Designed for busy in-house counsel and compliance professionals, this newsletter summarizes key domestic and international anti-money laundering (AML) regulatory and enforcement developments from the past few months with links to primary resources.
Q3 2026 continued two AML and Bank Secrecy Act (BSA) trends from the first half of the year: regulators are pursuing risk-based modernization and burden reduction, while enforcement agencies stay focused on willful misconduct. As of last quarter, most major developments were regulatory, led by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and the federal banking agencies.
Federal Reserve Proposes to Align Its AML/CFT Program Requirements with FinCEN’s Framework: On July 7, 2026, the Board of Governors of the Federal Reserve Board (FRB) requested public comment on a proposed rule updating its anti-money laundering and countering the financing of terrorism (AML/CFT) program requirements for banks. The FRB had not joined FinCEN, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) in their April proposal (see our Client Alert). The proposed rule closes the gap.
Like the other agencies’ proposed rules, the FRB proposal would require banks to incorporate FinCEN’s AML priorities into their risk assessments, allocate resources based on risk, and focus their programs on higher-risk customers and activities. In turn, the FRB’s supervision and enforcement efforts would focus on “significant or systemic” failures rather than “isolated, technical, or immaterial” deficiencies.
FinCEN Ends Beneficial Ownership Reporting Requirements for U.S. Companies: On August 11, 2026, FinCEN announced a final rule, effective August 14, 2026, that adopts the March 2025 interim final rule with limited changes. The rule permanently exempts domestic reporting companies from beneficial ownership information (BOI) reporting under the Corporate Transparency Act (CTA). It also exempts reporting companies from reporting BOI for U.S.-person beneficial owners and company applicants.
Only certain entities formed under foreign law and registered to do business in a U.S. state or tribal jurisdiction must still report BOI, and only for their non-U.S. beneficial owners. See our Client Alert.
Regulators Clarify That Banks May Discuss Suspicious Activity with Customers: On September 2, 2026, the FRB, FDIC, NCUA, OCC, and FinCEN issued a joint statement on how banks and credit unions can communicate with customers about suspicious or potentially fraudulent activity without violating the confidentiality rules that protect Suspicious Activity Reports (SARs). The joint statement does not change any existing legal requirement, but it restates a key distinction: the BSA prohibits disclosing a SAR or information that would reveal its existence, but it does not prohibit sharing the underlying facts, transactions, and documents on which a SAR is based. The agencies offered a non-exhaustive list of permissible communications, including notifying a customer that an account restriction, delay, or closure may relate to suspected fraud, and asking about the purpose of a transaction or the source of funds.
Together with FinCEN’s September 2025 guidance on cross-border information sharing, the joint statement signals that regulators want banks to be more forthcoming with customers, not less. See our Client Alert.
FinCEN Reissues Southwest Border Geographic Targeting Order: Also on September 2, 2026, FinCEN reissued its Geographic Targeting Order (GTO) requiring money services businesses (MSBs) along the southwest border to file Currency Transaction Reports (CTRs) for cash transactions between $1,000 and $10,000. The GTO runs through March 1, 2027.
The GTO dropped counties in California and Arizona and narrowed coverage in Texas and New Mexico from whole counties to specific zip codes. On September 8, 2026, FinCEN published frequently asked questions to assist MSBs implementing the order. See our Client Alert.
FinCEN Continues Its Focus on Fraud: FinCEN issued a steady stream of fraud-focused alerts, analyses, and orders this quarter:
Enforcement continued to focus on willful misconduct, with a particular emphasis on repeat offenders. Notable enforcement and related actions include the following:
New York DFS Penalizes Swedbank with $50 Million Penalty for Withholding Information
On July 16, 2026, the New York State Department of Financial Services (NYDFS) announced that Swedbank AB and its New York branch agreed to pay a total of $50 million under a consent order. The order resolves NYDFS’s investigation, which arose from the 2016 Panama Papers leak, into Swedbank’s noncompliance with New York Banking Law and its failure to cooperate fully with information requests.
According to NYDFS, Swedbank withheld critical information about its relationships with the Mossack Fonseca law firm and related parties, including its Baltic subsidiaries. The penalty addresses Swedbank’s lack of candor with its regulator, not the underlying AML conduct. It is a reminder that how an institution responds to regulatory inquiries can itself become an enforcement matter.
FinCEN Assesses Record $125 Million Penalty Against UBS Financial Services
On August 3, 2026, FinCEN assessed a $125 million civil money penalty against UBS Financial Services Inc. (UBSFS) for willful BSA violations. It is the largest penalty FinCEN has imposed on a broker-dealer for BSA violations.
It is also FinCEN’s second action against UBSFS, which paid $14.5 million in December 2018 for similar failures, including inadequate monitoring of foreign currency wire transfers. According to FinCEN, UBSFS did not remediate the underlying issues despite its assurances that it would do so. In announcing the penalty, then-FinCEN Director Andrea Gacki warned that “recidivist financial institutions will face severe repercussions.”
FinCEN Proposes to Cut Off Banque Misr UAE from the U.S. Financial System
On August 28, 2026, FinCEN issued a notice of proposed rulemaking (NPRM) under section 311 of the USA PATRIOT Act. It found that Banque Misr in the United Arab Emirates (“Banque Misr UAE”) is a financial institution operating outside the United States with a primary money laundering concern. The proposed special measure would:
The measure applies only to Banque Misr UAE branch, not to Banque Misr operations elsewhere. The NPRM is part of Operation Economic Outcast, a U.S. Treasury initiative targeting revenue streams and procurement networks tied to the Iranian regime.
Chinese Money Laundering Organization Courier Sentenced to 15 Years
On August 18, 2026, a Chinese national was sentenced in the Western District of North Carolina to 15 years in prison and ordered to forfeit a penalty of $25 million. He was part of a Chinese money laundering organization that laundered more than $92 million in illicit funds, including drug trafficking proceeds. The Justice Department’s Criminal Division described such networks as “a key enabler to the Mexican cartels.”
FinCEN Steps Up Iran-Related Actions Under Operation Economic Outcast
In September, FinCEN took several more steps, building on its May 2026 alert on the Islamic Revolutionary Guard Corps: