FinCEN Issues Alert on Potential Russian Sanctions Evasion Efforts

The Financial Crimes Enforcement Network issued FIN-2022-Alert001 to highlight the potential for attempts to evade sanctions and other measures implemented in connection with the Russian Federation’s invasion of Ukraine.

As a result of the sanctions, sanctioned Russian and Belarusian actors may seek to evade sanctions through various means, including through non-sanctioned Russian and Belarusian financial institutions and financial institutions in third countries.

The alert provides red flag indicators that credit unions should be on the lookout for. In addition, the alert discusses ransomware attacks and other cybercrimes.

Credit unions are required to file a SAR if it knows, suspects, or has reason to suspect a transaction conducted or attempted by, at, or through the financial institution involves funds derived from illegal activity, or attempts to disguise funds derived from illegal activity; is designed to evade regulations promulgated under the BSA; lacks a business or apparent lawful purpose; or involves the use of the financial institution to facilitate criminal activity, including sanctions evasion.

The alert provides specific SAR filing instructions if the credit union suspects a violation of these sanctions.

Question of the Week

Q. Do I advertise term share accounts as Certificates of Deposit (CD) or Share Certificates?

A. This depends on whether the credit union is state-chartered or federally chartered. Oregon, Washington, and Idaho state-chartered credit unions are permitted to pay interest and/or dividends on accounts, while federally chartered credit unions are only permitted to pay dividends. “CDs,” or “Certificates of Deposit,” are interest-bearing accounts.  Therefore, if a credit union is state-chartered AND offers interest-bearing accounts, it can offer a CD, or Certificate of Deposit.  However, if a credit union is federally chartered, it cannot offer a Certificate of Deposit or CD because federally chartered credit unions cannot pay interest. As a result, it can only offer “share certificates,” “certificate account,” or “certificate.”

It is important to note that Truth in Savings states that an advertisement must never be misleading, inaccurate or misrepresent a credit union’s account agreement.

Related Links

RCW 31.12.402(3)
ORS 723.152
IDS 26-2116
12 CFR 707.2
Appendix C to Part 707

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Financial Crimes Enforcement Network

FinCEN Advises Increased Vigilance for Potential Russian Sanctions Evasion Attempts: FinCEN issued alert FIN-2022-Alert001 to instruct financial institutions to be vigilant against efforts to evade the expansive sanctions and the other U.S. imposed restrictions implemented in connection with the Russian Federation’s invasion of Ukraine.  The alert provides numerous red flags that credit unions should keep in mind.

Office of Foreign Assets Control

OFAC has updated the SDN list as of March 11. The last update prior to this was March 7.

­­­­­­­­­­­­­­­­­­­­Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

Posted in Compliance News, Compliance News, Compliance Question.