The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has proposed changes to anti money laundering (AML) requirements to make risk-assessments an explicit obligation for financial institutions.

FinCEN states this move would be crucial in establishing an “effective and reasonably designed” AML programme. It released an advance notice of the proposed new rule yesterday and is seeking public feedback on the potential changes.

In a bid to “modernize” the regime, FinCEN has proposed an overhauling of the regulatory amendments to establish new policies that address “the evolving threats of illicit finance, and provide financial institutions with greater flexibility in the allocation of resources,” according to the notice. “Resulting in the enhanced effectiveness and efficiency of anti-money laundering programmes.”

The new AML regulations intend to ensure that “all financial institutions subject to an anti-money laundering programme requirement must maintain an ‘effective and reasonably designed’ anti-money laundering programme.”

The regulator hopes to provide a more comprehensive definition of what such a programme under the Bank Secrecy Act (BSA) should look like in due course. 

However, it says that its is considering regulatory amendments that would explicitly define an “effectively and reasonable designed programme” as one that:

  • Identifies, assesses, and reasonably mitigates the risks resulting from illicit financial activity — including terrorist financing, money laundering, and other related financial crimes – consistent with both the institution’s risk profile and the risks communicated by relevant government authorities as national AML priorities;
  • Assures and monitors compliance with the recordkeeping and reporting requirements of the BSA; and
  • Provides information with a high degree of usefulness to government authorities consistent with both the institution’s risk assessment and the risks communicated by relevant government authorities as national AML priorities.

With these changes, banks; casinos and card clubs; money services businesses; insurance companies; operators of credit card systems; finance companies; and housing government sponsored enterprises will also be in purview of the obligations of the new amendments. 

An Anti-Money-Laundering Effectiveness Working Group (AMLEWG) created by the Bank Secrecy Act Advisory Group (BSAAG) has provided recommendations for the strengthening of the regime.

Earlier this week FinCEN issued a final rule meaning banks lacking a federal functional regulator will no longer be exempt from meeting anti-money laundering requirements.

Hear more about domestic US policy at the FinCrime World Forum live streaming event on 1 December. Thomas Nadrowtski, chief auditor, AML, anti-bribery and corruption at Citibank and Basima Khuram, senior vice president, UK financial crime advisory, at BNY Mellon will discuss potential impacts of the forthcoming presidential election.

 

 

Topics