The New National Priorities for AML and Terrorist Financing

This week FinCEN issued the first Anti-Money Laundering and Countering the Financing of Terrorism National Priorities. They identify eight areas of focus for the next four years. John and Elliot discuss the Priorities, what they mean for the focus of enforcement going forward, how they may impact the examination process, and how FIs may consider responding publication of the Priorities.

The New National Priorities for AML and Terrorist Financing TRANSCRIPT

Elliot Berman: John. How are you this week? 

John Byrne: Hey, Elliot. How are you doing today?

Elliot Berman: I'm okay - So this week actually yesterday, FinCEN put out it's first national priorities with this mouthful title, “anti-money laundering and countering the financing of terrorism (AML/CFT) policy (the “Priorities”)”. And this was mandated in the money laundering act. I'm assuming you saw the release? 

John Byrne: And this is something that we have craved as a community for quite a while, and a centralized area for priorities, typically as you and I, and others know, you try to figure out what law enforcement and the banking agencies care about.

You're, tracking what they're putting on their websites - enforcement actions, that kinda thing - it looks like they've taken all of those sources and others as well and placed them in, in one location. So I think that's a positive for the community. 

Elliot Berman: Yeah. Agreed. So these are the national priorities for the next four years. And let me just read the list real quick. FinCEN makes a point of saying that the list is not in any particular order, but the priorities include corruption, cyber crime - including relevant cybersecurity and virtual currency considerations, foreign and domestic terrorist financing fraud, criminal organizational activity, drug trafficking, organization activity, human trafficking, and human smuggling and plural proliferation finance.

All eight topics are topics you and I have talked about and equally important are topics that the community has been focused on for some time. So not surprising - any of them, but interesting to see them all in one place. 

John Byrne: And I think it does confirm that we're getting it right. [The private and public sector.] Michael Mosher, the acting director in the statement released actually said that the publication of this, while it's a milestone, “it shows an ability to improve the efficiency and effectiveness of the regime to foster greater public private partnership.” And in terms of the sources, in addition to all the agencies, they do mention that they looked at previously issued guidance and documents, as well as interacting with the bank secrecy advisor groups. So there is some private sector consultation, which I've always thought was important. Hopefully it was quite a bit. And I think all of that together makes this a strong focus for all of us going forward. 

Elliot Berman: Agreed. So one of the unknowns is how will these priorities being published in this way, impact examination process for organizations that are subject to examination scrutiny under existing regulations and regulations to be written and finalized as mandated in the money laundering act. 

John Byrne: And I just finished writing a blog on this it'll go next week -but one of the things that I point out in that, is when the FFIC manual was created in 2005, we all believed it was a strong piece of evidence of transparency and the ability to understand what was in the minds of regulators and thus the examiners. But over time while that's still the case, it became a default area to point to for regulatory criticism. 

So my concern here is they will be implementing regs and they say in the inter-agency statement from the banking agencies that this is going to impact how a bank is supervised and examined, not yet, but it will.

So that's why it becomes pretty important, as it always is, to file comments when the implementing regs are or proposed. Because the last thing you want to see is when they focus on these eight priorities, are they going to criticize lack of infrastructure to deal with human trafficking domestic terrorism, all the things that are important, there needs to be some context.

And again, without making this negative, it's a positive, the priorities are there, but I do think you’ve got to watch very closely that it doesn't become a sort of a check the box mentality by examiners. 

Elliot Berman: Agreed. One of the things that organizations that are subject to examination could begin to do is they could review their current policies, procedures, and risk assessments, and how the language of the priorities appears or doesn't appear. It doesn't mean they're not doing it currently, But making sure that they do sort of a check for value vocabulary alignment, if you will, so that they're using the words that we now know are likely to appear in some of the regulatory proposals and are certainly on the minds of both law enforcement and the regulatory agents.

John Byrne: Like I said, I think this can be a very positive. There's a lot of good information in here. They put it in one place that we've said it focuses on areas that we've written about and cared about. I'd point to an advocacy group, Transparency International that did its own press statement about the inclusion of corruption.

And they point out correctly that it compliments what the Biden administration has already indicated is going to be a major focus. And that is anti-corruption actions, and the task force’s memorandums to the agencies. So that's a clear example that groups that care about anti-crime looked at this as “good, you've established corruption as a problem”.

Hopefully there'll be more attention paid to it, which obviously we all agree. And so members of our community, when I think this'll be useful for, in addition to that is to go to your management and say, “Hey, these things are priorities - I'd like to devote some more resources to that”. 

So I realize that it's sort of against what I just said two minutes ago, but it's not really, so you don't want to get nickeled and dimed on these things, but you do want to get support and say, I want to do more on human trafficking, I want to do more corruption, even if it's just education. This, I think will support your ability to do that, and hopefully get the resources that you need. 

Elliot Berman: Agreed. Lastly just caught my eye, that virtual currency considerations are specifically called out in the cybercrime priority. And I think it's important to keep an eye on that because we've seen some pretty clear messages from regulators and from other government agencies, like the treasury department and even the federal reserve about continuing concerns about virtual currencies, the marketplace, at least investors have had that.

A fair amount of exuberance in this space, but I, I think paying attention to what's going on in that space will be important going in. 

John Byrne: And as we close down we hope everybody has a great fourth. And our friends in Canada enjoyed Canada day. I will say two things. You can subscribe to us on iTunes [or spotify], and also [at] AML RightSource, we are hiring. So go to our website. We have some great opportunities out there and we are looking forward always to bolstering our staff and all the things that we're trying to do for our client base. So if you get a chance, take a look at www.amlrightsource.com.

Elliot Berman: Have a great weekend, John, and be safe.

John Byrne: Take care

Elliot Berman: You too. Bye bye.