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Recent legislative and regulatory developments indicate that wholesale modernisation of the US federal anti-money laundering/counter-terrorism financing (AML/CTF) framework is approaching.
For financial institutions, AML/CTF modernisation could be a double-edged sword. The changes could reduce reporting burdens, streamline compliance, and shift the focus of financial institutions toward high-risk activities in 2026. At the same time, state-level divergence may create new operational challenges, making early preparation critical.
Federal reform efforts
The STREAMLINE Act, introduced in the US Senate in October 2025, would increase reporting thresholds for currency transaction reports (CTRs) and suspicious activity reports (SARs) under the Bank Secrecy Act (BSA).
Currently, financial institutions are required to file CTRs for cash transactions exceeding $10,000 and SARs for transactions exceeding $2,000 or $5,000, depending on circumstances. The bill raises these thresholds to $30,000, $3,000 and $10,000, respectively, with the Treasury Department mandated to adjust amounts every five years to account for inflation.
Lawmakers argue that these changes will allow institutions to focus on material financial crime rather than low-value filings.
Complementing the STREAMLINE Act, the Federal Deposit Insurance Corporation (FDIC) and the Financial Crimes Enforcement Network (FinCEN) have surveyed banks on AML/CTF compliance costs and issued FAQs clarifying SAR filing requirements. These efforts aim to reduce operational waste and ensure resources target the most significant risks.
Reducing the compliance burden
Taken together, these developments signal a coordinated effort by federal lawmakers and regulators to relax AML/CTF requirements. They are intended to reduce operational burdens for financial institutions and narrow AML/CTF focus to material, high-risk activities.
The STREAMLINE Act is awaiting review by the Senate Banking Committee, and its progress is dependent on political headwinds. Nonetheless, it points to Republican lawmakers’ alignment with federal regulators’ AML/CTF modernisation agenda.
For financial institutions, the anticipated reforms would recalibrate compliance programs from volume-driven reporting towards risk-driven monitoring.
Higher thresholds and clarified expectations could reduce low-value filings, ease operational pressures and allow teams to reallocate resources towards conducting complex investigations, harnessing data-intensive analytics and concentrating on emerging typologies, such as crypto-enabled money laundering and AI-assisted fraud.
Financial institutions may also face transitional challenges, including updating systems, retraining staff and recalibrating risk assessments to align with revised regulatory priorities.
At the same time, with federal regulators reducing their own oversight, it is possible that state-level oversight – especially in Democrat-led states such as California and New York – will fill the supervisory void.
This approach has the potential to create a patchwork of diverging AML/CTF requirements across the country, creating new compliance costs.
Key steps for 2026
In light of these impacts, financial institutions operating in the US should consider the following steps:
- Begin scenario-planning for reporting threshold changes.
- Assess technology gaps and strengthen data-driven processes and systems to support more targeted AML/CTF detection.
- Monitor agency guidance and map potential policy shifts.
- Engage proactively in regulators’ comment processes.
- Enhance multi-jurisdictional governance to adapt to evolving state-level AML/CTF expectations and examinations.
By preparing effectively during 2026, firms can stay ahead of federal reforms while mitigating the operational risks associated with growing state-level divergence.
Those that modernise early will be best positioned to absorb regulatory change, strengthen their financial crime defences and maintain resilience in an increasingly complex US enforcement landscape.
