Alert
Tribes Invited to Consult on Proposed Rule Changes for AML/CFT Programs
The United States Department of the Treasury has invited Tribes to consult on proposed rule revisions to anti-money laundering (AML) and countering the financing of terrorism (CFT) programs currently maintained by financial institutions, including Tribally owned casinos.
Tribal leaders were encouraged to participate in a virtual consultation on September 13, 2024, to seek clarity, express potential concerns, and understand how the NPRM should be effectively implemented. Written or electronic comments will be accepted through October 18, 2024.
Ultimately, the proposed changes to the AML/CFT programs aim to modernize the regulatory framework of financial institutions, including gaming entities owned by Tribal governments. Prepare to participate with the following insights into the current rule and proposed changes.
Background on Current AML/CFT Programs
The Bank Secrecy Act (BSA), passed in 1970, is the foundation of the federal government’s efforts to combat money laundering. The BSA was designed to address and prevent illicit financial activity, explicitly targeting money laundering (ML) and terrorist financing (TF). Authority for compliance with this act rests with the Department of Treasury, which delegates authority to FinCEN.
Congress approved the AML Act of 2020 (AML Act) to respond to evolving threats in the financial landscape. The AML Act updated the BSA to address modern risks. The current proposed changes aim to establish risk-based compliance measures for financial institutions, including those governed by Tribal governments.
Overview of Proposed Changes
The Notice of Proposed Rulemaking (NPRM) titled, Anti-Money Laundering and Countering the Financing of Terrorism Programs was released August 16, 2024, by the Financial Crimes Enforcement Network (FinCEN).
While Tribal casinos have long been expected to maintain an AML/CFT program under the BSA, the proposed rule changes would codify those expectations.
Noteworthy revisions applicable to Tribal casinos include:
- Automated Program Requirement Removed. Currently, casinos are required, as applicable, to use automated programs to help with compliance. Under the proposed rule, this requirement would be removed. While this won’t result in changes for many casinos that have reliable automated programs in place, it does allow casinos to design a tailored, risk-based approach that best suits their property.
- Standardized Risk-Assessment Process. While many casinos and other Tribally owned enterprises perform risk assessments, this rule would formalize the requirement. To the extent Tribal casinos haven’t performed and documented a risk assessment process to develop policies, procedures, and controls, they would need to develop and implement compliance practices to ensure they’re addressing the risks specific to their organizational operations, including AML/CFT priorities issued by FinCEN. All entities would have to update their risk assessments on a periodic basis.
- Governing Bodies Oversee AML/CFT Program. To address organizational risk to combat money laundering and terrorist financing, the new rule requires that AML/CFT program be approved and overseen by an entity’s board of directors or equivalent governing body. Based on their organizational structure, Tribal casinos will need to identify the appropriate governing body to review, approve, and oversee the AML/CFT program.
We’re Here to Help
To learn more about the current AML/CFT rule and how the proposed changes can impact your Tribe, contact your Moss Adams professional.