The Financial Crimes Enforcement Network has issued a proposed rule to fundamentally reform how financial institutions design and are supervised for anti-money laundering and countering the financing of terrorism programmes under the Bank Secrecy Act. The proposal aims to shift compliance expectations toward effectiveness and risk-based, reasonably designed programmes, while promoting greater consistency in how banks are evaluated and reducing unnecessary compliance burden. Key changes include separating deficiencies tied to programme design from those arising in implementation, and reinforcing that institutions are best positioned to identify and assess their illicit finance risks so resources can be concentrated on higher-risk activity. The proposal also clarifies expectations for certain programme functions, including independent testing and audit, to limit examiner and auditor substitution of subjective judgment for an institution’s risk-based approach. It further affirms FinCEN’s central role in AML/CFT supervision by introducing a notice and consultation framework between federal banking supervisors and FinCEN for significant AML/CFT supervisory actions. The rule would update FinCEN regulations to reflect statutory changes in the Anti-Money Laundering Act of 2020 and fully supersedes and withdraws FinCEN’s 3 July 2024 proposed rule. The notice of proposed rulemaking is expected to be published in the Federal Register in the coming days, with comments due 60 days after Federal Register publication.

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