NPRM: Permitted Payment Stablecoin Issuer AML/CFT program and sanctions compliance program requirements (91 FR 18582) (Part 5 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.
regulators.396 As a function of the
number of current stablecoin issuers 2. Insured Depository Institutions With proposed amendments, this proposed
may exit the U.S. market, either because PPSI Subsidiaries rule is expected to directly affect
they are legally not able to remain if not
FinCEN and OFAC expect that certain FinCEN as well as other Federal
PPSIs, or because the market may
financial institutions other than future financial regulatory agencies and their
naturally consolidate as it matures.389
PPSIs themselves would be impacted by compliance examiners, who number
To estimate the near-term expected the rule. In particular, insured approximately 7,500 from the Board,
inflow of future PPSIs, FinCEN and depository institutions that would have FDIC, NCUA, and OCC,397 plus several
OFAC looked to the companionate a PPSI as a subsidiary may incur hundred additional examiners from the
GENIUS Act-related analyses of additional costs integrating their PPSI IRS.398
expected future PPSI registration subsidiaries into their broader AML/
requirements performed by OCC, FDIC, With respect to the proposed
CFT programs and sanctions
and NCUA as additional sources of sanctions compliance program
compliance framework.394 Because this
information.390 FinCEN and OFAC obligations, presented in section VII,
RIA projects that there may be up to 30
expect that a substantial proportion of such PPSIs on average in the each of the this NPRM would require that PPSIs
future PPSIs newly entering the U.S. first three effective years of the GENIUS maintain certain records related to their
stablecoin market would be affiliated Act, the corresponding number of sanctions compliance program, which
with an insured depository institution expected affected insured depository can be made available to OFAC upon
or uninsured national bank and that, institutions would also be up to 30. It request.399 As such, the proposed rule
additionally, some potential future is anticipated that insured depository may affect OFAC’s enforcement
PPSIs that currently do not have any institutions would arrange for their personnel, who would investigate and
such affiliation, may newly become subsidiary PPSI’s compliance policies, enforce potential violations of the
affiliated with an insured depository procedures, and activities to nest within effective sanctions compliance program
institution or uninsured national bank. the preexisting overall programmatic requirement. Additionally, similar to
Insured depository institutions in compliance structure of the parent FinCEN’s estimation above, the
particular are well-suited to launch organization. As such, parent proposed rule is anticipated to directly
payment stablecoin products due to organizations may be economically affect other Federal financial regulatory
their position within financial markets, affected by the need to revise, expand, agencies and their compliance
customer base, and existing technology or otherwise tailor their existing examiners, who number approximately
and compliance infrastructure. practices. It is possible that similarities 7,500 from the Board, FDIC, NCUA, and
The OCC, FDIC, and NCUA have each between the existing requirements for OCC, who already incorporate sanctions
conducted independent research with a banks and this proposal would reduce, compliance review as part of the
view to estimating the number of though not eliminate, these costs. examination process.400
potential PPSIs that would register as b. Regulators and Other Compliance
PPSIs in the near-term future.391 Examiners regulators. However, given that the GENIUS Act
Summing across these respective sets out a federal regulatory framework with certain
exercises yields a projection of up to 42 Examiners that would be required to tasks for Federal regulators, it is difficult at this
assess future PPSIs’ compliance with time to do more than speculate about what actions
new PPSIs that would initially register states may take, and therefore FinCEN and OFAC
as entities affiliated with insured AML/CFT and sanctions compliance did not attempt to estimate the effect of this rule
depository institutions. Taking each of program requirements are expected to on state regulatory agencies. However, FinCEN and
those independent analyses, their be directly affected by the proposed OFAC are interested in receiving comments offering
rule.395 With respect to the proposed assessments on this subject.
respective methodologies, and expected 396 FinCEN is not proposing to amend
levels of precision into consideration, 392 Because no currently operating stablecoin § 1010.810(b)(8) to effectuate this because the
FinCEN and OFAC anticipate that the issuers have been identified that can, with more
existing delegation covers it. See supra section
proposed rule could be expected to certainty than not, be expected to become a SQPSI VI.C.2.i.
397 This figure is based on the estimated number
apply to an average of approximately 50 within the PPSI regulatory framework (as defined
in proposed 31 CFR 1010.100(ttt)(3) and 31 CFR of compliance examiners at the Board, FDIC,
1010.100(xxx)), the population used in this analysis NCUA, and OCC.
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389 To the extent that the evolution of the 398 These figures represent an approximate
does not include an estimate for these types of
stablecoin market is comparable to other technology potential future PPSIs. number of Federal examiners provided by Federal
sector models. See e.g., Steven Klepper, ‘‘Entry, 393 See supra sections VI.C.1.xi and xiii functional regulators with AML/CFT supervisory
Exit, Growth, and Innovation over the Product Life (discussing potential definitions for FQPSIs and responsibilities.
Cycle,’’ The American Economic Review, vol. 86, SQPSIs at 31 CFR 1010.100(vvv) and (xxx), 399 See supra section VII.A.
no. 3 (June 1996), at pp. 562–83, available at https:// respectively); see also 12 U.S.C. 5901(11), (31). 400 On the listed figure, see supra note 398. See
www.jstor.org/stable/pdf/2118212.pdf. 394 See supra section VI.A.2.i.
generally OFAC, Examination Guidelines, (Jun. 30,
390 See supra note 11. 395 Certain state regulators may be affected in a 2005) available at https://ofac.treasury.gov/recent-
391 See id. way that is comparable to the effects on Federal actions/20050630a.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18629
c. Law Enforcement and National fraud 404 and help prevent the use of unauthorized transactions as they
Security Agencies payment stablecoins to enable and fund would apply on either the primary and
The proposed rule is intended to illicit activity counter to U.S. national secondary market, regardless of the
support the efforts of law enforcement security interests.405 proposed rule’s requirement that PPSIs
and national security agencies by 2. PPSI Customers maintain an effective sanctions
promoting AML/CFT compliance and compliance program. Furthermore, PPSI
Because the proposed AML/CFT customers who are U.S. persons are
sanctions compliance program requirements include obligations that
implementation among stablecoin already obligated to comply with U.S.
depend on information collected and
issuers that become PPSIs, which sanctions themselves. As a result, OFAC
produced by a PPSI’s customers,
should generate highly useful reports would not expect any incremental costs
FinCEN considered the prospective
and other data in addition to deterring customers of future PPSIs as uniquely to the customers of PPSIs as a result of
predicate crimes and violations of U.S. affected members of the general public. the proposed rule.
laws and regulations. Law enforcement Although estimated payment stablecoin To estimate the number of expected
and national security agencies that enter users number in the hundreds of primary market customers a future PPSI
into a memorandum of understanding millions, a substantially smaller number might interact with and, therefore, need
with FinCEN can directly access and (in the hundreds of thousands) are to collect certain information and
use reports and data provided to likely to interact with PPSIs in the conduct due diligence on under the
FinCEN in compliance with AML/CFT primary market. Many of these proposed AML/CFT requirements,
requirements. As of fiscal year 2024, 432 customers are large financial FinCEN and OFAC examined current
Federal, State, and local law institutions, as described above in on-chain minting and redemption
enforcement; regulatory; and national section IV.A, and most large stablecoin activity as observable from publicly
security agencies had access to BSA issuers set significant financial available data. The majority of
reports and BSA Search, and the BSA requirements for primary market stablecoin products meeting the
Portal had over 12,000 users.401 In participants that exclude retail-level
addition, reports of blocked property GENIUS Act’s definitional criteria for
participation. Most primary market future payment stablecoins that FinCEN
and rejected transactions submitted to activity, as measured in transaction
OFAC can be key to developing and OFAC reviewed had fewer than
volume, is attributable to these large 1,000 primary market customers in a
sanctions enforcement actions that help entities. However, some issuers have
protect U.S. national security interests. given year, which is consistent with
increasingly adopted wider-facing mint/
prior expectations of high barriers to
d. Members of the General Public redeem models that seek to include
market participation. However, a small
smaller investors and businesses. To the
FinCEN and OFAC expect the general number of the stablecoins reviewed had
extent that PPSI markets continue to
public to be affected by the proposed face large, or almost exclusively, larger significantly more primary market
rule, with certain subpopulations clients who are themselves legal contact (with up to as many as 250,000
affected more directly than others in entities, financial institutions, or other customers) in a given year. In the
specific instances.402 non-natural persons, the typical future sample of issuers FinCEN reviewed, the
PPSI would be expected to face a higher average number of an issuer’s primary
1. General Public
per-customer burden than other types of market customers was approximately
Implementing the proposed rule financial institutions that currently have 17,000, but this value appeared to be
would ensure that PPSIs are ‘‘subject to AML/CFT program obligations driven by extreme outliers. The
all Federal laws applicable to a financial comparable to those that would apply to truncated average was approximately
institution located in the United States PPSIs but a lower concentration of legal 1,000, and the median value was 100.406
relating to economic sanctions, entity customers to individuals. Because
prevention of money laundering, Based on this analysis, FinCEN
certain program requirements that rely estimates that the ‘‘average’’ PPSI would
customer identification, and due on customer information have burdens
diligence.’’ 403 Ensuring these guardrails have approximately 1,000 primary
that scale with the complexity of the market customers that it interacts with
and infrastructure are in place is customer and, in general, legal entity
fundamental to unlocking the potential directly, including issuing and
customers have more complex redeeming payment stablecoins and
benefits that a vibrant and well- information to provide than natural
functioning payment stablecoin market engaging in digital asset service
persons, both future PPSIs and their provider activities where those activities
can offer the public (described above in typical prospective customers would
section IV.B) because these regulatory are authorized by the appropriate
face compliance-related cost profiles primary Federal or the State payment
guardrails and infrastructure are that are unique to the industry.
necessary to insulate the system from OFAC also considered the impact of stablecoin regulator and consistent with
abuse and critical risks to its integrity the proposed rule on the relationship all other federal and state laws.
