Letter to FinCEN on Request for Comments on the Modernization of U.S. AML/CFT Regulatory Regime

Policy Division
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183

Dear Sir or Madam:

The American Bankers Association (ABA)  appreciates the opportunity to comment on FinCEN’s initiative to assess ways it might eliminate, modify or streamline its regulations and reduce burden. FinCEN is undertaking this review of its regulations and guidance to update the current anti-money laundering (AML) and countering the financing of terrorism (CFT) regime as well as meet the requirements of the Anti-Money Laundering Act of 2020 (AMLA). The review is similar to the decennial review of regulations conducted by the federal banking regulators under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). ABA welcomes this initiative, which we asked Congress to include in the AMLA.

FinCEN is particularly interested in exploring new and innovative approaches to Bank Secrecy Act (BSA) compliance that promote a risk-based approach to protecting the financial system. The review will also support and complement previous efforts by FinCEN to promote effectiveness and efficiency,  which permit banks to focus their efforts on higher risk priorities. 

The purpose of the review is to: (1) ensure the appropriate safeguards against illicit finance and terrorist financing are in place to protect national security; (2) ensure that reports and records required by the BSA are highly useful; and (3) identify outdated regulations or those that do not promote a risk-based approach to AML/CFT or that do not meet U.S. commitments to international standards to combat financial crime. Once the review is complete, FinCEN will begin revising regulations, as appropriate, and will submit a report to Congress on its findings.

Background

The BSA was enacted in 1970 and has been expanded and revised over the years, most recently by the AMLA. During the last 50 years, while requirements and expectations for the financial sector have steadily increased, FinCEN has never undertaken a focused effort to reconcile the different requirements into a comprehensive whole. And, while numerous provisions in AMLA codify and elaborate existing Treasury efforts to increase the efficiency and effectiveness of BSA/CFT compliance, the statute also adds a number of new requirements. Moreover, advances in technology have led to beneficial financial products and services, but they also have created opportunities for new illicit finance that the existing framework may be poorly suited to identify and prevent.

There is broad consensus among financial institutions that the billions of dollars spent annually on AML/CFT compliance programs – and the regulatory and supervisory structure that oversee these programs – is outdated and ill-suited for identifying and preventing 21st Century criminal activity and terrorist financing. It has, unfortunately, converted what was originally intended as a program to let banks alert law enforcement to unusual transactions into a paperwork and compliance exercise that can frustrate, rather than enhance, AML/CFT efforts.

The banking industry is committed to supporting national and international efforts to combat money laundering and terrorist financing  while protecting the integrity and efficiency of the financial system so that it can support and expand economic activity. To achieve these goals, it is critical to ensure that banks apply their limited resources effectively and efficiently. Therefore, we welcome this opportunity to identify outdated and unnecessary elements of the current regulatory framework.

Overview of ABA Comments

ABA offers a number of recommendations for FinCEN to consider. It is, however, important to recognize that this will be an ongoing and evolving process. FinCEN, regulators, law enforcement, and the financial sector must commit to ongoing collaboration to keep up as financial products and services, technology – and even illicit finance – continue to develop and evolve. Due to the dynamic nature of the economy and global finance, this is not a comprehensive list but a set of key recommendations to begin the process. ABA recommends that:

• FinCEN and the banking agencies issue clear guidance for implementing Treasury’s Anti-Money Laundering and Countering the Financing of Terrorism National Priorities.
• FinCEN should streamline and update reports and records, including:
  • Eliminate unnecessary Currency Transaction Reporting (CTR) and streamline CTR filings.
  • Eliminate aggregation requirements for transactors.
  • Authorize banks to exercise discretion to exclude certain transactions from structuring reports.
  • Streamline the CTR exemption process.
  • Eliminate the Monetary Instrument Log.
  • Streamline suspicious activity reporting and monitoring.
  • Restore the risk-based focus of account monitoring.

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