NPRM: Permitted Payment Stablecoin Issuer AML/CFT program and sanctions compliance program requirements (91 FR 18582) (Part 2 of 8)
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
used both in the term digital asset and
1010.100(t)—Financial Institution order to pay traditional money. It
should not be construed, including by payment stablecoin.
The GENIUS Act directs that a negative inference, that orders to pay vii. Proposed 31 CFR 1010.100(rrr)—
‘‘permitted payment stablecoin issuer other kinds of value that substitute for Lawful Order
shall be treated as a financial institution currency are not transmittal orders.141
for purposes of the’’ BSA.139 To FinCEN is proposing to define the
implement this directive and ensure v. Proposed 31 CFR 1010.100(ppp)— term ‘‘lawful order’’ as provided in the
that PPSIs are subject to the appropriate Digital Asset GENIUS Act, 12 U.S.C. 5901(16), with
BSA obligations in a clear and FinCEN is proposing to define the certain modifications in light of a
consistent manner—and because, as term ‘‘digital asset’’ as provided in the preexisting FinCEN regulatory
discussed above in section VI.A.1, GENIUS Act, 12 U.S.C. 5901(6). Under definition. Under the proposed rule the
FinCEN proposes exercising its 31 the proposed rule, the term ‘‘digital term ‘‘lawful order’’ would mean any
U.S.C. 5312(a)(2)(Y) authority to define asset’’ would mean any digital final and valid writ, process, order, rule,
PPSIs as financial institutions under the representation of value that is recorded decree, command, or other requirement
BSA—FinCEN is proposing to amend on a cryptographically secured issued or promulgated under Federal
the definition of ‘‘financial institution’’ distributed ledger. FinCEN considers it law, issued by a court of competent
at 31 CFR 1010.100(t) to expressly useful to define this term explicitly in jurisdiction or by an authorized Federal
include ‘‘permitted payment stablecoin its regulations in order to enhance the agency pursuant to its statutory
issuer.’’ Consistent with other financial clarity and conciseness of its authority, that (1) requires an
institutions, ‘‘permitted payment regulations. Many of the regulatory individual, partnership, company,
stablecoin issuer’’ will be defined obligations that FinCEN is proposing to corporation, association, trust, estate,
separately in a new paragraph. impose on PPSIs take into account, in cooperative organization, or other
one way or another, the concept of business entity, incorporated or
ii. Proposed Amendment to 31 CFR digital assets. Most notably, the term unincorporated, to seize, freeze, burn, or
1010.100(ff)—Money Services Business ‘‘digital assets’’ is used in ‘‘payment prevent the transfer of payment
FinCEN is proposing to amend the stablecoin.’’ stablecoins that the individual or entity
definition of ‘‘money services business,’’ FinCEN’s use of the term ‘‘digital issued; (2) specifies the payment
31 CFR 1010.100(ff), to add PPSIs to the asset’’ is limited currently to proposed stablecoins or accounts subject to
list of financial institutions that the term obligations to be imposed on PPSIs. blocking with reasonable particularity;
‘‘money services business’’ shall not FinCEN is aware that the addition of and (3) is subject to judicial or
include. The amendment makes clear ‘‘digital asset’’ adds a term related to administrative review or appeal as
that PPSIs are subject to obligations as other terms used in the BSA, its own provided by law.
a PPSI and not as a money services regulations and its guidance—most The proposed definition modifies the
business. notably ‘‘value that substitutes for GENIUS Act definition of lawful order
currency’’ and ‘‘convertible virtual by replacing the statutory term ‘‘person’’
iii. Proposed Amendment to 31 CFR currency.’’ FinCEN’s defining and use of with language used in the GENIUS Act
1010.100(bbb)—Transaction the term ‘‘digital asset’’ in proposed definition of ‘‘person,’’ as provided in
FinCEN is proposing to amend the obligations to be imposed on PPSIs 12 U.S.C. 5901(24).142 The term
definition of ‘‘transaction,’’ 31 CFR should not be construed, including by ‘‘person’’ is already defined in FinCEN
1010.100(bbb), to add the issuance or negative inference, to alter or displace regulations at 31 CFR 1010.100(mm) 143
redemption of a payment stablecoin as anything about FinCEN’s regulatory and differs from the GENIUS Act
a type of transaction. This amendment infrastructure related to value that definition of ‘‘person.’’ In particular,
clarifies that these activities qualify as substitutes for currency or CVC. Digital FinCEN’s regulatory definition of
transactions. It should not be construed, assets may be value that substitutes for ‘‘person’’ includes Indian Tribes as
including by negative inference, that currency, and vice versa, but the two are defined in the Indian Gaming
issuance and redemption of other kinds not synonymous, and the regulatory Regulatory Act, which the GENIUS Act
of value that substitute for currency are requirements that may be associated definition of person does not include.
not a transaction.140 Moreover, it should with one must be evaluated
142 See 12 U.S.C. 5901(24) (defining ‘‘person’’ as
not be construed, including by negative independently of the requirements that
‘‘an individual, partnership, company, corporation,
inference, that issuing and redeeming may be associated with the other. association, trust, estate, cooperative organization,
payment stablecoins are the only kinds vi. Proposed 31 CFR 1010.100(qqq)— or other business entity, incorporated or
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of transactions in which a PPSI will Distributed Ledger unincorporated’’).
143 See 31 CFR 1010.100(mm) (defining ‘‘Person’’
engage.
FinCEN is proposing to define the as ‘‘An individual, a corporation, a partnership, a
term ‘‘distributed ledger’’ as provided in trust or estate, a joint stock company, an
139 See 12 U.S.C. 5903(a)(5)(A).
association, a syndicate, joint venture, or other
140 See 2019 CVC Guidance, supra note 87, p. 13 the GENIUS Act, 12 U.S.C. 5901(8). unincorporated organization or group, an Indian
(discussing that an ‘‘administrator’’ engages in Tribe (as that term is defined in the Indian Gaming
issuing and redeeming a virtual currency and is 141 See infra section VI.C.9.ii.a; see also 2019 CVC Regulatory Act), and all entities cognizable as legal
generally a money transmitter). Guidance, supra note 87, p. 11. personalities.’’).
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18594 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
Further, FinCEN’s regulatory definition be, used as a means of payment or Although the GENIUS Act defines both
also does not characterize the entities settlement and (ii) the issuer of which: terms independently from payment
that comprise the category as ‘‘business’’ (A) is obligated to convert, redeem, or stablecoin, neither term is used outside
entities, as the GENIUS Act definition repurchase for a fixed amount of of payment stablecoin as pertinent to
does. To ensure the definition of monetary value, but not for a digital this rulemaking. Moreover, adding the
‘‘lawful order’’ for PPSIs accurately asset denominated in a fixed amount of GENIUS Act definitions of ‘‘national
applies to the ‘‘persons’’ that Congress a monetary value; and (B) represents currency’’ or ‘‘monetary value’’ as
intended, as evidenced by the GENIUS that such issuer will maintain, or create separately defined terms in 31 CFR
Act definition of the term, FinCEN the reasonable expectation that it will 1010.100 could have an unintended
accordingly proposes to, instead of maintain, the digital asset at a stable impact on other FinCEN regulations that
using the term person, incorporate the value relative to the value of a fixed already use similar terms to mean
language the GENIUS Act uses to define amount of monetary value. The different things, and could therefore
person into the regulatory definition of proposed definition also provides that a have unintended impact on the
‘‘lawful order.’’ FinCEN solicits ‘‘payment stablecoin’’ does not include regulatory obligations of other types of
comments on whether the incorporation a digital asset that is: (i) a national financial institutions or create
of the specific GENIUS Act language is currency; (ii) a deposit (as defined in unnecessary confusion about those
necessary, or whether, if FinCEN reverts section 3 of the Federal Deposit regulatory obligations. Relatedly, within
to the use of the term ‘‘person’’ as Insurance Act (12 U.S.C. 1813)) the definition of ‘‘national currency,’’
currently defined in its regulations, this including a deposit recorded using FinCEN proposes replacing the statutory
will change the intended meaning or distributed ledger technology; or (iii) a term ‘‘money’’ with the GENIUS Act’s
effect of the GENIUS Act. security, as defined in section 2 of the definition of ‘‘money.’’ This should
Additionally, the GENIUS Act uses Securities Act of 1933 (15 U.S.C. 77b), avoid confusion as ‘‘money’’ appears
the term ‘‘account’’ in the definition of section 3 of the Securities Exchange Act elsewhere in FinCEN’s regulations.
lawful order and FinCEN proposes to do of 1934 (15 U.S.C. 78c), or section 2 of FinCEN proposes that for purposes of
the same.144 A number of other terms the Investment Company Act of 1940 the definition of ‘‘payment stablecoin’’
currently codified in FinCEN’s general (15 U.S.C. 80a–2). For purposes of the the term—(i) National currency means
definition section, 31 CFR 1010.100 also definition of ‘‘payment stablecoin,’’ each of the following—(A) A Federal
use the term ‘‘account’’ without defining FinCEN intends for the definition of Reserve note (as the term is used in the
the term.145 As discussed in greater ‘‘security’’ provided in paragraph (iii) of first undesignated paragraph of section
detail below, and consistent with that the proposed definition to apply and not 16 of the Federal Reserve Act (12 U.S.C.
