By Hyunsu Yim and Kanjyik Ghosh
THE U.S. Treasury Department has proposed taking a more central role in the enforcement of AML rules in a bid to overhaul a system for catching illicit transactions by drug traffickers, according to reports.
The proposal could give FinCEN, the Treasury’s Financial Crimes Enforcement Network, the ability to veto a finding by another regulator that a bank has infringed on the BSA (Bank Secrecy Act).
It could also give the Treasury the ability to allow banks to avoid being penalized by regulators for what the Treasury views as mere technical violations of their AML (anti-money-laundering) systems.
That is according to a Wall Street Journal report, citing a draft term sheet circulated to the nation’s banking regulators.
The publication said that the Treasury’s proposal could still change. It also said that the measures would undergo a public comment period before going into effect.
The Journal reported that the proposal is meant to “establish a right of consultation for FinCEN”. It said that the move “won’t necessarily lead to the agency vetoing other regulators”, citing a person familiar with the matter.
U.S. President Donald Trump has launched an offensive against alleged drug-trafficking and stepped up efforts at drug enforcement, with actions including targeted missile strikes that have killed dozens.
Bank regulators and the Treasury Department did not immediately respond to requests for comment.
In October, Treasury Secretary Scott Bessent said that bank regulators and FinCEN were working on new rules for an effective AML program.
Trump-led regulators have taken steps to loosen regulations. All three federal bank regulators announcing this year they would no longer police banks on so-called “reputational risk”. This was where supervisors could sanction institutions for activities that are not strictly prohibited but could expose the bank to negative publicity or costly litigation.
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