The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has announced a proposed rule aimed at strengthening and modernizing financial institutions' anti-money laundering and countering the financing of terrorism (AML/CFT) programs. While these institutions have long maintained AML/CFT programs under existing regulations, the new rule seeks to amend those regulations to explicitly require that such programs be effective, risk-based, and reasonably designed. This approach aims to enable financial institutions to allocate their resources in line with their specific risk profiles.
"More than ever, financial institutions are partnering with government to address a range of serious law enforcement and national security issues with illicit financing implications, from fentanyl trafficking to Russia’s illegal invasion of Ukraine," said Deputy Secretary of the Treasury Wally Adeyemo. "It has been an important priority for Treasury to issue this proposed rule that promotes a more effective and risk-based regulatory and supervisory regime that directs financial institutions to focus their AML/CFT programs on the highest priority threats."
FinCEN Director Andrea Gacki also commented on the significance of this development: "Today’s publication is a significant milestone in FinCEN’s efforts to implement the AML Act. The proposed rule is a critical part of our efforts to ensure that the AML/CFT regime is working to protect our financial system from longstanding threats like corruption, fraud, and international terrorism, as well as rapidly evolving and acute threats, such as domestic terrorism, ransomware, and other cybercrime."
The proposed rule includes several key components:
- Amending existing program rules to explicitly require financial institutions to establish, implement, and maintain effective, risk-based AML/CFT programs with certain minimum components.
- Requiring financial institutions to review government-wide AML/CFT priorities and incorporate them into their risk-based programs.
- Promoting clarity and consistency across FinCEN’s program rules for different types of financial institutions.
Additionally, the proposal outlines broader considerations for an effective and risk-based AML/CFT framework as envisioned by the Anti-Money Laundering Act of 2020 (AML Act). For instance, it emphasizes avoiding one-size-fits-all approaches that could lead financial institutions to decline services for entire categories of customers. The proposal aligns with recommendations from Treasury's De-risking Strategy by encouraging reasonably designed and risk-based AML/CFT programs supervised on a risk basis while considering financial inclusion effects.
Financial institutions are also encouraged to modernize their AML/CFT programs where appropriate in order to responsibly innovate while managing illicit finance risks.
This proposal was prepared in consultation with several federal agencies including the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration.
Written comments on FinCEN's proposed rule must be received within 60 days following its publication in the Federal Register.
Proposed Rule: [Federal Register Link]
Fact Sheet: [Program NPRM FactSheet Link]
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