The push by the Senator comes a week after Citibank was fined $70 million by a US regulator for failing to address shortcomings in its AML policies.

The US needs to rethink its outdated anti-money laundering (AML) legislation as it is placing an unduly heavy compliance burden on the nation’s banks, Democratic Senator Elizabeth Warren said yesterday. 

At a Congressional hearing, Warren said she supported more stringent company ownership disclosure requirements and called for changes to the threshold for reporting suspicious transactions, suggesting this would lighten the load on lenders and enforcement. 

“Money laundering is a massive problem… so everything we can do to crack down on that is good and that’s what we should be doing,” the lawmaker said. “But it seems to me we need to rethink a lot of our money laundering laws, some of which… were written back in the 1970s and are badly out of date.”

The banking sector faces the biggest challenge under AML regulation as it is required to halt the flow of dirty cash and produce millions of reports annually flagging suspicious transactions to authorities. 

Since 2009, US watchdogs have handed out fines totalling more than $16 billion for AML compliance failings, while the world’s banks spent around $12 billion on AML compliance programs last year, according to Quinlan & Associates, a consultancy. 

Warren and others on the committee agreed that overhauling broader money laundering laws, which would apply to bank clients and other intermediaries, could make AML laws more robust while reducing the burden on banks. 

Democratic Senator Mark Warner also called on the Committee to more closely scrutinize crypto-currencies and the associated money laundering risks, stressing that lawmakers needed to “get ahead” of the issue after bitcoin’s meteoric price rise last year caused its market cap to swell to over $230 billion, eclipsing that of many large US banks. 

Last week, the Office of the Comptroller of the Currency (OCC) announced it had fined Citibank - a subsidiary of Citigroup, which has a private banking operation - $70 million for failing to address shortcomings in its AML policies. The regulator assessed the civil penalty as the bank had failed to address concerns first flagged in 2012.

A spokesperson for the bank said: “Citi is committed to taking all necessary and appropriate steps to remedy the concerns identified by the OCC.”

In some ways non-US banks have come in for the most severe AML fines. In June 2014, US authorities fined Paris-listed BNP Paribas, France's largest bank, $8.9 billion for breaches of sanctions against countries such as Iran, creating the perception that the US was better at going after foreign players who handle dirty money than its own.