Financial Crime World

CFT Rules for Financial Transactions in United States Get a Boost

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has announced a proposed rule to strengthen and modernize financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) programs. This new regulation aims to explicitly require that such programs be effective, risk-based, and reasonably designed, allowing financial institutions to focus their resources and attention on high-priority threats.

Background

The proposed rule is based on changes to the Bank Secrecy Act (BSA) as enacted by the Anti-Money Laundering Act of 2020 (AML Act). It is part of Treasury’s effort to build a more effective and risk-based AML/CFT regulatory and supervisory regime.

Quotes

“More than ever, financial institutions are partnering with government to address serious law enforcement and national security issues with illicit financing implications.” - Deputy Secretary of the Treasury Wally Adeyemo

Proposed Rule

The proposed rule would 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
  • Review of government-issued AML/CFT priorities and incorporation into their programs as appropriate

Key Components

  • Establish a risk-based approach to AML/CFT programs
  • Require institutions to review government-issued AML/CFT priorities and incorporate them into their programs
  • Encourage institutions to modernize their AML/CFT programs where necessary to responsibly innovate while managing illicit finance risks

Consultation and Feedback

The proposal has been prepared in consultation with 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.

Accessing the Proposed Rule

The proposed rule can be accessed on the Federal Register website.

Quotes

“Today’s publication is a significant milestone in FinCEN’s efforts to implement the AML Act, and the proposed rule is critical for ensuring that the AML/CFT regime works to protect the financial system from threats like corruption, fraud, and international terrorism.” - FinCEN Director Andrea Gacki

Consistency with Treasury’s De-Risking Strategy

The proposal is consistent with Treasury’s De-risking Strategy, which recommended proposing regulations to require financial institutions to have reasonably designed and risk-based AML/CFT programs supervised on a risk basis.