An interagency proposal to require financial institutions to establish and maintain risk-based anti-money laundering programs is flawed in that it would formalize a nearly universal recordkeeping practice and elevate it to become the foundation of all Bank Secrecy Act compliance, the American Bankers Association said in a letter to banking agencies.
The Financial Crimes Enforcement Network 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. The changes are meant to implement the AML Act, passed by Congress in 2021. The Federal Reserve, FDIC and the Office of the Comptroller of the Currency have proposed aligning each agency’s BSA compliance program requirements with FinCEN’s proposal.
In its letter, ABA reiterated concerns with a proposed requirement to have banks produce and periodically update a single written risk assessment, based on a formal risk assessment process. ABA pointed to its Sept. 3 letter to FinCEN in which the association provided several recommendations to improve the proposal. Among the suggestions was for agencies to adopt the language of the AML Act and require that a reasonably designed AML/CFT program focuses attention and resources in a manner consistent with the bank’s risk profile. Such a program would take into account higher-risk and lower-risk customers and activities.
ABA also made three additional requests. First, all BSA program rule requirements and supervisory expectations for banks should not just be consistent, but identical. Second, the agencies should unequivocally release banks from any requirement or supervisory expectation to establish a single written risk assessment document solely to comply with FinCEN’s revised rule. Third, the agencies provide additional specific and clear indications of ways a bank can reasonably meet the new program rule requirements.
