Fed Proposes Risk-Based AML Rule For Banks With 60-Day Comment Window
The Federal Reserve Board said its proposed risk-based AML/CFT requirements would apply to supervised banks, with comments due 60 days after Federal Register publication and no final implementation date yet.
Federal Reserve Seeks Comment on Risk-Based AML Rules for Banks
The Federal Reserve Board is seeking public comment on proposed rules that would require its supervised banks to direct anti-money-laundering resources toward higher-risk customers and activities.
The proposal, released July 7, would also require banks to incorporate Financial Crimes Enforcement Network priorities into their risk assessments.
Comments would be due 60 days after the proposal is published in the Federal Register.
The Federal Reserve said the amendments are intended to align its requirements with separate proposals from FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration.
What the Proposal Changes
The proposed rule would cover anti-money laundering and countering the financing of terrorism programs, known as AML/CFT programs.
Board-supervised banks would have to maintain programs reasonably designed to identify, assess and mitigate illicit-finance risks while supporting the purposes of the Bank Secrecy Act.
A bank’s risk assessment would account for its activities, products, services, distribution channels, customers, intermediaries and geographic locations.
It would also use Bank Secrecy Act reports filed by the bank, its affiliates and subsidiaries.
FinCEN’s national AML/CFT priorities would become part of that process.
FinCEN is expected to review those priorities at least once every four years under changes proposed to implement the Anti-Money Laundering Act of 2020.
How Banks Would Be Assessed
The proposal keeps formal compliance controls in place.
Banks would still need written AML/CFT policies, procedures and controls, independent testing, a designated compliance officer and ongoing employee training.
Their programs would also require approval and oversight from the board of directors or an equivalent governing body.
The notice would replace older references to a Bank Secrecy Act compliance officer with a requirement for a qualified compliance officer.
It defines the program around each bank’s risk profile rather than a uniform checklist, while requiring controls reasonably designed to assure and monitor compliance with Bank Secrecy Act requirements.
Once a bank has established an AML/CFT program, the Federal Reserve said its supervision and enforcement would focus on significant failures to implement that program.
The proposal describes the intended result as more useful information about illicit financial transactions for law-enforcement and national-security agencies.
What Happens Next
The measure remains a proposed rule, not a final operating requirement.
The notice identifies Docket No. R-1835 and RIN 7100-AG78 for comments, which may be submitted through the Federal Reserve’s proposal website, by mail, courier or email.
The Federal Reserve has not set a final effective date or bank implementation deadline.
Those details, along with the final examination thresholds and treatment of specific AML/CFT failures, would depend on the rulemaking process and the comments received before the 60-day period closes.
