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On 1 January 2021, Congress overrode President Trump’s veto of the National Defense Authorization Act (the NDAA). As part of the NDAA, Congress included long-considered provisions with the potential to revolutionize anti-money laundering and Bank Secrecy Act (AML/BSA) enforcement in the United States. Specifically, the NDAA includes the Anti-Money Laundering Act of 2020 (the AMLA), which contains numerous provisions to enhance the government’s enforcement powers, redefine enforcement priorities, increase international data sharing, and streamline certain reporting procedures. The NDAA also includes the Corporate Transparency Act (CTA), which establishes beneficial owner reporting obligations for certain non-public companies. Both the AMLA and the CTA include significant penalties for violations. As the Treasury Department issues new priorities for the Financial Crimes Enforcement Network (FinCEN) and promulgates regula
By Aaron Nicodemus2021-01-19T19:25:00+00:00
Congress has ordered a reassessment of the Bank Secrecy Act anti-money laundering (AML) program as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021 (H.R.6395).
The bill includes a “formal review” of BSA rules regarding the filing of suspicious activity reports (SARs) by financial institutions. Also included are separate AML provisions that pull back the veil on anonymous shell corporations and establish a BSA whistleblower program with financial rewards for tipsters whose information leads to a conviction.
In an ideal world, the U.S. Treasury and the Financial Crimes Enforcement Network (FinCEN) use the information gleaned from SARs to either launch investigations into criminal activity like money laundering or hand off the information contained in the reports to agencies better suited to handle them. For example, FinCEN regularly refers information collected in SARs regarding tax evasion to the Internal Re
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In January 2021, after the override of President Trump’s veto, Congress passed the National Defense Authorization Act (“NDAA”). The NDAA includes the Anti-Money Laundering Act of 2020 (the “Act”), which contains significant changes to the Bank Secrecy Act (“BSA”), along with changes relating to anti-money laundering (“AML”), counter-terrorism financing (“CTF”), and protections to the U.S. financial system against foreign interference.
Among the key reforms in the Act are the following: (1) substantial revision of the definition of “financial institution” to recognize innovations in financial technology; (2) establishment of new beneficial ownership reporting; and (3) requiring the U.S. Treasury to increase transparency and update the AML/CFT legal framework.
Their latest move is even more bizarre than the previous one, and that really says something.
In late October, the administration proposed a rule to lower the reporting thresholds for cross-border payments (remittances) from $3,000 to $250. As detailed here, this rule will impose higher costs on business owners and people electronically transferring relatively small payments, with little expected benefit for law enforcement.
Worse, the administration gave no advanced notice and allowed only a 30-day comment period on the rule. That is half the normal time, a problem that Treasury magnified by timing the proposal to overlap with the period when affected firms had to renew their state licenses. The entire process was very strange for an administration that celebrates its deregulatory successes.
On January 1, 2021, Congress enacted the Anti-Money Laundering Act of 2020 (the “Act”).
1 As part of the National Defense Authorization Act for Fiscal Year 2021, the Act creates a broad range of new anti-money laundering (“AML”) obligations for banks and other financial institutions, certain private investment structures, and even federal regulators.
Spanning more than 85 pages, the Act contains a number of significant new provisions and changes. Many of the new provisions, including those creating a federal beneficial ownership registry, call for implementing regulations that will be promulgated months or years from now. Other provisions, including new criminal offenses and new subpoena authority over foreign banks with U.S. correspondent accounts, take effect immediately.