(described in section IV.D). FinCEN and between PPSIs and their customers. However, some PPSIs are expected to
OFAC also considered that the proposed Because PPSIs would be considered have substantially more or substantially
rule could further benefit the general U.S. persons, they are therefore subject fewer. On aggregate, FinCEN does not
public to the extent that AML/CFT and to U.S. sanctions laws, including expect the total market population of
sanctions compliance would deter the obligations to block or reject identifiably unique future primary
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use of payment stablecoins to enable market PPSI customers to exceed
404 The Federal Bureau of Investigation estimated
401 See FinCEN, Financial Crimes Enforcement
that in 2025 direct losses to U.S. citizens resultant 406 To address the impact of extreme outliers, the
Network (FinCEN) Year in Review for Fiscal Year of crypto-related scammers and fraudsters exceeded truncated average was estimated by removing six
2024, p. 5. Note that not all users are from external $7.2 billion. See Federal Bureau of Investigation, percent of the sample from the left and right tails
agencies. FinCEN employees are also among the 2025 internet Crime Report (2026), available at of the distribution (the single smallest and largest
users with access to the BSA Portal. https://www.ic3.gov/AnnualReport/Reports/2024_ values). The largest value was more than three
402 See infra section XII.A.2.ii.d.2. IC3Report.pdf; see also supra section IV.D.2. standard deviations away from nearest value,
403 12 U.S.C. 5903(a)(5)(A). 405 See supra section IV.D. making it a significant outlier.
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18630 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
300,000.407 However, FinCEN and of primary market customers are account the observed incidence and rate
OFAC anticipate that a substantial reasonable. of MSB registration and BSA report-
number of these observably unique filing activity as well as the general
iii. Current Market Practices
customers may be affiliates of a single utilization of BSA filings by law
counterparty (i.e., not substantively In assessing the impact of the enforcement and national security
unique or representative of distinct legal proposed rule, FinCEN and OFAC took agencies’ efforts that PPSIs would
entities) or associated with non-U.S. into consideration a number of current contribute to under the proposed
entities.408 As such, FinCEN and OFAC market features relevant to both the requirements, and thereby indirectly
find that a more appropriate estimate of proposed future AML/CFT obligations benefit the general public.
the population of primary market and the proposed sanctions compliance
program requirements of potential 1. Current Stablecoin Issuer MSB
customers that are unique U.S.
future PPSIs.410 FinCEN then separately Registration
businesses, legal entities, or other non-
natural person is much smaller than considered current practices of unique In its review of MSB registrations
300,000 and is closer to approximately relevance to its proposed AML/CFT newly filed, revised, or renewed by the
10,000. These businesses belong to requirements,411 while OFAC similarly issuers of stablecoin products at least
several categories, including digital considered economic sanctions once in the most recent two calendar
asset exchanges, specialized digital asset compliance-related current market years, FinCEN observed that
commodities traders, and other types of practices.412 approximately 50 percent of the
investment and securities related stablecoin-issuing entities identified in
a. Market Structure and Activities section XII.A.2.ii.a.1 appear to have
businesses. Besides digital asset
exchanges, FinCEN and OFAC expect At present, the stablecoin market is submitted the requisite filings to be
that most of a typical future PPSI’s other characterized by many features of early registered as MSBs, including one issuer
customers are likely to be financial stage development, and within this also affiliated with a major international
institutions.409 ecosystem, existing stablecoins whose bank. Current stablecoin products for
FinCEN and OFAC also used publicly issuers would potentially be eligible to which no associated MSB registration
available data on on-chain minting and register as a payment stablecoin issuers activity could be identified, while
redemption activity to analyze annual (PPSIs or FPSIs) in the future constitute representing nearly half of the current
rates of customer growth and turnover. a small proportion of currently available stablecoin-issuing population,
Many of the stablecoin issuers reviewed products (less than one in five) but a represented less than one percent of the
retained the same group of large ‘‘core’’ considerably larger share of current total market capitalization of all the
primary market customers year over market capitalization, ranging in likely potential future payment
year but exhibited significant turnover expectation from approximately 75 to 81 stablecoin products.
among their smaller primary market percent, with variation based on
2. Current Stablecoin Issuer AML/CFT
customers. In addition, most stablecoin assumptions. Thus, the stablecoin
Programs
issuers saw significant growth in their market that future PPSIs would face
might reasonably be expected to persist Even without the AML/CFT
primary market customer base during requirements of the BSA or the GENIUS
2025. For purposes of modelling in being highly concentrated.
Current stablecoin issuers, Act, FinCEN expects that many
expected economic effects, FinCEN and stablecoin issuers would still be likely
OFAC assume that this growth will particularly those with larger market
shares, also appear to be part of more to employ some AML/CFT measures in
continue, particularly among stablecoin their current issuance and trading
issuers that are able to secure PPSI complex corporate structures, existing
operationally within a framework of frameworks. For example, nearly all
registration. Of the stablecoin issuers centralized issuers collect information
FinCEN reviewed, the average rate of affiliated legal entities that may be
functionally unified but, for either tax or on their direct customers (i.e., ‘‘primary
new customer inflow, year-over-year, market’’ customers) when minting or
was approximately 65 percent of the legal purposes, considered technically
distinct. It is unclear if these redeeming coins.413 Direct customers
number of existing, previous customers. must typically provide information such
Therefore, FinCEN and OFAC apply this configurations should be expected to
persist in their current form once the as name, address, Social Security
rate, where relevant, when estimating number/tax ID number (TIN),
the costs in the remaining analysis. GENIUS Act becomes effective.
government ID, and often additional
FinCEN requests comment on whether b. Current AML/CFT Compliance business documentation.
the assumptions regarding the number Practices In order to collect, screen, and store
To inform its assessment of the customer information in the ordinary
407 A substantial portion of these customers may
expected incremental impact of the course of business, stablecoin issuers
be affiliates of a single counterparty or associated
with non-U.S. entities. In cases where these entities proposed obligations, FinCEN and other financial market participants
are not U.S. persons, the incremental economic considered several features related to often employ software technologies
burdens of the proposed rule, while considered as current stablecoin issuers’ AML especially suited for this purpose. These
part of the broader economic analysis, are not third-party services often provide
included in the IRFA (see infra section XII.C) practices. In particular, FinCEN
because RFA considerations apply to U.S. small performed additional analysis of the customer identity information
entities only. stablecoin issuers identified, as verification and screening to collect and
408 In cases where these entities are not U.S.
discussed above in section XII.A.2.ii.a, verify personal information such as
persons, the incremental economic burdens of the
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proposed rule, while considered as part of the
as potential future PPSIs, taking into
413 The FATF identifies central governance bodies
broader economic analysis, are not included in the (issuers) as ‘‘obliged entities’’ responsible for
410 The term ‘‘potential payment stablecoin’’ is
IRFA because RFA considerations apply to U.S. customer due diligence and transaction monitoring;
small entities only. meant in this analysis to refer to those products they typically collect some customer information
409 Such firms would be classified under North which, based on FinCEN’s analysis, possess the from primary market customers. See FATF, Report
American Industry Classification System (NAICS) attributes that could qualify them as ‘‘payment to the G20 on So-called Stablecoins, pp. 9–11 (Jun.
industry code 523 (‘‘Securities, Commodity stablecoins’’ as defined in the GENIUS Act. 2020), available at https://www.fatf-gafi.org/en/
411 See infra section XII.A.2.iii.b.
Contracts, and Other Financial Investments and publications/Virtualassets/Report-g20-so-called-
Related Activities’’). 412 See infra section XII.A.2.iii.c. stablecoins-june-2020.html.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18631
name or address. These products 4,000 per entity in calendar year 2025, often separate from the legal entities
provide a technical basis for many the average was about 350, and the responsible for facilitating money
AML/CFT compliance tasks, truncated average was 104.414 In some transmission as an MSB. However,
particularly with regard to primary cases, high filing counts may have also based on the SAR filings that FinCEN
market customers. been attributable to the stablecoin reviewed, it seems clear that these
As previously discussed in section issuer’s offering of other products and functions operate in close coordination
XII.A.2.ii.d.2, many of the potential services in addition to its stablecoin with one another. In addition, it appears
future PPSIs identified by FinCEN have offerings (resulting in a wider range of plausible, based on BSA filing data, that
tended to retain the same group of large activity that could result in a SAR), so stablecoin issuers may use offshore
‘‘core’’ primary market customers year the truncated average is likely a closer entities or accounts to achieve favorable
over year but have exhibited significant estimate for the average rate of tax treatment or additional legal
turnover among smaller primary market stablecoin-related SAR filing frequency flexibility.
