BPInsights: July 11, 2026

Existing Law Already Covers Crypto AML. The Current Clarity Act Would Create New Gaps.

Some crypto advocates argue that Congress must pass the Clarity Act to create an anti-money laundering framework for digital assets because in their view, Congress has not to date weighed in on the specific AML requirements that should apply to crypto. That's not true. That framework already exists: the Treasury Department has authority today to impose anti-money laundering requirements on much of the digital asset ecosystem. The question is whether Congress will strengthen the law to require such coverage of the current ecosystem or weaken it by carving out major parts of the crypto market from similar AML requirements to which banks are subject, leaving gaps in the ability to track and stop the flow of illicit finance. To read more, access the post here.

Five Key Things

1. Fraud and Scams: Key Takeaways from a CFPB Survey

A new BPI post highlights notable insights from a recent BPI analysis of CFPB survey data on fraud and scams. The survey focuses on the extent to which consumers have experienced fraud, the types of fraud they encountered, their financial exposure and their propensity to report this experience. The research draws on these data to present observations about the landscape of fraud and scams in the post-COVID environment.

By the Numbers:

• About 78 million adults experienced a fraud or scam in 2024.
• About $67.1 billion was exposed to fraud or scams.
• Fraud and scams involving non-card bank products (cashiers' checks, wire transfers, etc.) had more severe financial effects on consumers.

The research also examines the prevalence of different types of fraud and scams:

• Online shopping (23.1 million)
• Phishing (15.6 million)
• Impostor (14.6 million)
• Social media (11.1 million).

The Big Picture: The research tells a coherent story about the modern fraud and scam landscape.

• Fraud and scams were widespread and increasing, affecting nearly 1 in 3 adults in 2024.
• Higher incidence of fraud and scams is associated with higher use of digital channels.
• Financial exposure is substantial and concentrated. A minority of cases generate most of the financial harm.
• Reporting is incomplete and gravitates toward financial institutions, which consumers view as more helpful and responsive than law enforcement or federal agencies. This pattern can make a comprehensive view of fraud incidents more challenging to capture by regulators alone and impede their efforts to monitor and respond to fraud.

2. BPI Statement on Federal Reserve Proposal on Anti-Money Laundering and Countering the Financing of Terrorism Programs

BPI issued the following statement this week in response to the Federal Reserve Board's proposed updates to its Anti-Money Laundering and Countering the Financing of Terrorism program requirements:

"The Federal Reserve's AML/CFT program proposal deviates materially from FinCEN and the other banking agencies' proposals by failing to give FinCEN a coordinating role in AML/CFT examination. Congress has explicitly entrusted the Secretary of Treasury with setting national priorities for the AML/CFT regime and establishing the standards a compliance program must meet. The Federal Reserve's proposal would leave examiners free to establish their own standards in conflict with those set by Treasury. Furthermore, to the extent that Fed examiners issue mandates inconsistent with the national priorities set by the Treasury Department, the Fed's proposal, unlike those of the other agencies, fails to allow banks to raise that matter with the Treasury Department."

3. Bowman: AI Should Balance Responsible Innovation, Appropriate Safeguards

In a speech this week, Federal Reserve Vice Chair for Supervision Michelle Bowman highlighted the Financial Stability Board's newly published consultation report on Sound Practices for Responsible Adoption of Artificial Intelligence. Bowman, who chairs the FSB's Standing Committee on Supervisory and Regulatory Cooperation, described the importance of understanding use cases for AI and of whether AI use is material. "In the report, we emphasized that lower-risk uses of AI should receive a lighter supervisory and regulatory touch," Bowman said. The report also focuses on "proportionality," Bowman noted, observing that AI considerations differ among smaller and larger banks. She described the report as "an important first step as we consider how financial institutions can use AI responsibly," encouraging feedback on its contents.

4. Media Report: Treasury's McKernan Planning to Depart

Treasury Under Secretary for Domestic Finance Jonathan McKernan will leave his position next week, according to Capitol Account, which cited anonymous sources familiar with McKernan's plans. The report said "people close to [McKernan] emphasize that he is ready to leave government service after a decade - a career that has wound through Capitol Hill, the FHFA and the FDIC, where he was a board member until early last year." The article said sources expect McKernan to "land in the private sector." McKernan has played an instrumental role in Treasury's effort to convene banking regulators as they enact reforms.

5. The Crypto Ledger

Here's the latest in crypto.

