BPInsights: February 28, 2026

FinCEN Should Reassert Leadership of AML Policy

The U.S. Treasury Department's Financial Crimes Enforcement Network should reclaim its role in dictating anti-money laundering policy, BPI's op-ed in American Banker explains.

Bottom Line. The key is leadership. The law clearly requires the Treasury Department and its Financial Crimes Enforcement Network, or FinCEN, and them alone, to set AML/CFT priorities and write rules to implement the Bank Secrecy Act; it granted examination authority for those rules to Treasury, which the banking agencies now exercise under delegated authority. The op-ed lays out concrete structural reforms that could make a difference.

Background. More than five years ago, Congress passed a comprehensive AML reform law. Yet, as the last administration ended, no meaningful changes had been enacted, and bank examination focus on check-the-box compliance had, if anything, intensive. The current administration has a once-in-a-generation opportunity to rationalize the process and refocus tens of thousands of bank employees on rooting out serious crime rather than checking boxes.

Current State of Play. Currently, duplicative examinations are conducted by the federal banking agencies, independent of national law enforcement or national security priorities. Banks spend inordinate resources on outdated tactics and rote searches. Meanwhile, geopolitical unrest in Venezuela, Iran and Russia has increased the urgency for the United States to improve efforts to identify and intercept illicit finance.

Five Key Things

1. Highlights of This Week's Prudential Regulator Hearing

Fed Vice Chair for Supervision Michelle Bowman, FDIC Chairman Travis Hill and OCC Comptroller Jonathan Gould testified before the House and Senate this week in regular prudential regulatory oversight hearings. Here are a few highlights.

• Prudential. Vice Chair Bowman reiterated the Fed's plan to work with the other banking agencies to issue a Basel reproposal sometime by the end of March. In response to Sen. Mike Rounds (R-SD), Bowman said the Fed is "open to considering all suggestions and reviewing many aspects, or all aspects, including the tier 1 leverage ratio." Bowman told Chairman Tim Scott (R-SC) that she "appreciated your comments about nominal GDP as the benchmark for indexing, and we will be hopefully proposing some changes to the asset threshold and other areas where we can tailor the way that we approach regulation and apply it."

• Master Accounts. Sen. Lisa Blunt Rochester (D-DE) asked Bowman about the Fed's recent request for information on payment accounts, sometimes known as "skinny" master accounts. Blunt Rochester asked if the Fed "were to grant this access and later determine that a firm posed risks, does the Fed have clear authority to immediately suspend or terminate that access?" Bowman responded: "We would need to ensure that we do have that access. And yes, I believe that we do."

• Deposit Flight. Sen. Bernie Moreno (R-OH) asked regulators about the risk of deposit flight from yield-paying stablecoins, the subject of discussion in crypto market structure legislation. "Any significant deposit flight, or material deposit flight would not go unnoticed, certainly by me, by you and others, elected officials of this committee, and if there were to be significant deposit flight, I believe that I and other federal banking agency regulators would take steps" to protect banking system safety, said Gould. Sen. Thom Tillis (R-NC) said he still has questions about the level of deposit flight risk presented by stablecoins: "The one thing that I still have not been able to find much analysis on, except for that which was commissioned by various stakeholders is to what extent we really do have a deposit migration risk if we don't get this right?"
• Citizenship Records. Several senators, including Sens. Angela Alsobrooks (D-MD) and Catherine Cortez Masto (D-NV), raised the topic of potential executive action on bank citizenship verification requirements, as reported this week in the press.

2. Spoofing, Smishing and Deepfakes: To Stop Scams, Consumers Need Stronger Protections

Americans' savings are at risk as never before as new, technology-driven fraud and scams are surging across the U.S. Phone scams have become part of everyday life for American consumers, and they're becoming more sophisticated and convincing, boosted by AI deepfakes, voice cloning and location spoofing. Many scams originate from organized transnational crime groups that leverage global communications infrastructure to target Americans at scale. Consumers' phones and their apps are key entry points for scams.

