May.20, 2010, 4:43 P.M. ET

NEW YORK (Dow Jones)--Banks should integrate their anti-money laundering, or AML, efforts with other loss-prevention measures, said James H. Freis Jr., director of the Financial Crimes Enforcement Network, known as FinCEN, part of the U.S. Treasury Department.

At a conference sponsored by the Institute of International Bankers in New York on Thursday, Freis said banks should stop looking at AML programs as a loss leader and start embracing them as part of doing clean business.

"It is ironic to FinCEN that while the cost of implementing compliance is calculated to the penny, some banks seem to consider such a $2 billion in annual losses, at least, to fraud as a type of inevitable cost of doing business," he said in prepared remarks. "A complete and correct risk assessment, customer identification program and transaction monitoring process can pay for itself through the prevention and detection of fraud committed against the institution."

Freis said his federal agency, which enforces the Bank Secrecy Act, will continue to focus on anti-money laundering and combating the financing of terrorism, or CFT, enforcement as its chief priorities, and there is an obvious alignment between combating them and the basic framework of recent international agreements, such as the principles of financial reform agreed to by the G-20 in November.

"The primary reason that I believe the focus on AML/CFT issues will continue is that...combating abuses of financial crime is a part of promoting financial stability," he said.

He said that despite proposed regulatory reform making its way through the U.S. Senate, FinCEN's jurisdiction has not come under scrutiny. The legislation about to come to a final vote in the Senate wouldn't have much of a direct impact on AML/CFT enforcement, he said.