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The Morning Risk Report: Employees Spot Compliance Gaps at Credit Union |
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he Virginia offices of Pentagon Federal, the third largest U.S. credit union. PHOTO: MARK H. ANDERSON/THE WALL STREET JOURNAL
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Good day. Staffers at the third-largest U.S. credit union flagged problems with its program to prevent money laundering, according to internal documents and people familiar with the matter.
The employees at Pentagon Federal Credit Union, which serves 1.6 million members and has about $24 billion in assets, told executives and regulators about their concerns. The documents don’t contain evidence of money laundering by the credit union’s customers; they do include reports about the adequacy of the compliance program and a push for a higher budget.
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Response: PenFed General Counsel Scott Lind said that the credit union’s anti-money-laundering program “fully complies with all government regulations.” In response to questions from The Wall Street Journal, the credit union’s chief executive said: “These false allegations against PenFed were properly reviewed by the appropriate third party authorities that have unfettered access to ALL relevant information, and were determined to be unfounded.”
The PenFed regulator, the National Credit Union Administration, gave PenFed in 2015 the highest-possible rating. The following year, employees began documenting what they saw as compliance gaps, such as not having a process to identify potentially high-risk members, according to an internal report, as well as a backlog of transactions flagged for further investigation.
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Send comments to the Risk & Compliance editor, Jack Hagel, at jack.hagel@wsj.com.
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