• American households reported losing an estimated $12.5 billion to scams in 2024, a 25 percent increase of the previous year.
• 68% of Americans reported receiving scam calls at least weekly, 61% of Americans reported receiving scam text messages at least weekly and about one-third of Americans say they get scam phone calls at least daily.

More work needs to be done to prevent fraud. Banks are educating consumers and investing significant resources in fraud prevention and mitigation, but often, once fraud reaches a bank's systems, consumers have already been harmed. Prevention is key, and action from industries and regulatory bodies outside of the banking sector are needed to achieve a durable solution. Learn more here.

3. OCC Issues Proposal Implementing Stablecoin Rules

The OCC this week released a proposal implementing the GENIUS Act, stablecoin legislation enacted in 2025. The measure proposes and seeks comment on the regulations that would apply to permitted payment stablecoin issuers and foreign payment stablecoin issuers under the OCC's jurisdiction as well as certain custody activities conducted by OCC-supervised entities. The rule addresses regulations the OCC must issue under the GENIUS Act aside from those related to the Bank Secrecy Act, Anti-Money Laundering and Office of Foreign Asset Control sanctions, which will be covered in a separate rulemaking.

4. Fed Seeks Comment on Proposal to Remove Reputational Risk from Supervision

The Federal Reserve this week issued a proposal seeking comment on its action to remove reputational risk from its supervision of banks. The proposal, which would codify this change in examination policy, "reiterates the Board's policy against penalizing or prohibiting an institution from banking a customer engaged in legal activity," according to the Fed. More broadly, the proposal would "build on that announcement to help ensure supervisory decisions are based on material financial risks, as well as increase clarity and facilitate greater precision in supervisory decision making. It would also support the Board's focus on core financial risk in its supervision of banks." The Fed's proposal is directionally aligned with the proposal from the FDIC and OCC issued in October of last year, though there are some key differences, including how the agencies define reputational risk.

5. The Crypto Ledger

Here's the latest in crypto.

• Charters. Fintech firm Payoneer applied for an OCC national trust bank charter, according to an announcement this week. The firm aims to establish a national trust bank "designed to support stablecoin-enabled infrastructure for global businesses." The application marks the latest in a series of similar bids from fintech and crypto firms for national trust bank charters. Crypto.com received OCC conditional approval for a national trust bank charter this week.
• Binance Finds $1.7B in Crypto Sent to Iranian Entities. Internal investigators at crypto exchange Binance discovered that about $1.7 billion flowed from Binance accounts to Iranian entities with links to terrorist groups, potentially violating global sanctions. People in Iran gained access to more than 1,500 Binance accounts over 2024, according to the investigation. The investigators reported these findings to top executives and within weeks, Binance fired or suspended at least four people involved in the probe.
• Meta Tests Stablecoin Payments in Its Apps. Meta, which operates WhatsApp, Instagram and Facebook, is testing ways to integrate stablecoin payments into its apps, according to Bloomberg. The trial will use existing stablecoins, and Meta does not plan to issue its own stablecoin, the firm clarified - a relevant detail, given widespread pushback to Meta's plan in recent years to develop its own digital currency known as Libra.
• Jane Street Accused of Insider Trading that Fueled Terraform Collapse. A lawsuit filed by the administrator winding down bankrupt crypto platform Terraform Labs accused high-speed trading firm Jane Street of insider trading that aimed to profit from the crypto firm's collapse.

In Case You Missed It

Administration Considering Executive Order to Require Banks to Collect Citizenship Data

The Trump Administration is considering a potential executive order or other action to require banks to collect citizenship information from their customers. This action could require banks to review passports, Social Security numbers or other information to verify customers' immigration status, in addition to existing Know Your Customer obligations. Currently banks do not collect or maintain customers' citizenship status. The potential action could involve Treasury's FinCEN collecting the information, according to the Wall Street Journal.

Traversing the Pond

Here is the latest in international banking policy.

