he U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has announced that it is working on significant reforms of the country’s anti–money laundering (AML) framework. Rather than a single sweeping overhaul, the current reform effort consists of a series of interrelated rulemakings, delays, and targeted expansions that collectively signal a shift toward a more risk-based, sector-inclusive, and flexible regulatory regime.
At the center of this effort is FinCEN’s proposed reconsideration of its 2024 rule extending AML obligations to investment advisers. That rule, originally slated to take effect in January 2026, would have required certain registered investment advisers (RIAs) and exempt reporting advisers to establish AML programs, file suspicious activity reports (SARs), and comply with Bank Secrecy Act (BSA) requirements for the first time. However, in September 2025, FinCEN issued a notice of proposed rulemaking to delay implementation until January 1, 2028.
This delay, finalized in early 2026, is more than a procedural adjustment. Treasury explicitly stated that the additional time would allow regulators to revisit the substance of the rule and better tailor it to the “diverse business models and risk profiles” of the investment adviser sector. The move reflects industry concerns that the original rule was overly broad and potentially burdensome, particularly for smaller firms. At the same time, FinCEN emphasized that AML obligations for the sector are inevitable, underscoring a longer-term policy objective of closing perceived gaps in financial system oversight.
Parallel to this reconsideration is a broader conceptual shift in how AML compliance is structured. FinCEN has proposed modernizing AML/CFT program requirements to emphasize effectiveness and risk alignment over rigid procedural checklists. Under this approach, institutions would be expected to design compliance programs that are “risk-based” and “reasonably designed” to mitigate specific illicit finance threats, rather than simply meeting prescriptive regulatory requirements. This reflects a growing recognition that a one-size-fits-all compliance model may be ill-suited to the complexity of modern financial markets, particularly as new technologies and nontraditional financial intermediaries emerge.
“For too long, Washington has asked financial institutions to measure success by the volume of paperwork rather than their ability to stop illicit finance threats,” Secretary of the Treasury Scott Bessent said in a statement. “Our proposal restores common sense with a focus on keeping bad actors out of the financial system, not burying America’s banks in more red tape.”
Another key pillar of FinCEN’s reform agenda is the expansion of AML obligations into historically under-regulated sectors—most notably residential real estate. A new nationwide reporting rule, which took effect in 2026 (with some implementation delays and legal challenges), requires reporting of certain non-financed residential property transfers involving legal entities and trusts. These transactions have long been viewed as a vulnerability in the U.S. AML regime, as illicit actors can use shell companies to purchase real estate without triggering traditional financial institution reporting requirements.
Beyond sector-specific reforms, FinCEN is also exploring structural changes to AML enforcement. According to reporting on Treasury’s internal proposals, the agency may seek a more centralized role in overseeing AML compliance across federal banking regulators. One proposal would allow FinCEN to review—or even veto—certain enforcement decisions made by other regulators under the BSA framework. While still in the proposal stage, such a shift could significantly alter the balance of authority among U.S. financial regulators and potentially lead to more consistent enforcement outcomes.
Among the most significant proposals and aims of AML reform are:
- Refocus compliance obligations and expectations on effectiveness by distinguishing between deficiencies stemming from program design and implementation
- Reinforce Treasury’s belief that financial institutions are best positioned to identify and evaluate their illicit finance risks
- Empower financial institutions to devote more attention and resources toward higher risks rather than toward lower risks
- Clarify expectations related to certain program requirements and functions—including independent testing and audit functions—to ensure that examiners and auditors do not substitute their subjective judgment in place of financial institutions’ risk-based and reasonably designed AML/CFT programs; and
- Affirm FinCEN’s central role in AML/CFT supervision, including through the introduction of a notice and consultation framework between Federal banking supervisors and FinCEN with respect to significant AML/CFT supervisory actions.
These reforms are unfolding against a backdrop of evolving enforcement priorities. Recent FinCEN actions—including expanded geographic targeting orders along the Southwest border and high-profile designations of foreign financial institutions—highlight a continued focus on combating drug trafficking, cybercrime, and transnational fraud networks. This suggests that while certain compliance burdens may be recalibrated, the overall intensity of AML enforcement is unlikely to diminish.
For financial institutions and other affected sectors, the implications are significant. Firms must prepare for an expanded AML landscape that encompasses new industries and transaction types, while also adapting to evolving expectations around program design and effectiveness. At the same time, the regulatory uncertainty created by ongoing revisions may complicate compliance planning in the near term.
FinCEN’s insists its current reform initiative does not represent a rollback of AML regulation, but rather a strategic reconfiguration. By combining expansion, flexibility, and structural reform, Treasury is attempting to build a more comprehensive and adaptive AML regime—one that is better equipped to address the complexities of modern illicit finance while balancing the operational realities faced by regulated entities. 