FDIC Proposes AML and Sanctions Compliance Standards for Stablecoin Issuers
The FDIC proposed rules to require state-chartered bank subsidiaries that issue payment stablecoins to maintain anti-money-laundering, sanctions and reporting programs aligned with FinCEN and OFAC requirements.
The proposal would amend 12 CFR Part 350 and add a Bank Secrecy Act ("BSA") and sanctions compliance provision (proposed Rule 350.6(d)) and create a new Subpart C governing supervision and enforcement of AML/CFT programs at FDIC-supervised "permitted payment stablecoin issuers," or PPSIs. Under proposed Rule 350.6(d), each PPSI would be required to comply with the BSA, GENIUS Act sections 4(a)(5) and 4(a)(6)(B), and applicable regulations at 31 CFR Chapter V ("OFAC Sanctions Rules") and 31 CFR Chapter X ("BSA Rule"), including any AML/CFT program, sanctions compliance program and reporting requirements.
The FDIC said the proposed rulemaking limits FDIC's AML/CFT enforcement actions against issuers that have effective programs to situations where there has been significant or systemic failure. Under proposed Rule 350.201, a PPSI that has established an effective AML/CFT program in line with FinCEN's Chapter X rules would not be subject to an FDIC AML/CFT enforcement action or a significant AML/CFT supervisory action - except in cases of a significant or systemic failure to implement an effective program. Failure to establish a program at all remains fully actionable, and the rule would not affect criminal enforcement under the BSA. Proposed Rule 350.202 would require the FDIC, before initiating any AML/CFT enforcement or significant supervisory action, to give the FinCEN Director at least 30 days' written notice along with the relevant underlying materials - including draft examination reports, enforcement papers and examination workpapers - and to consider FinCEN's input, including on the effectiveness of the issuer's program.
Proposed Rule 350.203 would expand information sharing with FinCEN by authorizing PPSIs to disclose non-public supervisory information to the FinCEN Director on the FDIC's behalf in connection with an existing or potential AML/CFT action, on the agency's authority to preserve privilege when transferring information to another federal agency. The FDIC presented two alternatives and is seeking comment: a simpler authorization (Option 1) and one (Option 2) that would additionally require the PPSI to disclose the same information contemporaneously to the FDIC, which the agency said may be more protective of privilege but could chill proactive reporting to FinCEN.