Anti-Money Laundering Program Effectiveness
Summary
SIFMA provided comments to the Financial Crimes Enforcement Network (“FinCEN”) on the advance notice of proposed rulemaking (the “ANPRM”) and request for comment on potential regulatory amendments to establish that all covered financial institutions subject to an anti-money laundering (“AML”) program requirement must maintain an “effective and reasonably designed” AML program.
SIFMA appreciates FinCEN’s efforts to revisit and modernize existing AML regulations and applauds the agency for engaging with the financial services industry—through consultation with the Bank Secrecy Act Advisory Group and via this ANPRM process—in advance of publishing a proposed rule. We also recognize and support FinCEN’s previous interactions with industry in this space, including through the BSA Value project.
SIFMA strongly supports FinCEN’s efforts to provide financial institutions with greater flexibility in how they allocate resources to support their AML programs more effectively and efficiently.
Excerpt
November 16, 2020
VIA ELECTRONIC SUBMISSION
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183
Re: Anti-Money Laundering Program Effectiveness (Docket Number FINCEN–2020–0011, RIN 1506–AB44)
Ladies and Gentlemen:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to submit this letter to the Financial Crimes Enforcement Network (“FinCEN”) on the advance notice of proposed rulemaking (the “ANPRM”) and request for comment on potential regulatory amendments to establish that all covered financial institutions subject to an anti-money laundering (“AML”) program requirement must maintain an “effective and reasonably designed” AML program.2SIFMA appreciates FinCEN’s efforts to revisit and modernize existing AML regulations and applauds the agency for engaging with the financial services industry—through consultation with the Bank Secrecy Act Advisory Group and via this ANPRM process—in advance of publishing a proposed rule. We also recognize and support FinCEN’s previous interactions with industry in this space, including through the BSA Value project. SIFMA strongly supports FinCEN’s efforts to provide financial institutions with greater flexibility in how they allocate resources to support their AML programs more effectively and efficiently.
SIFMA further appreciates FinCEN’s recognition of the need to account for industry-specific considerations in developing the regulatory framework for AML programs. The securities industry s unique in a number of important ways, including the nature and types of AML risks faced, the customer base, the types of products the industry offers, the varying size of securities firms and the way that firms approach existing AML requirements. We believe that these differences need to be considered in determining AML program requirements.
SIFMA also believes that it is important for the new “effective and reasonably designed” standard for AML programs to be defined with sufficient clarity to avoid creating regulatory ambiguity and unintended burdens on financial institutions. Below, we highlight several critical areas under each prong of the proposed regulatory definition of the standard that we believe require further clarification. With respect to the proposed key elements of an “effective and reasonably designed” AML program, SIFMA supports FinCEN’s proposals to establish a risk assessment process and issue a list every two years of national AML priorities (the “Strategic AML Priorities”). FinCEN should similarly further clarify these regulatory proposals to ensure the agency’s intended goal of providing greater flexibility to firms is achieved.