Treasury Proposes New Requirements for AML/CFT Compliance Programs
The Treasury Department’s Financial Crimes Enforcement Network proposed a new rule this week that it said will “explicitly require” banks and other financial institutions to have “effective, risk-based, and reasonably designed“ compliance programs to combat money laundering and terrorism financing. The agency’s proposal also would require them to put in place a risk assessment process and meet other “minimum” rules for their compliance programs.
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The rule is meant to help “strengthen and modernize” the compliance programs of banks; casinos, money services businesses, securities brokers and dealers, mutual funds, insurance companies, precious metals dealers and other financial businesses, FinCEN said. The agency is proposing for those institutions to, “at a minimum,” have in place a risk assessment process “that serves as the basis for the financial institution’s” anti-money laundering (AML) and countering the financing of terrorism (CFT) programs; practice “reasonable management and mitigation of risks” through internal policies and procedures; designate a qualified AML/CFT officer; have in place an ongoing employee training program; conduct independent, periodic testing; and more.
Treasury Deputy Secretary Wally Adeyemo said banks are increasingly working with the government “to address a range of serious law enforcement and national security issues with illicit financing implications, from fentanyl trafficking to Russia’s illegal invasion of Ukraine.” This rule has “been an important priority for Treasury” to help banks “focus their AML/CFT programs on the highest priority threats.”
The agency said the rule also “articulates certain broader considerations for” effective compliance frameworks and stresses that firms should “avoid one-size-fits-all approaches to customer risk that can lead to financial institutions declining to provide financial services to entire categories of customers.”
Public comments are due Sept. 3.