FDIC, Financial Institutions, Washington D.C., 2023

WASHINGTON D.C. – The federal government is tightening the screws on financial institutions in a bid to stem the flow of illicit funds. Four agencies – the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, National Credit Union Administration, and Office of the Comptroller of the Currency – jointly announced a proposed rule today, July 19, 2024, demanding stricter anti-money laundering (AML) and countering the financing of terrorism (CFT) programs.

This isn’t just bureaucratic red tape. We’re talking about real money fueling real crime – from drug trafficking and organized crime to the funding of terrorist cells. The proposed changes are largely driven by the Anti-Money Laundering Act of 2020 (AML Act) and align with parallel proposals from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The feds are finally trying to catch up to the increasingly sophisticated methods criminals are using to wash their cash.

Under the new rules, banks and credit unions won’t be able to simply check boxes. They’ll be forced to actively document their risks – pinpointing where the dirty money is likely to come from and how it’s being moved. This includes factoring in FinCEN’s published national AML/CFT priorities, essentially a hit list of current threats. It’s a move towards proactive policing of the financial system, rather than reactive cleanup after a crime has already been committed.

A key sticking point: accountability. The proposal explicitly states that responsibility for these AML/CFT programs must rest with individuals inside the United States, and those individuals must be directly answerable to the regulating agency. No more hiding behind offshore shell companies or outsourcing compliance to jurisdictions where oversight is lax. This is about making sure someone in the U.S. can be held responsible when things go wrong.

While the agencies are demanding stricter adherence to regulations, they are also signaling a willingness to consider innovative approaches to compliance. This suggests they understand that simply piling on more paperwork won’t solve the problem. The goal, they claim, is to find solutions that are both effective and efficient, allowing institutions to meet their obligations without being crippled by bureaucracy. However, whether this translates into genuine flexibility remains to be seen.

The agencies are now soliciting public comment on the proposed rule, with a 60-day window for feedback following its publication in the Federal Register. Interested parties can submit their comments, and the Grimy Times will be watching closely to see how this plays out. Contact Julianne Fisher Breitbeil (FDIC, 202-340-2043), Matthew Gonzalez (FRB, 202-452-2955), Joseph Adamoli (NCUA, 703-518-6572), or Stephanie Collins (OCC, 202-649-6870) for further information. Last Updated: August 14, 2024.

RELATED: Tax Thief Gets 25 Months

Related Federal Cases