Federal Reserve Proposes Risk-Based Overhaul of Bank AML Programs

The Federal Reserve Board has proposed amendments to its anti-money laundering (AML) program requirements for banks, reinforcing a more risk-based approach to financial crime compliance and aligning its framework with recent proposals issued by other U.S. banking regulators.

Under the proposal, banks would be expected to allocate AML resources based on risk, directing greater attention to higher-risk customers, products, services, and transactions rather than applying uniform compliance measures across all business activities.

A key change would require banks to incorporate the Financial Crimes Enforcement Network’s national AML and counter-terrorist financing priorities into their enterprise-wide risk assessments. This would ensure AML programs remain aligned with evolving financial crime threats and regulatory expectations.

The proposal also introduces a more targeted supervisory approach. Once an institution has established an AML program, the Federal Reserve would primarily focus examinations and enforcement actions on significant failures to effectively implement that program, rather than on technical or procedural deficiencies.

The amendments closely mirror proposals issued earlier this year by FinCEN, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration. Together, these reforms represent one of the most significant updates to U.S. Bank Secrecy Act (BSA) and AML program expectations in more than two decades.

Unlike the earlier interagency proposal, however, the Federal Reserve is seeking industry feedback on whether it should also require consultation with the FinCEN Director before taking certain supervisory or enforcement actions.

The proposal is open for public comment for 60 days following its publication in the Federal Register.

Why It Matters for Compliance

The proposal indicates a continued shift towards outcome-oriented AML supervision. Instead of relying solely on procedural checklists, regulators increasingly expect institutions to demonstrate that their AML programs are risk-based, aligned with national priorities, and equipped to effectively identify and combat financial crime.