August 25, 2016

Federal Register: FinCEN Requests Comments on Proposal to Enhance CIP and AML Requirements

On August 24, 2016, the Financial Crimes Enforcement Network ("FinCEN") issued a Notice of Proposed Rulemaking and requested comments on a proposal to make current anti-money laundering ("AML"), Customer Identification Program ("CIP") and beneficial ownership rules equally applicable to all types of banks. FinCEN's proposed rule would prescribe minimum standards for AML programs for banks without Federal functional regulators. Specifically, the proposed rule would remove the AML program exemption for banks that lack Federal functional regulators, including private banks, non-federally insured credit unions and certain trust companies. The request for comment was published in the Federal Register.

The proposed rule would:

  • amend the provision that exempts certain financial institutions from the requirement to establish an AML program;

  • amend the definition of "covered financial institution" to specify that non-federally regulated banks would be subject to the beneficial ownership requirements in the Customer Due Diligence Rule;

  • remove all substantive language in the definitions of "bank" and "financial institution" because there will be no more need to distinguish them from the those in the General Definitions;

  • impose AML program requirements on banks that lack Federal functional regulators, and prescribe minimum standards for the AML programs; and

  • amend the CIP requirements by deleting a specific requirement that the CIPs of banks without Federal functional regulators must be approved by the banks' boards of directors until AML program requirements apply.

If the rule is promulgated, FinCEN noted, banks without Federal functional regulators will be required to implement written AML programs approved by their boards of directors or by equivalent functional units within the banks.

Comments on the proposed rule must be submitted by October 24, 2016.


The proposed rule is but one in a series of many that FinCEN has issued. Taken as a whole, the rules ensure that all components of the financial system are bound in an effort to prevent money laundering. For that reason, smaller banks must assess their compliance systems now, and begin planning for the inevitability that they will be held to the same AML, CIP and beneficial ownership standards as their larger brethren.

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