The AML Analyst

April 25th, 2026

On April 7th, 2026, FinCEN issued a Notice of Proposed Rulemaking (NPRM) to modernise Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) programs under the Bank Secrecy Act (BSA). The key changes from the NPRM focus on reducing regulatory burden, adjusting FinCEN’s supervisory role, and prioritising the effectiveness of financial institutions’ AML/CFT systems over technical compliance. 

While the changes FinCEN is proposing have value, I would like to focus on the restructuring of FinCEN’s supervisory role. Under the proposed rule, federal banking regulators would be required to consult FinCEN when seeking AML/CFT supervisory actions. 

This, in theory, would be similar to the four-eye principle, a concept that is seen often during the onboarding process, where decisions have to be verified by two independent individuals before approval.

The logic here is sound. FinCEN’s role is not to slow down the enforcement action, but instead to evaluate whether the AML/CFT failings that regulators have identified are in fact due to an inefficient program, or whether the institution operated an effective risk-based system that fits the standards FinCEN is setting out, after existing rules fail to do so. Due to existing rules never defining what an effective AML/CFT program looks like, the interpretation made by financial institutions led to a ‘tick-box’ compliance, leading to low-quality SARs to avoid regulatory action and less adherence to the risk-based approach. Secretary of the Treasury Scott Bessent had this to say about the proposal: “For too long, Washington has asked financial institutions to measure success by the volume of paperwork rather than their ability to stop illicit finance threats.”

With this proposed rule, we should see a switch from defensive compliance frameworks to more risk-based programs. Institutions will have a clearer picture of what is expected from them in a compliance point of view, and design AML/CFT systems that fit FinCEN’s expectations. This will also help avoid heavy enforcement actions unless they display serious failures in their program. 

However, the proposal does not come without its challenges. 

Out of the regulatory bodies in the U.S., the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) all announced their support and commitment to restructure their own supervisory frameworks to match FinCEN’s proposal. However, the Federal Reserve (Fed) did not.

This challenges the proposal as FinCEN is attempting to bring about consistent oversight and reduce compliance burden, but with the Fed not committing, it may fail to do so. While it is too early to say whether changes will be made to bring the Fed’s support, or whether the Fed will keep its supervisory frameworks and institutions intact, and those under them will receive lighter or heavier enforcement actions, the inconsistent framework deserves attention. 

FinCEN’s proposal is a meaningful step in the right direction, which will not only reduce compliance burdens for financial institutions but also improve the intelligence sharing FinCEN handles. However, the Fed’s absence highlights the gap in the central oversight model FinCEN is trying to achieve. 

Should FinCEN go ahead with the proposal, what do you think the results would look like?

Links:

FinCEN Announcement: https://www.fincen.gov/news/news-releases/fincen-proposes-rule-fundamentally-reform-financial-institution-programs 

Fact Sheet: https://www.fincen.gov/system/files/2026-04/Program-NPRM-FactSheet.pdf 

Notice of Proposed Rulemaking (Key Changes): https://www.federalregister.gov/public-inspection/2026-07033/anti-money-laundering-and-countering-the-financing-of-terrorism-programs