Federal Reserve Proposes Risk-Based AML Rules for Banks

The Federal Reserve proposed risk-based AML and CFT program requirements for banks on July 7, 2026.

On July 7, 2026, the Federal Reserve Board proposed amendments to its anti-money laundering (AML) and countering financing of terrorism (CFT) program requirements for banks. This move aims to synchronize the Fed's regulations with parallel changes recently proposed by other federal agencies, such as the Financial Crimes Enforcement Network (FinCEN).

Central to the proposal is a risk-based approach that requires banks to allocate more attention and resources toward customers and activities that pose higher risks for illicit finance. As part of this, banks would need to integrate FinCEN's national AML priorities into their risk assessment processes. This approach moves away from measuring compliance success by paperwork volume toward focusing on stopping illicit finance threats. As Scott Bessent, Secretary of the Treasury, noted, "For too long, Washington has asked financial institutions to measure success by the volume of paperwork rather than their ability to stop illicit finance threats."

The Fed's proposal emphasizes that supervisory and enforcement efforts will concentrate on significant failures in implementing effective AML programs rather than on technical deficiencies. This shift intends to ensure meaningful compliance improvements across the banking system.

This regulatory update is a key step in implementing the Anti-Money Laundering Act of 2020, which mandates that regulators develop a more effective, risk-focused AML framework. The Federal Register comment period lasts 60 days from publication, allowing financial institutions and stakeholders to provide input on the proposed rule changes.

What's next: Comments on the proposal are due 60 days after its publication in the Federal Register, after which the Fed may revise the rule accordingly.