The American Fintech Council (AFC) and the Coalition for Financial Ecosystem Standards (CFES) have joined to issue a statement on the cost of Anti-money Laundering – Counter Terrorism Financing (AML/CFT) in response to a survey distributed by FinCEN.
Phil Goldfeder, CEO of the AFC, said the escalating costs are causing a significant burden to their members.
“We urge FinCEN to use these insights to shape risk-focused guidance that protects the financial system while reducing unnecessary operational strain.”
AFC and CFES surveyed their members to understand the challenges, including increased staffing and additional technology to maintain AML/CFT compliance. Respondents were said to include Fintechs as well as established finance.
Sima Gandhi, co-founder of the Coalition for Financial Ecosystem Standards, said there is a clear message: the status quo is becoming untenable.
The partners urged FinCEN to explore ways to incorporate tools and processes into supervisory activities and to enable and incentivize the use of Regtech.
Regtech or Suptech can automate much of the compliance process, yet both private participants and public entities can be slow to adopt new technology due to the initial upfront costs as well as a lack of coordination with government entities. Suptech is incredibly difficult to incorporate as federal agencies tend to be monolithic and difficult to change, yet it creates an opportunity to reduce government costs while improving oversight.
Ian Moloney, Chief Policy Officer at AFC, believes that costs are rising without a corresponding proportional reduction in risk.
“FinCEN can promote supervisory frameworks that encourage responsible innovation, increase operational efficiency, and support more effective risk management across the financial sector”