FinCEN Director, Ken Blanca’s presented remarks to the SIFMA AML conference in Feb 2019, were of particular interest in that they focussed on regulatory reform and a recognition that more needed to be done to modernise the fight against financial crime and that innovative and new ways of working would be encouraged and they were being discussed.

On regulatory reform, 5 areas were mentioned, though few concrete details provided. These were:

• reviewing ways in which financial institutions can take innovative and proactive approaches to identify, detect, and report financial crime and meet BSA/AML regulatory obligations;

• reviewing the risk-based approach to the examination process;

• reviewing the agencies’ approach to BSA/AML supervision and enforcement;

• Identifying better ways to communicate priorities and feedback to financial institutions, regulators, and law enforcement; and

• Identifying concrete ways to understand and quantify the value and use of financial institution reporting.

On innovation, there was acknowledgment “that financial institutions have been improving their ability to identify customers and monitor transactions by experimenting with new technologies that rely on advanced analytical techniques including artificial intelligence and machine learning. Many institutions are also working closer together to share information to get a more accurate picture of risks and illicit activity.” And that “FinCEN encourages these types and other financial services-related innovation” and “FinCEN is committed to engaging with the private sector and providing regulatory clarity, as needed.”

There were a couple of warnings too. Blanco stated that “as we explore leveraging innovation in the financial sector, it is important to remember these efforts do not mean that financial institutions can be lax in implementing existing BSA requirements or substitute completely untested products for existing compliance efforts. Compliance with the BSA regulations is critically important in protecting our financial system.” The second warning was that his interest is in activities that “make our country safer” and not those that “result in greater efficiencies.”