Financial regulators are pressing banks to use new technologies and innovative approaches to detect and report transactions that could be linked to money laundering activity.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) joined U.S. banking agencies in promising not to impede banks’ development and testing of compliance program updates, according to their joint statement on Dec. 3. This includes withholding any “supervisory criticism” of pilot programs, even those that prove unsuccessful, they said.
Regulators also said they won’t necessarily initiate “supervisory action” if banks’ pilot programs expose gaps in their Bank Secrecy Act and money laundering compliance programs.
The pledge is part of a regulatory working group’s effort to boost effectiveness and efficiency of anti-money laundering oversight.
“We are highly encouraged by innovative steps that financial institutions have taken recently to identify and report illicit financial activity related to North Korea, Iran, and other key national security and law enforcement priorities,” Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence, said in a Treasury press release.
The federal agencies “welcome” the establishment of banks’ dedicated, in-house intelligence units to identify potential threats, as well as the use of artificial intelligence and other “sophisticated” measures, the statement said.
These and similar innovations, when responsibly deployed, are proving “invaluable,” Mandelker said Dec. 3 during a speech at an American Bankers Association conference.
The agencies’ joint statement “recognizes the value of trial and error,” and serves as an invitation for banks to engage with their regulators, she said. “We want to ensure that banks are not deterred from testing innovative ideas out of a concern that it could lead to regulatory criticism.”
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