approach, FinCEN proposes not further the preexisting regulatory definition of 411)); or (B) A medium of exchange
elaborating on the meaning of account ‘‘security’’ at 31 CFR 1010.100(ss). currently authorized or adopted by a
within the definition of lawful order The GENIUS Act’s definition of domestic or foreign government
and requests comment on this ‘‘payment stablecoin’’ contains language including a monetary unit of account
approach.146 clarifying that ‘‘no bond, note, evidence established by an intergovernmental
of indebtedness, or investment contract organization or by agreement between
viii. Proposed 31 CFR 1010.100(sss)—
that was issued by a permitted payment two or more countries that is: (1)
Payment Stablecoin
stablecoin issuer shall qualify as a standing to the credit of an account with
FinCEN is proposing to define the security solely [because the issuer a Federal Reserve Bank; (2) issued by a
term ‘‘payment stablecoin’’ as provided satisfies] the conditions in [paragraph foreign central bank; or (3) issued by an
in the GENIUS Act, 12 U.S.C. 5901(22), (1) of the proposed ‘‘payment intergovernmental organization
with certain modifications in light of stablecoin’’ definition], consistent with pursuant to an agreement by two or
preexisting FinCEN regulatory section 17 of the Act.’’ FinCEN has more governments; and (ii) Monetary
definitions and technical changes. determined that this ‘‘for avoidance of value means national currency or
Additionally, FinCEN proposes doubt’’ language is unnecessary for its deposit (as defined in section 3 of the
embedding within the definition of regulatory definition of payment Federal Deposit Insurance Act (12
payment stablecoin two other terms stablecoin. The GENIUS Act includes U.S.C. 1813)) denominated in a national
defined in the GENIUS Act. amendments to the cited statutes currency. The proposed definition of
Under the proposed rule, the term covered in proposed paragraph (iii) that ‘‘national currency’’ reformats and
‘‘payment stablecoin’’ would mean a clarify that payment stablecoins are not modifies the definition in the GENIUS
digital asset (i) that is, or is designed to securities.147 Accordingly, while this Act, 12 U.S.C. 5901(19), by including
clarification may have been necessary to the GENIUS Act definition of ‘‘money,’’
144 See 12 U.S.C. 5901(16) (defining, in part,
understand the intent of the GENIUS 12 U.S.C. 5901(18) within the
‘‘lawful order’’ as one that ‘‘specifies the payment
stablecoins or accounts subject to blocking with Act at the time it was passed, the Act’s definition, in paragraph (B), and making
reasonable particularity’’ (emphasis added)). amendments of security-related statutory paragraphs (B), (C), and (D)
145 See, e.g., 31 CFR 1010.100(p) (defining
statutory provisions obviate the need to into proposed paragraphs (1), (2), and
‘‘established customer’’); 1010.100(bbb) (defining include this language in FinCEN’s (3) for grammatical consistency. The
‘‘transaction’’). For financial institutions with
customer identification program (CIP) obligations, regulations. proposed definition of ‘‘monetary
those institution’s subparts often include a The proposed definition of ‘‘payment value’’ within the definition of
definition of ‘‘account.’’ However, those definitions stablecoin’’ also includes definitions of ‘‘payment stablecoin’’ is consistent with
are limited to CIP obligations unless expressly the terms ‘‘national currency’’ and the definition of the term in the GENIUS
noted elsewhere. See 31 CFR 1020.100(a) (defining
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‘‘account’’ for CIP purposes in bank subpart); ‘‘monetary value’’ within the definition Act, 12 U.S.C. 5901(17).
1023.100(a) (defining ‘‘account’’ for CIP purposes in of ‘‘payment stablecoin’’ consistent with ix. Proposed 31 CFR 1010.100(ttt)—
brokers or dealers in securities subpart); see also the definition of the terms in the
1010.230 (defining ‘‘account’’ in obligation related Permitted Payment Stablecoin Issuer
to legal entity customers by explicit reference to CIP
GENIUS Act, 12 U.S.C. 5901(19) and
(17), with certain modifications. FinCEN is proposing to define the
definitions of ‘‘account’’).
146 See infra section VI.C.6.ii discussing proposed term ‘‘permitted payment stablecoin
obligations related to lawful order compliance and 147 See section 17 of the GENIUS Act, Public Law issuer’’ as provided in the GENIUS Act,
technical capabilities. 119–27. 12 U.S.C. 5901(23), with certain
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18595
modifications in light of preexisting approving issuers, FinCEN does not contains for the three subtypes of
FinCEN regulatory definitions. Under believe it is necessary to understand the institutions—nonbank entities,
the proposed rule, the term permitted scope of the obligations it proposes to uninsured national banks, and foreign
payment stablecoin issuer would mean impose or the population on which bank branches—references to OCC
an individual, partnership, company, those obligations are imposed. Finally, approval and in one case OCC’s
corporation, association, trust, estate, the definition also replaces the statutory statutory authority. FinCEN proposes to
cooperative organization, or other reference ‘‘has been approved to issue consolidate references to OCC approval
business entity, incorporated or payment stablecoins under section 5’’ and remove reference to the OCC’s
unincorporated formed in the United with ‘‘has been approved to issued statutory authority. FinCEN considers
States that is: (1)(A) a subsidiary of an payment stablecoins by a primary this approach appropriate in light of the
insured depository institution that has Federal payment stablecoin regulator’’
fact that the OCC, not FinCEN, has the
been approved to issue payment in both proposed paragraph (1)(A) and
stablecoins by a primary Federal (1)(B). authority to determine how, using what
payment stablecoin regulator; or (B) a terms and establishing what categories,
x. Proposed 31 CFR 1010.100(uuu)— to discharge the OCC’s regulatory
subsidiary of an insured credit union
Primary Federal Payment Stablecoin obligations in connection with Federal
that has been approved to issue
Regulator qualified payment stablecoin issuers as
payment stablecoins by a primary
Federal payment stablecoin regulator; FinCEN is proposing to define the required by the GENIUS Act. FinCEN
(2) a Federal qualified payment term ‘‘primary Federal payment conceives of its responsibility in this
stablecoin issuer; or (3) a State qualified stablecoin regulator’’ as provided in the connection as establishing a smooth
payment stablecoin issuer. The GENIUS Act, 12 U.S.C. 5901(25), with interface between its own regulations on
proposed definition modifies the certain modifications. Under the the subject and those of the OCC, and
definition of permitted payment proposed rule, the term ‘‘primary it regards the proposed language as the
stablecoin issuer provided in the Federal payment stablecoin regulator’’ best way to do so. In addition, the
GENIUS Act by replacing the statutory would mean (1) for a subsidiary of an proposed language has the benefit of
term ‘‘person’’ with the language the insured depository institution, as conciseness.
GENIUS Act uses to define ‘‘person’’ as described in paragraph (ttt)(1)(A) of this
provided in 12 U.S.C. 5901(24).148 As section, the appropriate Federal banking xii. Proposed 31 CFR 1010.100(www)—
described above, the term ‘‘person’’ is agency of such insured depository State Payment Stablecoin Regulator
already defined in FinCEN regulations institution; (2) for a subsidiary of an
at 31 CFR 1010.100(mm) 149 and differs insured credit union, as described in FinCEN is proposing to define the
from the GENIUS Act definition of paragraph (ttt)(1)(B), the NCUA; (3) for term ‘‘State payment stablecoin
person. To ensure the definition of a State chartered depository institution regulator’’ as provided in the GENIUS
‘‘permitted payment stablecoin issuer’’ not covered in subparagraph (1), the Act, 12 U.S.C. 5901(30), with certain
accurately applies only to ‘‘persons’’ as FDIC, the OCC, or the Board; or (4) for modifications in light of preexisting
defined in the GENIUS Act, FinCEN a Federal qualified payment stablecoin FinCEN regulatory definitions. Under
proposes adding the GENIUS Act issuer, the OCC. the proposed rule, the term ‘‘State
definition of ‘‘person’’ within the The proposed definition modifies the payment stablecoin regulator’’ would
‘‘permitted payment stablecoin issuer’’ statutory definition by including cross mean a state agency that has the primary
definition. references to the proposed definition of regulatory and supervisory authority in
Additionally, the proposed definition ‘‘permitted payment stablecoin issuer’’ such state over entities that issue
modifies statutory paragraph (A) by to describe a subsidiary of an insured payment stablecoins. Under the GENIUS
replacing the term ‘‘insured depository depository institution and a subsidiary Act, the term ‘‘State’’ includes ‘‘each of
institution’’ with the GENIUS Act of an insured credit union. The the several States of the United States,
definition of ‘‘insured depository definition also uses the full agency the District of Columbia, and each
institution,’’ in 12 U.S.C. 5901(15), names for each Federal banking agency territory of the United States.’’ 150
which includes two subparagraphs one named in the definition for stylistic FinCEN proposes modifying the
applying to insured depository consistency with other FinCEN GENIUS Act’s definition of ‘‘State
institutions as defined in section 3 of regulations. payment stablecoin regulator’’ to
the Federal Deposit Insurance Act and account for FinCEN’s existing definition
xi. Proposed 31 CFR 1010.100(vvv)—
a second for insured credit unions.
Federal Qualified Payment Stablecoin of ‘‘State,’’ 151 which does not include
FinCEN is also omitting from the
Issuer any U.S. territories. FinCEN is thus
GENIUS Act’s definition ‘‘insured
depository institution’’ the phrase ‘‘as FinCEN is proposing to define the adding its existing regulatory phrase
defined in section 3 of the Federal term ‘‘Federal qualified payment ‘‘Territory and Insular Possession’’ to
Deposit Insurance Act (12 U.S.C. stablecoin issuer’’ as provided in the make clear that for purposes of this
1813).’’ While this language may be GENIUS Act, 12 U.S.C. 5901(11), with definition ‘‘State’’ includes
essential for regulators responsible for certain technical modifications for territories.152
conciseness and in deference to another
148 See 12 U.S.C. 5901(24) (defining the term agency’s authority. Under the proposed 150 See 12 U.S.C. 5901(28).
‘‘person’’ to mean ‘‘an individual, partnership, 151 See 31 CFR 1010.100(vv) (defining ‘‘State’’ as
rule, the term ‘‘Federal qualified
company, corporation, association, trust, estate, ‘‘The States of the United States and, wherever
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cooperative organization, or other business entity,
payment stablecoin issuer’’ would mean necessary to carry out the provisions of this chapter,
incorporated or unincorporated’’). an entity that is approved by the OCC the District of Columbia.’’).
