The Bank Policy Institute[1] appreciates the opportunity to respond to the Financial Crimes Enforcement Network’s request for information and comment on ways to streamline, modernize, and update the U.S. anti-money laundering and countering the financing of terrorism regime.[2] BPI appreciates the holistic and comprehensive approach that FinCEN has taken in reviewing this regime. We agree, as outlined in the RFI, that FinCEN’s efforts will further important objectives of the Anti- Money Laundering Act of 2020 (the “AML Act”),[3] including by identifying Bank Secrecy Act regulations and guidance that are “outdated, redundant, or otherwise do not promote a risk-based [AML/CFT] regime for financial institutions”[4] and enhancing the ability of institutions to implement risk-based AML programs by, among other things, “ensuring that more attention and resources . . . [are] directed toward higher-risk customers and activities, consistent with the risk profile of a financial institution[.]”[5] BPI recognizes the extensive efforts that FinCEN has already taken with respect to implementing the AML Act and looks forward to continued engagement with FinCEN as these efforts advance, including through the review described in the RFI.
In this letter, we address several changes that we recommend FinCEN make to BSA regulations and guidance.[6] We believe each of these changes would further the overall objectives of the BSA, as amended by the AML Act, as well as the objectives of certain specific AML Act provisions. The changes that we recommend in this letter include the following:
- FinCEN should, in coordination with the federal banking agencies, update AML program rules so that the rules expressly authorize financial institutions to implement programs that are risk-based—that is, programs that are effective and reasonably designed in light of an institution’s specific activities and risk profile;
- FinCEN should coordinate with the member agencies of the Federal Financial Institutions Examination Council (the “FFIEC”) so that, through both the BSA/AML Examination Manual (the “FFIEC Manual”) and examiner training, the BSA/AML examination environment is more clearly focused on the implementation of risk-based practices and the allocation of resources on the basis of risk;
- FinCEN should revise reporting requirements for both suspicious activity reports (“SARs”) and currency transaction reports (“CTRs”) to reflect changes in practices and technology since applicable regulations were promulgated and increase the usefulness of reported information to law enforcement and national security authorities;
- FinCEN should modernize requirements and expectations for customer due diligence activities, including customer identification, beneficial ownership collection, and processes specific to certain products and customer types;
- FinCEN should update its regulations and guidance to address emerging illicit finance risks, including those that arise in connection with cryptocurrencies and other emerging payment methods; and
- FinCEN should update various other regulatory requirements and guidance to align with the purposes of the BSA, as amended by the AML Act, as well as the objectives of certain specific AML Act provisions.
To read the full comment letter, please click here.
[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks, and the major foreign banks doing business in the United States. Collectively, they employ almost two million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.
[2] Financial Crimes Enforcement Network, Review of Bank Secrecy Act Regulations and Guidance, Request for Information and Comment, 86 Fed. Reg. 71201 (Dec. 15, 2021) (the “RFI”).
[3] William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. No. 116-283 (“NDAA 2021”).
[4] NDAA 2021, § 6216(a)(1)(C)(i).
[5] NDAA 2021, § 6101(b) (codified at 31 U.S.C. § 5318(h)(2)(B)(iv)); see 85 Fed. Reg. at 71202.
[6]In this letter, references to “guidance” have the same scope as in the RFI: guidance issued by FinCEN includes administrative rulings, advisories, bulletins, fact sheets, responses to frequently asked questions (“FAQs”), and notices issued by FinCEN and posted on its website. See 85 Fed. Reg. at 71202 n.1.
