On June 30, 2021, the Financial Crimes Enforcement Network (“FinCEN”), issued the first government-wide Priorities for anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) policy (the “Priorities”). In accordance with the Anti-Money Laundering Act of 2020 (“AMLA 2020”), FinCEN established the Priorities, after consulting with the Attorney General, and various Federal regulators, to assist covered financial institutions, (which include, banks, brokers-dealers, mutual funds, insurance companies, commodities dealers, precious metal and stone dealers, credit card companies, loan or finance companies, money services businesses, and housing government sponsored entities) with meeting their AML and CFT obligations, including maintaining an AML program that combats money laundering and terrorism financing.
The Priorities identified: (1) corruption; (2) cybercrime, including relevant cybersecurity and virtual currency considerations; (3) foreign and domestic terrorist financing; (4) fraud; (5) transnational criminal organization activity; (6) drug trafficking organization activity; (7) human trafficking and human smuggling; and (8) weapons proliferation financing as the most significant “threats to the U.S. financial system and national security.” These Priorities build upon traditional AML/CFT concerns, such as combating cybercrime, including ransomware and phishing schemes, as well as the evolving use of convertible virtual currency by “criminals and other bad actors.”
Covered financial institutions are not required to take any immediate action in response to the Priorities. Indeed, FinCEN, in consultation with the relevant Federal and State regulators, contemporaneously issued statements for banks and non-bank financial institutions, which recognize that the Priorities “do not create an immediate change” in Bank Secrecy Act (“BSA”) requirements or supervisory expectations. FinCEN also indicated that it will not examine banks or non-bank financial institutions for compliance with the Priorities at this time. Instead, FinCEN and the relevant Federal and State regulators intend to issue regulations to implement the Priorities in 180 days. Covered financial institutions will have no obligation to incorporate the Priorities into their risk-based BSA/AML compliance programs until the effective date of the forthcoming regulations. However, FinCEN suggested that covered financial institutions “may wish to start considering how they will incorporate” the Priorities into their compliance programs by “assessing the potential risks associated with” their particular products and services, customer base, and the geographic area of operation.
Although no immediate action is required, covered financial institutions should review the Priorities to evaluate the need to modify their BSA/AML programs and related policies and procedures. Indeed, the forthcoming regulations, which will likely be issued by the end of 2021, will create new opportunities for regulatory scrutiny. Notably, the AMLA 2020 significantly increased penalties for BSA violations. In addition, the AMLA 2020 expanded whistleblower rewards and protections. Thus, now more than ever, an ounce of prevention may be worth several pounds of cure.