149 See 31 CFR 1010.100(mm) (stating ‘‘Person. under 12 U.S.C. 5903 to issue payment 152 See 31 CFR 1010.100(zz) (defining ‘‘Territories
An individual, a corporation, a partnership, a trust stablecoins and is either—(1) a nonbank and Insular Possessions’’ as ‘‘The Commonwealth of
or estate, a joint stock company, an association, a entity; (2) an uninsured national bank; Puerto Rico, the United States Virgin Islands,
syndicate, joint venture, or other unincorporated Guam, the Commonwealth of the Northern Mariana
organization or group, an Indian Tribe (as that term or (3) a Federal branch. Islands, and all other territories and possessions of
is defined in the Indian Gaming Regulatory Act), The GENIUS Act definition of Federal the United States other than the Indian lands and
and all entities cognizable as legal personalities.’’). qualified payment stablecoin issuer the District of Columbia.’’).
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18596 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
xiii. Proposed 31 CFR 1010.100(xxx)— Broadly speaking, the GENIUS Act stablecoin issuer’s outstanding issuance
State Qualified Payment Stablecoin divides PPSIs into two categories: PPSIs is not more than $10 billion or because
Issuer that are regulated for safety and the primary Federal payment stablecoin
soundness by a primary Federal regulator has granted the PPSI a waiver
FinCEN is proposing to define the payment stablecoin regulator (which to allow the PPSI to remain supervised
term ‘‘State qualified payment includes the OCC, Board, FDIC, and by a State payment stablecoin regulator.
stablecoin issuer’’ as provided in the NCUA) and PPSIs that are regulated for FinCEN believes the IRS is well
GENIUS Act, 12 U.S.C. 5901(31), with safety and soundness by a State positioned to conduct BSA
certain modifications in light of payment stablecoin regulator.156 examinations for PPSIs not examined by
preexisting FinCEN regulatory FinCEN proposes delegating a primary Federal payment stablecoin
definitions. Under the proposed rule, examination authority over PPSIs to regulator. As the BSA examiner for a
the term ‘‘State qualified payment federal agencies responsible for range of institutions not otherwise
stablecoin issuer’’ would mean an entity examining the same entities for safety examined by another agency, the IRS
that is: (1) legally established under the and soundness and, where no such has staff trained in BSA examinations
laws of a State or Territory and Insular federal agency exists, to the IRS.157 and a strong relationship with FinCEN
Possession and approved to issue and various state regulators. Relatedly,
payment stablecoins by a State payment i. State Qualified Payment Stablecoin
the IRS currently examines money
stablecoin regulator; and (2) not an Issuers
transmitters, including stablecoin
uninsured national bank chartered by Under the GENIUS Act, generally, a issuers, for BSA compliance and is,
the OCC pursuant to title LXII of the State qualified payment stablecoin thus, well positioned to assess PPSI
Revised Statutes; a Federal branch or an issuer with a consolidated total compliance with the BSA and ensure
insured depository institution, or a outstanding issuance of not more than consistent application of BSA
subsidiary, of such national bank, $10 billion payment stablecoins may opt provisions across PPSIs based in various
Federal branch, or insured depository for regulation under a State-level states.
institution. For meaning of ‘‘insured regulatory regime, provided that the To effectuate this delegation of BSA
depository institution’’ this definition State-level regulatory regime is examination, FinCEN believes that no
would reference the proposed definition substantially similar to the Federal changes are necessary to
of ‘‘permitted payment stablecoin regulatory framework under the § 1010.810(b)(8), which already states
issuer’’ at proposed 1010.100(ttt), GENIUS Act.158 State qualified payment that such authority is delegated with
clarifying that, consistent with the stablecoin issuers that exceed the $10 respect to ‘‘financial institutions . . .
GENIUS Act, ‘‘insured depository billion in outstanding issuance of not currently examined by Federal bank
institution,’’ includes insured payment stablecoins must either supervisory agencies for soundness and
depository institutions and insured transition to the regulatory framework of safety.’’ FinCEN believes the proposed
credit unions.153 the primary Federal payment stablecoin text ensures that each PPSI not
As with the definition of ‘‘State regulator, which is then jointly examined by a primary Federal payment
qualified payment stablecoin issuer,’’ administered by the State payment stablecoin regulator for safety and
FinCEN is adding ‘‘Territorial and stablecoin regulator and the primary soundness is examined by the IRS. This
Insular Possessions’’ to clarify that, Federal payment stablecoin regulator, or delegation will not grant authority to the
consistent with the GENIUS Act, issuers obtain a waiver permitting the State IRS where a State qualified payment
legally established under the laws of a qualified payment stablecoin issuer to stablecoin issuer is subject to a primary
Territory and Insular Possession can remain solely supervised by a State Federal payment stablecoin regulator’s
qualify as a State qualified payment payment stablecoin regulator.159 framework that is jointly administered
stablecoin issuer. Where a financial institution is not by the federal and state regulator and
examined for compliance with the BSA results in a primary Federal payment
2. Proposed Amendment to 31 CFR and FinCEN’s regulations by the OCC, stablecoin regulator examining for safety
1010.810—Delegation of Examination Board, FDIC, or NCUA, and is not and soundness.
Authority otherwise supervised by a Federal
functional regulator, FinCEN has ii. Proposed 31 CFR 1010.810(b)(8)—
As administrator of the BSA, FinCEN Federal Qualified Payment Stablecoin
delegated its examination authority to
has overall authority for enforcement Issuers
the IRS in § 1010.810(b)(8). Likewise,
and compliance with the BSA and its
here FinCEN proposes delegating its Under the GENIUS Act, the OCC,
implementing regulations.154 FinCEN,
examination authority to the IRS for Board, FDIC, and NCUA are the primary
however, may delegate examination PPSIs not examined by the OCC, Board, Federal payment stablecoin regulators
authority to appropriate agencies while FDIC, and NCUA—i.e., a primary and responsible for, among other things,
retaining authority for the coordination Federal payment stablecoin regulator— assessing a PPSI’s safety and
and direction of procedures and for safety and soundness. This soundness.160 Additionally, the GENIUS
activities of these agencies.155 FinCEN population will include State qualified Act requires the primary Federal
has delegated examination authority for payment stablecoin issuers not payment stablecoin regulators to issue
various financial institutions, as supervised by a primary Federal regulations relating to, among other
reflected at § 1010.810(b), and is payment stablecoin regulator, either things, risk management principles-
proposing the same approach with because the State qualified payment based requirements and standards,
regards to examination authority for
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including relating to the BSA.161
PPSIs. 156 See, e.g., 12 U.S.C. 5905 (outlining supervision
With regards to banks, FinCEN has
by primary Federal payment stablecoin regulators); delegated its authority to examine
153 12 U.S.C. 5901(15). 12 U.S.C. 5906 (outlining supervision by State
154 See Treasury Order 180–01, supra note 15, payment stablecoin regulators). financial institutions for chapter X
para. 3; see also 31 CFR 1010.810(a). 157 Compare 31 CFR 1010.810(b)(1)–(6) with 31 compliance to the agency that examines
155 31 U.S.C. 5318(a)(1); 31 CFR 1010.810(a); CFR 1010.810(b)(8).
158 See 12 U.S.C. 5903(c), 5906. 160 12 U.S.C. 5905(a)(3); 12 U.S.C. 5901(25).
Treasury Order 180–1, supra note 15, paras. 3(b),
4(b). 159 12 U.S.C. 5903(d). 161 12 U.S.C. 5903(a)(4)(A)(iv).
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the institution for safety and financing of terrorism, and other illicit CFT program by implementing the
soundness.162 Consistent with that finance activity risks (collectively, ML/ AML/CFT program in accordance with
approach, FinCEN’s proposal adds a TF risks), rather than mere technical paragraph (c) of § 1033.210. As part of
new paragraph to § 1010.810(b) to compliance. Furthermore, that proposed the program, and consistent with the
delegate examination authority to the rule for banks would help ensure that mandate in the GENIUS Act, PPSIs
primary Federal payment stablecoin supervisory and enforcement actions would be required to conduct ongoing
regulators responsible for assessing a related to AML/CFT programs are customer due diligence.
PPSI’s safety and soundness. FinCEN focused on significant or systemic
a. Factors That FinCEN Considered
believes the primary Federal payment failures to implement an effective AML/
stablecoin regulator responsible for CFT program (i.e., deficiencies or issues The AML Act requires FinCEN to take
promulgating standards related to BSA that arise from failing to implement, in into account certain factors when
and examining particular PPSIs for all material respects, a properly prescribing minimum AML/CFT
safety and soundness is best positioned established AML/CFT program). program standards. FinCEN has
to carry out effective and efficient BSA In this proposed rule FinCEN considered all these factors in
exams. As the definition of primary proposes to impose on PPSIs an AML/ developing this proposed rule.170
Federal payment stablecoin regulator CFT program obligation consistent with As stated in 31 U.S.C.
outlines the agency responsible for the program being proposed for the 11 5318(h)(2)(B)(iii), effective AML/CFT
oversight of various categories of PPSIs, types of financial institutions currently programs safeguard national security
FinCEN is not proposing to detail in covered by BSA program requirements, and generate significant public benefits
§ 1010.810(b)(11) which agency is with some modifications due to the by preventing the flow of illicit funds in
responsible for which subcategory of GENIUS Act’s specific provisions. the financial system and by assisting
PPSIs.163 FinCEN assesses that such consistency law enforcement and national security
across the types of financial institutions agencies with the identification and
3. Proposed 31 CFR 1033.210—AML/ prosecution of persons attempting to
promotes clarity, creates efficiencies,
CFT Program Requirements for PPSIs launder money or undertake other illicit
and best protects the U.S. financial
The GENIUS Act directs that PPSIs be system from illicit actors. As described activity through the financial system.
subject to ‘‘maintenance of an effective below, under FinCEN’s proposal, an The proposed rule would advance the
anti-money laundering program, which AML/CFT program is inherently BSA modernization and reform goals of
shall include appropriate risk tailored to the risk and operations of a the AML Act by providing PPSIs and
assessments and designation of an PPSI, meeting the GENIUS Act’s their regulators with clarity about the
officer to supervise the program.’’ 164 directive that rules are tailored to an requirements to have effective AML/
Effective AML/CFT programs safeguard issuer’s size and complexity.167 CFT programs.
national security and generate Likewise, 31 U.S.C.