customer institutions focused on market for the typical future PPSI. While In addition to filing BSA reports,
arbitrage or other short-term trading FinCEN also observed that some including SARs about their customers,
opportunities. In its review, FinCEN stablecoin issuers have historically filed the potential future PPSIs that FinCEN
observed that turnover rates were CTRs, it notes that within the past five identified were often the subject of
particularly high among issuers whose completed calendar years, only one of various filing types, including SARs,
business models, from inception, the stablecoin issuers the analysis in themselves. While there were
facilitated larger numbers of primary section XII.A.2.ii.a.1 identified as a substantially fewer of these SAR filings
market customers. These kinds of potential future PPSI continued to file about the respective stablecoin issuers
issuers appear to have had several through the end of the sample period. than there were filings by those issuers,
thousand new primary market FinCEN found several pieces of SARs that reported potential future
participants in a given year, which anecdotal, qualitative, and quantitative PPSIs may serve as an additional
suggests such firms are likely to have information that corroborate the indication of the illicit activity risks
automated screening functions to enable agency’s understanding of certain associated with stablecoins, as
interaction with such high volumes of baseline market features and activities discussed above in section IV.D.
new customers. Smaller or more in the SARs filed by stablecoin issuers. The SARs FinCEN reviewed that were
centralized stablecoin issuers generally In particular, the SAR narratives proved filed by stablecoin issuers also speak to
had far fewer new customers (although a rich source of information. For the incidence of what FinCEN and
retention or growth may be similar from example, data about the stablecoin- OFAC have discussed and referenced
a percentage standpoint) and have issuing filers of BSA reports support throughout as their expectations of
processes that may be more manual. FinCEN’s general observations about the certain current market practices and
structural complexity of potential future activities. In particular, a review of SAR
3. Current Stablecoin Issuer BSA narratives indicates that reporting
PPSIs as discussed above in section
Reporting Practices stablecoin issuers commonly employ a
XII.A.2.ii.a. Of the stablecoin issuers
In its assessment of current market with BSA filings, the average number of variety of technologies to conduct due
practices, FinCEN evaluated the SAR related but potentially distinct legal diligence in connection with customer
and CTR filing activity of current entities—as measured by the number of relationships and to identify high-risk
stablecoin issuers. This review both (1) unique filer TINs per issuer of customers. Filers often identified
informed the estimates of expected stablecoin products—associated with suspicious customers based on
BSA-reporting activity and burden filing activity was more than one documentation provided by the
utilized in sections XII.A.4.ii.a and (approximately two), but some customer that appeared contradictory or
XII.E.1 below and (2) illuminated stablecoin issuers had as many as eight. falsified, indicating that these issuers
aspects of certain stablecoin issuers’ In several cases, the legal entities filing currently obtain and carefully review
current organizational features and SARs were distinct from the legal substantial amounts of information
practices in identifying and responding entities registering as MSBs, even collected by and from customers. From
to suspicious activity. though they were affiliated with the SAR filings, FinCEN observed that it
As a preliminary matter, FinCEN same issuer. FinCEN also examined appears to be common practice, at least
observed that BSA filing activity Report of Foreign Bank and Financial among reporting stablecoin issuers, for
generally followed the same distribution Account (FBAR) filing activity in which customers to already be asked to
of attributes as stablecoin issuer MSB these issuers were the subject, and provide identifying information at a
registration but has, in relatively stable found indications that a number of these level equivalent to or exceeding the
fashion, remained concentrated to a issuers maintain offshore accounts minimum generally necessary to comply
smaller proportion of the population of which may be associated with separate, with the proposed rule. Reporting
stablecoin issuers and exhibited more offshore entities. issuers also appear to use technology
pronounced differences between high These findings provide important service providers to investigate linkages
volume and low volume report filers insight into how a typical stablecoin between customers and high-risk and/or
year over year. issuers may operate. Generally, such sanctioned entities.
FinCEN reviewed BSA available issuers establish multiple legal aliases, Some filings appear to have, in part,
filings for the issuers of 17 of the often to serve separate functions. The been informed by a concern about the
stablecoin products it identified in legal entities responsible for identifying apparent nature of the reported
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section XII.A.2.ii.a.1 as meeting the and reporting suspicious activity are transaction activity, and in some cases
definitional criteria set forth in the transactions with no apparent lawful
GENIUS Act to be eligible as potential 414 The truncated average was calculated by purpose or with certain identified high-
future PPSIs. Sixteen of these products removing the single largest outlier, which had over risk on-chain addresses were flagged for
had issuers who registered at least once 4,000 filings, significantly more than the next investigation. In certain instances,
highest value. This entity also offered other retail
as an MSB within the past three years. products in addition to their stablecoin offering,
issuers reported transaction patterns
The number of annual SAR filings by resulting in a number of SARs being filed unrelated inconsistent with their customers’
these entities ranged from zero to over to their stablecoin product. reported location information that the
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18632 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
reporting stablecoin issuers had 2018 used BSA reports to support their making it difficult, for purposes of this
identified and tracked. In several cases, work.418 RIA, to meaningfully disaggregate
SAR-filing stablecoin issuers reported certain costs attributable solely to
c. Current Sanctions Compliance
subjecting high-risk customers to current or future sanctions compliance
Practices
transaction freezes. In one instance, a requirements from broader AML/CFT
SAR-filing stablecoin issuer reported As previously discussed in section market baseline activities. Consistent
having frozen the use of issued coins by XII.A.2.i.b, prior to the enactment of the with FinCEN’s risk-based AML
a particular secondary market user in GENIUS Act, no U.S. person was framework, institutions generally
response to a law enforcement request. explicitly required to establish and already incorporate sanctions risk into
Reports such as these suggest that at maintain a sanctions compliance enterprise-wide risk assessments,
least some stablecoin issuers currently program. Nevertheless, in practice, customer due diligence, transaction
have the ability to, and do, monitor industry participants, including U.S.- screening, internal controls, and
customer activity including, in some based stablecoin issuers, have long escalation and remediation procedures
cases, using geolocation technology implemented risk-based sanctions that form part of the overall AML
and/or monitoring observable compliance measures consistent with compliance program.422
transactions on the secondary market, OFAC’s publicly issued guidance. As a matter of industry practice,
and these reporting issuers are also, in Specifically, OFAC’s 2019 Compliance sanctions compliance practices are also
many cases, currently able to freeze the Framework 419 strongly encourages typically both conceptually risk based
use of their stablecoin products. persons subject to U.S. jurisdiction— and, operationally, technology enabled.
including foreign entities engaging in Such programs commonly incorporate
4. Current Use of BSA Information by business in or with the United States, screening technology during customer-
Law Enforcement and National Security U.S. persons, or U.S.-origin goods or or client-onboarding and, on an ongoing
Agencies services—to adopt and maintain a risk- basis, screen against OFAC sanctions
While results may not be published, based sanctions compliance program. In lists, as well as conduct due diligence
FinCEN both routinely receives current practice, these measures have designed to identify sanctions-related
reports 415 and conduct surveys 416 that been adopted to ensure compliance with risks that may not explicitly be reflected
speak to the use and usefulness of BSA binding U.S. sanctions obligations, even in OFAC’s lists, including indirect or
information to law enforcement and in the absence of a formal programmatic layered exposure.423 As observed,
national security agencies. An older, but requirement. Additionally, in 2021, sanctions screening typically involves a
broadly analogous, publicly available OFAC issued the Virtual Currency number of complex processes, and
report from the U.S. Government Industry Guidance,420 which adapted stablecoin issuers often adopt ‘‘on-
Accountability Office (GAO) found that the five elements for a sanctions chain’’ screening technologies and
in 2018, a majority of federal and state compliance program from the 2019 processes to ensure that all payments
law enforcement agencies had direct Compliance Framework for the digital using stablecoins are compliant with
access to FinCEN’s BSA database (i.e., assets industry and provided guidance U.S. sanctions. Institutions typically
85 percent of federal agencies and 54 on specific risk typologies that may first screen customer information
percent of state agencies), though fewer arise within the industry. This guidance against OFAC-administered sanctions
than one percent of local law also highlighted best practices that can lists, including the SDN List, at the time
enforcement agencies did.417 FinCEN assist companies in the industry with of onboarding. Procedures usually
believes these survey results may sanctions compliance, such as the use of involve ongoing sanctions screening and
underrepresent the extent to which local geolocation tools and transaction risk-based re-screening (for example,
law enforcement may benefit from BSA monitoring and investigation software. related to a historical lookback) to
information insofar as the GAO study OFAC has also issued guidance account for updated customer
could not directly account for the specifically related to digital assets, information, updates to OFAC sanctions
incidence of referrals to local law including frequently asked questions lists, or changes in regulatory
enforcement of matters not otherwise (FAQs), that highlight OFAC’s practices requirements. Screening techniques
pursued by federal or state agencies and expectations for individuals and attempt to identify addresses, including
directly. The study also surveyed 5,257 entities operating in the digital assets physical, digital wallet, and IP
investigators, analysts, and prosecutors industry.421 addresses, and other relevant
at six federal law enforcement agencies Based on current market research, information with potential links (or
and found that these agencies used BSA FinCEN and OFAC observe that in indirect exposure) to sanctioned persons
data extensively, estimating that practice, sanctions compliance may be
approximately 72 percent of personnel operationalized as an integrated 422 See FinCEN, Information on Complying with
conducting investigations from 2015 to the Customer Due Diligence (CDD) Final Rule,
component of what is commonly available at https://www.fincen.gov/resources/
referred to as an institution’s broader statutes-and-regulations/cdd-final-rule; see also
415 William M. (Mac) Thornberry National
AML compliance framework. As a FinCEN, Fact Sheet: Proposed Rule to Strengthen
Defense Authorization Act for Fiscal Year 2021, and Modernize Financial Institution AML/CFT
Public Law 116–283, 134 Stat. 3388 (Jan. 1, 2021), result, sanctions-related controls
Programs, FIN–2024–FCT1 (Jun. 28, 2024),
sec. 6201 (Annual reporting requirements). commonly share training, technology, available at https://www.fincen.gov/system/files/
416 FinCEN, Agency Information Collection
personnel, and governance structures shared/Program-NPRM-FactSheet-508.pdf; FinCEN,
Activities: Proposed Renewal; Comment Request; with AML compliance programs, the Board, FDIC, NCUA, and OCC, Interagency
Renewal Without Change of the Generic Clearance Statement on the Issuance of the AML/CFT Program
for the Collection of Qualitative Feedback on Notices of Proposed Rulemaking (Jul. 19, 2024),
lotter on DSK8BHNXB4PROD with PROPOSALS3
418 Based on a response rate of approximately 57
Agency Service Delivery, 88 FR 30383 (May 11, available at https://www.fincen.gov/system/files/
2023). percent. shared/Interagency-Statement-on-the-Issuance-of-
419 See OFAC, 2019 Compliance Framework,
417 See GAO, Anti-Money Laundering: the-AML-CFT-Program-Notices-of-Proposed-
Opportunities Exist to Increase Law Enforcement supra note 285. Rulemaking-FINAL.pdf; see also FinCEN, Anti-
420 See OFAC, Virtual Currency Industry Money Laundering and Countering the Financing of
Use of Bank Secrecy Act Reports, and Banks’ Costs
to Comply with the Act Varied, GAO–20–574 (Sept. Guidance, supra note 286. Terrorism Programs, 89 FR 55428 (July 3, 2024).
