U.S. Treasury Eyes New Power to Steer Anti-Money-Laundering Enforcement

Key Takeaways

• FinCEN’s Gatekeeper Role: A Treasury draft proposal would position FinCEN as the central decision-maker on AML enforcement actions taken by other regulators.
• WSJ First to Report: The Wall Street Journal initially reported the proposal being circulated among federal banking regulators.
• Focus on Effectiveness: The plan aims to prioritize actionable intelligence over technical compliance errors that banks argue are costly and unproductive.
• Deregulatory Shift: Treasury Secretary Scott Bessent views current AML oversight as inhibiting economic growth while failing to stop major laundering activity.

Deep Dive

The Treasury Department is positioning itself to take a more commanding role in how the U.S. fights illicit finance, with a draft proposal that could reshape the enforcement of anti-money-laundering (AML) rules across the banking system.

The Wall Street Journal first reported that the proposal, now being circulated among federal banking regulators, would elevate the Treasury’s Financial Crimes Enforcement Network (FinCEN) as a “gatekeeper” in enforcement decisions. Under the plan, the agency could effectively veto findings by other regulators under the Bank Secrecy Act (BSA), particularly in cases where it believes banks are being cited for technical shortcomings rather than failures that meaningfully weaken defenses against criminal activity.

The shift comes as the Trump administration looks to overhaul a system long criticized as costly, complex, and not particularly effective at preventing money laundering before the damage is done. Banks have spent years urging regulators to focus on the substance of AML controls, rather than rigid checklists that produce millions of reports each year, many of which never trigger an investigation.

Treasury Secretary Scott Bessent and other administration officials say too many regulatory requirements have slowed economic growth while failing to keep out sophisticated criminal actors. Early in the term, officials explored merging some federal banking regulators; since then, Bessent has asserted Treasury’s primacy in ensuring agencies operate in sync and, increasingly, in line with the industry’s concerns.

A New Enforcement Dynamic

If finalized, the proposal would require the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. to consult with FinCEN before launching enforcement actions tied to AML deficiencies. FinCEN would weigh whether a bank has been providing valuable intelligence, particularly suspicious activity reports that align with national AML priorities established under 2021 reforms.

That creates the possibility that banks could avoid penalties in situations where Treasury views them as strong contributors to law-enforcement efforts, even if examiners spot shortcomings in compliance systems.

A person familiar with the discussions stressed that the proposal is still subject to revision, and would need to go through the full rulemaking process, including a public comment period.

Balancing Effectiveness and Accountability

The BSA, in force since 1970, deputizes banks as first responders against financial crime, requiring customer screening and transaction-monitoring systems designed to flag red flags ranging from structuring schemes to terrorist financing. But industry attorneys argue that enforcement has drifted too far toward punishing formatting errors and system-settings minutiae.

Supporters say clarity and centralization could lead to smarter AML controls. Critics caution that giving FinCEN the last word may weaken accountability if banks fall short.

For now, the Treasury’s initiative reflects a broader recalibration of reducing what the administration views as unnecessary regulatory friction while zeroing in on outcomes that actually disrupt criminal finance. The bet is that banks can spend less time on paperwork and more time generating intelligence that helps law enforcement, with FinCEN guiding the priorities and calling the plays.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.