The Final Rule Signals Bigger Changes Ahead
On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) issued a final rule that formally integrates Countering the Financing of Terrorism (CFT) into the required Anti-Money Laundering (AML) programs for certain investment advisers. While Money Services Businesses (MSBs) are not directly affected by this rule, the move is part of a broader modernization effort that strongly suggests similar requirements are coming soon for MSBs and other financial sectors.
Why This Rule Matters to MSBs
This rule is part of FinCEN’s implementation of the Anti-Money Laundering Act of 2020 (AMLA), a sweeping reform law designed to overhaul and unify AML/CFT expectations across all financial institutions. The final rule is a clear indicator that MSBs should begin strengthening their compliance programs before a formal mandate hits their sector.
Key Modernization Themes MSBs Should Act on Now
Even though MSBs aren’t bound by this rule (yet), FinCEN has already proposed applying these same principles to all financial institutions, including MSBs. Here’s how you can get ahead:
Mandatory Risk Assessment Process
Prepare for a future rule that will require MSBs to:
- Identify, evaluate, and document risks tied to money laundering and terrorist financing.
- Factor in business activities, customer types, and national AML/CFT priorities.
- Review and update the assessment periodically, especially when there are material changes in services or risk profiles.
Implication: If your MSB hasn’t conducted a structured risk assessment before, or hasn’t revisited one in years, now is the time to get this in place and keep it current.
Incorporation of AML/CFT Priorities
Your AML/CFT Program should reflect FinCEN’s national priorities, which include threats like:
- Terrorist financing
- Cybercrime
- Fraud
- Drug trafficking
- Human smuggling and trafficking
Implication: MSBs should not only acknowledge these priorities but also show how they’re being addressed through internal controls and customer due diligence.
AML/CFT Program Requirements
MSBs have long been required under the Bank Secrecy Act (BSA) to implement compliance programs that include the five (5) foundational pillars:
- Documented internal policies and procedures
- A qualified AML/CFT Compliance Officer
- Ongoing employee training
- Independent testing of the Program
- Oversight by the board of directors or equivalent governing body
Implication: The five pillars are not new, but the way MSBs demonstrate, document, and enhance them is under growing scrutiny. Consistency and modernization are the new baseline for compliance.
Formal Inclusion of CFT
The rule replaces the term “AML Program” with “AML/CFT Program” to reflect the explicit inclusion of Countering the Financing of Terrorism.
Implication: You must train employees and adapt your controls to monitor for both money laundering and terrorist financing activities.
Documentation & Oversight
MSBs must document the full scope of their AML/CFT Program and provide those records to FinCEN or other regulators upon request. This includes the risk assessment, training materials, compliance policies, and audit reports.
Implication: Well-organized documentation and board-level awareness will become critical to maintaining compliance and passing examinations.
Encouragement of Innovation
The final rule encourages the use of online learning and advanced analytics to improve program effectiveness.
Implication: If your MSB is still handling compliance manually, now is the time to explore solutions that can reduce false positives and streamline reporting.
Timeline
Final Rule Effective Date (Investment Advisers): January 1, 2026
MSBs Not Yet Covered, but FinCEN’s June 2024 NPRM includes MSBs
What You Should Do Now: Start evaluating your current AML/CFT Program against the new requirements and begin the process of updating risk assessments, policies, training, and documentation.
Updated AML/CFT Training
To support your transition, we’ve fully updated our AML/CFT training courses to reflect the new final rule. These include:
- Frontline Staff Courses – Train employees to detect money laundering and terrorist financing activity in daily transactions
- Compliance Manager Courses – Understand how to implement and oversee the updated program components
- Compliance Officer Certification – Lead an AML/CFT Program aligned with the final rule, from board oversight to innovation
Our online platform, On POinT Training Center, helps MSBs of all sizes develop custom training programs that meet federal standards and fit operational needs.
Ready to Modernize Your Compliance Program?
The AML landscape is evolving, and the Final Rule is your early warning. Stay ahead of the regulatory curve and update your AML/CFT Program, employee training program, and transaction monitoring today!
Tags: AML, AML/CFT Program, AMLA, Anti Money Laundering, CFT, Countering the Financing of Terrorism, Employee Training, Financial Crimes Enforcement Network, FinCEN, Money Services Business, MSB, Online Employee Training, Risk Assessment