significant public benefits by preventing i. AML/CFT Program Overview 5318(h)(2)(B)(iv)(I) provides that AML/
the flow of illicit funds in the financial A central objective of Treasury and CFT programs should be ‘‘reasonably
system and by assisting law FinCEN’s BSA modernization efforts is designed to assure and monitor
enforcement and national security to create an AML/CFT supervisory and compliance’’ with the BSA and its
agencies with the identification and regulatory regime that is more effective implementing regulations and be risk-
prosecution of persons attempting to in achieving the purposes of the BSA based. The proposed rule advances
launder money and undertake other and promoting better outcomes for law these objectives by explicitly requiring
illicit activity through the financial enforcement and national security PPSIs to have effective AML/CFT
system.165 agencies.168 This proposed rule would programs and by describing the
FinCEN has separately issued a notice further that objective by explicitly
of proposed rulemaking that would defining the requirements for a PPSI to 170 See 31 U.S.C. 5318(h)(2)(B). Per the BSA, the
amend FinCEN’s regulations that establish and maintain an effective factors FinCEN considered include, ‘‘(i) Financial
prescribe AML/CFT program institutions are spending private compliance funds
AML/CFT program. Consistent with the for a public and private benefit, including
requirements for current financial changes that the AML Act made for protecting the United States financial system from
institutions program rules under the other types of financial institutions, it illicit finance risks. (ii) The extension of financial
BSA. Updating the AML/CFT program would also adopt into regulation the services to the underbanked and the facilitation of
requirements across financial institution financial transactions, including remittances,
AML Act’s expectation that AML/CFT coming from the United States and abroad in ways
types is part of FinCEN’s efforts to programs should be risk-based, that simultaneously prevent criminal persons from
reform and modernize the BSA, as well including ensuring that PPSIs direct abusing formal or informal financial services
as implement the Anti-Money more attention and resources toward networks are key policy goals of the United States.
Laundering Act of 2020 (AML Act).166 (iii) Effective anti-money laundering and countering
higher-risk customers and activities, the financing of terrorism programs safeguard
That proposed rule is designed to help consistent with the risk profile of the national security and generate significant public
ensure that financial institutions’ AML/ PPSI, rather than toward lower-risk benefits by preventing the flow of illicit funds in
CFT programs are appropriately risk- customers and activities.169 the financial system and by assisting law
based, such that compliance with their enforcement and national security agencies with the
Under proposed § 1033.210 PPSIs identification and prosecution of persons
program obligations is focused on the would have an effective AML/CFT attempting to launder money and undertake other
goals of the BSA, including combatting program and comply with the illicit activity through the financial system. (iv)
and preventing money laundering, the requirements of 31 U.S.C. 5318(h)(1) Anti-money laundering and countering the
financing of terrorism programs [. . .] should be—
lotter on DSK8BHNXB4PROD with PROPOSALS3
and § 1033.210 if the PPSI: (1) (I) reasonably designed to assure and monitor
162 See 31 CFR 1010.810(b)(1)–(3), (5).
establishes an AML/CFT program in compliance with the requirements of this
163 See infra section VI.C.1.x.
164 See 12 U.S.C. 5903(a)(5)(A)(i); see also 31
accordance with paragraph (b) of subchapter and regulations promulgated under this
§ 1033.210; and (2) maintains an AML/ subchapter; and (II) risk-based, including ensuring
U.S.C. 5318(h). that more attention and resources of financial
165 31 U.S.C. 5318(h)(2)(B)(iii).
institutions should be directed toward higher-risk
166 Anti-Money Laundering Act of 2020, Public 167 See 12 U.S.C. 5903(a)(5)(B).
customers and activities, consistent with the risk
168 31 U.S.C. 5311.
Law 116–283, Div. F, sections 6001–6511, 134 Stat. profile of a financial institution, rather than toward
3388, 4547–4633 (Jan. 1, 2021). 169 31 U.S.C. 5318(h)(2)(B)(iv)(II). lower-risk customers and activities.’’
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18598 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
minimum components for an AML/CFT risk-based nature of AML/CFT program and coordinating and
program to be effective. Specifically, as programs. In doing so, the proposed rule monitoring day-to-day compliance; that
part of an effective AML/CFT program, also furthers the objectives of E.O. individual would be required to be
the proposed rule requires that a PPSI 14331, Guaranteeing Fair Banking for located in the United States and
establish and maintain a risk-based set All Americans, which seeks to combat accessible to, and subject to oversight
of internal policies, procedures, and ‘‘politicized or unlawful debanking.’’ 171 and supervision by, FinCEN and its
controls that are reasonably designed to designee, including the appropriate
b. Program Overview
ensure compliance with the BSA and primary Federal payment stablecoin
FinCEN’s regulations. The proposed rule would require a regulator. That individual also could not
The internal policies, procedures, and PPSI to establish an AML/CFT program have been convicted of a felony offense
controls requirement in the proposed and then maintain the AML/CFT involving certain kinds of activity, as
rule also demonstrates FinCEN’s program by implementing, in all required by the GENIUS Act.173
consideration of 31 U.S.C. material respects, the established AML/ Under the proposed rule, having an
5318(h)(2)(B)(iv)(II), which states that CFT program. In prescribing the effective AML/CFT program would be
AML/CFT programs should be risk- minimum standards for an AML/CFT more than a one-time adoption of a risk-
based, including ensuring that more program and in supervising and based set of internal policies,
attention and resources of a PPSI should examining compliance with those procedures, and controls. Rather, a PPSI
be directed toward higher-risk standards, the AML Act requires the would be required to keep its risk-based
customers and activities, consistent Secretary and the appropriate Federal set of internal policies, procedures, and
with a PPSI’s risk profile, rather than functional regulator to take into account controls—and the risk assessment
toward lower-risk customers and that effective AML/CFT programs processes that inform them—current as
activities. The proposed rule safeguard national security and help law the PPSI’s risk profile changes.
incorporates this directive by explicitly enforcement prevent the flow of illicit Similarly, an AML/CFT program would
requiring, as part of a PPSI’s risk-based funds in the financial system.172 An involve more than a one-time creation of
internal policies, procedures, and AML/CFT program can be effective an employee training program or
controls, that a PPSI identify, assess, without preventing every minor initiation of an independent testing
and document its ML/TF risks through instance of a financial institution falling mechanism: the PPSI would also be
risk assessment processes. These risk prey to illicit finance misuse. required to keep such aspects of the
assessment processes require a PPSI to Accordingly, the proposed rule would AML/CFT program current as the PPSI’s
evaluate ML/TF risks and review and set out that an AML/CFT program is risk profile changes. Thus, even where
incorporate the AML/CFT Priorities, as ‘‘effective’’ and complies with the a PPSI has previously established an
appropriate, with updates to risk requirements of 31 U.S.C. 5318(h)(1) so AML/CFT program in accordance with
assessment processes promptly upon long as it is established and maintained the proposed rule, a failure to update
any change that the PPSI knows or has in accordance with applicable the program to reflect significant
reason to know significantly changes the requirements. changes to the PPSI’s risk profile may
PPSI’s ML/TF risks. These risk A PPSI would be required to establish result in the program no longer meeting
assessment processes are designed to a risk-based set of internal policies, the program establishment
help PPSIs mitigate ML/TF risks and procedures, and controls that are requirements, and the PPSI may
ensure that they are allocating resources reasonably designed to ensure accordingly be subject to supervisory or
commensurate with their documented compliance with the BSA and 31 CFR enforcement action for failure to
ML/TF risks, directing more attention chapter X. The risk-based internal establish an effective AML/CFT
and resources toward higher-risk policies, procedures, and controls must program.
customers rather than toward lower-risk also be reasonably designed to: (1) Once a PPSI has properly
customers and activities. identify, assess, and document the ‘‘established’’ an AML/CFT program,
Finally, 31 U.S.C. 5318(h)(2)(B)(ii) PPSI’s ML/TF risks through risk the PPSI must ‘‘maintain’’ the program
requires FinCEN to consider the assessment processes that evaluate the by implementing it, in all material
extension of financial services to the risks of the PPSI’s business activities, respects. Minor deficiencies of an AML/
underbanked and the facilitation of review and, as appropriate, incorporate CFT program would not necessarily
financial transactions, including the AML/CFT Priorities, and are mean that a PPSI has failed to
remittances, while preventing criminal updated promptly upon any change that implement the program.
persons from abusing formal or informal the PPSI knows or has reason to know
financial services networks. Through its ii. Proposed 31 CFR 1033.210(b)—
significant changes in the PPSI’s ML/TF Program Establishment
emphasis on risk-based AML/CFT risks; (2) mitigate the PPSI’s ML/TF
programs, the proposed rule seeks to risks, consistent with the PPSI’s risk The AML/CFT program requirements
provide PPSIs with the flexibility to assessment processes; and, (3) conduct for PPSI’s must have certain minimum
serve a broad range of customers and ongoing customer due diligence. elements comprised of: (1) internal
avoid one-size-fits-all approaches to The proposed rule would also require policies, procedures, and controls; (2)
customer risk that can lead to PPSIs a PPSI to establish an ongoing employee an independent audit function to test
declining to provide financial services training program and independent programs; (3) a designated compliance
to entire categories of customers. The AML/CFT program testing as part of its officer; and (4) an ongoing employee
proposed rule would help ensure that AML/CFT program. training program.
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decisions taken by PPSIs with respect to Finally, the proposed rule would
closing customer accounts are based on a. Proposed 31 CFR 1033.210(b)(1)—
require a PPSI to designate an Internal Policies, Procedures, and
legitimate ML/TF risks and informed by individual responsible for establishing
relevant facts and circumstances. The Controls
and implementing the AML/CFT
proposed rule is intended to mitigate The BSA requires financial
the risks of PPSIs potentially being 171 E.O. 14331, Guaranteeing Fair Banking for All institutions to develop ‘‘internal
inappropriately pressured into closing Americans, 90 FR 38925 (Aug. 12, 2025).
customer accounts by emphasizing the 172 See 31 U.S.C. 5318(h)(2)(B)(iii). 173 See 12 U.S.C. 5903(f).
