly agenda item to Board
 Clear procedures applied by all staff
 Use the IT system to its capacity
 Work plan set out clearly by MLRO for
the year and followed each month
 MLRO in a staff supervisory role