Washington, D.C. – In a statement for the record ahead of today’s House FinCEN oversight hearing, the Bank Policy Institute urged Congress to modernize the Bank Secrecy Act so banks can focus on top national security threats and deliver more actionable intelligence to law enforcement. BPI called for aligning AML requirements with the Anti-Money Laundering Act’s core goals: modern technology, risk-based supervision and a sharper focus on useful information.
“Congress enacted AML reform more than five years ago to spur innovation and refocus banks and regulators on the most urgent threats. That promise remains unfulfilled, though recent Administration steps are moving in the right direction. We urge Congress and Treasury to consider policy actions that would align banks’ AML requirements with the goals of that reform law, including putting FinCEN explicitly at the center of AML supervision.” – Clara Kim, Bank Policy Institute Senior Vice President, BSA/AML & Sanctions
In the statement, BPI recommends that policymakers take four key steps.
- Finalize a truly risk-based, coordinated AML/CFT program rule. Recently, FinCEN and several of the U.S. banking agencies proposed a revised rule to clarify banks’ authority to run AML/CFT programs tailored to their risk profiles and activities. Encouragingly, the so-called “Program Rule” emphasized that banks should produce information that is highly useful to law enforcement and affirmed FinCEN’s role as a central coordinator of AML/CFT supervision. However, the Federal Reserve Board’s separate version of the Program Rule omits mention of FinCEN’s coordinating role in AML/CFT examination, which could allow examiners to impose bespoke, conflicting program expectations without a clear path for banks to raise concerns with Treasury.
- Reform BSA reporting with national priorities and usefulness. Banks spend extensive resources and time filing suspicious activity reports and currency transaction reports. Modernizing these requirements would allow banks to spend less time on low‑value, highly manual reporting and more time producing actionable intelligence for law enforcement. Today’s SAR expectations – for example, automatically classifying certain products as “high risk” – create incentives for defensive over-reporting.
- Encourage responsible innovation and data sharing. The Anti-Money Laundering Act explicitly encouraged technological innovation to counter money laundering and terrorism financing. Tools such as blockchain analytics and artificial intelligence/machine learning help banks enhance their illicit finance monitoring and surface complex, cross‑product patterns that traditional systems are unlikely to catch – but supervision and enforcement have failed to adapt, and often undermine efficiency by requiring banks to run legacy systems in parallel.
- Formalize permanent relief on customer due diligence obligations. FinCEN recently granted sensible exceptions on CDD requirements, and BPI supports broader, permanent relief that reduces duplicative, low-value reporting. This balance aligns with the goals of AMLA reforms.
Bottom Line: Banks operate some of the most sophisticated detection and investigative systems available to the U.S. government, and their reporting has directly supported high value prosecutions and the disruption of emerging criminal activity. BPI strongly supports FinCEN’s initiative to prioritize the investigation and reporting of activity that fulfills the BSA’s core purpose: Providing highly useful information to law enforcement.
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About Bank Policy Institute.
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud and other information security issues.
Media Contacts
Sam Fabens
Bank Policy Institute
sam.fabens@bpi.com