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18599
policies, procedures, and controls’’ as conducted on an annual basis, results in about a report it has filed or potential
part of their AML/CFT programs.174 a documented ML/TF risk assessment. risks at the PPSI, the PPSI may
Proposed § 1033.210(b)(1) provides that FinCEN believes PPSIs are best incorporate that information into its risk
a PPSI’s risk-based set of internal positioned to identify and evaluate their assessment processes. Similarly, PPSIs
policies, procedures, and controls must ML/TF risk and is therefore not may consider information identified
be reasonably designed to: (1) identify, prescribing any particular risk from responding to section 314(a)
assess, and document ML/TF risks assessment processes or methodologies requests. Certain FinCEN advisories or
through risk assessment processes; (2) other than the critical elements guidance may also be particularly
mitigate ML/TF risks consistent with described in this proposed rule. Under relevant to the PPSI’s business
the risk assessment processes, including the proposed rule, PPSIs will be activities, thereby warranting
by allocating more attention and examined for whether they have consideration when evaluating ML/TF
resources toward higher-risk customers established and implemented, in all risks. Regardless of the source, PPSIs
and activities rather than toward lower- material respects, reasonably designed should take measures in their risk
risk customers and activities; and (3) risk assessment processes—which need assessment processes to ensure this
conduct ongoing CDD. not be in the form of a singular risk information is reasonably current,
Under this proposal, a PPSI’s risk- assessment process. Furthermore, complete, and accurate.
based set of internal policies, FinCEN is not prescribing any particular
procedures, and controls should be ii. Proposed 31 CFR
timeframe for PPSIs to update their risk 1033.210(b)(1)(i)(B)—AML/CFT
based upon, informed by, and consistent assessment processes.
with a PPSI’s risk assessment processes. Priorities
The level of sophistication of the i. Proposed 31 CFR Proposed § 1033.210(b)(1)(i)(B) would
internal policies, procedures, and 1033.210(b)(1)(i)(A)—ML/TF Risks require PPSIs to review and incorporate
controls should be commensurate with Proposed § 1033.210(b)(1)(i)(A) would the AML/CFT Priorities. The AML/CFT
the size, structure, risk profile, and require a PPSIs’ risk assessment Priorities set out the priorities for the
complexity of the PPSI. processes to evaluate the ML/TF risks U.S. government’s AML/CFT policy as
The requirement that a PPSI’s risk- its business activities, including required by the AML Act and are
based set of internal policies, products, services, distribution designed to ensure that PPSIs’ AML/
procedures, and controls be ‘‘reasonably channels, customers, and geographic CFT programs are aligned with those
designed’’ gives PPSIs flexibility in how locations. These factors are generally priorities. Recognizing the diverse
they achieve compliance with the BSA well known and often incorporated into nature of ML/TF threats facing the U.S.
and the proposed rule’s other current risk assessment processes of financial system and national security,
requirements. As part of having risk- some stablecoin issuers and banks. For and that PPSI AML/CFT programs will
based set of internal policies, clarity’s sake, FinCEN considers benefit U.S. national security by
procedures, and controls reasonably ‘‘distribution channels’’ to refer to the safeguarding the financial system from
designed to ensure compliance with the methods and tools through which a ML/TF risk, the AML/CFT Priorities are
BSA and FinCEN’s regulations, PPSIs PPSI opens accounts and provides intended to ensure that PPSIs are
may choose to responsibly adopt new products or services (including payment focusing on the greatest threats to U.S.
technologies or innovative approaches stablecoins), including, for example national security, as defined by
to comply with BSA requirements. through remote or other non-face-to-face Treasury.
means. Thus, for example, PPSIs should FinCEN understands that the AML/
1. Proposed 31 CFR 1033.210(b)(1)(i)— CFT Priorities may not always be
Risk Assessment Processes consider how accounts are opened, as
well as the blockchains to which its applicable to a PPSI’s risk profile and
FinCEN is proposing in payment stablecoins are issued. activities. Therefore, FinCEN requires
§ 1033.210(b)(1)(i) that, as part of a PPSIs may use a variety of sources to the incorporation of the AML/CFT
PPSI’s risk-based set of internal policies, inform their risk assessment processes. Priorities in PPSI’s risk assessment
procedures, and controls, the PPSI Such sources may include information processes, as appropriate. This means
establish and maintain risk assessment obtained from other financial that, having reviewed the AML/CFT
processes to: (1) evaluate the ML/TF institutions, such as emerging risks and Priorities, a PPSI may determine the
risks of the PPSI’s business activities, typologies identified through 314(b) extent to which a particular priority is
including products, services, information sharing or payment applicable and whether and how a
distribution channels, customers, and transactions that other financial particular AML/CFT Priority should be
geographic locations; (2) review and, as institutions returned or flagged due to incorporated into its risk assessment
appropriate, incorporate the AML/CFT ML/TF risks.176 Information a PPSI processes.
Priorities; and (3) be updated promptly Further, a PPSI may use its judgment
generates or maintains could be another
upon any change that the PPSI knows or and apply a reasonable, risk-based
source, including information acquired
has reason to know significantly determination on whether to focus on a
from blockchain analytics. Such internal
changes the PPSI’s ML/TF risks. This specific aspect of an AML/CFT Priority
information may include, for example,
provision implements the GENIUS Act’s (e.g., cyber-enabled fraud), rather than
customer internet protocol (IP)
directive that PPSI AML/CFT programs addressing all aspects of an AML/CFT
addresses or device logins and related
include appropriate risk assessments.175 Priority that may either not be
geolocation information.
The proposed rule requires, as part of applicable or pose lower risks to the
Feedback from FinCEN, law
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a PPSI’s risk-based internal policies, PPSI. However, FinCEN cautions that a
enforcement, and financial regulators
procedures and controls, that it identify, surface-level, perfunctory review of an
may also inform risk assessment
assess, and document its ML/TF risks AML/CFT Priority by a PPSI and the
processes. For example, if a PPSI
using risk assessment processes. This foreseeable ways in which it may
receives feedback from law enforcement
risk assessment process, generally manifest itself within the PPSI’s
176 See FinCEN, Section 314(b) Fact Sheet, (Dec. customers, products and services,
174 31 U.S.C. 5318(h)(1)(A).
2020), available at https://www.fincen.gov/system/ geographies, and distribution channels
175 See 12 U.S.C. 5903(a)(5)(A)(i). files/shared/314bfactsheet.pdf. would not satisfy this requirement.
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18600 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
FinCEN anticipates that some PPSIs to focus more on higher risk customers a written AML/CFT program that
may ultimately determine that their and activities, which FinCEN has includes: ‘‘appropriate risk-based
business models and risk profiles have determined should result in PPSIs being procedures for conducting ongoing
limited exposure to some of the threats more effective at detecting, reporting, customer due diligence, to include, but
addressed in the AML/CFT Priorities and preventing the flow of illicit funds not be limited to: understanding the
but instead have greater exposure to and providing law enforcement with nature and purpose of customer
other ML/TF risks not addressed in the more valuable BSA reporting. relationships for the purpose of
AML/CFT Priorities. Additionally, some As noted above, FinCEN believes that developing a customer risk profile; and
PPSIs’ risk assessment processes may PPSIs are best positioned to identify and conducting ongoing monitoring to
determine that their AML/CFT programs evaluate their ML/TF risk and to make identify and report suspicious
already sufficiently take into account decisions related to risk identification transactions and, on a risk basis, to
some, or all, of the AML/CFT Priorities. and resource allocation in accordance maintain and update customer
In either case, any changes to PPSIs’ with risk identification. The proposed information.’’ 180
AML/CFT program, such as internal rule, therefore, does not contemplate Proposed § 1033.210(b)(1)(iii) would
policies, procedures, or controls, would regulatory second-guessing of a PPSI’s require PPSIs to conduct ongoing CDD
be based on the results of risk reasonable determinations regarding as part of their AML/CFT program
assessment processes and their impact appropriate resource allocation or obligations. To effectively mitigate the
on the AML/CFT program, including conclusions regarding specific risks. illicit finance risks in customer
how to review and, as appropriate, However, while FinCEN does not relationships, PPSIs need to obtain and
incorporate the AML/CFT Priorities believe that an examiner should maintain information sufficient to
before making these determinations. substitute his or her own subjective develop an understanding of normal
judgment in place of the PPSIs, and expected customer activity. This in
iii. Proposed 31 CFR turn requires development of an
examiners will be expected to assess
1033.210(b)(1)(i)(C)—Update Risk understanding of the ‘‘nature and
whether: (1) a PPSI’s resource allocation
Assessment Processes purpose,’’ or in other words the intent,
decisions are informed by, and
Proposed § 1033.210(b)(1)(i)(C) would consistent with, reasonably designed of the customer in initiating and
require PPSIs to update their risk risk assessment processes; and (2) with maintaining the relationship. The PPSI
assessment processes promptly upon respect to implementation, specifically, can draw conclusions about the type of
any change that the PPSI knows or has whether the PPSI knows or should activity and transactions the customer
reason to know significantly changes its know of resource-related issues can be expected to engage in, setting a
ML/TF risk profile. For example, a PPSI involving its internal policies, ‘‘baseline against which aberrant,
may need to update its risk assessment procedures, and controls and other suspicious transactions are
when new products, services, and mandatory elements that may result in identified.’’ 181 These are core elements
customer types are introduced; or the PPSI failing to implement its AML/ and fundamental expectations of
existing products, services, and CFT program in all material respects FinCEN’s regulations implementing the
customer types undergo significant and failing to address such issues. BSA.
