On New Year’s Day 2021, Congress suspended a presidential veto to pass the 2020 Anti-Money Laundering Act (GwG 2020), which amends and modernizes the Bank Secrecy Act (BSA). The GwG 2020 includes comprehensive reforms to update and modernize the laws, rules and regulations to combat money laundering in the USA. While most of these reforms target financial institutions subject to the BSA, some have far-reaching implications for domestic and international business.

About the series

This multi-part series will highlight key findings from the 2020 AMLA that have practical implications for our clients, including (1) new and far-reaching requirements for beneficial ownership disclosure of companies that the Financial Crimes Enforcement Network (FinCEN) is currently actively working to implement; (2) increased incentives for whistleblowers to report money laundering violations; (3) Extension of the US subpoena to include foreign financial institutions with correspondent accounts in the United States; (4) New criminal penalties for disguising the involvement of senior foreign policy figures and certain Designated Bodies in transactions involving US financial institutions; (5) Extension of the Money Laundering Act to codify responsibility for activities in virtual currencies; and (6) developing regulatory solutions with a greater focus on emerging technologies. The following is a general overview of some of the topics covered in this series:

New disclosure requirements for beneficial ownership. Perhaps most importantly, the 2020 AMLA requires many Limited Liability Companies (LLC) to disclose their beneficial owners to the government – a new requirement that will apply to previously unregulated companies. The AMLA instructs FinCEN to keep a secure register of beneficial ownership rights of legal entities in order to facilitate investigations by law enforcement agencies and due diligence by financial institutions. This provision, which is aimed at Shell companies and other single-purpose vehicles, is designed to prevent the use of anonymous units to disguise the natural persons behind a company. On April 1, 2021, FinCEN published an advance notice of the proposed rulemaking, setting out the issues it is addressing in order to have the necessary rules in place by January 1, 2022 and asking the public for comments on how the rule of beneficial ownership should be implemented. The first part of this series will describe the expanded legal definition of beneficial owner, examine the long list of AMLA’s exemptions from registration requirements, and discuss some of the key lessons learned from FinCEN’s recent public announcement.

Significantly improved whistleblower incentives. The GwG 2020 will introduce a whistleblower program based on the program of the US Securities and Exchange Commission. These provisions encourage whistleblowers to report violations of the BSA and authorize higher financial rewards for those who provide information to their employers or the government. The availability of rewards for internal reporting is a provision that can be particularly problematic when the reporting employee and the company disagree on whether the conduct in question needs to be reported to regulators or otherwise. The second part of this series discusses these provisions in detail.

Extended subpoena. The 2020 AMLA expands the U.S. Department of Justice’s subpoena to include foreign financial institutions. It gives the Treasury Secretary and the Attorney General the power to issue subpoenas to foreign financial institutions holding correspondence accounts in the United States in relation to account information in their possession. This is a significant addition to the previous authorization, which was limited to records on US correspondence accounts. The third part of this series explains these new regulations and how they affect foreign financial institutions and foreign individuals and companies that are being investigated.

New penalties for covering up transactions with high-ranking foreign policy figures. Finally, the GwG 2020 amends the BSA to the effect that criminal sanctions are provided that forbid the deliberate concealment of transactions with high-ranking foreign policy figures and certain designated money laundering bodies in front of financial institutions. The prohibition specifically extends to anyone involved in the concealment, misrepresentation, or forgery (or attempt to cover up, misrepresentation or forgery) any financial institution having material facts relating to the ownership or control of assets in excess of US $ 1 million – Dollars by a senior foreigner political figure (or an immediate family member or close associate). The penalty sharpens the transaction diligence process and will no doubt improve the quality of care financial institutions receive when reviewing account holders and transactions. Like other recent anti-money laundering disclosure requirements – such as the real estate-related global targeting mandates that have been issued over the past few years and expanded continuously – this can have important implications for the expansion of anti-corruption enforcement. This determination is examined in the fourth part of our series.

Expansion of the Money Laundering Act to codify responsibility for activities in virtual currencies. The GwG 2020 codifies earlier FinCEN guidelines, according to which companies that carry out certain business activities in virtual currencies must register as money service providers. By expanding the definitions of terms such as “financial institution” and “money transfer business”, the new law includes companies that exchange or otherwise transfer virtual currencies or “values ​​that replace currencies”. FinCEN’s guidelines have been controversial in the industry and codifying them into law will create additional challenges and opportunities.

Developing an emerging financial technology focus. The GwG 2020 gives the financial supervisory authorities and the Government Accountability Office the impetus to conduct studies and submit reports to Congress and develop skills to better understand and adapt the legal framework in order to address emerging fintech technologies. The law instructs FinCEN to hire emerging technology professionals to identify emerging technologies such as artificial intelligence, digital identity technology, and distributed ledger technologies that can potentially aid government and financial institutions in combating money laundering and terrorist financing. Federal financial regulators are expected to investigate new payment methods, such as virtual currency and peer-to-peer payment systems, and provide reports to Congress on their use in money laundering and illegal activities. The federal financial supervisory authorities have promoted the use of emerging technologies by financial institutions, and the AMLA 2020 instructs FinCEN to set up a no-action letter procedure that enables the industry to find the technology solutions acceptable to the supervisory authorities for compliance with the To understand BSA better.

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