FinCEN AML Proposal Encourages Banks to Use AI and Collaborate

The Anti-Money Laundering Act of 2020 directed U.S. regulators to modernize the Bank Secrecy Act framework and make AML/CFT programs more effective. The Federal Reserve’s proposal matters because it would push supervised banks to allocate compliance resources according to actual illicit-finance risks, rather than treating documentation and standardized reviews as ends in themselves. Banks would need evidence showing that risk assessments, controls, testing, training and customer due diligence work in practice.

The Federal Reserve Board approved the proposal on July 6, 2026, and announced it on July 7, proposing amendments to 12 CFR Part 208. Banks would have to incorporate Financial Crimes Enforcement Network AML/CFT priorities into risk assessments and update programs when products, customers, channels or geographic exposures materially change. Once a program is properly established, supervision and enforcement would focus on significant implementation failures. Comments are due September 8; the proposal specifies no new fine or compliance-spending amount.

The U.S. Bank Secrecy Act has long required financial institutions to maintain anti-money-laundering and counterterrorism-financing programs. Banks, however, often expend resources on forms, audits and box-ticking. Congress passed the Anti-Money Laundering Act in 2020, directing the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, to adopt a risk-based approach and encourage technological innovation so oversight can focus on significant illicit-finance and national-security threats.

FinCEN proposed a new rule on April 7, 2026, replacing its July 3, 2024 proposal and directing banks to shift resources from repetitive, low-risk checks to higher-risk activity. The Federal Deposit Insurance Corp., National Credit Union Administration and Office of the Comptroller of the Currency issued parallel proposals. The comment period closed on June 9. The proposal does not involve a specific monetary amount, and the industry has urged regulators to streamline reporting forms further.

The GENIUS Act, which took effect on July 18, 2025, requires the U.S. Treasury Department to report to Congress on new anti-money laundering tools for digital assets. Identity risk is a central concern: FinCEN data show that about 1.6 million Bank Secrecy Act filings in 2021 involved identity-related issues, accounting for 42% of all filings that year and $212 billion in suspicious activity.

The Treasury submitted its report to Congress in March 2026 after reviewing more than 220 comments received between August and October 2025. It advocated using digital credentials to strengthen customer identification at banks and AI to focus scrutiny on high-risk transactions. FinCEN separately proposed a new risk-based AML/CFT rule on April 7, replacing its 2024 proposal. The comment period closed on June 9.

U.S. banks and FinTechs share APIs, customer identities and transaction data, but fragmented information can undermine the detection of suspicious transactions. The FDIC, OCC and NCUA are therefore requiring regulated institutions to allocate resources according to their actual risks and bring business partners into an ongoing AML compliance framework.

The latest draft was jointly proposed by the three agencies. It focuses on embedding APIs, identity data and transaction transparency into banks' compliance processes while keeping risk assessments up to date. Available information on the proposal does not disclose its publication date, effective date, applicable thresholds or monetary amounts. The final rule and implementation timetable remain pending.