changes; or when the PPSI adopts new For PPSIs, some considerations of the
risk mitigation technology; or if the PPSI 3. Proposed 31 CFR 1033.210(b)(1)(iii)— nature and purpose of customer
as a whole expands or contracts through Conduct Ongoing Customer Due relationships will be similar to existing
mergers, acquisitions, divestitures, Diligence practices for other regulated financial
dissolutions, and liquidations. This The GENIUS Act specifies that PPSIs institutions. However, some factors may
would include, for example, when a should be subject to all Federal laws also be new or unique due to the
payment stablecoin is deployed on a applicable to a financial institution characteristics of the products and
new blockchain or new features are located in the United States relating to services being offered. PPSIs may need
coded into the smart contract. A PPSI ‘‘due diligence.’’ 178 The existing to consider, among other factors, the
may also need to update its risk program rules for certain financial type of entity seeking to establish a
assessment process based on factors institutions contain CDD requirements customer relationship, the jurisdiction
external to its operations that it knows that have commonly been referred to as in which they are domiciled, the AML/
or has reason to know significantly the ‘‘fifth pillar’’ of AML program rules CFT obligations they are subject to (and
changes its ML/TF risk profile. for those types of financial potentially the rigor of supervisory
2. Proposed 31 CFR 1033.210(b)(1)(ii)— institutions.179 Under these oversight of those obligations), the
Mitigate ML/TF Risks requirements, covered financial customer’s operating history, the
institutions must establish and maintain services the customer offers to its users,
Under the proposed rule, a PPSI’s the markets that the customer serves,
efforts to mitigate its ML/TF risks would 178 See 12 U.S.C. 5903(a)(5)(A).
and the agents or intermediaries through
involve directing more attention and 179 See applicable program rules with CDD
which the customer may provide its
resources toward higher-risk customers requirements for covered financial institutions are
services. Such business, product,
and activities, consistent with the risk located at 31 CFR 1020.210(a)(2)(v) and (b)(2)(v)
(banks), 1023.210(b)(5) (broker-dealers),
profile of the PPSI, rather than toward 1024.210(b)(5) (mutual funds), and 1026.210(b)(5) 180 See 31 CFR 1020.210(a)(2)(v) and (b)(2)(v)
lower risk customers and activities.177 (futures commission merchants and introducing (banks); 1023.210(b)(5) (broker-dealers);
The goal of risk-based allocation is for brokers in commodities). FinCEN in February 2026 1024.210(b)(5) (mutual funds); 1026.210(b)(5)
issued an order granting exceptive relief to covered (futures commission merchants and introducing
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PPSIs to spend less time, energy, and brokers in commodities).
financial institutions from the requirements in 31
resources on lower priority activities CFR 1010.230(b) to identify and verify the identities 181 See FinCEN, Customer Due Diligence
that may result in fewer resources of beneficial owners of legal entity customers at Requirements for Financial Institutions, 81 FR
devoted to, and potentially distract each new account opening. See FinCEN, Exceptive 29398, 29419 (May 11, 2016); FinCEN, Frequently
from, more serious threats. The Relief from Requirement to Identify and Verify Asked Questions Regarding Customer Due Diligence
Beneficial Owners at Each Account Opening (Feb. Requirements for Financial Institutions, Question
proposed rule would thus enable PPSIs 13, 2026), available at https://www.fincen.gov/ 36 (Apr. 3, 2018), available at https://
system/files/2026-02/FinCEN-Order- www.fincen.gov/system/files/2018-04/FinCEN_
177 31 U.S.C. 5318(h)(2)(B)(iv)(II). CCDExceptiveRelief.pdf. Guidance_CDD_FAQ_FINAL_508_2.pdf.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18601
service, and geographic risk whether internal or external, would be AML/CFT program and coordinating
considerations are well established required to be independent of other and monitoring day-to-day compliance;
components of existing BSA programs. parts of the PPSI’s AML/CFT program, instead, the proposed rule focuses on
PPSIs may also need to consider including its oversight. For PPSIs that the AML/CFT officer’s position in the
information more narrowly tailored to engage outside auditors or consultants, PPSI’s organizational structure that
the stablecoin market, including both the PPSI would be required to ensure enables the AML/CFT officer to
information available from public that the outside parties conducting the effectively establish and implement the
blockchains and relevant off-chain independent testing are not involved in PPSI’s AML/CFT program. The AML/
considerations. Notably, as stated above, functions related to the AML/CFT CFT officer’s authority, independence,
FinCEN assesses that the majority of program at the PPSI that may present a
and access to resources within the PPSI
illicit activity involving stablecoins conflict of interest or lack of
are critical. An AML/CFT officer should
occurs on the secondary market.182 independence, such as AML/CFT
Although the proposed rule would not training or the development or have decision-making capability
impose a standalone, independent enhancement of internal policies, regarding the AML/CFT program and
obligation on a PPSI to monitor procedures, and controls. Additionally, sufficient functional stature within the
secondary market transactions, for the purposes of the independent organization to ensure that the program
consideration of such activity may be testing component, outside parties meets BSA requirements.
appropriate in the PPSI’s development would not include government agencies, The AML/CFT officer’s access to
and maintenance of a customer risk entities, or instrumentalities, such as a resources may include the following:
profile (e.g., public blockchains may PPSI’s primary Federal payment adequate compliance funds and staffing
indicate that a digital assets exchange stablecoin regulator or State payment with the skills and expertise appropriate
that is a PPSI customer is engaged in stablecoin regulator. PPSIs with less to the PPSI’s risk profile, size, and
deposits or withdrawal activity of the complex operations, and lower risk complexity; an organizational structure
PPSI’s stablecoin with addresses profiles may consider utilizing a shared that supports compliance and
attributed to illicit actors). resource as part of a collaborative effectiveness; and sufficient technology
b. Proposed 31 CFR 1033.210(b)(2)— arrangement to conduct testing, as long and systems to support the timely
Independent Testing as the testing is independent.183 FinCEN
identification, measurement,
would generally expect, as with the
The purpose of independent testing is monitoring, reporting, and management
AML/CFT officer component,
to assess the PPSI’s compliance with of the PPSI’s ML/TF risks. An AML/CFT
independent testers to have the
AML/CFT statutory and regulatory expertise and experience to officer with conflicting responsibilities
requirements, relative to its risk profile. satisfactorily perform such a duty, that adversely impact the officer’s
This evaluation helps to inform the PPSI including having sufficient knowledge ability to effectively coordinate and
of weaknesses or areas in need of of the PPSI’s risk profile and AML/CFT monitor day-to-day AML/CFT
enhancement or stronger controls. laws and regulations. compliance generally would not fulfill
Typically, this evaluation includes a this requirement.
conclusion about the PPSI’s overall c. Proposed 31 CFR 1033.210(b)(3)—
compliance with AML/CFT statutory Designate an AML/CFT Officer 2. Proposed 31 CFR 1033.210(b)(3)(i)
and regulatory requirements and Under the GENIUS Act and the BSA, and (ii)—The AML/CFT Officer Located
sufficient information for the reviewer an ‘‘officer’’ oversees an AML/CFT in the United States and Accessible to
(e.g., board of directors, senior program.184 Regulators
management, AML/CFT officer, outside
auditor, or an examiner) to reach a 1. Proposed 31 CFR 1033.210(b)(3)(iii)— Proposed § 1033.210(b)(3)(i) and (ii)
conclusion about whether the risk-based Duties of the AML/CFT Officer would require a PPSI’s AML/CFT officer
set of internal policies, procedures, and Proposed § 1033.210(b)(3)(iii) would be located in the United States and
controls are reasonably designed and require PPSIs to designate an individual accessible to, and subject to oversight
resources are well-allocated consistent (referred to as an AML/CFT officer) and supervision by FinCEN and its
with the PPSI’s risk assessment responsible for establishing and designee. Under the proposed rule,
processes. implementing the AML/CFT program while the AML/CFT officer must be
Additionally, while PPSIs retain some and coordinating and monitoring day- located in the United States, personnel
flexibility regarding who conducts the to-day compliance with the located outside of the United States
audit or testing, the proposed rule requirements and prohibitions of the would still be permitted to perform
would require that testing be BSA and FinCEN’s implementing certain AML/CFT functions. This
independent. PPSIs that do not employ regulations. FinCEN’s view is that the language does not alter existing
outside auditors or consultants or that individual serving as the AML/CFT regulations and guidance that generally
do not have internal audit departments officer must be qualified for that role prohibit the sharing of SARs with
may comply with this requirement by and not overburdened with other personnel located outside of the United
using internal staff who are not involved responsibilities at the institution. States other than limited circumstances
in the function being tested. For these The proposed rule is not intended to such as a bank’s foreign head office or
PPSIs and PPSIs with other types of be primarily concerned about the formal controlling company.185
arrangements for independent testing, title of the individual responsible for
lotter on DSK8BHNXB4PROD with PROPOSALS3
the AML/CFT officer or any party who establishing and implementing the 185 See, e.g., FinCEN, Financial Crimes
directly, and in some cases, indirectly Enforcement Network; Confidentiality of Suspicious
reports to the AML/CFT officer, or an 183 See Board, FDIC, NCUA, OCC, and FinCEN,
Activity Reports, 75 FR 75593 (Dec. 3, 2010); see
equivalent role, would generally not be Interagency Statement on Sharing Bank Secrecy Act also FinCEN, the Board, FDIC, OCC, and Office of
Resources (Oct. 3, 2018), available at https:// Thrift Supervision, Interagency Guidance on
considered sufficiently independent. www.fincen.gov/news/news-releases/interagency- Sharing Suspicious Activity Reports with Head
Any individual conducting the testing, statement-sharing-bank-secrecy-act-resources. Offices and Controlling Companies (Jan. 20, 2006),
