In a recent Wall Street Journal article, journalist Dylan Tokar highlights the challenges faced by US regulators in modernizing anti-money laundering laws following the Anti-Money Laundering Act of 2020.
According to Tokar, banks had hoped the reforms required by the legislation would reduce regulatory burdens. However, when the US Treasury's Financial Crimes Enforcement Network (FinCEN) released its proposal to implement the required changes earlier this year, many were left frustrated.
Banks argued that the proposed regulations merely formalized practices they were already following, such as periodic risk reviews, without reducing compliance costs or complexity. Industry groups like the American Bankers Association (ABA) and Bank Policy Institute (BPI) expressed concerns that the changes did not align with Congress's intent. Gregg Rozansky, a lawyer for BPI, stated that the proposed rule “would neither implement the intent of Congress... nor facilitate a risk-based approach to identifying and disrupting financial crime.”
Banks also hoped that the updated rules would focus resources on high-risk customers, as directed by the legislation. However, FinCEN's proposed rules are seen as maintaining the current "check-the-box" culture, which has forced banks to file millions of suspicious activity reports (SARs) annually. Many of these SARs have little value for law enforcement.
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