Joint Trades Comment Letter on FinCEN AML Program ANPR

To Whom It May Concern:

The Bank Policy Institute (“BPI”), the American Bankers Association (“ABA”), the Bankers Association for Finance and Trade (“BAFT”), the Center for Capital Markets Competitiveness (“CCMC”), the Consumer Bankers Association (“CBA”),the Independent Community Bankers of America (“ICBA”), the Institute of International Bankers (“IIB”) and the Securities Industry and Financial Markets Association (“SIFMA”) (collectively, the “Associations”) appreciate the opportunity to comment on the advance notice of proposed rulemaking issued by the Financial Crimes Enforcement Network (“FinCEN”) related to anti-money laundering (“AML”) program effectiveness. We believe that regulatory action is necessary to enable financial institutions to allocate resources to enhance the effectiveness and efficiency of their AML programs, while remaining compliant with the legal requirements set forth in the Bank Secrecy Act (“BSA”). Therefore, we support the goals set forth in this rulemaking and the public sector’s efforts generally to “re-examine the BSA regulatory framework and the broader national AML regime. . . to upgrade and modernize [it].”

As an initial matter, we encourage FinCEN and its regulatory partners to work collaboratively with law enforcement and the private sector to adopt the recommendations set forth by the BSAAG’s AML Effectiveness Working Group. Only with meaningful regulatory reform can the programmatic definition described in FinCEN’s proposed rule provide financial institutions with sufficient flexibility to address priority threats without imposing additional burden. We support FinCEN’s proposal that AML program expectations incorporate the utility of information provided to law enforcement, as applicable to specific types and sizes of financial institutions, in line with the statutory goals set forth in the BSA. The absence of this consideration has, in part, resulted in the current supervisory and internal audit focus on technical compliance, rather than the effectiveness of the program as a whole. Incorporating this concept into the AML program definition will better enable the public and private sectors to drive resource deployment to law enforcement needs and serve as a foundation for the recalibration of exam and internal audit approaches. This change, coupled with the establishment of national AML priorities, has the potential to further enable financial institutions to provide law enforcement with the most relevant and useful information.

Ultimately, the definition of effectiveness should encourage institutions to move away from their current focus on procedural and technical compliance and towards a principles-based, institution-specific approach commensurate with risk. Therefore, we offer the following high-level recommendations to further guide the rulemaking process so that we can realize a more effective and efficient U.S. AML regime.

➢ FinCEN should state that compliance expectations apply only to laws and regulations. In August 2020, FinCEN released its Statement on Enforcement of the Bank Secrecy Act, which noted that the agency “will not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of law.”3 While a helpful statement, the current misalignment of compliance resources at financial institutions has resulted, in part, from the treatment of regulatory guidance as binding. To facilitate the objective described in FinCEN’s proposal of enabling institutions to reallocate resources to improve the effectiveness of their AML programs, FinCEN should affirmatively limit compliance expectations to requirements provided by law or regulation and clarify that institutions will not be subject to examiner criticism for non-compliance with guidance.4 By providing institutions and examiners with such clarity, FinCEN will reduce the risk to institutions of being criticized for non-compliance with guidance.