2020), available at https://www.gao.gov/assets/gao- 421 See OFAC, Questions on Virtual Currency, 423 See OFAC, Entities Owned by Blocked Persons
20-574.pdf. GAO conducted the survey from available at https://ofac.treasury.gov/faqs/topic/ (50% Rule) (Aug. 13, 2024), available at https://
November 9, 2019, through March 16, 2020. 1626. ofac.treasury.gov/faqs/topic/1521.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18633
or jurisdictions, often utilizing choose to create a bespoke system for its quantified burden (in hours or dollars),
screening tools’ ‘‘fuzzy logic’’ sanctions compliance needs. the reason for doing so is briefly
capabilities to account for common explained in the description of expected
3. Description of Proposed
name variations and misspellings (e.g., costs in section XII.A.4.ii.
Requirements
‘‘Crimea’’ versus ‘‘Krimea’’). ‘‘Smart To balance the completeness of the
contracts’’ are a commonly utilized For purposes of the RIA, FinCEN and RIA with the desire for expositional
blockchain tool that, among other OFAC considered the various clarity and ease of tractability between
functions, may be programmed to components of the proposed rule with a the proposed regulatory text and
automatically identify and prevent view towards the specific features or sections VI and VII (section-by-section
transactions attempted by sanctioned elements that are expected to generate, analyses) and section XII. (regulatory
entities or rely on third-party data either directly or indirectly, an impact analysis), FinCEN and OFAC
sources, such as oracles, for sanctions economic benefit or cost, or lead to have included table 2, to provide a
screening.424 Based on market research, changes in market participant incentives mapping of the various components of
FinCEN and OFAC find that while in a way that may generate economic the proposed rulemaking as presented
existing ‘off-the-shelf’ software is benefits or costs.425 For components of in FinCEN and OFAC’s respective
already available to meet many of these the proposed rule that FinCEN and section-by-section analyses to their
requirements, a future PPSI might OFAC analysis has not assigned a analogous categorization in the RIA.
TABLE 2—OVERVIEW/MAPPING OF REGULATORY TEXT AND ANALYSES
Section VI and VII anal- Considered in RIA sub- Proposed regulatory text
Scope of affected entities The proposed rule would . . . ysis section(s) location
PPSIs ................................ Amend the definition of ‘‘financial institution’’ to in- VI.C.1.i ............................ XII.A.3.i and iii.a .............. 31 CFR 1010.100(t)(11).
clude ‘‘a permitted payment stablecoin issuer’’ for
purposes of the BSA.
Amend the definition of ‘‘money services business,’’ VI.C.1.ii ............................ XII.A.3.i ............................ 31 CFR 1010.100(ff)(8).
by adding ‘‘a permitted payment stable coin
issuer’’ to the list of entities excluded from the
definition.
Amend the definition of ‘‘transaction,’’ to add the VI.C.1.iii ........................... XII.A.3.i ............................ 31 CFR
issuance or redemption of a payment stablecoin 1010.100(bbb)(1).
as a type of transaction.
Amend the definition of ‘‘transmittal order,’’ to add a VI.C.1.iv ........................... XII.A.3.i ............................ 31 CFR 1010.100(eee).
payment stablecoin as a subject of an order.
Define the terms ‘‘digital asset,’’ ‘‘distributed ledg- VI.C.1.v–xiii ..................... XII.A.3.i ............................ 31 CFR 1010.100(ppp),
er,’’ ‘‘lawful order,’’ ‘‘payment stablecoin,’’ ‘‘per- (qqq), (rrr), (sss), (ttt),
mitted payment stablecoin issuer,’’ ‘‘primary Fed- (uuu), (vvv), and
eral payment stablecoin regulator,’’ ‘‘Federal (www).
qualified payment stablecoin issuer,’’ ‘‘State pay-
ment stablecoin regulator,’’ and ‘‘State qualified
payment stablecoin issuer.’’.
Delegate examination authority for PPSIs ............... VI.C.2 .............................. XII.A.3 ............................. 31 CFR 1010.810(b)(11).
PPSIs with respect to their Require internal policies, procedures, and controls VI.C.3.ii.a ......................... XII.A.3.iii.a, XII.A.4.ii.a.1, 31 CFR 1033.210(b)(1).
AML/CFT Program Re- that (1) identify, assess, and document ML/TF XII.A.4.ii.a.4, XII.E.1.
quirements. risks through risk assessment processes; (2)
mitigate ML/TF risks consistent with a PPSI’s risk
assessment processes; and (3) conduct ongoing
customer due diligence.
Require that risk assessment processes (1) evalu- VI.C.3.ii.a ......................... XII.A.3.iii.a, XII.A.4.ii.a.1, 31 CFR
ate ML/TF risks from business activities; (2) con- XII.E.1. 1033.210(b)(1)(i)(A),
sider AML/CFT Priorities; and (3) update prompt- (B), and (C).
ly responsive to significant changes to ML/TF
risks.
Require independent testing of the AML/CFT pro- VI.C.3.ii.b ......................... XII.A.3.iii.a, XII.A.4.ii.a.2 31 CFR 1033.210(b)(2).
gram.
Require the designation of an AML/CFT officer, re- VI.C.3.ii.c ......................... XII.A.3.iii.a, XII.A.4.ii.a.1, 31 CFR 1033.210(b)(3).
quire that the designated individual is located in XII.E.1.
the United States, has not been convicted of a
felony, and is subject to oversight and super-
vision by FinCEN and its designee, and is re-
sponsible for establishing and implementing the
AML/CFT program and coordinating and moni-
toring day-to-day compliance.
Require a PPSI AML/CFT program to include an VI.C.3.ii.d ......................... XII.A.3.iii.a, XII.A.4.ii.a.3, 31 CFR 1033.210(b)(4).
‘‘ongoing employee training program.’’. XII.E.1.ii.a.
Require the AML/CFT program be written, made VI.C.3.iii ........................... XII.A.3.iii.a, XII.A.4.ii.a.1, 31 CFR 1033.210(d).
available upon request to FinCEN or its des- XII.E.1.
ignee, and approved by the PPSI’s board of di-
rectors, an equivalent governing body within the
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issuer, or appropriate senior management.
Require any and all certifications submitted to the VI.C.3.iv ........................... XII.A.3.iii.a, XII.A.4.ii.a.1, 31 CFR 1033.210(e).
PPSI’s primary Federal payment stablecoin regu- XII.E.1.
lator or State payment stablecoin regulator certi-
fying that the PPSI has implemented an AML/
CFT program be made available upon request to
FinCEN or its designee.
424 See supra section IV.A, note 37. 425 See infra section XII.A.4.
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18634 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
TABLE 2—OVERVIEW/MAPPING OF REGULATORY TEXT AND ANALYSES—Continued
Section VI and VII anal- Considered in RIA sub- Proposed regulatory text
Scope of affected entities The proposed rule would . . . ysis section(s) location
Define the terms/phrases ‘‘AML/CFT enforcement VI.C.4.i ............................ XII.A.3.i ............................ 31 CFR 1033.221(a).
action,’’ ‘‘AML/CFT requirement,’’ and ‘‘significant
AML/CFT supervisory action.’’.
