FinCEN Finalizes AML Rule for Banks Lacking Federal Oversight
15 Sep 2020

The US Treasury Department on Monday issued a final rule imposing anti-money laundering (AML) obligations on institutions that are not overseen by a federal functional regulator, including private banks, non-federally insured credit unions and non-depository trust companies.

The final regulation by the department’s Financial Crimes Enforcement Network (FinCEN) formally ends a regulatory exemption first afforded to the non-federal, state-chartered banks in a 2002 interim rule implemented under the 2001 USA Patriot Act. While such banks must comply with certain Bank Secrecy Act requirements, including the filing of suspicious activity reports, the institutions were not obligated to establish AML programs prior to the issuance of the final rule.

Regulations imposed since 2002 narrowed the initial pool of exempted banks, but law enforcement officials have subsequently “identified specific instances of illicit actors taking advantage of this lack of regulatory coverage,” FinCEN said.

Under the final rule, the institutions must implement AML policies and procedures, designate a dedicated compliance officer, train their employees on compliance measures and establish an independent audit function. The banks must also comply with Customer Identification Program requirements finalized in 2003 as well as the bureau’s 2016 rule on beneficial ownership obligations, FinCEN said.

The bureau, which first issued a notice of proposed rulemaking in August 2016, said that the regulation will take effect 60 days after its publication in the Federal Register, and that institutions will have 180 days to comply with its requirements.

In a statement published on its website, the American Bankers Association said that it had lobbied for a lengthier transition period to give the covered businesses more time to comply.

Read the final rule here

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