This comment and our previous comment “Congress passes major anti-money laundering reforms in the US, “describe the main provisions of the new laws and when they were implemented.
Advantageous possession (Section 6403): CTA discourages the use of Shell companies as a tool to conceal and move illegal funds by establishing uniform federal standards for the disclosure and reporting of beneficial ownership information by corporations, limited liability companies, and similar entities. The CTA requires “reporting companies” to report information to FinCEN to identify individuals who directly or indirectly own or control 25% or more of the ownership interests in the company, as well as those who have “material control” over the company. According to the AMLA, the Minister of Finance must enact the regulations by January 1, 2022. Within one year of issuing these rules, the secretary must revise the FinCEN client due diligence rule. Existing reporting entities must disclose beneficial ownership information to FinCEN within two years of the effective date of the beneficial ownership rules enacted by the Treasury Secretary. After the new regulations come into effect, start-up companies will need to provide beneficial ownership information to FinCEN at the time of incorporation. Reporting Entities must also update their beneficial ownership information within one year of a change in beneficial ownership.
Safe haven for law enforcement cooperation (Section 6306): From January 1, 2021, the GwG will offer financial institutions a safe haven from liability for opening a customer account or a customer transaction upon written application by a federal law enforcement authority, provided that this law enforcement authority grants an advance notification to FinCEN of the intention to address such a written request to the financial institution.
Foreign banking records from US correspondence accounts (Section 6308): The AMLA extends the powers of the Treasury Department and the Department of Justice (“DOJ”) to subpoena documents from a non-US bank that has a correspondence account in the US. The AMLA grants the DOJ the power to subpoena records from non-US banks in relation to correspondent accounts as before, but now includes records from all accounts at the foreign bank that are the subject of US criminal law, civil foreclosures and investigations related to it Are money laundering. The return dates must be specified in these summons. However, prior to the return date, the non-US bank has the option of requesting the competent US district court to lift the subpoena.
FinCEN No-Action Letter Process (Section 6305): According to the AMLA, the FinCEN director must decide in consultation with the Attorney General, the federal and state financial supervisory authorities, as well as other government agencies, whether to set up a procedure for issuing non-action letters upon request from financial institutions in relation to interpretations of the Banking Secrecy Act (“BSA”) and the USA PATRIOT Act. These agencies are required to submit findings and related decisions to the Senate Banking, Housing, and Urban Affairs Committee and House Financial Services Committee by June 30, 2021.
Whistleblower Awards (Section 6314): AMLA is updating whistleblower rewards program in the Treasury to improve the incentives for reporting potential AML violations and to significantly increase the thresholds for awarding rewards. Although this section is self-executing, the Secretary of the Treasury also retains the ability to issue rules and regulations necessary to implement the provisions of this section.
Pilot for cross-border information exchange (Sec. 6212): Under the AMLA, the Ministry of Finance must set up a pilot program for the exchange of SARs and SAR information by financial institutions with their overseas branches, subsidiaries and affiliates, except in sanctioned jurisdictions, by January 1, 2022, to combat illegal activities. The pilot program ends after three years, but the Treasury can extend it for two years.
Anti-Money Laundering / Terrorist Financing (“AML / CFT”) priorities (Section 6101): The Treasury Department, in consultation with the DOJ, Functional Regulators, State Regulators, and National Safety Regulators, must set AML / CFT priorities by June 30, 2021 that are in line with the National Security Strategy. Financial institutions must incorporate these priorities into their AML / CFT programs, and FinCEN has 180 days from setting those priorities to legislate to implement them. FinCEN has to review and update the AML / CFT priorities every four years in consultation with the other regulatory authorities. FinCEN must publish threat patterns and trend information at least twice a year. In order to share these priorities, the GwG calls on FinCEN to communicate regularly with financial institutions and supervisory authorities and to give and receive feedback from them.
Risk reduction through financial institutions (§ 6215): The GwG requires minimum standards to cover risk reduction (avoidance or closure of accounts) for customers with higher risk by financial institutions. By January 1, 2022, the Comptroller General must submit a report on financial services risk reduction to the Senate Banking, Housing, and Urban Affairs Committee and the House Financial Services Committee. Once the report has been submitted, the Minister of Finance, along with other public and private stakeholders, will have to conduct a formal review and propose changes. One year after this analysis has been carried out, the Treasury Secretary must submit a report to the congressional committees with the findings and an ongoing strategy for reducing risk.
FinCEN domestic connection (§ 6107): After coming into force, the GwG authorizes FinCEN to set up an office for domestic connections within FinCEN, which is responsible for contacting BSA officials at financial institutions. By January 1, 2022, and every five years thereafter for five years, the FinCEN director will submit a progress update report to the Senate Banking, Housing and Urban Affairs Committee and the House Financial Services Committee.
FinCEN Foreign Financial Intelligence Liaisons (Section 6108): Upon entry into force, the AMLA expands FinCEN’s international coordination efforts by authorizing FinCEN to set up at least six foreign financial news liaison officers at US embassies to build relationships and encourage engagement with their foreign counterparts. The AML is providing the Treasury with US $ 60 million annually for the next four years to provide technical assistance abroad and to promote compliance with international standards and best practices for the establishment of AMLA / CFT programs.
Innovation officer (§ 6208): After coming into force, the GwG authorizes FinCEN to determine the position of the BSA innovation officer. One year after FinCEN enacts regulations to set up a FinCEN exchange, the FinCEN director must appoint a BSA innovation officer to link public relations with law enforcement agencies and help implement new financial services technologies that further the goals of the BSA. The federal financial service agencies must also determine the position of the BSA innovation officer within their agencies.
Optimization of reporting (Section 6204): The Treasury Department must evaluate SAR and currency transaction reports and send a report to Congress by January 1, 2022, reflecting its findings on reducing the onerous requirements and associated regulatory frameworks. Until 2032, the Ministry of Finance must reassess the reporting thresholds at least every five years and, if necessary, propose regulations (Section 6205).
Older foreign policy figures (§ 6313): With the entry into force of the AMLA, the penalties for concealing or misrepresenting ownership of certain assets will be expanded, with high-ranking foreign policy figures and their immediate family members being prohibited from concealing control over these assets.