The Financial Crimes Enforcement Network (FinCEN) has proposed a plan to issue anti-money laundering (AML) guidance every two years to encourage financial institutions to align their Bank Secrecy Act (BSA) compliance programs with the agency’s enforcement priorities.
The proposal, according to a notice of rulemaking published by FinCEN on Wednesday, is to have financial institutions reallocate resources within their BSA compliance programs so that they “address areas of risk and national AML priorities.”
Under the proposal, BSA compliance programs would be considered “effective and reasonably designed” if they fold AML priorities issued by FinCEN with the institution’s own risk assessment processes; comply with all BSA requirements; and provide information that is of a “high degree of usefulness” to government authorities, according to a FinCEN press release.
If the new rules are approved, financial institutions’ BSA compliance programs would then prioritize finding and reporting “terrorist financing, money laundering, and other related financial crimes” within the financial transactions of their customers.
“FinCEN understands that institutions may reallocate resources from other lower-priority risks or practices to manage and mitigate higher-priority risks, including any identified as Strategic AML Priorities,” FinCEN said in its proposal.
The new requirement “would also seek to implement a common understanding between supervisory agencies and their supervised financial institutions on the necessary AML program elements,” the guidance said.
As things stand, financial institutions covered by the BSA—which include banks, securities brokers and dealers, money service businesses, and several other kinds of financial organizations—can use different sets of risk assessments to determine what transactions merit filing suspicious activity reports (SARs). Sometimes institutions of the same size and in the same industry use different assessments, FinCEN said.
The revamped framework could streamline BSA compliance programs in some financial institutions, FinCEN said, focusing the program’s attention on providing SARs “with a high degree of usefulness to government authorities.” Other institutions may conclude that their current BSA compliance system sufficiently complies with FinCEN’s AML priorities, as well as the institution’s own risk assessment.
“FinCEN recognizes and appreciates financial institutions must continue to identify, reasonably manage, and mitigate these risks consistent with financial institutions’ risk-management processes,” the proposal said.
The proposal would require the director of FinCEN to issue a list of national AML priorities, to be called FinCEN’s Strategic Anti-Money Laundering Priorities, every two years, the press release said.
FinCEN is seeking public comment on its proposed changes for the next 60 days.