Provide that a PPSI with an AML/CFT program es- VI.C.4.ii ............................ XII.A.3.iii.a ....................... 31 CFR 1033.221(b).
tablished in accordance with proposed 31 CFR
1033.210(b) would not be subject to an AML/CFT
enforcement action or significant AML/CFT su-
pervisory action absent a significant or systemic
failure to implement said program within the
meaning of proposed 31 CFR 1033.210(c), and
provide that the proposed 31 CFR
1033.221(b)(1) provisions do not apply when
there is a failure to establish an AML/CFT pro-
gram within the meaning of proposed 31 CFR
1033.210(b).
Provide that in determining to take, or in review of, VI.C.4.iii ........................... XII.A.3.iii.a ....................... 31 CFR 1033.221(d).
an AML/CFT enforcement action or significant
AML/CFT supervisory action, the Director would
take into account factors under 31 U.S.C.
5318(h)(2)(B) and the PPSI’s unique ability and
efforts to advance AML/CFT priorities.
Amend 31 CFR 1010.230 with respect to PPSIs’ VI.C.5 .............................. XII.A.3.iii.c, XII.A.4.ii.a.4, 31 CFR 1010.230.
obligation to collect and verify beneficial owner- XII.A.5.i.b, XII.E.1.
ship information about legal entity customers.
Require ‘‘technical capabilities, policies, and proce- VI.C.6.i ............................ XII.A.3.iii.b, XII.A.4.ii.a.5, 31 CFR 1033.240(a).
dures to block, freeze, and reject specific or im- XII.A.5.i.c.
permissible transactions that violate Federal or
State laws, rules, or regulations.’’.
Require a PPSI to (1) have the technical capabili- VI.C.6.ii ............................ XII.A.3.iii.b, XII.A.4.ii.a.5, 31 CFR 1033.240(b).
ties to comply with the terms of any lawful order
and (2) comply with the terms of any lawful order.
Require the filing of CTRs ........................................ VI.C.7 .............................. XII.A.3.iii.c, XII.A.4.ii.a.6, 31 CFR 1033.310–315.
XII.E.1.
Require the filing of SARs ........................................ VI.C.8.i–iii ........................ XII.A.3.iii.c, XII.A.4.ii.a.6, 31 CFR 1033.320(a), (b).
XII.E.1.
Require the retention of copies of filed SARs and VI.C.8.iv ........................... XII.A.3.iii.c, XII.A.4.ii.a.6, 31 CFR 1033.320(c).
the underlying related documentation for a period XII.E.1.
of five years from the date of filing.
Prohibit the disclosure a SAR or any information VI.C.8.v ........................... XII.A.3.iii.c ....................... 31 CFR 1033.320(d).
that would reveal the existence of a SAR.
Provide protection from liability for making required VI.C.8.vi ........................... XII.A.3.iii.c ....................... 31 CFR 1033.320(e).
or voluntary reports of suspicious transactions, or
for failures to provide notice of such disclosure to
any person identified in the disclosure to the full
extent provided by 31 U.S.C. 5318(g)(3).
Require examination of compliance with their obli- VI.C.8.vii .......................... XII.A.3.iii.c, XII.E.1 .......... 31 CFR 1033.320(f).
gation to report suspicious transactions by
FinCEN and its delegees.
Exclude secondary market transfers from a PPSI’s VI.C.8.viii ......................... XII.A.3.iii.c, XII.A.4.ii.a.6, 31 CFR 1033.320(g).
SAR reporting obligations. XII.E.1.
Require the retention of appropriate records ........... VI.C.9.i ............................ XII.A.3.iii.d, XII.A.4.ii.a.7, 31 CFR 1033.410.
XII.E.1.
Apply the information-sharing provisions of sections VI.C.10 ............................ XII.A.3.iii.e, XII.A.4.ii.a.8, 31 CFR 1033.520; 540
314(a) and (b) of the USA PATRIOT Act to XII.E.1.
PPSIs.
Require compliance with special standards of dili- VI.C.11 ............................ XII.A.3.iii.f, XII.A.4.ii.a.9– 31 CFR 1033.600–630;
gence, prohibitions, and special measures under 10, XII.E.1. 31 CFR 1010.651; 653;
section 311 of the USA PATRIOT Act, including 658–661; 663; and
enhanced due diligence for correspondent and 664.
private banking accounts and some active spe-
cial measures.
PPSIs with respect to their Impose standard recordkeeping and reporting re- VII.A ................................ XII.A.3.iv, XII.A.4.ii.a.1, 31 CFR 502.102.
Sanction Compliance quirements as found in 31 CFR part 501, includ- XII.A.4.ii.a.7, XII.E.1.
Program Requirements. ing requiring any and all certifications submitted
to the PPSI’s primary Federal payment
stablecoin regulator or State payment stablecoin
be provided to OFAC.
Require senior management (1) review and ap- VII.B.1 ............................. XII.A.3.iv, XII.A.4.ii.a.1, 31 CFR 502.201(b)(1).
proval of a PPSI’s sanctions compliance program XII.E.1.
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and (2) support for the sanctions compliance pro-
gram’s effective implementation.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18635
TABLE 2—OVERVIEW/MAPPING OF REGULATORY TEXT AND ANALYSES—Continued
Section VI and VII anal- Considered in RIA sub- Proposed regulatory text
Scope of affected entities The proposed rule would . . . ysis section(s) location
Require sanctions-related risk assessments by: (i) VII.B.2 ............................. XII.A.3.iv, XII.A.4.ii.a.1, 31 CFR 502.201(b)(2).
conducting holistic assessments of U.S. sanc- XII.E.1.
tions risks at appropriate intervals; (ii) using the
risk assessments to inform the PPSI’s operation
of its sanctions compliance program, including
revising internal controls and training as appro-
priate; and (iii) revising risk assessments as ap-
propriate to account for any identified U.S. sanc-
tions violations or deficiencies, new products,
services, mergers, or acquisitions, and any other
factors that may affect a PPSI’s risk profile.
Require a system of risk-based internal controls, in- VII.B.3 ............................. XII.A.3.iv, XII.A.4.ii.a.5, 31 CFR 502.201(b)(3).
cluding technical capabilities. XII.A.4.ii.a.7, XII.A.5.ii.
Require a system of risk-based internal controls, in- VII.B.3 ............................. XII.A.3.iv, XII.A.4.ii.a.1, 31 CFR 502.201(b)(3).
cluding written policies and procedures. XII.A.5.ii, XII.E.1.
Require an independent testing or audit function, VII.B.4 ............................. XII.A.3.iv, XII.A.4.ii.a.3, 31 CFR 502.201(b)(4).
accountable to senior management, with suffi- XII.A.5.ii, XII.E.1.
cient resources, expertise, and authority to iden-
tify U.S. sanctions compliance-related weak-
nesses and deficiencies.
Require records of testing and auditing results and VII.B.4 ............................. XII.A.3.iv, XII.A.4.ii.a.7, 31 CFR 502.201(b)(4)(iv).
resulting updates or enhancements to the sanc- XII.E.2.
tions compliance program be maintained and
provided upon request to OFAC.
Require a risk-based compliance training program VII.B.5 ............................. XII.A.3.iv, XII.A.4.ii.a.2, 31 CFR 502.201(b)(5).
XII.A.5.ii, XII.E.1.
Defines the terms ‘‘knowingly,’’ ‘‘OFAC,’’ ‘‘payment VII.C.1–3 ......................... XII.A.3.ii ........................... 31 CFR 301–304.
stablecoin-related activity,’’ and ‘‘permitted pay-
ment stablecoin issuer; PPSI.’’.
Federal Financial Institu- Require an FFIRA consultation with the Director VI.C.4.iii ........................... XII.A.3.iii.a, XII.A.4.ii.b .... 31 CFR 1033.221(c)(1).
tions Regulatory Agen- before any significant AML/CFT supervisory ac-
cies (FFIRAs). tion pursuant to delegated authority is initiated.
Require, generally, an FFIRA to provide written no- 31 CFR 1033.221(c)(2)(i).
tice to the Director of any intent to take a signifi-
cant AML/CFT supervisory action pursuant to
delegated authority at least 30 days in advance
of the proposed action.
Require, to the extent reasonably practicable, that 31 CFR
an FFIRA respond to requests from the Director 1033.221(c)(2)(ii).
for additional information regarding a proposed
significant AML/CFT supervisory action.
FinCEN and its Delegees Require examination of PPSIs’ compliance with VI.C.8.vii .......................... XII.A.3.iii.c, XII.A.4.ii.b ..... 31 CFR 1033.320(f).
their obligation to report suspicious transactions.
i. Proposed New and Amended FinCEN definitions are necessary to effectuate section of the new 31 CFR part 502.
