The Bank Policy Institute (BPI) has submitted a statement to the U.S. House Financial Services Committee regarding its oversight of the Financial Crimes Enforcement Network (FinCEN) and the Office of Terrorism and Financial Intelligence. The statement commends FinCEN staff for their diligence but criticizes the lack of changes in AML compliance examinations following new legislative requirements.
"Four years since the enactment of the Anti-Money Laundering Act, the AML/CFT examination process remains dysfunctional — focused more on process than substance, more on immaterial matters than material ones," BPI states. "Many of these key provisions of the Act have not been implemented. Meanwhile, the federal banking agencies have ignored the spirit of the Act, as their examinations continue to produce the problems that the Act was designed to solve."
BPI initiated an empirical study in 2017 to assess the effectiveness of the U.S. AML/CFT regime using data and feedback from banks, law enforcement, and other stakeholders. The study's 2018 report indicated that despite significant investment by banks in compliance efforts, these measures were inadequate for effectively combating illicit finance.
Following these findings, BPI worked with a coalition including FACT Coalition, law enforcement and national security experts, business associations, and non-profit groups to support passing the Anti-Money Laundering Act of 2020. This legislation marked a significant reform to U.S. AML laws since the 1970s and called for substantial changes by the Treasury Department to encourage innovation and technology adoption.
However, many key provisions remain unimplemented. BPI is urging Congress to prompt the Department of Treasury to seek public input and advance reforms mandated by this act. They have made twelve specific recommendations aimed at enhancing banks' capabilities in combating illicit finance and supporting law enforcement effectively.
The Bank Policy Institute represents leading banks across America, employing nearly two million people and significantly contributing to small business loans and economic growth.
For further details or access to BPI's full statement, contact Austin Anton at austin.anton@bpi.com.