The Financial Crimes Enforcement Network’s proposed changes to the Bank Secrecy Act program rule requiring financial institutions to establish and maintain risk-based anti-money laundering programs are unlikely to bring about meaningful reform as banks would need to divert resources away from AML efforts into filling out paperwork, the American Bankers Association said in comments to the agency.
FinCEN in June proposed banks add requirements, including elevating a new mandatory written risk assessment process, as the foundation of an “effective, risk-based and reasonably designed” AML/CFT program. As part of the agency’s implementation of the AML Act, it would also require financial institutions to review government-wide AML/CFT priorities and incorporate them “as appropriate” into risk-based programs. In its letter, ABA said that while it supports the objectives behind the proposal, the rule itself does not accomplish the reform goals of the AML Act or effectively reinforce a risk-based approach. Banks already write and update risk assessments unique to their customers, products and services.
“As proposed, this approach risks prioritizing duplicative paperwork and technical compliance over goals of identifying and combating illicit finance activity,” ABA said. “Rather, FinCEN must ensure banks’ requirement to review (and if appropriate, incorporate) the AML/CFT priorities into their compliance programs does not, ironically, divert compliance resources and attention away from the actual threats the priorities are intended to address.”
Banks need meaningful feedback from the government regarding where and what to look for, ABA added. The association also said the six-month compliance deadline for the proposed rule is too short given the changes that would be required.
“We believe changes to the proposed rule are necessary to achieve FinCEN’s important objectives and avoid exacerbating the very problems FinCEN seeks to minimize,” ABA said.
