AML Reform Is Failing: How Financial Institutions Are Drowning in Compliance Paralysis

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The anti-money laundering (AML) reform movement that once promised to streamline compliance and embrace innovation is now buckling under its own weight.

A senior figure working in global financial crime prevention at a leading U.S. bank, financial institutions are being left in regulatory limbo as rulemaking drags on and priorities shift without warning.

Speaking at CeFPro’s recent Financial Crime USA conference, she described the current state of AML reform under the 2020 AML Act as anything but efficient.

“We’re nowhere near as far along as we thought we’d be,” she said, citing a series of stalled or delayed rules from FinCEN, particularly around the Corporate Transparency Act.

Her team, she said, spent months preparing compliance frameworks for beneficial ownership disclosures, only to see U.S. entities excluded from the rule’s scope in an interim decision that rendered most of their work irrelevant.

She stressed that the AML modernization agenda has instead become ‘additive’ in nature – layering on more obligations without simplifying the existing structure.

“Even though the overarching goal was modernization, in reality, many of the requirements just add regulatory burdens,” she adds, pointing to the tensions within an administration that claims to oppose new mandates for American firms.

One example is the AML national priorities introduced in 2021. While conceptually sound, She believes their practical implementation has amounted to checking off a longer list of risks – cybercrime, narcotics, terrorism, corruption – without real clarity on expectations.

“We added data points in our risk assessment, adjusted our transaction monitoring scenarios, and updated policies,” the executive said, “but much of it was form over substance.”