Federal Reserve Proposes Risk-Based AML/CFT Program Requirements

On July 7, 2026, the Federal Reserve Board requested comment on a proposed rule that would amend the anti-money laundering and countering the financing of terrorism (AML/CFT) program requirements for Board-supervised banks. The proposal would amend Regulation H to implement provisions of the Anti-Money Laundering Act of 2020 and align the Board’s requirements with related rules proposed by the Financial Crimes Enforcement Network (FinCEN), OCC, FDIC, and NCUA.

The proposal would require Board-supervised banks to establish and maintain effective AML/CFT programs reasonably designed to identify, assess, and mitigate money laundering, terrorist financing, and other illicit finance risks. Specifically, the proposal would:

• Require risk-based program design. Banks would need policies, procedures, and controls that assess risks across products, services, distribution channels, customers, and geographic locations, while incorporating applicable FinCEN AML/CFT priorities.
• Prioritize higher-risk areas. The proposal would direct banks to allocate greater attention and resources to higher-risk customers and activities and promptly update risk assessment processes when significant changes affect the bank’s risk profile.
• Preserve core program requirements. An effective program would continue to include ongoing customer due diligence, independent testing, employee training, and a designated AML/CFT officer located in the United States.
• Focus significant actions on material failures. After a bank properly establishes its program, the Board generally would reserve AML/CFT enforcement or significant supervisory actions under the program rule for significant or systemic implementation failures.

The proposal also would permit a bank’s board of directors, an equivalent governing body, or appropriate senior management to approve the written AML/CFT program. Comments are due September 8, 2026.

Putting It Into Practice: The Federal Reserve’s proposal complements FinCEN’s recently proposed revisions to its AML/CFT program rules (previously discussed here). Although the proposals arise under separate authorities, they are intended to create a consistent, risk-based framework for AML/CFT programs. Board-supervised banks should review the proposed requirements for risk assessments, program governance, U.S.-based AML/CFT officers, and significant supervisory or enforcement actions and consider submitting comments by September 8, 2026.

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