• How Rogue Nations Use Crypto to Evade Sanctions. The Wall Street Journal recently published an analysis of how Iran, Russia, North Korea and other U.S. sanctions targets have "dramatically increased" their use of cryptocurrency to evade restrictions, pay smugglers and buy drones and weapons, among other illicit purposes. Around $100 billion worth of digital assets tied to sanctions evasion flowed through exchanges and other intermediaries last year alone, the Journal reported.
• Kraken Seeks EU Banking License. Crypto exchange Kraken, which has obtained a limited Federal Reserve master account in the U.S., is also pursuing a banking license in Europe. The firm plans to apply via the Bank of Lithuania. Under the EU's Markets in Crypto Assets regulation, digital asset firms must seek access to the continent's licensing regime through a national banking authority. Binance recently withdrew its application for access to the market.
• Sony's Connectia Trust Obtains Preliminary Conditional Charter Approval. Connectia Trust, the online banking unit of Sony Bank Inc., received preliminary conditional approval for an OCC national trust charter. The OCC's decision clears an initial hurdle for Connectia to launch a trust bank that plans to issue stablecoins and safeguard crypto, according to Law360. The preliminary approval specified that Connectia "will limit its operations to those of a trust company and activities related thereto, focusing primarily on dollar-backed stablecoin issuance and reserve maintenance in a nonfiduciary capacity." In a November 2025 comment letter, BPI said that approval of the charter application "would permit the national trust bank charter to be used in a new and untested manner that could significantly increase risks to the U.S. financial system."

In Case You Missed It

CFPB Prepares Request for Information on Credit Card Late Fees

The CFPB submitted a request for information on credit card late fees to the White House Office of Information and Regulatory Affairs for "prepublication clearance." The measure, which is "pending review" at OIRA, relates to an issue that sparked widespread opposition when the CFPB in 2024 issued a rule that would have capped late fees at $8. After being challenged by the Chamber of Commerce and other parties, the rule was ultimately vacated by a Texas court in 2025.

Traversing the Pond

Here's the latest in international banking policy.

• ECB Eyes Bank Plans for Mitigating AI Cyber Risks. The European Central Bank has requested to review banks' plans to mitigate cybersecurity risks arising from frontier AI models such as Anthropic's Mythos, according to Bloomberg this week. ECB supervision chief Claudia Buch told banks in a recent letter to submit action plans by the end of October.
• Payment System Outage. The stringent AI oversight stance contrasts with apparent flaws within the ECB's own systems - the ECB's payment system on Monday suffered its second outage in a week due to a software update-related glitch.
• ECB Imposes Collateral Haircuts Related to Climate Risk. The ECB is imposing additional haircuts on collateral that poses climate risks, in order to guard against potential losses. The new policy would evaluate bonds to identify those most sensitive to climate shocks, with "uncertainty scores" playing a role in collateral valuation.
• BoE to Revamp Leverage Ratio. The Bank of England on Tuesday announced plans to revise the leverage ratio, aiming to align requirements for British banks more closely with international standards. The BoE's Financial Policy Committee unveiled work to enhance the usability of capital buffers, combating a tendency among banks to stockpile "uncertainty" buffers to ensure they have more than enough to meet minimums under stress.

The Buffer Between Europe and Economic Growth

As Europe continues to seek spurs to economic growth, one focus should be the opaque and overly complex capital regime it imposes on its banks. A more transparent and objective capital regime would give bank investors more confidence and thereby lower banks' cost of funding, making them more efficient providers of credit.

• More Below the Waterline than Above: The EU capital framework starts with three transparent minimum requirements but then layers on as many as seven "Pillar 2" charges that are imposed in secret and subject to minimal parameters and generally little to no ability for a bank to appeal. A new BPI post explains these layers and their implications.
• Bottom Line: Transparent, objective capital requirements enable efficient capital planning; provide clear information to investors and analysts and thereby reduce the bank's cost of capital and the funding it provides to businesses and households; and prevent banks from having to hold "uncertainty buffers" to guard against unexpected rises in requirements.

Member News

Citi Completes First Dollar-Denominated Instant International Payment

Citigroup completed its first instant international payment in dollars with a partner bank, Thailand's Siam Commercial Bank, according to Reuters this week. Phillip Securities Thailand, a client of SCB, made ⁠an instant transfer of funds in dollars from a Citigroup account in the UK to a Siam Commercial Bank account in Thailand during the U.S. July 4 holiday weekend, Citigroup said in a statement.

Upcoming Events

• 7/14/2026: House Financial Services Committee Hearing: Federal Reserve Semi-Annual Monetary Policy Report
• 7/15/2026: HFSC Hearing: Semi-Annual Report of the Bureau of Consumer Financial Protection
• 7/15/2026: Senate Banking Committee Hearing: Federal Reserve Semi-Annual Monetary Policy Report
• 7/16/2026: SBC Hearing: The CFPB Semi-Annual Report: A New Day at the CFPB Through Reform
• 7/17/2026: HFSC Subcommittee on Digital Assets, Financial Technology and Artificial Intelligence Field Hearing: Building the Future of Finance: How the CLARITY Act Unlocks Innovation
• 7/21/2026: HFSC Subcommittee on National Security, Illicit Finance and International Financial Institutions Hearing: Oversight of the Financial Crimes Enforcement Network
• 7/21/2026: HFSC Subcommittee on Housing and Insurance Hearing: Oversight of the Federal Home Loan Bank System