Today, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed a rule to enhance and modernize financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) programs. This rule aims to update existing regulations, ensuring these programs are effective, risk-based, and well-designed, allowing financial institutions to align their efforts with their specific risk profiles. These updates are essential for protecting national security and maintaining the integrity of the U.S. financial system. The proposed changes stem from the Bank Secrecy Act (BSA) amendments enacted by the Anti-Money Laundering Act of 2020 (AML Act) and are part of Treasury’s goal to build a more effective and risk-based AML/CFT regulatory framework.
“Financial institutions are increasingly collaborating with the government to tackle serious law enforcement and national security challenges related to illicit financing, from fentanyl trafficking to Russia’s illegal invasion of Ukraine,” said Deputy Secretary of the Treasury Wally Adeyemo. “Issuing this proposed rule is a key priority for Treasury, promoting a more effective and risk-based regulatory regime that directs financial institutions to focus on the highest priority threats.”
“Today’s publication marks a significant milestone in FinCEN’s implementation of the AML Act,” said FinCEN Director Andrea Gacki. “The proposed rule is critical to ensuring our AML/CFT regime protects our financial system from longstanding threats like corruption, fraud, and international terrorism, as well as emerging threats such as domestic terrorism, ransomware, and other cybercrimes.”
This proposed rule would:
- Amend existing program rules to require financial institutions to establish, implement, and maintain effective, risk-based, and well-designed AML/CFT programs with mandatory risk assessment processes.
- Require financial institutions to review government-wide AML/CFT priorities and incorporate them into risk-based programs, along with technical changes to program requirements.
- Promote clarity and consistency across FinCEN’s program rules for different types of financial institutions.
The proposal outlines broader considerations for an effective and risk-based AML/CFT framework as envisioned by the AML Act. It emphasizes avoiding a one-size-fits-all approach to customer risk, which can lead to financial institutions refusing services to entire categories of customers. This aligns with Treasury’s De-risking Strategy, which recommends regulations for reasonably designed, risk-based AML/CFT programs supervised with financial inclusion in mind. The proposed rule also encourages financial institutions to modernize their AML/CFT programs to innovate responsibly while managing illicit finance risks.
The proposal, developed in consultation with the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC, and the National Credit Union Administration, will collectively amend BSA compliance program rules for the institutions they supervise.
Written comments on FinCEN’s proposed rule are due within 60 days of its publication in the Federal Register.
By FCCT Editorial Team
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