Definitions the GENIUS Act’s direction that PPSIs OFAC’s proposed definitions of the
As discussed in greater detail in be subject to the BSA, or are otherwise terms ‘‘knowingly’’ and ‘‘OFAC’’ are
section VI.C.1 above, FinCEN is intended to harmonize the GENIUS Act consistent with other OFAC regulations.
proposing to amend four existing definitions with FinCEN’s existing OFAC’s proposed definition of
definitions and add nine new terms to regulations, to improve readability, or to ‘‘payment stablecoin-related activity’’ is
the general definitions section of its avoid confusion with other similar scoped to cover the range of activities
regulations, 31 CFR 1010.100. FinCEN is terms defined by FinCEN’s regulations involving a PPSI’s payment stablecoin
proposing three additional definitions without changing the meaning of any from the time of issuance until the
in connection with the proposed defined terms, these components of the payment stablecoin’s removal from
regulation and supervision of PPSI proposed rule are not expected to circulation. Finally, OFAC’s proposed
AML/CFT programs in 31 CFR part independently generate incremental definition of ‘‘permitted payment
1033. Where it is adding new terms, in direct economic effects. As such, these stablecoin issuer’’ is consistent with the
large part, FinCEN’s proposed elements of the proposed rule are not definition of that term contained in the
definitions would embed the language separately considered in the section GENIUS Act, with minor modifications.
of the GENIUS Act in FinCEN XII.A.4 discussion below. Public While OFAC recognizes that
regulations. In a few instances, however, comment is invited on whether FinCEN definitions can generate economic
FinCEN is proposing to modify the should reconsider the potential effects, OFAC does not expect these
statutory language. standalone economic impact of the components of the proposed rule to
definitions, collectively or individually,
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As a general matter, definitions independently generate incremental
prescribe the scope of parties to whom, in the context of and as proposed direct economic effects. OFAC’s
and products to which, a regulation components of this NPRM. proposed definitions are necessary to
applies and are therefore capable of ii. Proposed New OFAC Definitions effectuate and enforce the GENIUS Act’s
generating economic effects as a requirement that PPSIs maintain an
consequence of the delineations they set As discussed in greater detail in effective sanctions compliance program,
forth. However, because FinCEN’s section VII.C above, OFAC is proposing including by emphasizing that a PPSI’s
proposed additions and changes to to define four terms in the definitions sanctions compliance obligations apply
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18636 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
to all activity involving its payment innovation and, as warranted by the that approval encompasses each of the
stablecoins,426 or are otherwise PPSI’s risk profile, implement new components of the AML/CFT
intended to harmonize the GENIUS Act technology or innovative approaches in program.435 In addition, the proposed
definitions with OFAC’s existing combating financial crime. rule would require PPSIs to make
regulations. As such, these elements of Additionally, PPSIs may find it available to FinCEN, or its designee,
the proposed rule are not separately beneficial to consider whether the AML/ upon request any and all certifications
considered in section XII.A.4 discussion CFT program appropriately uses the submitted to the PPSI’s primary Federal
below. Public comment is invited on financial institution’s existing internal payment stablecoin regulator or State
whether OFAC should reconsider the capabilities, technologies, product lines, payment stablecoin regulator certifying
potential standalone economics impact and data. For example, if a PPSI’s that the PPSI has implemented an AML/
of the definitions, collectively or issuance or financial risk management CFT program.
individually, in the context of and as team monitors the lifecycle of the PPSI’s FinCEN is proposing to require PPSIs
proposed components of this NPRM. stablecoins for financial resilience, the to establish and maintain written
PPSI may find it beneficial for its AML/ procedures that are reasonably designed
iii. Proposed New FinCEN CFT program to consider using similar to identify and verify the beneficial
Requirements technology or approaches in managing owners of legal entity customers as part
a. AML/CFT Program-Related Proposed and mitigating its ML/TF risks. of a PPSI’s AML/CFT program
Requirements The proposed rule also includes obligations.436 These requirements
several other program requirements. The mirror existing BSA requirements that
As discussed in greater detail in BSA requires AML/CFT programs to apply to many other financial
section VI.C.3, the proposed rule have an ‘‘independent audit function to institutions. The GENIUS Act requires
includes new requirements for PPSIs to test programs.’’ 429 Under the proposed that PPSIs be subject to ‘‘due diligence
develop and implement AML/CFT rule, a PPSI would need to establish requirements.’’ Collection of beneficial
programs. The proposed rule would independent AML/CFT program testing ownership information is a core element
require AML/CFT programs to to be conducted by the PPSI’s personnel of effective due diligence.
reasonably manage and mitigate ML/TF or an outside party.430 The GENIUS Act, The proposed rule also sets forth a
risks through internal policies, 12 U.S.C. 5903(a)(5)(A)(i), and the BSA, supervision and enforcement
procedures, and controls that are 31 U.S.C. 5318(h)(1)(B), also require framework. FinCEN expects proposed
commensurate with those risks and PPSIs to designate an AML/CFT officer. 31 CFR 1033.221(d) to affect PPSIs’
ensure ongoing compliance with the Under the proposed rule, PPSI’s would incentives because it provides that in
BSA and its implementing regulations. be required to designate an individual, determining to take, or in review of, an
The proposed rule would require PPSIs who is located in the United States and AML/CFT enforcement action or
to reasonably manage and mitigate risks accessible to, subject to oversight and significant AML/CFT supervisory
using internal policies, procedures, and supervision by, FinCEN and its action, the FinCEN Director would take
controls based on their institution- designee, and has not been convicted of certain factors into consideration,
specific ML/TF risks as identified by the certain felony offenses.431 The AML/ including facts and circumstances
risk assessment process(es) required. An CFT officer would be responsible for unique to the PPSI in question. In
effective, risk-based, and reasonably establishing and implementing the particular, § 1033.221(d)(2) would
designed AML/CFT program would AML/CFT program and coordinating require the Director to consider the
continue to incorporate the results of and monitoring day-to-day compliance PPSI’s demonstrable efforts to advance
the applicable risk assessment with the requirements and prohibitions AML/CFT priorities such as its
process(es) through appropriate changes of the BSA and FinCEN’s implementing production of highly useful information,
to internal policies, procedures, and regulations.432 The BSA additionally analytics, or other innovations. FinCEN
controls to manage ML/TF risks on an requires AML/CFT programs to have an expects that the proposed regulation
ongoing basis as necessary. The ‘‘ongoing employee training could reasonably be expected to
procedures must also integrate and program;’’ 433 accordingly, the proposed generate economic effects because it
support the conduct of ongoing rule would require PPSIs to have an would likely change the scope or nature
customer due diligence. The proposed ongoing employee training program.434 of activities undertaken and/or
rule would require PPSIs to conduct The proposed rule would require investments made.
ongoing customer due diligence as part PPSIs to have a written AML/CFT
of their AML/CFT program program and would require the PPSI to b. Proposed Additional Technical
obligations.427 The GENIUS Act requires make a copy of its written AML/CFT Capabilities, Policies, and Procedures
that PPSIs are subject to due diligence program available to FinCEN or its The GENIUS Act requires that PPSIs
requirements including enhanced due designee upon request. The proposed have ‘‘technical capabilities, policies,
diligence where appropriate.428 rule would also require that a PPSI’s and procedures to block, freeze, and
The proposed rule provides PPSIs written AML/CFT program be approved reject specific or impermissible
with the regulatory flexibility to by the PPSI’s board of directors or an transactions that violate Federal or State
consider innovative approaches to equivalent governing body within the laws, rules, or regulations.’’ 437 This is a
comply with BSA requirements as PPIS, or appropriate senior management novel requirement that does not
FinCEN aims to encourage instances of the PPSI. The proposed rule specifies currently apply to other types of
where a PPSI finds it beneficial to financial institutions.438 GENIUS Act
lotter on DSK8BHNXB4PROD with PROPOSALS3
consider and evaluate technological 429 See 31 U.S.C. 5318(h)(1)(D).
430 See supra section VI.C.3.ii.b. 435 See supra sections VI.C.3.iii–iv.
426 As noted in section V.B, U.S. persons, 431 See supra section VI.C.3.ii.c. 436 See supra section VI.C.5.
including U.S. person stablecoin issuers, are and 432 This individual is also commonly referred to 437 12 U.S.C. 5903(a)(5)(A)(iv).
have always been subject to U.S. sanctions laws, as a ‘‘BSA officer.’’ However, as discussed below, 438 As noted in section V.B, however, U.S.
including with respect to transactions occurring on the particular labels that FinCEN or a PPSI may use persons, including U.S. financial institutions, are
the primary or secondary markets. to refer to this individual are immaterial. required to comply with U.S. sanctions laws,
427 See supra section VI.C.3.ii.a.3. 433 See 31 U.S.C. 5318(h)(1)(C).
including obligations to block, reject, and report
428 12 U.S.C. 5903(a)(5), 5903(a)(5)(A)(v). 434 See supra section VI.C.3.ii.d. certain prohibited transactions.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18637
also requires that PPSIs ‘‘issue payment PPSIs.443 PPSIs would also be required f. Special Standards of Diligence,
stablecoins only if the issuer has the to maintain copies of filed SARs and the Prohibitions, and Special Measures
technological capability to comply, and underlying related documentation for a Finally, the proposal would require
will comply, with the terms of any period of five years from the date of that PPSIs be subject to some of the
lawful order.’’ 439 The GENIUS Act filing. The proposed rule also applies special standards of diligence,
defines ‘‘lawful order,’’ which states, in standards for SARs relating to prohibitions, and special measures
part, that a lawful order is an order that confidentiality and liability. under section 311 of the USA PATRIOT
is subject to judicial review and is Act, including enhanced due diligence
issued under Federal law that requires d. Proposed Recordkeeping
for correspondent and private banking
a person to ‘‘seize, freeze, burn or accounts and additional special
The GENIUS Act requires that PPSIs
prevent the transfer of’’ payment measures.447 As discussed in section
stablecoins the person issued and be subject to laws relating to ‘‘retention
of appropriate records.’’ 444 Under the VI.C.11, FinCEN is not proposing to
specifies the payment stablecoins or apply 31 CFR 1010.630 to PPSIs, which
account with reasonable BSA, FinCEN has authority to impose
on financial institutions obligations would prohibit correspondent accounts
particularity.440 for foreign shell banks. Thus, this
Due to the overlap in terms between relating to requiring, retaining, and
maintaining records.445 Pursuant to this provision is not relevant to the cost of
this requirement and the requirement the proposed rule. The proposed rule
that PPSIs be able to ‘‘block, freeze, and authority, FinCEN has issued
would require PPSIs to comply with
reject’’ specific transactions, under the recordkeeping regulations, including
special measures issued pursuant to the
proposed rule the regulatory text those codified as 31 CFR part 1010,
sections 311, 9714(a), and 2313a to
regarding the block/freeze/reject subpart D, which apply broadly to
maintain the options available under
requirement also includes the financial institutions subject to these sections to protect the U.S.
