In a speech at the Association of Certified Anti-Money Laundering Specialists Assembly Conference, John K Hurley, the US Department of the Treasury’s Under Secretary for Terrorism and Financial Intelligence, outlined plans to overhaul the Bank Secrecy Act (BSA) framework, pledging to replace process-heavy compliance supervision with an outcomes-driven model centred on the needs of law enforcement and national security agencies.
Prioritising useful intelligence over volume
Hurley said the purpose of the BSA is “to combat money laundering and terrorist financing by requiring financial institutions to provide highly useful information to the government”. However, he cautioned that “regulatory pressure has led to more and more of the not so useful SARs”, adding that the 170-page guidance on completing a Suspicious Activity Report (SAR) illustrated how complexity has undermined effectiveness.
“Our concept for reforming the system is simple,” he explained. “First, law enforcement and the national security establishment are the customers of our anti-money laundering/countering the financing of terrorism (AML/CFT) system… Second, AML/CFT programs should deliver better outcomes by providing those customers with the most useful information, not by overwhelming the system with noise. And finally, compliance takes real resources. That’s why prioritisation matters.”
Objective performance measures for supervision
Central to Hurley’s proposals is reforming the examination process to focus on measurable results rather than adherence to prescribed processes. “We intend to replace subjective assessments of process with objective measures of output,” he said. “The best measures of the effectiveness of a program are not how it looks, but first and foremost, how well it captures and proactively reports what law enforcement needs, and secondly, how rarely it fails to identify activity it should be capturing.”
He argued that measuring institutions on their ability to produce high-value intelligence would encourage innovation and efficiency, saying it would “allow you to apply your experience and creative talent to invent new and better solutions”.
Embracing technology and encouraging innovation
Hurley highlighted the potential of technological innovation to improve outcomes, stating that “well-governed technology is a force multiplier”. He pointed to advances in artificial intelligence, blockchain analysis, digital identity and application programming interfaces (APIs) as tools that could enhance suspicious activity detection and reporting.
“When, for example, a financial institution invests the time and money to experiment with AI and successfully drops its false positive ratio and escalates vital information to law enforcement more rapidly, their team should be celebrated, not written up,” he said. Examiners, he added, would need “clear guidance on the objective measures we care about” to ensure that innovation is rewarded, not penalised.
He cited a recent Financial Crimes Enforcement Network (FinCEN) exemptive order under the Customer Identification Program rule as an example of pragmatic reform, which now allows banks to “collect a taxpayer identification number from a third-party source rather than directly from a customer”.
Cutting low-value burdens
Hurley also signalled a review of several long-standing practices that he said divert resources from meaningful work. These included “continuing activity reviews”, which require banks to manually reassess accounts after a SAR filing. “That has become a significant administrative burden consuming resources without improving outcomes,” he said, adding: “We’ve heard you: this is not a good use of resources.”
He criticised the expectation that firms document decisions not to file a SAR, noting: “There is no requirement to document the decision not to file a SAR… Every hour spent documenting a non-SAR is an hour not spent protecting Americans, and that trade-off is unacceptable.”
Hurley also questioned the value of large volumes of data on structuring activity from legitimate businesses, warning that “banks spending significant amounts of time and money flooding the system with structuring data on businesses they know are legitimate is a foolish waste of time”.
Collaboration and incentives
To support the shift towards an outcomes-based system, Hurley urged industry engagement on developing “objective measures” of performance. He asked institutions to share what indicators have worked in practice, and how regulators could incentivise firms to reinvest efficiency gains into improved compliance capabilities. “How do we modernise the system so that doing the right things that help protect our nation and our communities is also financially the smart thing for your shareholders?” he asked.
Concluding, Hurley emphasised the shared responsibility between government and financial institutions to strengthen the AML framework. “Together, I hope we can turn frustration into reform, and your experience and creativity into better outcomes that protect the integrity of our financial system and help our partners as they keep our nation and communities safe,” he said.
CUBE's comment
Based on the information provded, Compliance teams should immediately pivot toward prioritising quality over quantity in suspicious activity reporting, streamlining burdensome practices that do not contribute to meaningful outcomes. This means reassessing SAR processes, minimising unnecessary documentation, and reallocating resources from manual administrative tasks to activities that generate high-value intelligence and actionable outcomes. At the same time, firms should begin piloting new technologies to improve detection accuracy, like AI detection software and Automated Regulatory Intelligence tools like CUBE's RegPlatform suite. This should be managed while engaging with regulators, to help shape the development of objective performance measures. Finally, senior leadership should be briefed on this outcomes-driven shift to ensure institutional alignment and support for more strategic compliance investment.
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