transnational crime or financial fraud. Additionally, recent presidential action has paused enforcement of the Foreign Corrupt Practices Act, which could signal changes to the priority of corruption, especially domestically. Compliance teams must stay ahead of these developments to ensure ongoing alignment with regulatory expectations. Other Regulatory Areas to Watch Law Enforcement and National Security The new administration is expected to maintain a strong emphasis on AML/CFT compliance as a tool for safeguarding national security. One way we’ve already seen this is with a recent FinCEN Geographic Targeting Order (GTO) requiring money services businesses (MSBs) to file currency transaction reports on any cash transaction over $200 in specific southwestern border zip codes. Financial institutions that provide financial services to these MSBs should ensure that their customers are adhering to these new requirements and support law enforcement efforts by ensuring timely and accurate reporting of suspicious activity when necessary. Drug Trafficking and Trade-Based Money Laundering (TBML) Drug trafficking remains a top concern for the new administration, as evidenced by the Department of Justice’s noteworthy cases against TD Bank and Brinks. FinCEN issued an alert in June 2024 highlighting the risks associated with the illicit fentanyl supply chain and the deceptive financial practices used to obscure these transactions. More recently, the administration issued a Presidential Action designating certain cartels as Foreign Terrorist Organizations, followed by the State Department’s formal designations on Feb. 19, 2025. These actions signal increased regulatory scrutiny on financial flows linked to drug trafficking and reinforce the need for strong AML/CFT measures for financial institutions. With the U.S. imposing new tariffs on Canada and Mexico, experts predict that drug cartels will adapt by incre asing trade-based money laundering (TBML) efforts. Mexico remains a key transit point for fentanyl entering the U.S., with precursor chemicals sourced from China. Investment Advisor Sector and AML/CFT Compliance FinCEN recently issued a final rule aimed at addressing illicit finance risks in the investment advisor sector. This rule is meant to assist in the fight against terrorist financing and corruption. The new administration may refine these regulations further, increasing compliance obligations for financial institutions that interact with investment advisors. As previously mentioned, the administration may delay the effective date, currently scheduled for Jan. 1, 2026, until a review of the rule can be conducted. Virtual Assets and Cryptocurrency Regulation The regulatory landscape for cryptocurrency and virtual assets continues to evolve, with a focus on preventing illicit finance activities. The administration has already issued an Executive Order to support the growth of the cryptocurrency industry with a lighter touch on regulations. Financial institutions involved in this space should review their policies on virtual asset risk management. Cybercrime and Financial Fraud Cybercrime is a growing concern for financial institutions and regulators. Cybercrime continues to be a significant global problem, with costs projected to reach $10.5 trillion annually by 2025. The administration may expand efforts to combat cyber-enabled financial crimes through new reporting requirements and cybersecurity expectations. Financial institutions should assess their cybersecurity controls and fraud detection capabilities to mitigate risks. How Financial Institutions Can Prepare for Changing Compliance Requirements With the potential for significant regulatory changes, financial institutions should take proactive steps to strengthen their AML/CFT programs: • Refresh AML/CFT Risk Assessments: Identify areas that may be affected by shifting priorities. • Enhance Transaction Monitoring: Ensure systems are equipped to detect trade-based money laundering, drug trafficking and cyberfraud. • Monitor Regulatory Updates: Keep up with FinCEN announcements, rule changes and enforcement actions. • Review Compliance Controls: Align AML/CFT programs with the latest FinCEN enforcement trends. • Invest in Compliance Technology: Use robust transaction monitoring and automation to adapt to evolving risks. • Engage With Regulators: Participate in industry discussions and provide feedback on proposed rules. The direction of FinCEN’s priorities in 2025 will depend on the administration’s policy goals and approach to financial crime enforcement. While some regulations may be paused or revised, others, such as those addressing drug trafficking, trade-based money laundering and cybercrime, could remain top priorities. By staying informed and adapting compliance strategies accordingly, financial institutions can proactively manage risk, maintain compliance and support efforts to combat financial crime. NEBRASKA INDEPENDENT BANKER 21
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