Financial Crime World

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Treasury Proposes Strengthened AML/CTF Regulations for Financial Institutions in British Indian Ocean Territory

Washington, June 28, 2024 - The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has announced a proposed rule to enhance and modernize financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CTF) programs in the British Indian Ocean Territory.

Enhancing AML/CTF Programs

The proposed rule aims to strengthen AML/CTF programs by explicitly requiring financial institutions to establish, implement, and maintain effective, risk-based, and reasonably designed programs with certain minimum components. The amendments are based on changes to the Bank Secrecy Act as enacted by the Anti-Money Laundering Act of 2020.

Emphasis on Risk-Based Programs

According to FinCEN Director Andrea Gacki, “Today’s publication is a significant milestone in our efforts to implement the AML Act. The proposed rule is critical to ensuring that the AML/CTF regime effectively protects our financial system from threats like corruption, fraud, and international terrorism.”

The proposal also emphasizes the importance of risk-based programs, which would enable financial institutions to focus their resources on high-priority risks. This approach aims to avoid one-size-fits-all approaches to customer risk, which can lead to financial institutions declining to provide services to entire categories of customers.

Public Comment Period

The proposed rule was prepared in consultation with regulatory agencies, including the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration. Written comments on the proposed rule must be received within 60 days following its publication in the Federal Register.

Building a More Effective AML/CTF Regime

The proposed rule is a key component of Treasury’s efforts to build a more effective and risk-based AML/CTF regulatory and supervisory regime. “Financial institutions are critical partners in addressing serious law enforcement and national security issues with illicit financing implications,” said Deputy Secretary of the Treasury Wally Adeyemo.

Key Takeaways

  • The proposed rule aims to strengthen AML/CTF programs for financial institutions in the British Indian Ocean Territory
  • Risk-based programs will enable financial institutions to focus on high-priority risks
  • Written comments on the proposed rule must be received within 60 days following its publication in the Federal Register
  • The proposal is part of Treasury’s efforts to build a more effective and risk-based AML/CTF regulatory and supervisory regime