Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLGY—More financial trade associations comment on FDIC’s AML/CFT proposed rule, (Aug 6, 2026)

By Sherri M. Schroeder, J.D.

The American Fintech Council and the Conference of State Bank Supervisors both support the proposed rule and provide recommendations for its improvement.

More financial trade associations—the American Fintech Council (AFC) and the Conference of State Bank Supervisors (CSBS)—have commented on the notice of proposed rulemaking (NPRM) issued by the Federal Deposit Insurance Corporation on June 5, 2026. The NPRM sets Bank Secrecy Act (BSA) and sanctions compliance standards for permitted payment stablecoin issuers (PPSIs) supervised by the agency under the GENIUS Act (see Banking and Finance Law Daily, May 26, 2026). The proposed rule would require such PPSIs to comply with applicable anti-money-laundering and countering the financing of terrorism (AML/CFT) requirements, economic sanctions rules, reporting obligations, and customer-identification standards and establishes a supervisory and enforcement framework for AML/CFT program deficiencies. These trade association comments join those of the American Bankers Association, the Bank Policy Institute, and The Clearing House (see Banking and Finance Law Daily, Aug. 5, 2026).

In its letter, the AFC notes that the NPRM is addressing a “particularly consequential” component of the federal payment stablecoin framework. According to the AFC, this framework should respect the separate roles of the FDIC, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC); evaluate compliance under a risk-based model; and preserve the confidentiality and legal protections “essential to candid supervisory engagement.” CSBS’s letter focuses on issuer supervision and the consultation process for AML/CFT and sanctions compliance purposes.

AFC. The position taken by the AFC in its comment letter is best summed up by a quote from Ian P. Moloney, AFC’s Chief Policy Officer, in AFC’s press release: “A final rule grounded in regulatory coordination, risk-based enforcement, efficient interagency consultation, and durable confidentiality protections would strengthen AML/CFT outcomes and provide PPSI’s (sic) with the clarity necessary to build effective programs.” Noting that it supports a “coordinated federal compliance framework that promotes consistent supervision and efficient risk management,” the AFC urges the FDIC to define its role as a prudential supervisor “in a manner that complements, rather than duplicates, the substantive BSA and sanctions requirements administered by FinCEN and OFAC.” The council believes the final rule should focus on the FDIC’s review of whether a PPSI has an effective governance and risk management framework that integrates applicable requirements, clearly assigns accountability, and identifies and remediates material risks in a timely manner. The AFC also believes that the framework should expressly permit a PPSI affiliated with an insured depository institution to leverage that institution’s existing enterprise systems to achieve compliance. A PPSI’s operational responsibilities should also be permitted to be allocated to qualified third parties.

The AFC also urges the FDIC to explicitly state the principle that a PPSI with an effective AML/CFT program should not face significant supervisory or enforcement action based solely on an isolated control failure, processing error, or an immaterial deficiency that does not undermine the program’s overall effectiveness. Additionally, the proposed definitions of “AML/CFT enforcement action” and “significant AML/CFT supervisory action” should be refined “to provide greater certainty regarding the threshold for consultation and the consequences that follow.” Suspension and revocation proceedings should have clear procedures laid out in the final rule.

AFC believes that the consultation process should apply to all enforcement actions and significant supervisory actions without an asset or outstanding issuance threshold. They also believe the consultation process should be mandatory, not elective; have firm procedural deadlines; and be confined to the issues necessary to evaluate the proposed action. Furthermore, the final rule should explain how the FDIC will address a material disagreement with FinCEN.

Finally, AFC wants narrow information-sharing safeguards “that preserve privilege and promote candid supervisory engagement” to be included in the final rule. FDIC should also avoid sharing privileged legal advice, attorney work product, etc. that reflect legal analysis. FDIC should also require secure methods for transferring and storing consultation materials, limit retention times, and address procedures for inadvertent disclosures.

CSBS. The CSBS’s comment letter focuses on the consultation process as proposed in the FDIC’s NPRM. The CSBS believes that involving FinCEN in the consultation process before initiating an AML/CFT enforcement or supervisory action “could significantly reduce examination efficiency and lead to other unintended consequences.” They therefore advise an alternative consultation process. They state that mandatory notice and consultation will lengthen examination timelines, delay closure of supervisory findings, create uncertainty, and create supervisory “divergence” that could lead to overly expansive enforcement.

CSBS believes the notice and consultation process should be replaced with an optional consultation whereby PPSIs request that their federal payment stablecoin regulator consult with FinCEN regarding significant AML/CFT supervisory actions. “This approach would balance the benefit of FinCEN providing a broader view of AML/CFT program consistency, without making FinCEN a mandatory participant in every significant supervisory communication between the FDIC and an issuer,” they write. In the alternative, should FinCEN and the FDIC maintain the mandatory consultation process in their final rules, they should expressly include a rule that the consultation requirement is deemed satisfied and the FDIC may proceed if FinCEN provides no feedback within a 30-day period. Additionally, they recommend that the final rule should confine the entirely of FinCEN’s review and feedback process, including requests for additional information, to 30 days beginning with the date FinCEN was notified of a potential significant supervisory action.

Companies: American Fintech Council; Conference of State Bank Supervisors

RegulatoryActivity: BankingOperations BankSecrecyAct DepositInsurance FinancialStability FinTech