NCLC supports FinCEN’s efforts to strengthen and modernize the anti-money laundering and countering the financing of terrorism (AML/CFT) program requirements for financial institutions, but urges FinCEN to do more. NCLC especially supports the inclusion of fraud in the priorities issued by FinCEN on June 20, 2021, and its incorporation into the proposed rule.
FinCEN must, however, take additional steps to emphasize the importance of fraud prevention and fraud detection in combating money laundering and financing of terrorism within the U.S. banking and payments system. Specifically, FinCEN must place stricter requirements on non-bank entities that engage in payment and banking services. FinCEN should also update the SAR to catch information about accounts that receive fraudulent funds, and FinCEN should take additional measures to promote information sharing about payment fraud.
NCLC also believes more clarity and guidance need to be included in the proposed rule as well as in any implementing guidance and examination manuals to ensure that financial institutions do not define risk too broadly. Financial institutions should not consider credit risk as a factor in developing and implementing an AML/CFT program, and without clarity, blunt-fisted, opaque identification requirements exclude vulnerable consumers from the U.S. banking system and allow for discrimination. More specificity and clarity are also necessary so that overly aggressive BSA/AML programs targeting fraud do not lead to bank account closures and freezes.
Additionally, FinCEN should protect specific vulnerable populations such as immigrants, domestic violence survivors, and justice-impacted individuals who experience financial exclusion often exacerbated by overly broad BSA/AML programs.
Finally, FinCEN should be extremely cautious and vigilant about the use of AI in AML/CFT programs and BSA compliance.
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