Federal Banking Regulators Issue Interagency Statement Encouraging Innovative Approaches to BSA/AML Compliance
Federal banking regulators are encouraging institutions to consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet BSA/AML compliance in order to strengthen the financial system against illicit financial activity.
The joint statement issued by the Federal Reserve Board, FDIC, FINCEN, NCUA, and OCC (the Agencies), recognizes that private sector innovation, including the adoption of new tools and technologies, may enhance the effectiveness of banks’ BSA/AML programs. Key points from the statement include:
- Banks that maintain effective BSA/AML compliance programs will not be penalized for choosing not to pursue innovative approaches.
- The Agencies are not advocating a particular method or technology for enhanced BSA/AML compliance at this time, although experimentation with artificial intelligence identity technologies was recognized as a “welcomed” approach to enhance protection against illicit activity.
- Unsuccessful pilot programs, in and of themselves, will not subject banks to supervisory criticism. However, the statement was clear that a pilot program should not displace existing compliant BSA/AML processes.
- Pilot programs that expose gaps in BSA/AML compliance that would not have otherwise been identified by existing processes will not be used by the Agencies to automatically assume that existing processes are deficient.
- FinCEN will consider requests for exceptive relief under 31 CFR 1010.970 to facilitate the testing of new innovations, provided overall BSA/AML compliance is maintained.
The Agencies are also launching or working to establish a number of initiatives to support the implementation of responsible innovation, although the statement was sparse on details on this front.
