WASHINGTON —House Committee on Financial Services Chairman French Hill and Subcommittee on National Security, Illicit Finance, and International Financial Institutions Chairman Warren Davidson are urging the Financial Crimes Enforcement Network (FinCEN) to reduce unnecessary regulatory burdens, focus enforcement on higher-risk financial crimes and encourage the use of artificial intelligence tools as part of an ongoing effort to modernize anti-money laundering rules.
According to statements from the offices of Hill and Davidson, the lawmakers sent a June 9 letter to FinCEN Director Andrea Gacki in response to the agency’s Notice of Proposed Rulemaking on Anti-Money Laundering and Countering the Financing of Terrorism programs.
The lawmakers said the proposal presents an opportunity to improve implementation of the Bank Secrecy Act by shifting regulatory expectations away from what they described as low-value compliance exercises and toward efforts that better identify and combat illicit financial activity.
Where Focus Should Be
In their letter, Hill and Davidson argued that Bank Secrecy Act enforcement should focus on identifying and mitigating anti-money laundering and counter-terrorist financing risks rather than penalizing institutions for compliance deficiencies that have little relevance to law enforcement objectives.
The lawmakers also called for increases to Currency Transaction Report and Suspicious Activity Report reporting thresholds, noting that the thresholds have not been adjusted in decades and should be updated to reflect inflation. In addition, they urged regulators to support the adoption of artificial intelligence-powered tools designed to strengthen anti-money laundering and counter-terrorist financing compliance programs.
“We are encouraged by the NPRM’s aim to fundamentally shift BSA compliance from a pattern of box checking and low-value reporting to one that provides law enforcement with the information it needs to identify and stop financial crime,” Hill and Davidson wrote in the letter. “We look forward to continuing to work with you to develop a final rule that follows through on AMLA’s mandates and meets the objectives set out in the NPRM.”
2020 Law Cited
The letter refers to the Anti-Money Laundering Act of 2020, which lawmakers said was intended to modernize the nation’s anti-money laundering framework and promote more risk-based compliance programs.
FinCEN, along with three federal financial regulators, proposed new rules on April 7 that the agencies said would modernize anti-money laundering and counter-terrorist financing requirements and allow financial institutions to better focus resources on higher-risk activities.
At the time, FinCEN said its proposal would “fundamentally reform” anti-money laundering and counter-terrorist financing programs required under the Bank Secrecy Act by reducing compliance burdens and promoting a more risk-based approach.
Also on April 7, the Federal Deposit Insurance Corporation, NCUA and Office of the Comptroller of the Currency issued a companion proposed rule designed to align their regulations with FinCEN’s proposed framework.
