FinCEN Proposes Rule To Strengthen US Anti-Money Laundering

August 03, 2024
Source:  Read the full article at Skadden

The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has proposed a rule (the Proposed Rule) to implement certain aspects of the Anti-Money Laundering Act of 2020 (the AML Act), which updated the Bank Secrecy Act (BSA) to strengthen and modernize the U.S. anti-money laundering and countering the financing of terrorism (AML/CFT) regime by focusing regulatory scrutiny on the most significant national security and illicit financing threats.

FinCEN’s stated goals in issuing the June 28, 2024, Proposed Rule are to:

  1. Reinforce the risk-based approach FinCEN already expects of AML/CFT programs.
  2. Make these programs more dynamic and responsive to evolving risks.
  3. Render them more effective in achieving the purposes of the BSA.
  4. Refocus them toward a more risk-based, innovative and outcomes-oriented approach, as opposed to mere “technical compliance” with BSA requirements.

The Proposed Rule thus includes an express requirement that regulated financial institutions (FIs) maintain an AML/CFT compliance program that is “effective, risk-based, and reasonably designed” to help FIs focus resources and attention in a manner consistent with their risk profiles. (See sidebar below.)

The Proposed Rule also aims to harmonize AML/CFT program requirements across all types of FIs, including:

  • Banks (regardless of whether the bank is supervised by a federal functional regulator).
  • Broker-dealers regulated by the Securities and Exchange Commission (SEC).
  • Futures commission merchants.
  • Introducing brokers in commodities regulated by the Commodity Futures Trading Commission (CFTC).
  • Money services businesses.1

FinCEN acknowledges that certain of the requirements that the Proposed Rule would codify are already well-established expectations — for instance, that certain FIs will maintain risk-based policies and undertake periodic risk assessments — and that it is seeking to standardize these requirements across FIs, where appropriate.

Accordingly, while the impact of the Proposed Rule changes could vary depending on the type of institution and the nature and sophistication of its existing AML/CFT compliance program, we do not expect the Proposed Rule, if it becomes final, to impose significantly new or onerous obligations on regulated FIs.

Written comments on the Proposed Rule are due by September 3, 2024.