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For too long, the U.S.
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Fortunately, the U.S. administration acknowledges the current system’s shortcomings and is committed to meaningful change and innovation in AML. Treasury Secretary Scott Bessent has signaled a shift in AML supervision from a check-the-box approach to one centered on program effectiveness. Speaking late last year, he previewed a move from a “zero-tolerance focus on process and documentation” toward activities of higher value.
The industry welcomes this proposal and concrete steps to make it a reality. Recent guidance on filing suspicious activity reports is a positive start on the journey toward a more risk-based approach to AML. It would be even more powerful if coupled with legislation to recalibrate reporting thresholds, which remain untouched since Richard Nixon was president.
Secretary Bessent’s blueprint for AML reform would empower banks to place greater emphasis on providing law enforcement agencies with useful information that aligns with their priorities. It would curtail asymmetric regulatory incentives that lead inevitably to unnecessary account closures — a well-documented and regrettable consequence of the prevailing overbroad, highly punitive AML framework. And it would conserve resources currently wasted on reports that do little to combat illicit activity.
Recentering AML supervision on tangible results — not vague, hyper-technical obligations prone to divergent examiner interpretations — is precisely what’s needed. This isn’t deregulation; it’s the pursuit of better outcomes for our financial system and customers.
One significant opportunity for Bank Secrecy Act modernization lies in the responsible deployment of advanced technologies, including artificial intelligence. We see enormous potential, at Citi and across the industry, to employ AI to turbocharge AML programs — from analyzing vast documentation and automating testing, to conducting straightforward investigations and SAR filings to alleviate undue operational burden.
To fully deploy AI in support of AML, we need the government — Treasury, Fincen, bank regulators, supervisory teams and law enforcement — to embrace innovative practices responsibly adopted. AML regulation has seen little change in recent years despite tectonic technological advancements. This disparity creates a significant gap between the possible and the permissible. A regulatory framework that embraces technological innovation is necessary to unleash enhanced capabilities and efficiencies for combating financial crime.
We envision a system in which the reports required for lower-risk activities are automated and filed directly with Fincen, flagging suspicious activities immediately and freeing up valuable time for investigators and bank staff. This would allow bank experts to focus more on higher-risk areas that better serve law enforcement and national security objectives. We applaud senior leaders such as John Hurley, Treasury’s under secretary for terrorism and financial intelligence, for supporting broader innovation and the use of AI as integral components of a smarter AML framework. Now this mindset shift should be codified into law, so banks have the legal certainty necessary to make changes.
This is an opportune moment of public-private alignment and a critical juncture for reform and modernization. Both the administration and the industry recognize the imperative for reform. The administration has been willing to collaborate with financial institutions toward our shared goal of disrupting financial crime, and we are eager to continue this dialog to accelerate essential policy changes.
Working together, we must forge a future where our AML programs are a more powerful force for protecting our national security and the integrity of our financial system.