Treasury advances GENIUS Act to tighten illicit finance rules

The U.S. Treasury moved the GENIUS Act proposal further into the department’s rulemaking process for review and potential public comment. The proposal would expand reporting obligations for banks and other covered entities and give regulators additional tools to detect and disrupt illicit finance.

Under the proposal, covered financial firms would face enhanced duties to collect and transmit information on transactions and beneficial ownership. Regulators would gain access to more granular data to support investigations. The plan also calls for improved analytic tools and closer coordination among federal agencies to accelerate detection of suspicious activity and support sanctions compliance.

A Treasury official described the GENIUS Act as ‘an update to existing anti-money-laundering and sanctions frameworks’ designed to address newer concealment methods, such as complex corporate structures and certain digital-asset channels.

The department intends to work with other federal agencies, law enforcement and the private sector to refine rule language, assess operational impacts and set implementation timelines. Officials expect a period of public comment and industry consultation before any final regulations are issued.

Treasury frames the proposal as a response to persistent challenges in tracking illicit flows, including opaque ownership of legal entities, cross-border trade manipulation and rapid innovation in financial technology that can obscure transactions.

Financial industry groups are likely to raise concerns about compliance costs, operational burdens and data privacy. Banks and nonbank financial firms may need to upgrade systems, add staff and adopt new procedures to meet expanded reporting requirements. Privacy advocates and some lawmakers expect safeguards for how collected data are stored, used and shared.

The department plans to include protocols for data security and limited access and to coordinate with Congress and regulators on privacy and civil liberties issues.

The GENIUS Act builds on existing controls under the Bank Secrecy Act and recent rules on beneficial ownership transparency. Treasury and FinCEN have focused in recent years on closing gaps used to conceal ownership and obscure the source of funds.

If finalized, the regulations would expand reporting across sectors and provide law enforcement with more detailed records for investigations of criminal networks and sanctioned actors. Treasury plans further outreach and technical analysis as it develops the final rule language and evaluates impacts on the financial system.