FinCEN proposes to update AML/CFT program requirements

The Financial Crimes Enforcement Network (FinCEN) issued a proposed rule Friday amending financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) programs to explicitly require that such programs be effective, risk-based, and reasonably designed, enabling financial institutions to focus their resources and attention in a manner consistent with their risk profiles.

The proposed amendments are based on changes to the Bank Secrecy Act (BSA) as enacted by the Anti-Money Laundering Act of 2020.

Specifically, it would:

  • Amend existing program rules to explicitly require financial institutions to establish, implement, and maintain effective, risk-based, and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process;
  • Require financial institutions to review government-wide AML/CFT priorities and incorporate them, as appropriate, into risk-based programs, as well as provide for certain technical changes to program requirements; and
  • Promote clarity and consistency across FinCEN’s program rules for different types of financial institutions.

According to FinCEN, the emphasis on risk-based AML/CFT programs seeks to avoid one-size-fits-all approaches to customer risk that can lead to financial institutions declining to provide financial services to entire categories of customers.

The proposal was prepared with consultation with the NCUA and other federal financial regulators to collectively issue proposed amendments to respective BSA compliance program rules for institutions they supervise.

Comments are due within 60 days of publication in the Federal Register.

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