John Zasada, Compliance Consulting Director, Financial Institutions Group

On Sept.17, 2020, the Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking (ANPRM) on potential amendments to anti-money laundering (AML) program requirements.  The amendments are intended to modernize the Bank Secrecy Act (BSA) and provide more flexibility to financial institutions.

The proposal addresses whether to clearly define a requirement for an “effective and reasonably designed” AML program in BSA regulations. An “effective and reasonably designed” would be defined as follows:

  • Identifies, assesses and reasonably mitigates the risks resulting from illicit financial activity—including terrorist financing, money laundering and other related financial crimes—consistent with both the institution’s risk profile and the risks communicated by relevant government authorities as national AML priorities;
  • Assures and monitors compliance with the recordkeeping and reporting requirements of the BSA; and
  • Provides information with a high degree of usefulness to government authorities consistent with both the institution’s risk assessment and the risks communicated by relevant government authorities as national AML priorities.

The ANPRM proposes amending the rules to establish an explicit requirement for a risk-assessment process. That risk-assessment process would include the identification and analysis of money laundering, terrorist financing and other illicit financial activity risks faced by the financial institution based on an evaluation of various factors, including its business activities, products, services, customers and geographic locations in which the financial institution does business or services customers.

The ANPRM also addresses whether the Director of FinCEN should issue every two years a list of national AML priorities, to be called FinCEN’s “Strategic Anti-Money Laundering Priorities”.  Financial institutions would then have to reasonably manage and mitigate the risks identified in the risk-assessment process by taking into consideration the strategic AML priorities, as appropriate and among other relevant information.

For more information on regulatory compliance related to AML, contact Doeren Mayhew’s regulatory compliance specialists.