US Officials Issue Statement Encouraging Banks to Innovate with Regard to AML Compliance

US treasury financial crime AML money laundering

In her December 3rd, 2018 remarks to the ABA/ABA Financial Crimes Enforcement Conference, U.S. Treasury Department undersecretary Sigal Mandelker emphasized the importance of adopting new technological advances for the detection of illicit financial activity. “Private sector innovation, including new ways of using existing tools or by adopting new technologies, can be an important element in safeguarding the financial system against an evolving array of threats,” Ms. Mandelker said. This nudge by regulators towards adopting new technology coincides with increased activity and innovation in the private sector surrounding AML compliance.

The statement went on to assure banks that deficiencies discovered by newer and superior technology would not necessarily be met with supervisory action and that pilot programs for new technology should not subject the banks to further scrutiny. “The statement also recognizes the value of trial and error. It notes that innovative pilot programs in and of themselves should not subject banks to supervisory criticism, even if the pilot programs ultimately prove unsuccessful. Likewise, pilot programs that expose gaps in an AML compliance program will not necessarily result in supervisory action with respect to that program.”

This statement is a noteworthy acknowledgement by regulators of the value and necessity for banks to adopt new technology and engage with the innovative private sector. Banks that do not choose to invest in their compliance technology will soon see their programs fall behind those of their peers and face heightened regulatory scrutiny and action.

U.S. Department of the Treasury Press Release

WSJ Article