Sec. 304. Testing methods rulemaking
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Section 5318 of title 31, United States Code, as amended by section 301, is further amended by adding at the end the following: The Secretary of the Treasury, in consultation with the head of each agency to which the Secretary has delegated duties or powers under subsection (a), shall issue a rule to specify— with respect to technology and related technology-internal processes ( new technology ) designed to facilitate compliance with the Bank Secrecy Act requirements, the standards by which financial institutions are to test new technology; and in what instances or under what circumstance and criteria a financial institution may replace or terminate legacy technology and processes for any examinable technology or process without the replacement or termination being determined an examination deficiency.
The standards described under paragraph
(1)may include— an emphasis on using innovative approaches, such as machine learning, rather than rules-based systems; risk-based back-testing of the regime to facilitate calibration of relevant systems; requirements for appropriate data privacy and security; and a requirement that the algorithms used by the regime be disclosed to the Financial Crimes Enforcement Network, upon request. If a financial institution or any director, officer, employee, or agent of any financial institution, voluntarily or pursuant to this subsection or any other authority, discloses the institution’s algorithms to a Government agency, such algorithms and any materials associated with the creation of such algorithms shall be considered confidential and not subject to public disclosure. . The Financial Institutions Examination Council shall ensure— that any manual prepared by the Council is updated to reflect the rulemaking required by the amendment made by subsection (a); and that financial institutions are not penalized for the decisions based on such rulemaking to replace or terminate technology used for compliance with the Bank Secrecy Act (as defined under section 5312 of title 31, United States Code) or other anti-money laundering laws.