WASHINGTON —Deputy Secretary of the Treasury Michael Faulkender said the Trump administration is looking to reduce the compliance demands of Suspicious Activity Reports (SARs) and Customer Transaction Reports (CTRs).
Speaking to the spoke 62nd Bank Secrecy Act Advisory Group (BSAAG) plenary meeting organized by the Financial Crimes Enforcement Network (FinCEN), Faulkender told the meeting all regulation should derive from a clear statutory mandate, including safety and soundness, mitigating material risk to financial stability, and consumer protection, and that such regulation should be “efficient, striking an appropriate balance between costs and benefits.”
Moreover, said Faulkender, regulation should be fair and objective, there should be clarity and consistency in the industry across entities and time, and that regulators themselves should be efficient in mitigating risk and in the use of “taxpayers’ hard-earned dollars.”
“Throughout the regulatory reform process, we intend to focus heavily on the second principle: ensuring that we find the optimal fulcrum for balancing the somewhat opposing forces of costs and benefits,” Faulkender stated.
Faulkender said the Trump Administration wants Main Street financial institutions to have a stronger voice on regulatory reform.
‘Meaningful Ways’
“A reinvigorated BSA system must recognize these differences in meaningful ways. An approach that we may deem necessary for a large institution with an expansive risk profile may be unnecessarily burdensome for a smaller one with a more limited risk profile,” Faulkender said. “We recognize that there is an urgent need to modernize the implementation of the AML/CFT regime in the United States so that it is effective, risk-based, and focused on the greatest threats to financial institutions and national security.”
Faulkender said he had directed Treasury and other financial regulators to move expeditiously to make progress on our modernization efforts and as Treasury works to “change the AML/CFT status quo so that the framework focuses on our national security priorities and highest risk areas and explicitly permits financial institutions to de-prioritize lower risks.”
“In line with the AML Act’s directive, this includes an acknowledgement that financial institutions must be permitted to direct more attention and resources toward higher-risk customers and activities, consistent with an institution’s risk profile, rather than toward lower-risk customers and activities,” Faulkender told the meeting.
The Vision
Faulkender said the vision for a modernized BSA regulatory and supervisory regime is one where financial institutions:
- Comply with AML/CFT laws and regulation
- Are examined for the risk-based and reasonably designed nature of their AML/CFT programs and set of internal controls
- Direct more resources to the higher-risk areas to U.S. national security and fewer resources to lower-risk areas
- Generate highly useful information for law enforcement and national security agencies in priority areas defined by Treasury.
Improving Reporting
“Another area where we need to modernize the BSA regime is reporting, especially the Suspicious Activity Report and Currency Transaction Report,” Faulkender said. “…Treasury recognizes the burden this reporting imposes on industry and that it is critical for institutions to be able to direct their compliance resources towards the most significant threats to national security.”
Faulkender said Treasury is exploring ways to make both SAR reporting CTR more streamlined.
