AML and Countering the Financing of Terrorism Programs

Summary

SIFMA ¹ provided comments to FinCEN in support of the notice of proposed rulemaking (NPRM) to "fundamentally reform the requirements for financial institutions' anti-money laundering and countering the financing of terrorism (AML/CFT) programs…that better achieve the purposes of the BSA and lead to more effective outcomes…" ² SIFMA also supports the proposed enhancement of FinCEN's role in AML/CFT supervision and enforcement and recommend certain changes below to enhance these proposals and better achieve FinCEN's goals.

Excerpt

We wish to thank FinCEN for incorporating our comments on the 2024 NPRM into this new proposal, which reflects substantial progress towards the Anti-Money Laundering Act of 2020's (AML Act) mandate to modernize the Bank Secrecy Act (BSA) regime, reduce burdens, and stimulate innovation. We look forward to further efforts by FinCEN to modernize other elements of the BSA regime, including currency transaction report (CTR) and suspicious activity report (SAR) reforms, public-private partnership feedback, and innovation. Combined, these efforts will help financial institutions, law enforcement, and national security agencies more effectively combat illicit financial activity. In addition, we appreciate FinCEN's recognition that our members' "…AML/CFT programs safeguard national security and generate significant public benefits by preventing the flow of illicit funds in the financial system and by assisting law enforcement and national security agencies with the identification and prosecution of persons attempting to launder money or undertake other illicit activity through the financial system." ³

Setting clear expectations is critical to fulfilling the AML Act's mandate and FinCEN's goal to modernize the outdated BSA regime so that financial institutions can more efficiently and effectively safeguard national security and generate significant public benefits. Without clear expectations, a finalized rule could become a matter of form over substance, and financial institutions will never be able to move away from check-the-box compliance that diverts finite resources away from higher risks, or from shifting regulatory expectations that do not result in better outcomes for financial institutions, law enforcement, or national security agencies. Our comments below are intended to help ensure FinCEN's AML/CFT Program Rule accomplishes these worthy goals. ⁴

Executive Summary

• Standards and key terms must be clear and immutable. The preamble contains several helpful concepts that are not incorporated into the regulatory text. Thus, we propose FinCEN incorporate key elements of the NPRM's preamble into the regulatory text, not only for clarity, but also for regulatory certainty. Regulatory rather than preamble text is
  more binding, enduring, easily accessible and relied upon by practitioners, stakeholders, and examiners.
• Expand and clarify the FinCEN Supervisory Policy to cover enforcement actions by other regulators, not just the defined federal financial institutions regulatory agencies, for consistent application and interpretation of the BSA. Additionally, make the policy transparent and provide a financial institution with the opportunity to present its case.
• Retrain examiners on effective outcomes and enhance the feedback loop between examiners, law enforcement, and financial institutions for greater effectiveness.
• Extend the effective date to 24 months from 12 months, with the proviso that financial institutions can comply before the effective date of the final rule.