Key Question – How will the Financial Crimes Enforcement Network’s (“FinCEN”) proposed anti-money laundering and countering the financing of terrorism (“AML/CFT”) program reforms affect compliance expectations for broker-dealers and other regulated financial institutions?
Our View – FinCEN’s proposed AML/CFT reforms will likely require broker-dealers, RIAs, compliance officers, and senior management to implement more formally documented, risk-driven, and outcome-focused AML programs, with heightened emphasis on governance, testing, documentation, and demonstrable effectiveness.
Executive Summary
On April 7, 2026, FinCEN, together with the FDIC, OCC, and NCUA, issued a significant Notice of Proposed Rulemaking (“NPRM”) intended to modernize and fundamentally reshape AML/CFT compliance obligations across the financial services industry. The proposal is designed to align AML program requirements with the Anti-Money Laundering Act of 2020 and shift regulatory expectations away from purely technical compliance toward demonstrable program effectiveness and measurable risk mitigation outcomes. While much of the proposal directly references banking institutions, FinCEN’s companion proposal expressly impacts broker-dealers and other entities subject to the Bank Secrecy Act (“BSA”).
For broker-dealers, the proposal signals a potentially meaningful shift in how regulators evaluate AML programs, with greater emphasis on enterprise-wide risk assessments, governance accountability, the integration of FinCEN priorities, and documentation supporting supervisory decisions. Regulators appear to be emphasizing whether firms can demonstrate that their AML programs are reasonably designed, implemented in practice, and capable of identifying and mitigating illicit finance risks.
Regulatory Background
The BSA and related AML regulations have historically required broker-dealers to establish and maintain written AML programs reasonably designed to detect and report suspicious activity. These obligations include customer identification procedures, suspicious activity monitoring, independent testing, training, and designation of AML personnel. Broker-dealers are additionally subject to FINRA Rule 3310, which establishes minimum AML program requirements and supervisory expectations.
Practical Impact and Key Developments
The proposal reflects a broader regulatory shift toward outcome-oriented AML supervision. For broker-dealers, the practical impact may extend well beyond policy revisions, requiring firms to reassess how AML risk management is operationalized, documented, supervised, and tested across the organization.
- Enhanced Risk Assessment Expectations. Broker-dealers should expect risk assessments to become operational compliance tools that directly influence monitoring logic, escalation procedures, staffing, and governance oversight.
- Shift Toward Effective AML Programs. The proposal repeatedly references maintaining an “effective” AML/CFT program. Regulators may focus less on whether a policy technically exists and more on whether the program meaningfully functions in practice.
Recommended Actions
- Conduct comprehensive AML risk assessment reviews.
- Evaluate transaction monitoring effectiveness.
- Strengthen governance documentation.
- Review independent testing programs in preparation for the implementation of the proposed rule changes.
- Enhance documentation practices.
Key Takeaways
- Increased Focus on Effectiveness. Regulators are moving toward demonstrable AML program effectiveness supported by governance and documentation.
- Risk Assessments Will Become Central. AML risk assessments will increasingly drive operational compliance decisions.
- Governance Expectations Are Expanding. Senior management accountability and supervisory documentation expectations are likely to increase.
Conclusion
FinCEN’s proposed AML/CFT reforms represent one of the most significant proposed changes to the AML regulatory framework in recent years. Broker-dealers should begin preparing now for heightened supervisory and operational expectations.