.svg)
The current U.S. anti-money laundering (AML) framework does not account for advances in technology and is outdated, the American Bankers Association (ABA) has said in its response to a request for information (RFI).
The U.S. bank lobby group said that the existing AML framework may be poorly suited to identify and prevent new forms of illicit finance resulting from technological progress.
“There is broad consensus among financial institutions that the billions of dollars spent annually on AML/CFT compliance programs — and the regulatory and supervisory structure that oversee these programs — is outdated and ill-suited for identifying and preventing 21st century criminal activity and terrorist financing,” the association said.
The ABA made these statements in a submission to an RFI aimed at streamlining and modernising anti-money laundering/counter-terrorism financing (AML/CTF) regulations issued pursuant to the Bank Secrecy Act (BSA).
The RFI is part of a larger legislative effort to overhaul the U.S. AML framework. Among many others, the Anti-Money Laundering Act 2020 (AMLA) directed the Financial Crimes Enforcement Network (FinCEN) to conduct a formal review of existing BSA regulations and related guidance.
It is aimed at ensuring the appropriate safeguards against illicit finance and terrorist financing are in place to protect national security, ensure that reports and records required by the BSA are highly useful, and identify outdated regulations.
The bank association now says that the current BSA rules miss their original purpose to let banks alert law enforcement to unusual transactions, and instead they turned “into a paperwork and compliance exercise that can frustrate, rather than enhance, AML/CFT efforts.”
The ABA offers a number of recommendations for FinCEN to consider but asks the regulator to commit to ongoing collaboration with the financial sector to ensure the rules keep up with technological changes.
In its submission, the ABA recommended the agency continue providing advisories to help banks identify possible illicit activity, but collect and store all guidance in one accessible location to make them easier to use.
The ABA also urged the agency to take steps to update and streamline the current reporting systems and reexamine the currency transaction and suspicious activity reporting systems.
The association also asked FinCEN to update the rules under the PATRIOT Act to make it easier for banks to share information.
The PATRIOT Act creates a safe harbor for financial institutions to share information if they suspect that the information being shared may involve money laundering or terrorist activity.
The ABA urges FinCEN to streamline the eligibility process for financial institutions to register and create a set of contacts for the users of the registry.
“Bankers, particularly community bankers, often report they find it difficult to reach the appropriate contact at another bank to obtain the necessary information and that the time and effort to find the right contact often discourages them from using the process,” it stressed.
The RFI comment period closed on February 14.
