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A Joint Statement To Encourage Innovative Industry Approaches To BSA/AML Compliance

The Federal Deposit Insurance Corporation (FDIC) and Federal Banking Regulators and the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued a joint statement to encourage innovative industry approaches to BSA/AML Compliance.

The depository institutions would consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their Bank Secrecy Act/anti-money laundering (BSA/AML) compliance obligations to strengthen the financial system against the illicit financial activity.

In the statement, the Board of Governors of the Federal Reserve System, the FDIC, FinCEN, the National Credit Union Administration, and the Office of the Comptroller of the Currency recognize that private sector innovation, including adopting new technologies and finding new ways to use existing tools, can help banks identify and report money laundering, terrorist financing, and other illicit financial activity.

In the effort to assist depository institutions, the statement clarifies that the agencies are committed to continued engagement with the private sector and other interested parties.

FDIC Chairman Jelena McWilliams said: “New technology, such as artificial intelligence and machine learning, can provide better strategies for banks of all sizes to better manage money-laundering and terrorist-financing risks while reducing the cost of compliance.”

Institutions are becoming increasingly innovative and sophisticated in their approaches to BSA/AML compliance, commensurate with their risk profiles. For example, some banks and credit unions are building or enhancing internal financial intelligence units devoted to identifying vulnerabilities and threats. Others are experimenting with digital identity technology to enhance their BSA/AML compliance programs.

Each of the agencies has established or will establish projects or offices to support the implementation of responsible innovation and new technology in the financial system. While bank management should continue to follow existing protocols for communication with their respective regulators, these projects and offices may serve as points of contact to facilitate communication-related to innovation and new technology.

The agencies also welcome industry feedback on how they can best support innovative efforts through explanations of, or updates to, supervisory processes, regulations, and guidance. Those wishing to share such feedback in writing may do so by sending their submission electronically to FinCEN at FRC@fincen.gov.

Joint Interagency Statement on Innovation

Today's joint statement is the second statement resulting from a working group formed by the agencies and Treasury's Office of Terrorism and Financial Intelligence that focuses on improving the BSA/AML regime's effectiveness and efficiency. On October 3, 2018, the agencies issued a joint Interagency Statement on Sharing Bank Secrecy Act Resources.

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's banks and savings associations, 5,479 as of September 30, 2018. It promotes the safety and soundness of these institutions by identifying, monitoring, and addressing the risks they are exposed to. The FDIC receives no federal tax dollars—insured financial institutions fund its operations.

Date: December 3, 2018
David Barr
(202) 898-6992
dbarr@fdic.gov


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