requirement that PPSIs have specified exceptions. These financial system from certain illicit
capabilities, policies, and procedures in recordkeeping obligations enhance law finance threats.448
place to comply with lawful orders.441 enforcement’s ability to detect,
investigate, and prosecute money iv. Proposed OFAC Sanctions
c. Proposed Currency Transaction and Compliance Program Requirements
laundering and other financial crimes
Suspicious Activity Reporting
by preserving an information trail about The GENIUS Act requires that PPSIs
The proposed rule includes reporting persons sending and receiving funds. maintain an ‘‘effective sanctions
requirements related to currency This proposed rule would apply these compliance program’’ 449 and that
transaction reporting,442 Specifically, recordkeeping regulations to PPSIs.446 regulations promulgated under the Act
the proposal requires PPSIs to file CTRs The recordkeeping obligations would are ‘‘tailored to the size and
for ‘‘each deposit, withdrawal, exchange require PPSIs to create and retain complexity’’ 450 of a PPSI. To implement
of currency or other payment or transfer, this requirement, OFAC’s proposed rule
certain records for extensions of credit
by, through, or to such financial would require PPSIs adopt a sanctions
in excess of $10,000; and certain records
institution which involves a transaction compliance program that includes, at a
of cross-border transfers of currency,
in currency of more than $10,000,’’ minimum, five key elements outlined in
monetary instruments, funds, checks,
unless subject to an applicable OFAC’s 2019 Compliance
exemption. As discussed in section investment securities, and credit worth
Framework: 451 (1) senior management
VI.C.7 and section XII.A.2.iii.b.3, more than $10,000. The proposal also
and organizational commitments,452
FinCEN recognizes that, presently, requires financial institutions to collect requiring that a PPSI’s senior
stablecoin issuers rarely transact in and retain records for funds transfers management establish and maintain an
physical transfers of currency. and transmittals of funds in amounts of effective sanctions compliance program
The GENIUS Act explicitly requires $3,000 or more. Lastly, The Travel Rule as prescribed in the proposed rule; (2)
PPSIs to be subject to BSA requirements requires financial institutions to risk assessments,453 requiring holistic
relating to ‘‘monitoring and reporting of transmit information on certain funds assessments of sanctions risks at
any suspicious transaction relevant to a transfers and transmittals of funds to appropriate intervals that are utilized
possible violation of law or regulation.’’ other financial institutions participating and revised as specified in the proposed
Under the BSA, FinCEN has authority to in the transfer or transmittal. rule; (3) internal controls,454 which are
require any financial institution to e. Special Information Sharing applicable to all payment stablecoin-
report ‘‘any suspicious transaction related activity, whether on the primary
relevant to a possible violation of law or The proposed rule would apply the or secondary market, that identify,
regulation.’’ With limited exceptions, all information sharing provisions at block, and/or reject transactions that
financial institutions subject to the BSA § 1010.520 also known as 314(a) and may violate or would violate U.S.
are required to identify and report § 1010.540 also known as 314(b) to sanctions and retains relevant records in
suspicious activity. These reports PPSIs. The description of requirements accordance with OFAC regulations; (4)
provide highly useful information that in section VI.C.10 above is adopted by an independent testing and auditing
is leveraged by authorized users as part reference. function,455 accountable to senior
of criminal, tax, and regulatory
447 See supra section VI.C.11.
investigations; risk assessments; and 443 See supra section VI.C.8.
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448 See supra section VI.C.11.iii.
intelligence and counterintelligence 444 See 12 U.S.C. 5903(a)(5)(A)(ii).
449 12 U.S.C. 5903(a)(5)(A)(vi).
activities. The proposed rule 445 See 12 U.S.C. 1953; 31 U.S.C. 5318(a)(2); see
450 12 U.S.C. 5903(a)(5)(B).
implements these requirements for also 12 U.S.C. 5901(2) (defining ‘‘Bank Secrecy 451 See supra section VII.B; OFAC, 2019
Act’’ to include 12 U.S.C. 1951 et seq.); 31 U.S.C.
5311(1) (stating purpose of the BSA includes Compliance Framework, supra note 285.
439 12 U.S.C. 5903(a)(6)(B). 452 See supra section VII.B.1.
requiring records that are highly useful for law
440 See 12 U.S.C. 5901(16). 453 See supra section VII.B.2.
enforcement and regulatory investigations and
441 See supra sections VI.C.6.ii. intelligence and counterintelligence activities). 454 See supra section VII.B.3.
442 See supra section VI.C.7. 446 See supra section VI.C.9. 455 See supra section VII.B.4.
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18638 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
management, with sufficient resources, 4. Anticipated Economic Effects between investors and stablecoin
expertise, and authority; and (5) This section provides FinCEN and issuers. As discussed earlier, regulatory
training,456 requiring PPSIs to establish OFAC’s analysis of the estimated uncertainty often increases investors’
and maintain a risk-based sanctions benefits and costs of the proposed rule. perceptions of risk and reduces or
compliance training program for all While not all benefits and costs are otherwise distorts equilibrium levels of
relevant personnel and stakeholders.457 readily quantifiable, in this analysis investment. Regulatory measures
The GENIUS Act’s requirement that FinCEN and OFAC have sought to affecting digital assets in U.S. states
PPSIs maintain an effective sanctions have been found to be associated with
include an evaluation of certain
compliance program is a novel legal significant increases in industry
foreseeable non-quantified economic
requirement that currently does not investment activity.463
benefits in addition to quantified costs
apply to other U.S. persons.458 In addition, the AML/CFT and
to more comprehensively assess the sanctions compliance program
Nevertheless, the five enumerated potential net benefit of the proposed
minimum elements for a sanctions requirements in the proposed rule
rule and select alternatives. would provide further benefit by
compliance program included in the
proposed rule reflect a well-established i. Expected Benefits addressing existing gaps and market
risk-based approach to sanctions externalities, with potentially
The proposed rule is anticipated to
compliance that OFAC has strongly significant implications for detection
result in certain nonquantifiable
encouraged and for which OFAC has and deterrence. For instance, some
benefits to covered PPSIs, law
issued publicly available guidance, anticipated results associated with the
enforcement, national security, U.S.
including the 2019 Compliance proposed rule include (1) implementing
foreign policy objectives and the general
Framework.459 Accordingly, apart from enhanced technology standards for
public. As discussed in section XII.A.1,
one new recordkeeping requirement PPSIs that are not currently applicable
these benefits are expected to flow from
discussed below, OFAC does not assess to MSBs or banks, (2) requiring non-IDI
the extent to which BSA and sanctions subsidiary PPSIs to collect more
the required elements of a sanctions compliance program requirements
compliance program as proposed would detailed information on legal entities
reduce uncertainty, improve who are their primary market
impose novel incremental economic transparency, and increase adherence to
costs. OFAC’s history of enforcing U.S. customers, (3) setting clear standards for
legal requirements in the stablecoin PPSIs that prevent stablecoin products
sanctions has shown that, as a matter of industry.
current industry practice, actors in the from exploiting or being exploited by
The benefits assessed here are more regulatory arbitrage or ambiguity, and
digital asset ecosystem—alongside difficult to quantify than the costs, but
numerous other U.S. persons—employ (4) codifying sanctions compliance
the proposed rule is nonetheless requirements. These changes would
sanctions compliance practices that are anticipated to add substantial value
typically risk based, technology support law enforcement by ensuring
directly and indirectly through effects the technological means to mitigate the
enabled, and informed by the outlined that can contribute to the detection and use of illicit funds by criminal actors.
