Legs and Regs

The Financial Crimes Enforcement Network (FinCEN) issued an advanced notice of proposed rulemaking (ANPRM) regarding potential regulatory amendments establishing that all covered financial institutions subject to anti-money laundering (AML) requirements must maintain an “effective and reasonably designed” program.

The potential regulatory amendments would modernize the regulatory regime and further clarify that the AML compliance programs must: assess and manage risks as informed by a financial institutions individual risk assessment; provide for compliance with Bank Secrecy Act requirements; and provide for the reporting of information with a high degree of usefulness to government authorities.

FinCEN noted that the amendments would also provide financial institutions with greater flexibility in allocating resources. In particular, the amendments allow for the financial industry and corresponding supervisory authorities to leverage off of new technologies and risk-management techniques. The changes would also facilitate the increased sharing of information and the discarding of inefficient and unnecessary practices.

Recommendations for the amended regulatory regime include: clarification of current requirements and supervisory expectations related to risk assessments, negative media searches, customer risk categories and ongoing customer due diligence; revision of existing guidance or regulations with respect to politically exposed persons; and support for potential automation opportunities for high-frequency and/or low-complexity suspicious activity reports and currency transaction reports, among other measures to upgrade the AML rules.

Written comment are due within 60 days of the publication of the ANPRM in the Federal Register.