FinCEN preparing a rule that will require banks to demonstrate that their AML/CFT programs are "reas

The Financial Crimes Enforcement Network (FinCEN) will almost certainly require banks and other financial institutions to evaluate their anti-money laundering (AML) and counter-terrorist financing (CFT) programs to ensure they are "effective and reasonably designed."

FinCEN announced in the Federal Register on Monday that it will publish a notice of proposed rulemaking to establish national exam and supervision priorities for financial institutions, as part of the Anti-Money Laundering Act of 2020's provisions. Financial institutions that do not already have a CFT program would be required to implement one under the potential rule, according to FinCEN, a division of the US Treasury.


Combating corruption, cybercrime, terrorism financing (foreign and domestic), fraud, transnational criminal organization activity, drug trafficking, human trafficking/smuggling, and proliferation financing are among FinCEN's eight AML/CFT priorities, which were released in June. FinCEN's rule would require financial institutions to demonstrate that their anti-money laundering and counter-terrorist financing programs, which are regulated under the Bank Secrecy Act, align with the agency's eight priorities.

Furthermore, FinCEN would mandate that all financial institutions "maintain an effective and reasonably designed AML/CFT program, and that such a program must include a risk assessment process."


FinCEN has stated that the notice of proposed rulemaking will be published in April.

The new rule would formalize FinCEN's review process for determining the effectiveness of a financial institution's anti-money laundering and counter-terrorist financing program, though the Federal Register notice does not specify how this process will work.

According to a blog post from AML training and certification organization ACAMS, this process will move regulatory assessments from the realm of supervisory expectation to the realm of legal enforcement.


"Regulators for years have expected financial institutions to conduct regular risk assessments and gear their AML programs towards those findings and have come repeatedly under criticism by industry professionals for essentially treating their expectation as mandatory without having finalized a rule to that effect," according to the blog post.

By fLEXI tEAM