By: Matthew Hovis, CAMS, CFE, CPP, Director of BSA/AML Services

On June 30, 2021, FinCEN published their first official national priorities document, “Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Priorities”, which is one of many responsibilities they’ve been assigned as part of the AML Act of 2020 (“AMLA”).

BACKGROUND ON THE AMLA

Enacted on January 1, 2021, The AMLA directs the US Treasury and other agencies (primarily FinCEN) to address a wide array of matters pertaining to BSA/AML regulations. The AMLA also requires agencies to produce tangible outcomes for their tasks, in the form of proposals for rule changes, new rules, new guidance, and publications.

UNDERSTANDING THE NATIONAL PRIORITIES

One such release required as part of the AMLA is the national priorities document, which must be developed and published by FinCEN – with oversight by the Secretary of the Treasury and input from law enforcement, national security agencies, and state and federal regulators – at least every four years. Under the AMLA, these priorities must align with the US Treasury’s biennial “National Strategy for Combating Terrorist and Other Illicit Financing” (last published in 2020), which is based upon the National Money Laundering Risk Assessment (last published in 2018). While similar in content, the priorities document is distinct in its purpose, which is to serve as the roadmap for changes to BSA, as numerous other parts of the AMLA require FinCEN to align their efforts with the priorities.

The substance of FinCEN’s initial priorities publication is distilled from the 2020 national strategy, with added commentary about their efforts to address the most urgent AML/CFT threats. In particular, FinCEN identifies eight key priorities: corruption, cybercrime, terrorist financing, fraud, transactional criminal organization activity, drug trafficking organization activity, human trafficking and smuggling, and proliferation financing. For each of these, FinCEN summarized the threats posed and their recent steps taken to address them.

HOW TO RESPOND

The publication of the national priorities initiates two new requirements that require action and close monitoring by financial institutions:

  1. Within 180 days, FinCEN must develop proposals for new or modified regulations needed to accomplish their priorities.
  2. Financial institutions must incorporate national priorities into their risk-based BSA/AML Programs, as future examinations will evaluate the effectiveness of those programs from the framework of FinCEN’s AML/CFT priorities.

However, within a publication released on the same day, FinCEN and state/federal financial regulators (“Interagency Statement on the Issuance of the Anti-Money Laundering/Countering the Financing of Terrorism National Priorities”), indicated they will not expand their examination processes to include confirmation of this new requirement until the date in which FinCEN’s new rules or revisions go into effect.

Notwithstanding the interagency statement, BSA Officers should begin preparing for the eventual requirement to incorporate FinCEN’s national priorities into their program. One practical way to initiate that process is to expand the BSA/AML risk assessment to address each priority with a high-level overview of how the threat affects the institution, the mitigating controls in place, and any identified areas for enhancements. In addition, BSA Officers should keep Senior Management and the Board informed about the national priorities and their eventual impact on the institution’s requirements and resource needs.

 

About Sheshunoff Risk Management’s BSA/AML Services
Sheshunoff Risk Management’s seasoned BSA/AML Audit professionals have extensive backgrounds both as auditors and working directly within BSA/AML Departments at financial institutions. Using this deep subject matter understanding, we are able to readily identify and prioritize issues then provide practical and cost-effective recommendations to resolve them or mitigate their risks. In addition, we maintain an extensive set of proprietary audit programs that can cover a diverse array of higher risk areas (e.g., marijuana banking, third-party payment processing, etc.) and small to mid-sized banks and credit unions. Combined with our strong project management culture and efficient processes, our practice can ensure you keep your expenses low while keeping the quality of your independent testing high. https://risk.smslp.com/service/bank-secrecy-act-anti-money-laundering-audit/ 

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