OUR POSITION

Bank Secrecy Act and Enforcement

Position

  • ICBA opposes the mandatory collection of beneficial ownership information of legal entities regardless of risk by financial institutions. Rather, this information should be universally collected by FinCEN at the time an entity is formed. However, financial institutions should have access to this information to assist them in performing customer due diligence.
  • ICBA strongly recommends raising Currency Transaction Reporting (CTR) and Suspicious Activity Reporting (SAR) thresholds with future increases linked to inflation. The CTR threshold should be raised from $10,000 to $30,000.
  • ICBA supports Bank Secrecy Act/Anti-Money Laundering (BSA/AML) reforms that will ease compliance burdens while providing more useful data to law enforcement.
  • Nonbank institutions that perform “bank-like” functions and offer financial services should be subject to the same AML/BSA laws and regulations as banks.
  • ICBA encourages the Office of Foreign Asset Control to streamline and simplify watch-lists of terrorists for ease of reference and application by bankers.
  • ICBA asks that FinCEN take a leadership role in combatting ransomware, synthetic IDs, and other types of fraud.

Background

Community bankers are committed to supporting balanced, effective measures to prevent terrorist financing and money laundering. However, because BSA/AML requirements are outdated, community banks doubt their effectiveness.

ICBA supports statutory and regulatory changes that would make BSA/AML requirement more targeted, efficient, and effective. Community banks should be relieved from the collection of beneficial ownership information, which is already collected at the time a legal entity is formed.

Today’s outdated SAR and CTR thresholds promote over-filing and dilute their value to law enforcement. Treasury is required by the 2020 Anti-Money Laundering Act to update these thresholds. Higher thresholds will result in more valuable information and reduce community bank burden. SARs will have more value if they are appropriately risk-based.

More generally, BSA requirements should be flexible, easily applied, and effectively communicated. Congress and the agencies should continue to work with industry to reduce community banks’ mounting costs and regulatory burdens. Additional guidance is needed that is understandable and easily applied. Community banks must understand the methods of terrorist financing and money laundering they are trying to prevent.

Finally, the federal government should have consistent regulations across all financial services providers including nonbank entities.

Staff Contact

Rhonda Thomas-Whitley

SVP and Senior Regulatory Counsel

ICBA

[email protected]

Steven Estep

AVP, Operational Risk

ICBA

[email protected]

Susan Sullivan

SVP, Congressional Relations

ICBA

[email protected]

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Related News

ICBA offers plan for modernizing BSA rules

Feb. 15, 2022

ICBA laid out its plan for the Financial Crimes Enforcement Network to modernize its outdated Bank Secrecy Act framework to alleviate compliance burdens while producing more useful information for law enforcement.

Details: Responding to a FinCEN request for information under the Anti-Money Laundering Act of 2020, ICBA urged the agency to:

  • Undertake a holistic review of financial crime outside the banking system.

  • Raise Suspicious Activity Report and Currency Transaction Report thresholds.

  • Withdraw bank beneficial ownership collection and verification requirements.

  • Abandon plans to decrease record-keeping and travel rule thresholds.

  • Allow banks to deploy resources to areas affecting their specific institution.

  • Issue frequent reports on local, regional, and national trends, financial crime patterns, and threats.

  • Provide more robust assurances for the use of new technologies.

More: ICBA last week separately called on FinCEN to withdraw bank beneficial ownership requirements now that it is required to collect this information directly from reporting companies.