US: FinCEN Exploring Creation of Regulatory Sandboxes.

As published on bankingjournal.aba.com, Thursday 13 January, 2022.

The Financial Crimes Enforcement Network is exploring the creation of regulatory sandboxes to test new methods of transaction monitoring, FinCEN Acting Director Him Das said today at the ABA/ABA Financial Crimes Enforcement Conference. Das said the idea stemmed from conversations FinCEN has been having with banks over the past two years as part of its Innovation Hours program.

The sandboxes would be a series of “interim but formal frameworks” for how institutions can pilot technologies like artificial intelligence to “transform traditional rules-based transaction monitoring,” said Das. He acknowledged that FinCEN needs additional staff and budget to build the program, but said it is working on getting those additional resources and requested input from banks about the potential use and risks of the program. “We cannot design these sandboxes without knowing how your institutions would like to use them. What are you interested in building? What assurances do you need to start? What risks should we be on the lookout for?” said Das.

FinCEN is also considering other new ideas, Das said, including new approaches to customer risk rating and institutional risk assessment, digital identity tools and utilities, and automating the adjudication and filing of suspicious activity reports related to certain types of activity.