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December 5, 2018

US regulators push for innovation in banks’ AML programmes

Five regulatory agencies in the US have joined hands to encourage innovation in banks’ anti-money laundering (AML) and Bank Secrecy Act (BSA) compliance efforts.

The agencies involved are the Federal Reserve System, Federal Deposit Insurance, Financial Crimes Enforcement Network, National Credit Union Administration and Office of the Comptroller of the Currency.

The agencies did not vouch for a specific method or technology in this regard.

They also encouraged collaboration with the private sector and other interested parties.

“The Agencies recognise that private sector innovation, including new ways of using existing tools or adopting new technologies, can help banks identify and report money laundering, terrorist financing, and other illicit financial activity by enhancing the effectiveness and efficiency of banks’ BSA/AML compliance programmes,” the regulators said.

Moreover, the agencies welcomed the use of artificial intelligence and digital identity technologies for BSA/AML compliance.

However, they said that pilot programmes carried out by banks will not make them open to supervisory criticism even if unsuccessful.

Similarly, pilot programmes that reveal loopholes in existing compliance programmes would not necessarily lead banks to supervisory action.

“For example, when banks test or implement artificial intelligence-based transaction monitoring systems and identify suspicious activity that would not otherwise have been identified under existing processes, the Agencies will not automatically assume that the banks’ existing processes are deficient. In these instances, the Agencies will assess the adequacy of banks’ existing suspicious activity monitoring processes independent of the results of the pilot programme,” the regulators noted.

At the same time, the regulators said that they will not criticise or penalise banks that have effective compliance programmes in place but do not pursue innovative approaches.


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