Kingsfield · Research · Banking & Financial Services

What are the required elements of a bank's anti-money laundering compliance program?

Published 2026-06-23 · U.S. federal law

Section 5318(h) requires a financial institution to establish an anti-money laundering program that includes internal policies and controls, a designated compliance officer, ongoing employee training, and an independent audit function.

The answer

The four required elements

31 U.S.C. § 5318(h) directs financial institutions to establish anti-money laundering programs including, at a minimum, the development of internal policies, procedures, and controls; the designation of a compliance officer; an ongoing employee training program; and an independent audit function to test the program.

A statutory minimum

These elements are a floor, not a ceiling. The Secretary may prescribe additional standards, and an institution's program must be reasonably designed for its size, products, and risk profile.

The judged input

What the AI drafted

Submitted to the judge

This is an excerpt from a draft BSA/AML compliance memo — the kind of work product a lawyer generates with a legal-AI drafting tool, then has to stand behind. Kingsfield does not write it; it rules on the citations the model put in it. This draft cites two authorities; one of them is wrong.

AI draft excerpt — BSA/AML compliance memo

The Bank must document each statutory element of its AML program before the next examination cycle. Under 31 U.S.C. § 5318(h), the program must include internal policies and controls, a designated compliance officer, ongoing employee training, and an independent audit function. These four pillars are also set out in the Bank Secrecy Act's purpose section, 31 U.S.C. § 5311, which mandates the compliance-officer and independent-testing elements. We advise that the board ratify the designated BSA officer in the minutes.

The judge ruled on every citation as the draft used it — it accepted 31 U.S.C. § 5318(h) and rejected 31 U.S.C. § 5311. Here is why.

The verdict

How Kingsfield ruled

Ruled 2026-06-23

Each citation in the draft above was submitted to the Kingsfield judge and ruled against the primary-law corpus — Accept, Reject, or Inconclusive, per citation. These are live verdicts, not editorial. Each card shows the claim the draft made and the verbatim authority the verdict was rendered against.

Accept31 U.S.C. § 5318(h)

The draft claimed: Financial institutions must establish anti-money laundering programs including, at a minimum, internal policies, procedures and controls; a designated compliance officer; an ongoing employee training program; and an independent audit function to test programs.

“§ 5318 The Secretary of the Treasury may (except under section 5315 of this title and regulations prescribed under section 5315)—”

Cite found; proposition supported by the cited text.

Reject31 U.S.C. § 5311

The draft claimed: Section 5311 sets out the required elements of a bank's AML program, including the compliance officer and independent testing requirements.

Cite found, but the cited text does not support the claim. 31 U.S.C. 5311 is the Bank Secrecy Act's declaration of purpose, stating the policy goals of the reporting and recordkeeping requirements; the specific AML-program elements are mandated by 31 U.S.C. 5318(h). Regenerate with the correct authority.

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This page is legal information, not legal advice, and does not create an attorney-client relationship. The draft shown is an illustration of a typical AI answer; verdicts reflect the cited authority in the Kingsfield corpus as of the ruling date shown above.