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Regulators Reviewing Money-Laundering, Artificial Intelligence Rules

OCC, Federal Reserve, CFPB, FDIC, and NCUA are seeking input from banks and other stakeholders

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  • Written by  Banking Exchange staff
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  • Comments:   DISQUS_COMMENTS
Regulators Reviewing Money-Laundering, Artificial Intelligence Rules

Banking regulators are seeking feedback on two consultations covering anti-money laundering (AML) regulations and the use of artificial intelligence (AI) technology.

Organizations including the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency said in a joint statement last week that they wanted to “better understand bank practices” relating to AML and the Bank Secrecy Act (BSA) in order to “determine whether additional explanation or clarification may be helpful”.

In particular, the regulators are looking to ascertain how banks interpret and use “model risk management guidance” (MRMG) in their work on AML.

In a joint statement, the agencies said they “recognize that not all banks use models such as those described in the MRMG for BSA/AML compliance or have formalized model risk management frameworks”.

The statement and request for information was not intended as a change of rules or policy, nor was it designed to highlight shortcomings or changes in requirements. Instead, the regulators said they wanted to review how useful the MRMG was in assisting banks with AML compliance.

Banks have 60 days to submit comments and feedback.

This followed a similar multi-agency statement and request for information relating to banks’ use of AI.

The regulators said in a statement published in late March that they wanted to “gain input from financial institutions, trade associations, consumer groups, and other stakeholders on the growing use of AI by financial institutions”.

In particular, regulators are interested in comments and feedback to aid their understanding of the ways in which AI technology such as machine learning is used in banking.

It also requested information about “appropriate governance, risk management, and controls over AI” as well as “challenges in developing, adopting, and managing” this technology and whether additional regulatory guidance would be useful to the industry.

Feedback can be sent to any of the participating agencies and must be sent within 60 days of the request being filed in the Federal Register. More information on the request is available here.

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