• Bloomberg: UK Banks Reluctant to Reduce Capital Buffers at BoE Behest, Citing Ratings Concerns. Large UK banks are hesitating to reduce capital levels in response to Bank of England guidance aiming to boost lending, according to Bloomberg. The BoE announced in December that the benchmark level of tier 1 capital should be 13%, 1 percentage point lower than its previous guidance. The BoE has not cut capital requirements, but the announcement aimed to prompt banks to tighten the extra buffer they hold above their regulatory minimums. Banks cited concern about negative impacts on credit ratings as a reason for not lowering their buffers.
• Basel Committee Discusses Crypto Standards at Recent Meeting. At its meeting this week, the Basel Committee on Banking Supervision discussed progress on a targeted review of the prudential standard for banks' cryptoasset exposures. The Committee has expedited a review of that prudential standard. In addition, the Committee discussed vulnerabilities in government bond-backed repo markets and a more general outlook for financial stability. The Committee also approved a technical amendment on the standardized approach to operational risk, following its previous consultation, and approved a response to a frequently asked question about the market risk framework.

BoE Paper Suggests Central Bank Lender-of-Last-Resort Function Stabilizes Funding Markets

Central bank funding programs can significantly enhance credit supply by stabilizing wholesale funding markets and lowering banks' funding costs, even when banks do not directly use these facilities, a recent Bank of England paper suggests. One of the main functions of a central bank is to act as a lender of last resort. Policymakers often embrace that role cautiously, worrying that banks may overly rely on the central bank for funding instead of trying to retain access to private markets. In other words, the concern is that the lender of last resort may crowd out private funding for banks. A recent paper by the Bank of England suggests that these concerns are unfounded and that, instead, access to the lender of last resort has stabilizing effects on funding markets. Even without actual use of the facility, the mere access to the lender of last resort can stabilize private funding markets and allow banks to maintain a healthy provision of credit to the real economy. This is an important finding especially in the context of renewed attention about destigmatizing the discount window and incorporating discount window capacity as a high-quality liquid asset for the purpose of liquidity regulations.

In Memoriam

Longtime Financial Policy Analyst Karen Shaw Petrou Dies at 73

Karen Shaw Petrou, co-founder of policy analysis firm Federal Financial Analytics, died on Feb. 21, 2026 after a diagnosis of liver cancer. Petrou, 73, was predeceased by her husband, Basil Petrou, in 2021. She was a graduate of Wellesley College and the University of California, Berkeley, and began her career at Bank of America in 1977. She was the author of a book titled "Engine of Inequality: The Fed and the Future of Wealth in America." Petrou was blind due to retinitis pigmentosa and advocated for funding medical research to find cures for blindness and other conditions. "Karen was a fixture in Washington, trusted by everyone and prized for her insights and personal strength," stated BPI CEO Greg Baer. "She was a good analyst and good company. She will be missed."

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Member News

BofA Invests Nearly $40 Million into American Workforce Skills in 2025

In recognition of Career and Technical Education Month, Bank of America on Thursday announced it invested nearly $40 million in 2025 in workforce development initiatives, partnering with more than 100 universities and community colleges and over 600 nonprofit partners across all its U.S. markets. These workforce development partners estimate the bank's investments last year alone contributed to approximately 86,400 individuals getting connected to livable wage jobs and provided 265,000 people with access to training, education and career readiness programs designed to position them for long term career success. Learn more here.

Upcoming Events

• 3/4/2026: House Financial Services Committee Markup
• 3/5/2026: HFSC Financial Institutions Subcommittee Hearing Titled "Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions"
• 3/17/2026-3/18/2026: FOMC Meeting
• 3/18/2026: HFSC Task Force on Monetary Policy, Treasury Market Resilience and Economic Prosperity Hearing: "Revisiting the Treasury-Fed Accord"
• 3/25/2026: University of North Carolina ABCs of Banking Law in Charlotte, N.C.
• 3/26/2026-3/27/2026: UNC School of Law Banking Institute in Charlotte, N.C.