Anti-Money Laundering Program Effectiveness, 1506–AB44
Docket Number FINCEN–2020–0011
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183
Dear Director Blanco:
The American Bankers Association (ABA) appreciates the opportunity to comment on the advanced notice of proposed rulemaking (ANPRM) considering regulatory changes to emphasize that AML programs must be “effective and reasonably designed.” The goals set forth in the ANPRM are goals that ABA has supported for many years.
One of the primary foundations of the Bank Secrecy Act (BSA) is to ensure that banks provide information that is highly useful to law enforcement for investigating and prosecuting possible cases of money laundering or terrorist financing. The banking industry is committed to its role to combat money laundering and terrorist financing but over the years banks have identified BSA compliance as one of the most burdensome compliance obligations they face. It also is not unusual for bankers to comment that they very rarely see the results of their efforts, even though law enforcement officials and FinCEN regularly state how important BSA information is. Despite these divergent views, there has been growing recognition that steps must be taken to make the system more effective and efficient.
While banks and other financial institutions have been applauded for all the efforts they put into anti-money laundering (AML) and countering the financing of terrorism (CFT), international data on the results of these efforts do not reflect the time and effort being expended. Therefore, FinCEN is evaluating steps intended make the program more effective by creating clear expectations for AML compliance program, mandating risk assessments for all financial institutions, and creating a set of national AML priorities that would guide financial institutions’ efforts.
ABA believes that focusing on effectiveness and efficiency in AML compliance programs will go a long way toward eliminating inefficient and unnecessary practices and focus resources on fulfilling the BSA’s stated purpose of providing information with a high degree of usefulness to government authorities. It is time to work in collaboration with law enforcement, regulators and other financial institutions to ensure that the significant resources the financial industry commits annually are designed effectively and focused efficiently to detect and deter illicit financial activity—not to merely satisfy a regulatory requirement. However, to effect that change in focus, we believe several additional policy changes will be critical. First, existing regulatory requirements should be reviewed and updated to eliminate redundant, unnecessary, or outdated requirements; this is particularly important to ensure older mandates take into account new technologies.
Second, to ensure that information provided for law enforcement is useful, better communication and feedback from law enforcement is vital. We support the publication by FinCEN of Strategic Anti-money Laundering Priorities (Strategic AML Priorities or Priorities) to help bankers allocate resources, both human and capital, to efforts that are most helpful to law enforcement. At the same time, the Priorities must include information from law enforcement about typologies and red flags in order to give financial institutions the tools that they need to incorporate the Priorities. However, it is important to be clear that these new Priorities will become an integral part of AML compliance as a guide to risk assessment and an effective AML compliance program. If the Priorities are seen as merely a new mandate on top of existing mandates, they will run counter to the efforts to focus on effectiveness and efficiency.
Third, expectations for an effective compliance program must be both clear and flexible. Clarity is needed to ensure that all parties, including financial institutions, examiners, consultants, vendors, and software providers understand what is expected. It is especially important that examiners understand how this new approach changes the existing program for evaluating bank compliance. Although ABA agrees that these standards should apply across all segments of the financial sector, variations in charter, business models, and operations must be taken into account when the standards are applied.
Fourth, while banks have had an implicit requirement to adopt a risk assessment since 2005, making that a mandate that applies across all segments of the financial sector would be sensible.
Finally, since feedback from law enforcement is the foundation for effectively combatting money laundering and illicit finance, FinCEN must take steps to foster better communication between the financial sector and law enforcement. And, to validate the process and demonstrate its credibility, FinCEN should issue reports on a frequent basis, possibly annually, demonstrating how the creation of priorities are working in practice.
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