On December 3, 2018 FinCEN and the joint agencies released an advisory to encourage and support the implementation of responsible innovation and new technology in the financial system. The advisory encourages banks and credit unions to take innovative approaches to their Bank Secrecy Act (BSA) programs for combating money laundering, terrorist financing, and other illicit financial threats.
The joint statement recognizes that private sector innovation, including new ways of using existing tools or adopting new technologies, can help banks identify and report money laundering, terrorist financing, and other illicit financial activity by enhancing the effectiveness and efficiency of BSA/AML compliance programs. The joint statement encourages banks to consider, evaluate, and, where appropriate, responsibly implement innovative approaches in this area. The statement also makes clear that regulators are committed to continued engagement with the private sector on this issue.
The regulators also encourage bank management to prudently evaluate whether, and at what point, innovative approaches may be considered sufficiently developed to replace or augment existing BSA/AML processes. In making these evaluations, the agencies state that bank management should also consider and address other factors including, but not limited to, information security issues, third-party risk management, and compliance with other applicable laws and regulations, such as those related to customer notifications and privacy. Furthermore, the joint statement encourages bank management to discuss their evaluations with the bank’s respective regulators.
It should be noted that the advisory also explains that the regulatory agencies will not penalize or criticize banks that maintain effective BSA/AML compliance programs commensurate with their risk profiles but choose not to pursue innovative approaches. While banks are expected to maintain effective BSA/AML compliance programs, the Agencies will not advocate a particular method or technology for banks to comply with BSA/AML requirements.
The entire joint statement can be found here.