The Bank Policy Institute (BPI) and The Clearing House Association have submitted recommendations to the U.S. Department of the Treasury as part of an initiative to modernize anti-money laundering (AML) rules under the Bank Secrecy Act. These recommendations focus on aligning regulatory requirements with advancements in digital asset technologies and new tools that banks use to fight illicit finance.
“A financial crime is a financial crime, whether it happens in a bank branch or on the blockchain,” the associations stated after filing the letter. “Banks are in an arms race with increasingly sophisticated global criminals, and the laws designed to prevent financial crime must match the latest technologies and tactics. These recommendations position the AML framework to evolve alongside innovation, not behind it.”
The associations highlighted that anti-money laundering laws should be adaptable enough to keep pace with technological change and respond effectively to new methods used by those engaging in illicit finance. They emphasized that regulations should address risk based on activity rather than technology or company type.
Among their key proposals is applying AML rules uniformly across both traditional banks and digital asset firms, using a “same activity, same risk, same rules” approach. The groups also called for clearer definitions regarding when entities must meet Know Your Customer obligations.
They recommended allowing banks more flexibility to implement emerging technologies like artificial intelligence, machine learning, and digital identification systems through consistent guidance from regulators. They suggested regulators avoid requiring banks to maintain outdated systems without reasonable phase-out timelines.
Another recommendation was rescinding existing model risk management guidance that they argue hampers innovation. The organizations said that platforms monitoring financial crimes should not automatically be subject to standards designed for other types of models such as those used for capital or liquidity calculations.
To improve information sharing, BPI and The Clearing House urged removing restrictions or establishing legal protections so banks can share intelligence about illicit finance with law enforcement agencies, national security experts, and others affected.
Finally, they proposed clarifying when decentralized finance (DeFi) actors are required to comply with digital asset service provider regulations.
BPI represents major U.S. universal banks, regional institutions, and large foreign banks operating in the country. It focuses on research related to regulation and monetary policy as well as cybersecurity issues affecting financial services providers.
The Clearing House Association is recognized as one of the oldest banking trade groups in America and offers advocacy on payments-related issues while its affiliate operates payment system infrastructure clearing over $2 trillion daily.