Banks Lacking a Federal Functional Regulator
FinCEN finalized a rule extending Bank Secrecy Act/Anti-Money Laundering, Customer Identification Program, and beneficial ownership requirements to approximately 567 banks that previously lacked a federal functional regulator, such as state-chartered non-depository trust companies, including some handling cryptocurrency. The rule closed a regulatory gap that had been exploited in cases involving terrorist financing, narcotics trafficking, and corruption. The rule became effective November 16, 2020, with full compliance required by March 15, 2021. This rulemaking is significant for the BaaS ecosystem as it brings additional institutions under federal AML oversight, reducing the potential for regulatory arbitrage in bank-fintech partnerships.
Verified from source: FinCEN published a final rule extending BSA/AML, CIP, and beneficial ownership requirements to approximately 567 banks lacking a federal functional regulator. The rule becomes effective November 16, 2020, with a compliance deadline of March 15, 2021.
- State-chartered non-depository trust companies, including those serving as crypto custodians or BaaS partners, now face full BSA/AML obligations
- Closes a regulatory gap that could have been exploited in bank-fintech partnership structures
- Fintech partners relying on banks previously outside federal AML oversight must ensure their bank partners achieve compliance