Last week, the Financial Crimes Enforcement Network (FinCEN) published an Advance Notice of Proposed Rulemaking (Notice) to obtain public comments on proposed enhancements to anti-money laundering (AML) programs. The Notice discusses new regulations requiring financial service providers to adopt “effective and reasonably designed” AML programs. If you are subject to AML regulations, soon you may need to revisit your current AML policy. FinCEN’s notice is often published before adopting new regulations and demonstrates areas where FinCEN is focusing attention.
The Notice suggests the following changes:
1. Adoption of new regulation clearly defining an ‘‘effective” and “reasonably designed’’ AML program
According to FinCEN, a compliant AML program would:
• Identifies, assesses, and reasonably mitigates the risks resulting from illicit financial activity, including terrorist financing, money laundering, and other related financial crimes, consistent with both the institution’s risk profile and the risks communicated by relevant government authorities as national AML priorities;
• Assures and monitors compliance with the record-keeping and reporting requirements of the BSA;
• Provides information with a high degree of usefulness to government authorities consistent with both the institution’s risk assessment and the risks communicated by relevant government authorities as national AML priorities.
2. Adoption of an express regulatory requirement for a risk assessment program
Although under current practice a risk assessment is not an express requirement for all financial service providers, it is often a de facto requirement when evaluating the effectiveness of an AML program. Thus FinCEN proposes a law which stipulates a risk assessment as a legal requirement.
3. Adoption of a specific requirement to reasonably manage and mitigate the risks identified in the risk assessment and the published AML priorities.
This is another AML practice many financial service providers follow even though there isn’t any express requirement, and it is clear that FinCEN believes that this should be stated in the regulation.
FinCEN’s Notice does not introduce a completely new concept or a set of rules. Many financial service providers have already implemented the AML requirements discussed in the Notice. However, for those financial institutions who have only followed the express regulatory requirements in the law, now it’s time to redesign your AML program.
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