FinCEN Deputy Director Talks Reform, NBFI Supervision

Jamal El-Hindi, the deputy director of the Financial Crimes Enforcement Network (FinCEN), spoke at the 2019 Money Transmitter Regulators Association Annual Conference on Wednesday (Sept. 11) about the importance of innovation and the regulation of non-banking financial institutions (NBFI), according to a release.

“Innovation and regulatory reform are topics of much discussion in Washington these days. From FinCEN’s perspective, our BSA/AML system is good, but it can always be improved, and we see great opportunities in working with industry on innovations that can help better detect and safeguard against illicit activity,” he said. “In focusing on innovation, we want to examine how we can focus more industry and government resources on priority areas of national security and high-value illicit crimes.”

El-Hindi made it clear that he doesn’t want to sacrifice innovation in pursuing anti-money laundering (AML) and other anti-illicit policies. He said pilot programs from banks that push innovation should not be specifically subject to supervisory criticism, even if the programs don’t end up working out. Even if they do, he added, they should be allowed to exist.

“Likewise, pilot programs that expose gaps in anti-money laundering compliance programs will not necessarily result in supervisory action with respect to that program,” El-Hindi said.

FinCEN also wants to ensure that it is staying on top of regulations when it comes to non-banking financial institutions. El-Hindi said that FinCEN is prioritizing and upping engagement with these organizations.

“By joining forces with state and federal examiners in the field, FinCEN is better positioned to make intelligence- and experience-derived contributions to the examination process and the ultimate assessment of the risk posed to the U.S. financial system by potential findings of non-compliance,” he said.

El-Hindi stressed that the system is in the wake of oncoming currencies from many different entities, including social media companies, and that “they need to address AML and CFT issues now, not later. And any operations that they begin should be in compliance with our rules at the start.”