184 See 12 U.S.C. 5903(a)(5)(A)(i); 31 U.S.C. available at https://www.fincen.gov/system/files/
182 See supra section IV.D. 5318(h)(1)(B). guidance/sarsharingguidance01122006.pdf.
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18602 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
3. Proposed 31 CFR 1033.210(b)(3)(iv)— iii. Proposed 31 CFR 1033.210(d)— regulator or State payment stablecoin
Restriction on Officers With Felony Written AML/CFT Program and regulator shall make this certification
Convictions Approval available upon Treasury request,
Proposed § 1033.210(d) would require FinCEN’s authority under the BSA also
Under the GENIUS Act, PPSIs must enables it to require PPSIs to provide a
that a PPSI’s AML/CFT program be
designate an ‘‘officer’’ to supervise its written, and that a PPSI, upon request, copy of such certifications to FinCEN as
AML/CFT program.186 This GENIUS Act make available a copy of its written part of FinCEN’s efforts to ensure
provision reflects the BSA requirement AML/CFT program to FinCEN or its compliance with the BSA.192
that a financial institution designate a designee, which can include the 4. Proposed 31 CFR 1033.221—
‘‘compliance officer’’ for its AML/CFT appropriate agency with examination Supervision and Enforcement
program.187 The GENIUS Act further authorities delegated by FinCEN.190
provides that no individual who has Proposed § 1033.210(d) would also As previously noted, FinCEN is
been convicted of a ‘‘felony offense require that a PPSI’s written AML/CFT proposing delegating authority to
program be approved by the PPSI’s examine PPSIs for compliance with the
involving insider trading,
board of directors or an equivalent proposed rules to the primary Federal
embezzlement, cybercrime, money
governing body within the PPSI, or payment stablecoin regulators.193 In
laundering, financing of terrorism, or another rulemaking, FinCEN has
financial fraud’’ may serve as an appropriate senior management. The
188 proposed rule specifies that approval proposed that where it has delegated its
‘‘officer’’ or director of a PPSI. examination authority to the OCC,
encompasses each of the components of
Given the use of the term ‘‘officer’’ in the AML/CFT program. Board, FDIC, and NCUA (the
the GENIUS Act’s prohibition on The proposed rule provides PPSIs ‘‘Agencies’’), those Agencies be required
individuals being convicted of felonies with significant flexibility in its chosen to consult with FinCEN prior to taking
involving certain activity and the use of approval method. While some PPSIs significant AML/CFT supervisory
the same term in the GENIUS Act and may choose to have its board approve actions and outlined FinCEN’s own
BSA provisions regarding AML/CFT the written AML/CFT program, for considerations in determining when it
programs, FinCEN proposes to apply others, an equivalent governing body will take certain enforcement actions.
this restriction to AML/CFT officers might be a sole proprietor, general The proposal also outlined that a bank
and, accordingly, is proposing adding partner, or trustee, or a grouping of would only be subject to certain kinds
owners, senior officers (including board of enforcement actions and significant
this requirement to the AML/CFT
committees or other groups with supervisory actions for significant and
program’s provision relating to the
oversight responsibilities), senior systemic failures to implement an AML/
individual responsible for overseeing CFT program. In that proposal, FinCEN
the AML/CFT program. FinCEN expects management, or other persons having requested comments on whether the
PPSIs would ensure an individual does functions and authority similar to that
of a board. framework outlined in the proposal
not have a disqualifying felony prior to should be extended to financial
The proposed rule’s provision
designating an individual as responsible institutions beyond banks.
requiring the approval of the AML/CFT
for the AML/CFT program, as well as The GENIUS Act similarly identifies
program by a PPSI’s board of directors,
require the individual to report any equivalent body, or appropriate senior these Agencies—the OCC, Board, FDIC,
such conviction and monitor for management reflects the importance of and NCUA—as primary Federal
whether the individual receives such a PPSIs maintaining a strong culture of payment stablecoin regulators for
conviction. compliance. A culture of compliance certain PPSIs as discussed in section
involves demonstrable support and VI.C.2.ii. Additionally, as discussed in
d. Proposed 31 CFR 1033.210(b)(4)— section IV, some stablecoin issuers
Ongoing Employee Training Program visible commitment from leadership,
the dedication of adequate resources to engage in certain activities that are
The BSA requires AML/CFT programs AML/CFT compliance, effective similar to those of banks. Accordingly,
information sharing throughout the in light of the same Agencies that serve
to include an ‘‘ongoing employee
PPSI, qualified and independent testing, as the primary Federal payment
training program.’’ 189 Proposed
and understanding across leadership stablecoin regulators and certain
§ 1033.210(b)(4) would require PPSIs similarities in activities as banks,
establish an ongoing employee training and staff levels of the importance of
BSA reports. Adherence to these FinCEN proposes to set forth a
program. FinCEN would generally supervision and enforcement framework
expect training to cover the PPSI’s principles is critical to ensuring that
AML/CFT programs are effective. that would subject PPSIs to the same
internal policies, procedures, and framework proposed for banks.
controls, which should in turn reflect iv. Proposed 31 CFR 1033.210(e)—AML/ Specifically, the proposed rule would
the results of the PPSI’s risk assessment CFT Program Certifications add § 1033.221 to set forth a supervision
processes, the latest AML/CFT The proposed rule would also require and enforcement framework for PPSIs’
regulatory requirements, and other PPSIs to make available to FinCEN, or AML/CFT programs that is aligned with
relevant information. The frequency its designee, upon request any and all the AML Act’s emphasis on
with which the training would occur, certifications submitted to the PPSI’s effectiveness and risk-based
and the content of the training, would primary Federal payment stablecoin supervision. This proposal includes
depend on the PPSI’s ML/TF risk profile regulator or State payment stablecoin three elements: the first defining key
lotter on DSK8BHNXB4PROD with PROPOSALS3
and the roles and responsibilities of the regulator certifying that the PPSI has terms; the second outlining when
persons receiving the training. implemented an AML/CFT program.191 FinCEN or the primary Federal payment
While the GENIUS Act specifies that the stablecoin regulators would take
primary Federal payment stablecoin enforcement or supervisory action
186 See 12 U.S.C. 5903(a)(5)(A)(i).
regarding certain kinds of AML/CFT
187 See 31 U.S.C. 5318(h)(1)(B).
190 See 31 CFR 1010.810(b); see also supra section
188 See 12 U.S.C. 5903(f). 192 See 31 U.S.C. 5318(a)(2).
VI.C.2.
189 See 31 U.S.C. 5318(h)(1)(C). 191 See 12 U.S.C. 5904(i)(l). 193 See supra section VI.C.2.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18603
program violations; and the third that arise from failing to implement, in include, but is not limited to: the
outlining when the primary Federal all material respects, a properly relevant portions of the draft report
payment stablecoin regulators would established AML/CFT program), a PPSI enforcement action; the relevant
consult with FinCEN on potential that has properly established an AML/ examination workpapers supporting the
supervisory actions. FinCEN welcomes CFT program would not be subject to an proposed action and the relevant AML/
comment on whether this supervisory AML/CFT enforcement action based on CFT information submitted by the PPSI
and enforcement framework should a violation of proposed § 1033.210 by to the primary Federal payment
apply to PPSIs, as well as the FinCEN or to a significant AML/CFT stablecoin regulator. FinCEN notes the
consultation proposal. The enforcement supervisory action based on a violation primary Federal payment stablecoin
requirements do not apply to and in no of proposed § 1033.210 by FinCEN or by regulators would not be obligated to
way affect criminal enforcement a primary Federal payment stablecoin provide information over which the
liability under the BSA. regulator, when acting under PPSI may claim privilege under Federal
supervisory authority delegated by or State law. The primary Federal
i. Proposed 31 CFR 1033.221(a)— FinCEN. payment stablecoin regulators would
Definitions The proposed rule would clarify that also be required to respond to requests
Proposed § 1033.221(a) would define nothing in this policy would restrict an for additional AML/CFT information
several terms used throughout the AML/CFT enforcement action or a from the Director regarding the
section. significant AML/CFT supervisory action proposed action.
The term ‘‘AML/CFT enforcement with respect to a failure to properly Finally, proposed § 1033.221(d)
action’’ as proposed in § 1033.221(a)(1) establish an AML/CFT program. specifies the factors that the Director of
would mean any formal or informal Moreover, the proposed rule would not FinCEN would consider in determining
action taken by FinCEN that seeks to affect the factors that FinCEN applies in whether to take an enforcement action
penalize, remedy, prevent, or respond to the disposition of a violation once or significant supervisory action with
noncompliance with past or ongoing FinCEN has determined that such respect to PPSIs, or when reviewing a
violations of, or past or ongoing violation involves either: (1) a failure to proposed action by a primary Federal
deficiencies relating to, an AML/CFT properly establish an AML/CFT payment stablecoin regulator. These
requirement. program, or (2) a significant or systemic factors would include the factors set
The term ‘‘AML/CFT requirement’’ as failure to implement an AML/CFT forth in 31 U.S.C. 5318(h)(2)(B), as
proposed in § 1033.221(a)(2) would program.195 applicable; the extent, if any, to which
mean a requirement of the BSA, 12 the PPSI—where appropriate in light of
iii. Proposed 31 CFR 1033.221(c) and
U.S.C. 5903(a)(5)(A)(i)–(v), 12 U.S.C. its size, complexity, and risk profile—
(d)—FinCEN Consultation and
5903(a)(6)(B), 12 U.S.C. 5903(f)(1)(A), or has advanced the AML/CFT Priorities
Consideration
31 CFR chapter X. by providing highly useful information
The term ‘‘significant AML/CFT Proposed § 1033.221(c) would to law enforcement or national security
supervisory action’’ as proposed in establish a notice and consultation officials, conducting proactive analytics
§ 1033.221(a)(3) would mean any framework applicable when a primary or performing other innovative activities
written communication or other formal Federal payment stablecoin regulator, producing demonstrable outputs
supervisory determination issued by acting under supervisory authority evincing the effectiveness of the PPSI’s
FinCEN or a primary Federal payment delegated by FinCEN, intend to initiate AML/CFT program (including effective
stablecoin regulator, when acting under a significant AML/CFT supervisory use of artificial intelligence, federated
supervisory authority delegated by action. Before initiating such an action, learning, or other advanced monitoring
FinCEN, that identifies one or more the primary Federal payment stablecoin tools); and any other factor the Director
alleged deficiencies, weaknesses, regulator would be required to provide deems appropriate, including the PPSI’s
violations of law, or unsafe or unsound the Director of FinCEN with an size, complexity, and risk profile, and,
opportunity to review the action and as relevant, circumstances in which the
practices or conditions relating to an
consider any input offered by the PPSI’s low-risk customers or limited
AML/CFT requirement; communicates
Director, which may include any view business activities naturally limit the
supervisory expectations regarding
as to the effectiveness of the PPSI’s extent to which the PPSI can
actions or remedial measures required
AML/CFT program. To facilitate that meaningfully contribute to AML/CFT
to correct the issue; and contemplates
review, the primary Federal payment Priorities.
significant or programmatic actions or
stablecoin regulator would be required The FinCEN Director’s consideration
remedial measures to be taken by the
to provide written notice to the Director of the extent to which a PPSI has
PPSI. Examiner observations,
of their intent to take the action at least provided highly useful information to
suggestions, or other informal comments
30 days in advance of the proposed law enforcement or national security
would be expressly excluded from this action, unless a shorter period is agencies reflects that FinCEN considers
definition. necessary, in the sole discretion of the information sharing to be an important
ii. Proposed 31 CFR 1033.221(b)— primary Federal payment stablecoin element of an effective AML/CFT
Enforcement and Supervision Policy regulators, to remedy, prevent, or program. PPSIs may share useful
respond to an unsafe or unsound information by responding to 314(a)
Proposed § 1033.221(b) would
practice or condition. requests, or may use 314(b) authorities
articulate FinCEN’s enforcement and The notice would be accompanied by
supervision policy as it relates to AML/ to share information with other
the relevant AML/CFT information
lotter on DSK8BHNXB4PROD with PROPOSALS3
CFT requirements for PPSIs.194 Except financial institutions to identify and
underlying the proposed action. report to the federal government
with respect to a significant or systemic Relevant AML/CFT information may
failure to implement an effective AML/ activities that may involve ML/TF.
