In a sweeping change to America’s anti-money laundering framework, the U.S. Treasury has announced a major overhaul of the Bank Secrecy Act (BSA), empowering banks to ease compliance pressure on low-risk clients and reallocate efforts toward national security threats.
Deputy Treasury Secretary Michael Faulkender unveiled the changes during a meeting with the BSA Advisory Group, highlighting that the updates are part of a broader modernization push rooted in the 2020 Anti-Money Laundering Act. The revisions aim to make financial compliance smarter, more efficient, and risk-focused—especially for smaller banks who face disproportionate burdens under existing rules.
Under the new principles, financial institutions can now adjust their AML (Anti-Money Laundering) programs to focus more heavily on high-risk threats such as terrorist financing, cyber-enabled crimes, and sanctions violations. As part of this shift, banks will be permitted to reduce the intensity of monitoring and reporting requirements for low-risk customers, including fewer Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) where appropriate.
The Treasury also outlined that AML programs must be designed around a clear risk-based framework. This includes mandatory risk assessments, effective internal controls, and transparency in how those controls are evaluated by regulators. The goal is to ensure financial institutions are spending resources where the risk is highest—while reducing unnecessary compliance for low-threat clients.
One of the most significant outcomes of the policy shift is relief for smaller and community banks, which often struggle with the resource demands of traditional AML requirements. The modernization initiative is expected to deliver cost-effective regulation while preserving the integrity of the financial system.
Looking ahead, FinCEN and other agencies will provide more detailed guidance to support implementation. Financial institutions are expected to review and revise their internal policies and systems to match the updated risk-based expectations.
The Treasury’s move signals a decisive pivot away from the outdated “check-the-box” model of AML compliance. Instead, the future points toward agile, intelligence-led financial security—giving banks the flexibility to fight crime where it actually exists, not just on paper.
