Banking and Finance Law Daily Wrap Up, BANK SECRECY ACT—Fintech groups alert FinCEN to rising AML/CFT compliance costs, (Dec 4, 2025)

By Justin Marcus Smith, J.D.

The organizations urged FinCEN to look for innovative ways to shift the supervisory emphasis from “process conformity” to practical measurement of AML/CFT outcomes to combat rising costs.

The American Fintech Council (AFC) and the Coalition for Financial Ecosystem Standards (CFES) (collectively, AFC-CFES) have directed a Dec. 1, 2025, comment letter to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), responding to FinCEN’s recent survey of AML/CFT [Anti-Money Laundering/Combating the Financing of Terrorism] compliance costs. AFC-CFES said their own member survey results called for looking at the rising costs and difficulties of AML/CFT compliance in the absence of metrics and a “feedback loop” to assess compliance outcomes.

CFES-AFC is advocating for a “data-driven” regulatory policy that will focus on outcomes. They suggested better data standardization could reduce operational waste, and regulators should provide more space for modernization and metrics for determining “whether filings drive tangible enforcement value.” AFC CEO Phil Goldfeder urged FinCEN to use the AFC-CFES insights to “shape risk-focused guidance that protects the financial system while reducing unnecessary operational strain.” CFES co-founder Sima Gandhi said CFES members sent a clear message that the status quo is “becoming untenable,” but he concluded there are “clear opportunities to reduce burdens” without sacrificing AML/CFT effectiveness.

FinCEN survey. As reported in October, FinCEN requested approval for a new information collection to survey the costs of AML/CFT compliance requirements. FinCEN’s notice for publication in the Federal Register invited public comments until Dec. 1, 2025 (see Banking and Finance Law Daily, Oct. 3, 2025)).

CFES-AFC survey. CFES and AFC said they conducted their own joint member survey in November 2025. The survey gathered quantitative and qualitative data from CFES-AFC members on AML/CFT expenditures, staffing needs, vendor costs, technology investments, and key compliance challenges.

Survey respondents purportedly represented a diverse range of institution sizes and business models from fintech startups to established financial institutions with thousands of employees. The largest concentration of respondents fell between 50 and 499 employees.

Cost centers identified. Although personnel and technology were naturally the two largest cost categories, CFES-AFC said their members identified transaction monitoring, which requires both staff and systems, as their single largest expense. Members noted technology costs, driven more by regulatory expectations than business choice, have become a “permanent, escalating baseline” for AML/CFT compliance. CFES-AFC said this was especially so in “complex alert review, onboarding, transaction monitoring, audit readiness, and SAR drafting functions.”

Members purportedly said new system requirements often require substantial spending to “maintain alignment” with supervisory expectations, even when AML/CFT detection improvements are “limited.” The members faulted an examination emphasis on “process conformity” over measurable outcomes. Members suggested a “clearer supervisory framework” using modern approaches might help manage rising costs while potentially improving AML/CFT effectiveness.

Members noted that existing compliance systems were meant for paper-based workflows such that they are having difficulty adapting those systems to emerging payment channels, fintech products, and changes in regulatory expectations. Revalidation of existing systems is very time-consuming with testing and legal review that often has to be done without an effective feedback loop to measure “enforcement outcomes or intelligence value.”

Disproportionate operational burdens. Members cited disproportionate operational burdens in the following areas:

• manual or repetitive SAR and alert workflows that require large, dedicated review teams;

• difficult integration of multiple vendor systems and datasets into a single investigative and reporting platform;

• resource-intensive audits and examinations made particularly challenging by varying agency or examiner expectations;

• inconsistent or unclear regulatory expectations leading to delays and increased costs; and

• lack of clear benchmarks on what constitutes strong performance.

CFES. CFES holds itself out as a coalition of nearly 20 fintechs, digital asset entities, and community banks that regularly engages with federal and state regulators. CFES said its members share a commitment to strong AML/CFT controls “while ensuring that regulatory expectations remain risk-aligned, transparent, and operationally feasible.”

AFC. AFC holds itself out as a standards-based organization and “premier” trade association representing Fintech companies and “innovative banks offering embedded finance solutions.” AFC said its members aim to improve access to financial services and increasing overall competition in the financial services industry by supporting responsible lending growth and lowering the cost of financial transactions.

Companies: American Fintech Council; Coalition for Financial Ecosystem Standards

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