FDIC backs interagency NPR to modernize AML/CFT Bank Secrecy Act compliance; board authorizes publication

FDIC presenters outlined an interagency notice of proposed rulemaking to revise and republish the FDIC's AML/CFT compliance program rule, aligning FDIC requirements with the AML Act of 2020 and concurrently proposed FinCEN rulemaking. Presenters said the NPR is a joint effort with the SEC and the NCUA and aims to create a more effective AML/CFT regime that produces information useful to law enforcement and national security agencies.

Staff described a retained and clarified four-pillar program structure: (1) risk-based internal policies, procedures and controls; (2) independent testing; (3) a designated AML/CFT officer who must be located in the U.S. and accessible to regulators; and (4) an ongoing employee training program. Presenters said the proposal would adopt a two-pronged effectiveness framework (programs must be "established" and "maintained") and would raise the threshold for enforcement to systemic or significant failures to maintain an established program.

The proposed rule would also enhance coordination with FinCEN: FDIC would be required to notify FinCEN in writing at least 30 days before initiating an AML/CFT enforcement action or significant supervisory reaction to allow FinCEN review and input. Staff told the board that harmonizing terminology and ensuring consistent language with FinCEN rulemaking should improve supervisory outcomes and allow banks to focus resources on higher-risk customers and activities.

Board members noted the policy's potential to reduce unnecessary compliance burdens while preserving tools to address severe misconduct. Following discussion, the board moved and adopted a resolution to publish the NPR; the motion passed with proxy votes recorded.