U.S. Treasury Seeks ‘Gatekeeper’ Role Over AML Penalties

The Trump administration is moving to give the U.S. Treasury Department’s financial intelligence unit a decisive say over how banks are punished for anti–money-laundering (AML) failures, according to new reporting by The Wall Street Journal.

A draft proposal circulated to federal banking regulators would give the Treasury’s Financial Crimes Enforcement Network, or FinCEN, veto power over Bank Secrecy Act (BSA) enforcement decisions made by federal bank supervisors, including the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., the newspaper said.

In practice, that could allow the Treasury bureau to block penalties for violations it considers “mere technical” shortcomings in a bank’s AML systems, rather than more substantive failures, the Journal said.

FinCEN would weigh, among other things, how useful a bank’s Suspicious Activity Reports (SARs) have been to investigators, and would presume filings to be “highly useful” if they correspond to national AML priorities the bureau has been required to set since 2021.

Treasury Secretary Scott Bessent signaled the change in October, saying planned revisions would “position FinCEN as a gatekeeper” over AML enforcement, the Journal noted.

The Treasury blueprint could still change and would go through a public comment process before any rule takes effect. A person familiar with the plan told the Journal the measure would establish a right of consultation for FinCEN and does not necessarily mean the agency will routinely veto other regulators.

Industry executives have long argued that supervisors focus too heavily on documentation errors and system quirks that don’t meaningfully affect the detection of drug traffickers, terrorists or other serious criminals.

The Journal earlier this year detailed how one laundering network in Los Angeles County was able to move more than $50 million for Mexico’s Sinaloa cartel despite the existing controls, including six-figure deposits at major U.S. banks.

Kevin Toomey, a lawyer at Arnold & Porter, told the Journal the administration appears intent on giving banks a clearer sense of what counts as an effective AML program rather than punishing them for minor technical faults. “I can’t tell you how many clients spend millions of dollars on technical violations that have nothing to do with the effectiveness of the program,” he said.