The U.S. anti-money laundering regime may have been spawned by the stereotypical case of a drug trafficker washing cash through shell companies, but it has never been limited to that scenario. For decades, the Bank Secrecy Act has been used to surface a broad range of underlying criminality and advance policy goals from combatting fraud to terrorism. Its intelligence-gathering and risk-management architecture has helped financial institutions aid government in countering drug trafficking, corruption, terrorist financing and other serious predicate crimes. But recent federal action concerning unauthorized workers illustrates how quickly AML expectations can be redirected toward more contested policy priorities. FinCEN’s June 5, 2026 Joint Advisory on Non-Work Authorized Populations and Their Employers (the “Joint Advisory”), together with the Treasury Department’s statements with respect to the Joint Advisory’s purpose, shows that AML’s elasticity is what makes it an effective policy tool while also prompting the harder question: should it be used that way?
At its core, AML targets conduct with a meaningful nexus to crime and the financial flows generated or sustained by such crime. The recent Joint Advisory extends that mandate toward immigration enforcement through links to financial crime. But leveraging AML’s elasticity to advance immigration policy risks rendering AML’s boundaries incoherent.
In the Joint Advisory, FinCEN, together with the FDIC, OCC, and NCUA, urged financial institutions—particularly banks—to monitor for suspicious activity involving “non-work authorized populations” and their employers. This exhortation ties unlawful employment to wage and payroll abuses, identity theft, tax losses, shell-company misuse, and financing linked to transnational criminal organizations. Some of these connections to serious crime are real and well documented. ICE has long reported worksite violations that surface document fraud, labor trafficking, and money laundering—all conduct that falls within established AML categories. But the Joint Advisory also frames any unauthorized employment, even that which may be unrelated to any other illegal financial activity except for the unauthorized work itself, broadly as a financial integrity risk warranting bank-level surveillance.
By connecting unlawful-employment schemes to criminal proceeds, immigration-related violations can be brought under the AML mandate–but the more important question is whether the AML system should be repeatedly repurposed as as a financial-enforcement tool for evolving political priorities. That concern is acute because FinCEN’s own modernization project has emphasized that AML/CFT programs should be effective, risk-based, reasonably designed, and calibrated to actual financial-crime risk, not reflexively expanded to cover each predicate offense. The AML Act reforms are intended to help institutions focus resources consistently with priority criminal concerns, while tacitly acknowledging that devoting resources to every form of crime is unfeasible and even wasteful.
Of the eight priorities listed in the government-wide AML/CFT Priorities set out in 2021 (and which are statutorily overdue for updating), the Joint Advisory links financial transactions of unauthorized workers to five: fraud, terrorist financing, drug trafficking organizations, transnational organized crime, and human trafficking/smuggling. This is a fair characterization of some of the more serious crimes that can be linked to unauthorized work, but with the Pew Research Center estimating that there are roughly 8 million unauthorized immigrant workers in the United States (roughly 5 percent of the total US labor force) it seems unlikely that a significant percentage of these workers’ activities are linked to more serious illicit activity.
Utilizing AML’s mandate to advance newly urgent social, political, or criminal concerns, banks must update typologies, revise procedures, re-tune monitoring scenarios, retrain staff, recalibrate customer risk ratings, and prepare for expanded examination questions. They also must absorb false positives. In the immigration context, those burdens are not hypothetical. The Joint Advisory identifies industries, documentary patterns, and account behaviors that institutions are expected to scrutinize. It is hard not to view the advisory as a directive to intensify SAR reporting around undocumented-worker and employer-related activity, likely to further slow the onboarding of small businesses and the development of new bank profucts. Unlike a rule change, which goes through a notice-and-comment process and which requires an assessment of both the benefits and cost burdens associated with the change, the Joint Advisory does not take into account such balancing.
If AML can be leveraged whenever underlying conduct is illegal and may produce proceeds, there is almost no principled stopping point, with our financial institutions being deputized to address issues that either have not been by prioritized by general law enforcement agencies or are better left to the purview of specialized government agencies. Organized retail theft, labor misclassification, customs evasion, environmental offenses, wage-and-hour violations, price fixing and other anti-competition practices, campaign finance laws, OSHA violations, sale of alcohol to minors, and even truck fleet safety violations could all be reframed as AML priorities whenever political attention towards such issues spikes. When the mandate expands to fill that space, the regime does not become more effective, it becomes more diffuse and less capable of concentrating resources on the threats Congress designed it to address.
The risk is thus not simply that banks will do more work. An AML regime that becomes a floating apparatus for broad social regulation, with financial institutions serving as reporters for whichever novel AML priority is ascendant,raises concerns, even for FinCEN, about de-risking and reduced overall transparency with respect to financial services for whole classes of customers or sectors.
Banks, asked to infer immigration or employment irregularities from indirect financial signals, may be forced to rely on ambiguous indicators: payroll deposits, small-dollar remittances, the use of an ITIN, activity in labor-intensive sectors, or multiple workers tied to a common address. With this increased pressure on an already-strained SAR regime, institutions may overreport to protect themselves, even when the financial indicators are only weak proxies for underlying immigration-related misconduct. The result can be lower-quality reporting, higher compliance costs, and greater pressure on lawful but higher-risk customer groups.
None of the above argues for ignoring genuine financial crime that is connected to unlawful employment. Identity theft, shell-company abuse, labor trafficking, tax fraud, cash payroll concealment, document fraud, or flows linked to transnational criminal organizations, are genuine AML issues and should remain so. Indeed, several of the issues discussed in the Joint Advisory were raised previously via FinCEN’s August 2023 Notice on Payroll Tax Evasion and Worker’s Compensation Fraud in the Construction Sector, which incidentally did distingush between authorized and unauthorized workers in describing the crime. But the position taken with the 2023 Notice is narrower than utilizing AML to enforce immigration policies through tenuous connections. The former approach keeps the regime anchored to identifiable illicit finance. The latter risks turning the BSA into a flexible instrument for every newly elevated policy concern with a financial dimension. Keeping the AML regime on the right path after a sweeping new priority is announced may involve more nuanced guidance to help financial institutions focus on higher priority activities within the new priority while avoiding unintended consequences such as the derisking of legal activity.
AML systems are powerful because they are selective. They are most effective when institutions are asked to focus on meaningful financial-crime indicators and when regulators are disciplined about what belongs inside the core AML mission. If every offense that generates proceeds becomes an AML priority whenever it becomes politically salient, the result will not be a stronger regime. It will be a more diffuse, burdensome, and ultimately less effective one. Financial institutions can support law enforcement in many ways, but they cannot absorb an ever-expanding mandate without losing focus on the threats that matter most.