CFT program (i.e., deficiencies or issues PPSIs may also elect to participate in
195 FinCEN, FinCEN Statement on Enforcement of
the FinCEN Exchange Program, a
the Bank Secrecy Act, pp. 2–3 (Aug. 18, 2020),
194 The proposal is not intended to and does not available at https://www.fincen.gov/system/files/
voluntary public-private information
affect criminal enforcement liability under the BSA, shared/FinCEN%20Enforcement%20Statement_ sharing partnership among FinCEN, law
or the related authority of the Department of Justice. FINAL%20508.pdf. enforcement agencies, national security
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18604 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
agencies, and financial institutions and to identify and verify beneficial owners terms of any lawful order.’’ 202 FinCEN
other private sector entities that aims to of legal entity customers and to include assesses that these obligations are
support priority national security and such procedures in their anti-money distinct but complementary and,
counter-illicit finance objectives.196 laundering compliance program accordingly, proposes implementing
FinCEN strongly encourages required under 31 U.S.C. 5318(h) and its both requirements at § 1033.240,
information sharing for the purpose of implementing regulations.’’ Section categorized as additional technical
advancing the AML/CFT Priorities. 1010.230(f) defines ‘‘covered financial capabilities, policies, and procedures for
The Director of FinCEN may consider institution’’ for purposes of the section PPSIs. Paragraph (a) would implement
the above alongside other factors, by referencing § 1010.605(e)(1), to the block, freeze, and reject requirement
including those outlined in the FinCEN which FinCEN is proposing to add and paragraph (b) would implement the
Statement on Enforcement of the Bank PPSIs. lawful order requirement. Both
Secrecy Act, such as the nature and Section 1010.230 provides further obligations would apply to secondary
seriousness of violations, including the specificity on the kinds of procedures market activity. Additionally, the
extent of possible harm to the public that must be established and maintained obligations would also apply where a
and amounts involved; impact or harm and the meaning of account, including PPSI is authorized by its primary
of the violations on FinCEN’s mission to in § 1010.230(b)(2) and (c). For financial Federal payment stablecoin regulator or
safeguard the financial system from institutions currently required to collect State payment stablecoin regulator to
illicit use, combat money laundering, beneficial ownership information, engage in digital assert service provider
and promote national security; or § 1010.230(b)(2) and (c) reference the activities.203
financial gain or other benefit resulting customer identification program Although both of these requirements
from, or attributable to, the violations, regulation in the respective parts for will be unique obligations under
amongst others.197 those institutions. Given that no such chapter X, FinCEN expects that some
regulation currently exists for PPSIs, stablecoin issuers may have in place
5. Proposed Amendment to 31 CFR
FinCEN proposes language generally technical capabilities and policies and
1010.230—Collection of Beneficial
describing identification verification procedures relating to taking action
Ownership Information
procedures and the meaning of account. regarding impermissible transactions
FinCEN is proposing to require PPSIs More specifically, FinCEN is currently and adhering to lawful orders because of
to collect beneficial ownership proposing requiring procedures relating existing legal requirements, including
information about legal entity to verifying the identity of beneficial complying with OFAC sanctions and
customers, which is critical for a PPSI owners that would contain the same court orders.
to effectively carry out its due diligence elements as 31 CFR 1022.220(a)(2), the
obligations as provided in the GENIUS customer identification program rule for i. Proposed 31 CFR 1033.240(a)—
Act.198 This proposed obligation is banks. FinCEN proposes that in Obligations Relating to Blocking,
effectuated through FinCEN’s proposed explaining the meaning of account in Freezing, and Rejecting Certain
AML/CFT program obligation, its § 1010.230(c), FinCEN clarify that for Transactions
proposed amendment to PPSIs an account is a formal The proposed rule would effectuate
§ 1010.605(e)(1), and its proposed relationship between a customer and a the GENIUS Act’s directive that PPSIs
amendment to § 1010.230(b)(2) and permitted payment stablecoin issuer have technical capabilities, policies, and
(c).199 Collecting information on legal established to provide or engage in procedures to block, freeze, and reject
entity customers helps a financial services, dealings, or other financial specific or impermissible transactions
institution assess and mitigate risk, as transactions. FinCEN anticipates further that violate Federal or State laws, rules,
well as the ability of law enforcement to modifications to its proposed language or regulations by proposing to
identify assets and accounts connected based on its expected forthcoming promulgate the same language used in
with illicit activity. FinCEN is not rulemaking implementing the GENIUS the GENIUS Act, with additional
contemplating application of CDD to Act’s requirement that PPSIs maintain language clarifying that this obligation
secondary market activity. Accordingly, customer identification programs.200 extends beyond a PPSI’s customers and
FinCEN is not extending the collection Ultimately, FinCEN expects the accounts, i.e., to secondary market
of beneficial ownership information to requirement under § 1010.230 for PPSIs activity.
secondary market activity. will closely adhere to existing BSA FinCEN recognizes that some
Pursuant to § 1010.230(a) ‘‘covered requirements that apply to many other stablecoin issuers are currently able to
financial institutions’’ are required ‘‘to types of financial institutions, including block, freeze, or reject transactions
establish and maintain written banks. involving their stablecoin by
procedures that are reasonably designed programming the stablecoin’s smart
6. Proposed 31 CFR 1033.240—
contracts. Stablecoin issuers leverage
196 FinCEN, FinCEN Exchange, available at Additional Technical Capabilities,
this capability on secondary as well as
https://www.fincen.gov/resources/fincen-exchange. Policies, and Procedures for PPSIs
197 FinCEN, FinCEN Statement on Enforcement of
primary market activity. Some
the Bank Secrecy Act (Aug. 18, 2020), available at
The GENIUS Act requires that PPSIs stablecoin issuers use the
https://www.fincen.gov/system/files/shared/ have ‘‘technical capabilities, policies, programmability afforded in smart
FinCEN%20Enforcement%20Statement_ and procedures to block, freeze, and contracts to ban specific wallet
FINAL%20508.pdf. reject specific or impermissible
198 See 12 U.S.C. 5903(a)(5)(A).
addresses from interacting with
transactions that violate Federal or State stablecoin smart contracts, effectively
199 See Customer Due Diligence Requirements for
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Financial Institutions, 81 FR at 29398. As
laws, rules, or regulations.’’ 201 The ‘‘freezing’’ the stablecoins held at those
previously highlighted, FinCEN in February 2026 GENIUS Act also requires that PPSIs addresses, or to permanently remove
issued an order granting exceptive relief to covered ‘‘issue payment stablecoins only if the stablecoins from circulation (i.e.,
financial institutions from the requirements in 31 issuer has the technological capability
CFR 1010.230(b) to identify and verify the identities
‘‘burning’’ them).
of beneficial owners of legal entity customers at
to comply, and will comply, with the
202 See 12 U.S.C. 5903(a)(6)(B).
each new account opening. See Exceptive Relief
200 12 U.S.C. 5903(a)(5)(A)(v). 203 See 12 U.S.C. 5903(a)(7)(B), 5901(7) (defining
from Requirement to Identify and Verify Beneficial
Owners at Each Account Opening, supra note 179. 201 See 12 U.S.C. 5903(a)(5)(A)(iv). ‘‘digital asset service provider’’).
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18605
The proposed rule neither prescribes would be expected to have the technical the GENIUS Act’s precise language, but
how PPSIs should implement the capabilities, policies, and procedures for with some clarifying modifications.
technical capability requirement nor the both primary and secondary market Proposed § 1033.240(b) would reflect
policies and procedures that are activity. FinCEN believes extending that the GENIUS Act obligation related
specifically required to meet the these provisions to secondary market to lawful orders is ongoing rather than
proposed obligation. FinCEN considered activity is consistent with the GENIUS only in existence at the time a
providing more prescriptive regulatory Act, as well as critical to controlling stablecoin is issued, which FinCEN
text, but has preliminary assessed that illicit finance risk associated with PPSI believes is both consistent with the
PPSIs are best positioned to determine activity. Imposing this obligation only GENIUS Act and necessary for the
how to effectively and efficiently on primary market activity would be of obligation to be meaningful. As with the
comply with the obligation, particularly limited utility, as FinCEN assesses that obligation to have technical capabilities
in light of potential technological PPSIs currently have a small number of and policies and procedures to block,
changes. Accordingly, the proposal large, generally institutional customers. freeze, and reject impermissible
provides PPSIs the flexibility to use FinCEN assesses that most of the illicit transactions, FinCEN proposes to
various methods to meet the proposed activity involving stablecoins occurs on include some language clarifying that
obligation and account for the the secondary market, and it is critical PPSIs must account for and abide by