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IPFS News Link • Central Banks/Banking

Banks Will Soon Need to Identify Domestic Terrorists - Good Luck!


Banks will soon need to ask, and answer, these and similar questions when it comes to whether, how, and to whom they'll offer their financial services. 

Domestic Terrorist Financing and AML Compliance Programs

Section 6101 of the Anti-Money Laundering Act of 2020, made into law on January 1, 2021, requires the Treasury Department to establish national exam and supervision priorities, compels financial institutions to incorporate those priorities into their anti-money laundering compliance programs, and directs the federal functional regulators to supervise and examine those institutions on how well they incorporate those priorities into their programs.  

Section 6101 also required Treasury to publish those priorities within 180 days of when the Act became law (which it did), then to promulgate regulations to implement all of this 180 days thereafter. Section 6101 did this by changing two sections of the main AML statute, subchapter II of chapter 53 of title 31, United States Code: 31 USC section 5311, the "purpose" section, and 31 USC section 5318(h), the "program" section.

Treasury's Financial Crimes Enforcement Network, or FinCEN, published the eight national priorities within the required 180 days (on June 30, 2021). FinCEN also published a Statement for Banks and a Statement for Non-Bank Financial Institutions (NBFIs). Both statements contained similar advice. The only difference was that banks apparently have "risk-based BSA compliance programs" and NBFIs have "risk-based AML programs". Regardless, neither are required to incorporate the AML/CFT Priorities into their risk-based programs until the effective date of the final revised regulations. However, "in preparation for any new requirements when those final rules are published, [they] may wish to start considering how they will incorporate the AML/CFT Priorities into their risk-based ... programs, such as by assessing the potential related risks associated with the products and services they offer, the customers they serve, and the geographic areas in which they operate."