The Bank Policy Institute (BPI) has voiced its objections to the current regulatory approach to updating illicit finance rules in a letter sent to prudential regulators. The Anti-Money Laundering Act of 2020 mandates collaboration between regulators, the Financial Crimes Enforcement Network, and banks to enhance anti-money laundering and combating the financing of terrorism programs. However, BPI argues that the proposal continues to focus on documentation rather than improving effectiveness through technology and a risk-based approach.
“The proposed rule will neither implement the intent of Congress in enacting the AML Act nor facilitate a risk-based approach to identifying and disrupting financial crime,” states the letter. It criticizes the existing regime for its focus on technical compliance over managing true risks.
BPI's letter includes four key recommendations:
1. Encourage banks to align their responses with an activity’s risk level, allowing resource allocation based on risk.
2. Clarify expectations for updating risk assessments by eliminating vague timelines.
3. Permit banks to use offshore personnel for U.S. AML/CFT functions while ensuring oversight remains domestic.
4. Extend the implementation timeline from six months to two years for necessary updates.
The letter was addressed to several regulatory bodies, including the Office of the Comptroller of the Currency and others. This follows similar concerns raised by BPI in a previous communication with FinCEN on September 4, 2024.
BPI represents leading banks in the United States, advocating for public policy and research while supporting economic growth.