The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and banking agencies issued two proposed rules to revise Bank Secrecy Act (BSA) regulations governing financial institutions’ anti-money-laundering (AML) programs and establish such requirements for stablecoin issuers.
One of the proposals, announced on April 7, would establish four “core pillars” to be integrated into a bank’s AML program and require them to include provisions for countering the financing of terrorism (CFT).
The other proposal, issued jointly with the Office of Foreign Asset Control on April 8, would implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act requirement to establish BSA compliance obligations and sanction policies for payment stablecoin issuers.
Core pillars rule
The four pillars would consist of:
- “the development of internal policies, procedures, and controls;
- “the designation of a compliance officer;
- “an ongoing employee training program; and
- “an independent audit function to test programs”
Treasury Secretary Scott Bessent characterized the proposed rulemakings as part of the Treasury’s broader effort to modernize the AML/CFT regulatory and supervisory framework “to better achieve the purposes of the BSA.”
“For too long, Washington has asked financial institutions to measure success by the volume of paperwork rather than their ability to stop illicit finance threats,” Bessent said in a press release. “Our proposal restores common sense with a focus on keeping bad actors out of the financial system, not burying America’s banks in more red tape.”
The revised rules would require that only “significant or systemic failures” by a financial institution to implement a properly established AML/CFT program would warrant an enforcement action or a significant supervisory action.
Stablecoin issuers
Stablecoin issuers would be legally obligated to meet BSA requirements, including filing suspicious activity reports, creating and retaining certain records and conducting due diligence. They would also have to maintain an effective sanctions compliance program.
“President Trump is strengthening American leadership in digital financial technology,” Bessent said in a separate release. “This proposal will protect the U.S. financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem.”
The proposed AML/CFT program requirements for stablecoin issuers include the same four pillars described in the proposed BSA rule revisions proposed for banks and other financial institutions.
The stablecoin rule also would establish a coordination function between FinCEN and primary federal stablecoin regulators before any supervisory action. Enforcement actions or major supervisory actions would be limited to cases where the issuer has a significant or systemic failure to maintain its program.
Comments on both proposals are due no later than June 9.