What FinCEN’s Proposal Means for AML/CFT Programs: Reducing the BSA Compliance Burden

On April 7, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a proposed rule that would place greater focus on whether anti-money laundering (AML)/countering the financing of terrorism (CFT) programs under the BSA are effective, risk-based and reasonably designed rather than focused solely on technical compliance. Public comments on the rule are due by June 9, 2026.

The proposal would bring more clarity to AML/CFT regulations and would replace AML programs with AML/CFT programs, where appropriate. As underscored in FinCEN’s press release, the proposal is intended to “modernize the U.S. AML/CFT regulatory and supervisory framework.” The proposed rule is intended to promote more “risk-based, reasonably designed programs” with greater consistency in how effectiveness is evaluated.

For financial institutions, the proposal signals a continued shift toward outcomes. The focus is not simply on whether required elements are in place, but whether programs effectively mitigate risk and produce meaningful results.

In practical terms, expectations are becoming more focused on several key areas. The rule places greater emphasis on AML/CFT program effectiveness, encouraging institutions to demonstrate that controls are appropriately designed and operating effectively, rather than focusing only on technical compliance. It also reinforces the expectation that risk assessments actively drive program design and resource allocation, creating a clearer linkage between identified risks and controls.

Concurrently, the proposal indicates supervisory focus may increasingly emphasize significant or systemic weaknesses affecting AML/CFT program effectiveness, rather than isolated technical deficiencies. Perhaps most importantly, institutions will be expected to demonstrate disciplined alignment of resources, ensuring that higher-risk areas receive appropriate attention and investment.

Background: Modernizing the Existing Framework

The proposed rule builds upon the long-standing risk-based AML/CFT framework reflected in existing regulatory and supervisory guidance. Under the current framework, institutions are evaluated based on, among other things, the following elements:

• Their money laundering/terrorist financing risk profile
• Core program elements (controls, testing, training, governance)
• Compliance with requirements such as CIP, CDD, SAR and CTR processes

The proposal focuses on how the AML/CFT programs are evaluated in practice. In many cases, programs have emphasized documentation and compliance, sometimes at the expense of clearly demonstrating effectiveness. As emphasized in FinCEN’s accompanying fact sheet, the proposal is also intended to refocus AML/CFT efforts on higher-risk activity while reducing unnecessary compliance burden — an objective that underpins several of the clarifying points in the rule.

What the Proposed Rule Clarifies

The proposal reinforces the existing principles of identifying, preventing and reporting financial crime, while making expectations more explicit. It is intended to reform AML/CFT program requirements to evaluate whether the programs are risk-based, reasonably designed to ensure compliance and are effective in practice. The proposal would clarify that AML/CFT programs should be evaluated not only on the existence of controls, but also on whether controls are appropriately designed and functioning effectively.

Key Components of the Proposed Changes

• Program effectiveness over design: Refocusing compliance on effectiveness by distinguishing between deficiencies from program design (establishment) and program implementation (maintenance)
• Risk ownership: Reinforcing that financial institutions are in the best position to identify and evaluate their money laundering, terrorist financing and illicit finance risks
• Resources focused on higher risk: Empowering more attention and resources toward higher risk customers and activities rather than toward lower-risk customers and activities
• Clearer audit and testing expectations: Clarifying expectations on program requirements, including independent testing and audit functions, to ensure examiners and auditors do not substitute judgment of risk-based designed AML/CFT programs
• Enhanced FinCEN supervisory coordination: Affirming FinCEN’s central role in AML/CFT supervision, including introduction of a notice and consultation framework between federal banking supervisors and FinCEN regarding significant supervisory actions
• Embedded AML/CFT priorities: Incorporating AML/CFT priorities in both AML/CFT program requirements and considerations involving significant supervisory or enforcement actions

What Does This Mean for Financial Institutions

Many institutions will find the underlying framework familiar. The shift lies in how clearly programs can demonstrate alignment between risk, controls and outcomes. This includes showing that risk assessments meaningfully lead control design, that monitoring is concentrated in higher-risk areas and that policies align with execution. Areas likely to draw increased scrutiny include risk assessments that do not drive decision-making, misalignment of resources, gaps between documented procedures and practice, and limited support for key program decisions.

Looking Ahead

This proposal does not replace the core BSA compliance framework but rather refines how AML/CFT program effectiveness may be evaluated. Those relying primarily on documentation without clear evidence of effectiveness may need to recalibrate.

As FinCEN continues its broader effort to modernize the AML/CFT framework, this proposal provides a clear signal of supervisory direction. For more information about preparing for compliance, contact us.

©2026

Authored by Dulce Klingenberg and Jennifer Brooms