FinCEN issues final rule requiring AML program for banks lacking a federal functional regulator
On September 14, 2020, more than four years after publishing proposed rules, the Financial Crimes Enforcement Network issued final rules that require minimum standards under the Bank Secrecy Act across the banking industry for anti-money laundering programs for banks lacking a federal functional regulator. Types of banks within the scope of this rulemaking include:
- State-chartered, non-depository trust companies
- Non-FDIC-insured state banks and savings associations and non-NCUSIF-insured credit unions
- Private banks and
- International banking entities that are not FDIC insured but are authorized by Puerto Rico and the US Virgin Islands to provide banking and other services to non-resident aliens.
The final rule requires minimum standards for anti-money laundering programs to ensure that all banks, regardless of whether or not they are subject to federal regulation and oversight, are required to establish and implement anti-money laundering programs. By amending the definition of “covered financial institution,” the final rule also extends customer identification program requirements and beneficial ownership requirements, obligating all banks to identify and verify the beneficial owners of legal entity customers.
Banks that lack a federal functional regulator must establish and implement AML programs under the specified minimum standards, including obtaining approval of the AML program by their board of directors or an equivalent governing body and making the AML program available to FinCEN or its designee upon request. These banks are already required to comply with certain BSA obligations, including filing suspicious activity and currency transaction reports. Banks now obligated to implement these programs will have 180 days from the day the final rule is published in the Federal Register (September 15, 2020) to be in compliance.
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