US Treasury proposes to centralize AML enforcement under FinCEN, easing banks’ compliance burden
The U.S. Treasury Department, led by Secretary Scott Bessent, has circulated a proposal to overhaul bank anti–money laundering (AML) oversight by centralizing enforcement authority under the Financial Crimes Enforcement Network (FinCEN). The plan would allow FinCEN to review and potentially veto AML findings made by other regulators. Officials say the current framework is outdated, costly for banks, overly rigid, and ineffective at stopping large-scale criminal money flows. The proposed reforms aim to modernize AML enforcement, streamline compliance, reduce penalties for technical or minor infractions, and refocus resources on detecting serious illicit activity. The change is part of a broader effort by the administration to update AML rules and ease the regulatory burden on financial institutions.
Neutral
The proposal is primarily regulatory and procedural rather than directly targeting crypto markets or specific crypto firms, so immediate market-moving effects on digital-asset prices are limited—hence a neutral classification. Centralizing AML oversight under FinCEN could produce mixed outcomes for crypto traders: in the short term, clearer and more consistent enforcement may reduce regulatory uncertainty, which can support market stability. Conversely, a tougher, more focused approach to detecting serious illicit flows could increase compliance scrutiny on crypto services, raising costs for exchanges and custodians and possibly curbing some retail activity. Past events show regulatory clarity often benefits markets over time (e.g., clearer guidance around custody and ETFs supported institutional flows), while heightened enforcement can depress risky, leveraged retail activity. Longer term, a modernized AML regime that concentrates on meaningful illicit-activity detection could strengthen institutional confidence if it avoids onerous technical penalties; however, stricter scrutiny of crypto-related flows could raise operational costs and slow certain products. Traders should watch rule details, how FinCEN implements veto power, and any specific guidance applied to crypto firms to assess trading risk and liquidity impacts.