FinCEN Proposes New AML Guidelines For Unregulated Financial Service Providers

AML
AML

Various financial services providers in the US are still unregulated to this very day. Some of the Bitcoin companies will certainly fall into this category, but there are also banks that need to step up their game. FinCEN created a new proposal which introduces new AML requirements for these unregulated providers. Although this initiative focuses on banks alone, it is not unlikely this will extend to Bitcoin in the future.


NEW AML PROPOSAL BY FINCEN

Contrary to what some people may want to believe, there are regulatory gaps in the AML policy. A total of 600 US-based lenders is not officially AML compliant right now, which is a rather surprising number. The new FinCEN proposal removes the AML program exemption for these institutions. Affected private banks, trust companies, and credit unions will not be too pleased with this plan.

As a result of this proposal, minimum standards for AML programs would be prescribed. Any bank in the US should adhere to these rules, regardless of how they are overseen or regulated. Moreover, more thorough customer identification standards will need to be established.

“Banks without a federal functional regulator may be as vulnerable to the risks of money laundering and terrorist financing as banks with one. This proposed rule would eliminate the present regulatory ‘gap’ in AML coverage between banks with and without a federal functional regulator. FinCEN expects uniform regulatory requirements for all banks to reduce the opportunity for criminals to seek out and exploit banks subject to less rigorous AML requirements.”

Some people may find it odd this proposal is popping up all of a sudden. This rule would not be as imposing as anticipated, though, as these institutions already comply with the Bank Secrecy Act. Additionally, the majority of these 600 institutions perform customer identification already.

It is not unlikely this new FinCEN proposal will be extended to companies active in the Bitcoin world. The majority of cryptocurrency business are unregulated as well – in the traditional sense anyway – and these new requirements would apply to them as well. It remains to be seen if this proposal is approved, though, as a resolution is not expected until early November of 2016.

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