Well now, that is something new I learned today. I wonder how recent the usage is in the UK? I ask because in both world wars, there was a British female volunteer nursing unit called the FANY, an abbreviation for First Aid Nursing Yeomanry and obviously the members would be called FANYs ... I always thought it cute the ladies had this name that sounded so much like bottom or derriere, I'm certain that many jokes were made with this.
But instead of a bottom it is apparently also a British colloquialism for a vulva ... very good indeed. But I suppose it wouldn't have had that connotation in 1907 when the FANYs were established? Or did it? Would have been awfully naughty back then I'd think.
It's an interesting question, but nobody seems to know the etymology surrounding the word 'fanny'. It has certainly been used as taboo slang for vulva for at least 50 years judging by the people who I've known use it with that meaning. While in the USA and Canada it refers to buttocks, in the UK and Australia (possibly other commonwealth countries too, but I can't be certain) it always means vulva. The different usage could result in uncomfortable misunderstandings.
The closest I've ever found to an explanation for the word is here -
http://www.etymonline.com/index.php?term=fanny
This would seem to date the use of the word 'fanny' for vulva much earlier than a mere 50 years ago - and if this is reliable evidence, why didn't it occur to someone that it might be embarrassing to name a specialist British female nursing unit the FANY? π
The vulva meaning has certainly been in common enough usage in England for at least the past 40 years. It was a word very frequently used during my school days, and it always, always meant vulva. Never buttocks.
When groups of young males in the UK hunt in packs for women in bars and nightclubs, they might make an unrefined comment that a particular establishment was "heaving with fanny" or as the less fortunate might say, "No fanny in there, mate". The usage of 'fanny' in these situations is clearly equivalent to using the word 'pussy', but in the UK the word fanny is what you would be more likely to hear.