AML/CFT Compliance in the Credit Union Sector: What the FSC Is Prioritising and Why It Matters

In June 2026, FSC CEO Warrick Ward joined the UWI (Cave Hill) Co-operative Credit Union Limited for a panel discussion on “AML/CFT Compliance: Aligning Credit Unions with National Regulatory Expectations.” The panel brought together regulators, practitioners, and credit union stakeholders to examine how the sector can strengthen its anti-money laundering and counter-financing of terrorism frameworks.

Below, we outline the key points Mr Ward raised on the day; covering the FSC’s current supervisory priorities, the principle of proportionality in regulation, and the path forward for inter-agency coordination.

Where Is the FSC Focusing Its Supervisory Attention?

Based on examination ratings across the credit union sector for the period November 2024 to March 2026, the FSC has identified the areas where the most persistent weaknesses exist. For the 2026–2027 financial year, supervisory priorities will focus on:

• Board functionality: ensuring that boards are actively engaged in oversight of AML/CFT obligations
• Compliance and audit: strengthening internal control assurance mechanisms
• Customer due diligence and Know-Your-Customer (KYC) measures: addressing gaps in how credit unions identify and verify their members
• Risk assessment: improving how institutions identify and mitigate AML/CFT risks
• Training, education, and staff screening: ensuring staff are equipped to recognise and respond to compliance risks

These priorities reflect patterns identified across multiple institutions. The FSC’s supervisory approach will remain risk-based and outcome-focused, with priority placed on timely remediation. Engagement with the sector during this period will take the form of remediation plan follow-up, sectoral circulars, and targeted supervisory outreach.

Can Regulation Be Proportionate Without Lowering Standards?

One of the most frequently asked questions in the credit union sector is whether smaller institutions can reasonably be held to the same compliance standards as larger ones. The FSC’s position is clear: standards do not change, but how they are applied can.

Risk-based supervision (RBS) is the mechanism that makes this possible. RBS recognises that not all credit unions carry the same level of risk to members or to the financial system. Rather than applying a one-size-fits-all framework, the approach calibrates regulatory requirements, supervisory intensity, and reporting obligations to the size, complexity, risk profile, and systemic importance of each institution.

All credit unions are still expected to meet minimum standards for safety, soundness, governance, consumer protection, AML/CFT compliance, and risk management. What may differ is the sophistication of those requirements and how they are assessed. The FSC’s objective is to ensure that every credit union effectively manages the risks within its sphere of operations, and that the likelihood of failure in the sector is minimised.

Strengthening Coordination: FSC, FIU, and the League

Effective AML/CFT supervision does not sit with any one body. The FSC has signalled its intention to enhance coordination with the Financial Intelligence Unit (FIU) and the Barbados Co-operative and Credit Union League (the League), building on the existing inter-agency information-sharing framework.

• Priority areas under consideration include:
• Establishing regular coordination meetings
• Developing a shared sectoral risk dashboard
• Implementing targeted thematic data calls
• Introducing periodic feedback on the quality and timeliness of reporting

Together, these measures are intended to support a more proactive exchange of supervisory and intelligence insights, improve identification of emerging vulnerabilities in the sector, and enable more timely and coordinated responses to material AML/CFT risks.

The FSC’s Role in Supporting the Sector

The FSC’s engagement in discussions such as this one reflects its broader commitment to fostering a well-regulated, resilient non-bank financial sector. Regulatory compliance is not a burden to be managed, it is a foundation for the trust that credit unions depend on to serve their members effectively.

For more information on the FSC’s supervisory activities or AML/CFT guidance for the credit union sector, visit https://www.fsc.gov.bb/aml-cft