OFAC guidance. deterrence of money laundering and These changes would indirectly benefit
The proposed rule would impose terrorist financing, and that support the public at large by reducing money
certain recordkeeping requirements that broader policy goals. laundering and sanction evasion
extend beyond current obligations on Significant direct benefits of the activity, which can distort legitimate
U.S. persons pursuant to existing proposed rule are expected to accrue to markets, countering the financing of
regulations administered by OFAC.460 the public sector, most notably to U.S. terrorism and other illicit finance
First, the proposed rule would require a law enforcement and the national activity, and protecting national
PPSI to maintain records of the results security community, and to the security.
and enhancements that are made to a stablecoin industry itself. Further, the In addition, the newly proposed
PPSI’s sanctions compliance program in identification of illicit activity in, or requirement for PPSIs to establish and
line with the testing and auditing malign uses of, the stablecoin industry maintain an effective sanctions
mandated by the proposed rule.461 that would not occur but for the compliance program would increase
Second, the proposed rule would application of specific program, transparency and accountability, closing
require PPSIs to provide upon request to sanctions compliance, technology, certain potential avenues for sanctions
OFAC any and all certifications reporting, and recordkeeping obligations evasion, and helping ensure consistent
submitted to the PPSI’s primary Federal to payment stablecoin issuers would (1) regulatory oversight.
payment stablecoin regulator or State result in more effective detection of
payment stablecoin regulator certifying illicit finance activity occurring through ii. Expected Costs
that the PPSI has implemented an the industry and (2) contribute to This section assesses the potential
effective sanctions compliance deterrence. This would benefit society incremental costs to PPSIs, government
program.462 more generally through a range of agencies, and the customers of PPSIs
economic, security, and other effects. associated with the proposed rule,
456 See supra section VII.B.5. The proposed rule is also expected to relative to the baseline over a three-year
457 See OFAC, 2019 Compliance Framework,
benefit participants in the payment period in which a final rule would be
supra note 285. stablecoin industry by introducing
458 A PPSI, by virtue of their status as a U.S.
person would be required to comply with U.S.
greater regulatory clarity and industry- 463 A BIS study found that a one-standard-
deviation increase in digital asset regulatory
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sanctions obligations applicable to U.S. persons specific standards around AML/CFT
comprehensiveness, as measured by the authors,
under OFAC’s existing regulations. See, e.g., 31 CFR and sanctions compliance program was associated with a 30-percent increase in capital
510.326, 555.313, 583.314. requirements. By introducing legal
459 See OFAC, 2019 Compliance Framework,
raised by crypto-related firms located in those
clarity around the status and jurisdictions. See Matteo Aquilina, Giulio Cornelli,
supra note 285; OFAC, Virtual Currency Industry and Marina Sanchez del Villar, ‘‘Regulation,
Guidance, supra note 286. requirements of certain issuers of
Information Asymmetries and the Funding of New
460 See 31 CFR part 501. payment stablecoins, the GENIUS Act Ventures,’’ BIS Working Papers, no. 1162, pp. 5–21
461 See supra section VII.B.4. and the proposed rule may reduce (Jan. 2024), available at https://www.bis.org/publ/
462 See supra section VII.A. certain information asymmetries work1162.pdf.
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Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules 18639
effective.464 For PPSIs, this includes enforce the totality of proposed subsidiary PPSI).465 However, the cost
incremental costs associated with the requirements described herein. Given for smaller PPSIs is expected to be
need to (1) establish and maintain a the substantial, but not complete, significantly less on average,
written AML/CFT program and an overlap in practice between an AML/ approximately $13,737 per IDI-
effective sanctions compliance program CFT program and the proposed subsidiary PPSI and $22,987 per non-IDI
in accordance with the requirements of sanctions compliance program, the subsidiary PPSI in the first year.466
the proposed rule, (2) update training remainder of section XII.A.4.ii. ascribes FinCEN and OFAC estimate that up to
programs to contain sanctions and discusses certain expected costs to 19 of the 50 potential PPSIs could be
compliance, (3) conduct ongoing CDD both FinCEN and OFAC requirements small; 467 thus, the average first-year
and BOI collection for legal entity jointly where appropriate. For elements cost to the small PPSIs is estimated to
customers, (4) store the results of the applicable only to FinCEN or OFAC range between $261,011 and $436,762.
testing and auditing of the sanctions requirements, only the relevant agency The cost to government is expected to
compliance program and implement is included in that subsection. be $1.7 million in the year prior to the
required technology, and (5) comply In sum, FinCEN and OFAC expect the final rule’s effective date, $5.9 million
with special measures. The section also total incremental cost of the proposed in the first year, and $2.9 million in
includes discussion of other costs to rule for PPSIs to be approximately $1.8 each year thereafter. The cost to
PPSIs associated with requirements in million in the first year (approximately customers is expected to be
the proposed rule that are not $24,983 per insured depository approximately $1.2 million annually. In
considered incremental. The analysis institution (IDI)-subsidiary PPSI and total, the quantified economic costs of
then estimates costs to customers of $52,453 per non-IDI subsidiary PPSI), the proposed rule would amount to an
providing information to PPSIs that the and $1 million in each year thereafter average incremental expenditure of
proposed rule would require, and costs (approximately $10,249 per IDI- approximately $6.5 million per year
to the government to support and subsidiary PPSI and $36,760 per non-IDI once a final rule became effective.
TABLE 3—QUANTIFIED INCREMENTAL COSTS OF THE PROPOSED RULE BY YEAR
3-Year
Affected party Year (¥1) Year 1 Year 2 Year 3 average
PPSIs ................................................................................... ........................ $1,798,558 $1,042,670 $1,042,670 $1,294,633
Government ......................................................................... 1,713,930 5,871,244 2,938,297 2,938,297 3,915,946
New PPSI Customers .......................................................... ........................ 1,245,800 1,245,800 1,245,800 1,245,800
Annual Incremental Costs ............................................ 1,713,930 8,915,602 5,226,768 5,226,768 6,456,379
a. Costs for PPSIs would not represent incremental costs an independent audit function; (3) a
uniquely attributable to the designated compliance officer; and (4)
In this subsection, FinCEN and OFAC requirements of the proposed rule. an ongoing employee training program.
identify the costs associated with (1) Where relevant, FinCEN and OFAC A PPSI’s internal policies, procedures,
program development and maintenance; have provided explanation below when and controls would need to be
(2) audit and independent testing, (3) the pro forma costs presented are reasonably designed to identify, assess,
training development and expected to differ from the anticipated and document the PPSI’s ML/TF risks
implementation; (4) customer due incremental costs of the respective through risk assessment processes and
diligence; (5) addition technical proposed requirements. mitigate the PPSI’s ML/TF risks,
capabilities, policies, and procedures; consistent with the PPSI’s risk
(6) BSA reporting; (7) recordkeeping and 1. Program Development and
assessment processes, including by
technology; (8) information sharing; (9) Maintenance
allocating more attention and resources
special standards of diligence; and (10) The proposed rule would require toward higher risk customers and
section 311 and other special measures. PPSIs to establish and maintain an activities rather than toward lower-risk
Some of these costs are expected to flow effective AML/CFT program and an customers and activities. PPSIs would
from requirements proposed by FinCEN, effective sanctions compliance program, be required to conduct independent
others from requirements proposed by described in sections VI.C.3 and VII.B, testing to assess the PPSI’s compliance
OFAC, and others could not be respectively. FinCEN and OFAC outline with the AML/CFT statutory and
meaningfully disaggregated and the impacts of these requirements on regulatory requirements. A PPSI would
separately attributed given the nature of incremental costs below. be required to designate an individual
how the respective programs are With respect to FinCEN requirements, responsible for establishing and
expected to be jointly operationalized in PPSIs would be required to establish implementing the AML/CFT program. A
an integrated fashion by future PPSIs. and maintain an effective AML/CFT PPSI would be required to establish an
FinCEN and OFAC further anticipate program comprised of: (1) internal ongoing employee training program. A
that many of the costs articulated below policies, procedures, and controls; (2) PPSI would also be required to keep its
lotter on DSK8BHNXB4PROD with PROPOSALS3
464 Note, the incremental costs presented in this by the proposed rule, even if such activities are 466 See infra section XII.A.4.ii.a for a discussion
subsection differ in several ways from the PRA already being conducted by the respondents. of the basis for differential cost estimates by size.
recordkeeping and reporting costs presented in 465 FinCEN estimates that the net present value of See specifically sections XII.A.4.ii.a.1, 4, and 7.
section XII.E below. The cost totals presented here
costs associated with a three-year time horizon is 467 This estimate was obtained by applying the
reflect the estimated incremental costs that would
result from this proposed rule, while the costs $3.44 million ($3.68 million) using a 7 precent (3 equivalent annual revenue threshold for small
presented in section XII.E analysis include pro percent) discount rate, respectively. This equates to entities described and utilized in the IRFA below.
forma accounting of all costs associated with the annualized costs of $1.31 million ($1.30 million) See infra section XII.C.2.i.b.
PRA recordkeeping and reporting activities required using the same discount rates.
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18640 Federal Register / Vol. 91, No. 69 / Friday, April 10, 2026 / Proposed Rules
risk-based internal policies, procedures, approve the sanctions compliance risks stemming from both AML/CFT and
and controls, risk assessment processes, program. Senior management would sanctions compliance obligations. Thus,
and employee training program current also be required to support the effective OFAC does not expect that most
as the PPSI’s risk profile changes. implementation of the sanctions requirements associated with sanctions
The proposed rule would also require compliance program, as previously compliance program implementation
that PPSI’s AML/CFT program be described in section VII.B.1, by ensuring would impose an incremental cost
written, and that a PPSI, upon request, that it is appropriately resourced, beyond the overall AML/CFT program
make available a copy of its written supported, and integrated into a PPSI’s implementation.
AML/CFT program to FinCEN or its operations. A key part of this program As discussed in section XII.A.2.ii.a,
designee. It would also require the implementation is the establishment FinCEN and OFAC expect that most
PPSI’s