On June 28, the Financial Crimes Enforcement Network (FinCEN) issued a proposed rule to update Bank Secrecy Act (BSA), Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) programs. This is a result of the ongoing efforts to update AML/CFT programs in accordance with the reforms passed in the Anti-Money Laundering Act of 2020 (AMLA).
As we have discussed before, the AMLA was the most significant change in BSA/AML legislation since the Patriot Act. Some of the more notable changes include overhauling the Beneficial Owner Rule, the updated Whistleblower Program for financial institutions, enhanced penalties and an overall expansion of the purpose and power of the BSA.
The proposed rule would update current regulations and explicitly require that such programs be effective, risk-based and reasonably designed. Specifically, existing rules would be updated to mandate that financial institutions have an AML/CTF risk assessment process (making it a pillar of your program). The government wide AML/CFT priorities would need to be reviewed and formally incorporated into your program and the BSA/AML framework of your institution would also need to be formally updated to align with and be consistent with the AML/CTF language utilized in the AMLA.
According to FinCEN, the proposed rule will allow for flexibility so that financial institutions can be creative in mitigating risk, avoid de-risking, and allow modernization through innovation and collaboration. Again, this is just another step in a multi-year implementation plan for the significant reforms mandated by AMLA. Rest assured, we will continue to keep an eye on the changing environment and keep you up to date as the requirements are finalized.
Published
2024/07/15
