FinCEN Proposal to Strengthen and Modernize AML/CFT Programs
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
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Kevin Edwards
Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them. Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).