The Financial Crimes Enforcement Network (FinCEN) announced on April 7 that it has issued a new Notice of Proposed Rulemaking, introducing significant revisions to the anti-money laundering and countering the financing of terrorism (AML/CFT) program requirements for financial institutions under the Bank Secrecy Act. The proposed rule is described as one of the most substantial overhauls in recent years and aims to implement provisions from the Anti-Money Laundering Act of 2020.
This proposal matters because it seeks to reduce regulatory burdens while strengthening efforts to identify, prevent, and report illicit finance activity. The reforms are intended to move away from technical compliance and instead focus on effectiveness in combating money laundering.
Treasury Secretary Scott Bessent said that the reform “restores common sense with a focus on keeping bad actors out of the financial system, not burying America’s banks in more red tape.” The proposed rule grants financial institutions greater discretion to direct their AML resources toward higher-risk areas. It also introduces organizational changes by distinguishing between deficiencies in program design and implementation, requiring programs to be both risk-based and effective.
Key elements include four required pillars: internal policies with risk assessment processes, independent program testing, designation of a U.S.-based compliance officer, and ongoing employee training. Institutions will need to conduct ongoing customer due diligence with enhanced attention on higher-risk customers. FinCEN would become more involved as a gatekeeper for enforcement actions against banks by reviewing significant supervisory or enforcement actions before they proceed.
Other notable reforms include raising thresholds so only significant or systemic failures justify enforcement action against banks and empowering institutions to prioritize high-risk activities. However, some terms such as “significant” or “systemic” remain undefined in detail within the proposal.
FinCEN plans to publish its proposal soon in the Federal Register, after which public comments will be accepted for 60 days. Questions remain about how regulators will interpret key concepts once final rules are adopted.
