This Commentary, and our prior Commentary, “Congress Passes Major U.S. Anti-Money Laundering Reforms,” describe key provisions of the new laws and timing for their implementation.
Beneficial Ownership (Sec. 6403): CTA discourages the use of shell companies as a tool to disguise and move illicit funds by setting uniform federal standards for disclosure and reporting of beneficial ownership information by corporations, limited liability companies, and similar entities. Under CTA, “reporting companies” must report to FinCEN identifying information for any individual who owns or controls, directly or indirectly, 25% or more of the company’s ownership interests, as well as any individual who exercises “substantial control” over the company. AMLA requires the Secretary of the Treasury to promulgate regulations by January 1, 2022. Within a year of the issuance of those rules, the Secretary must revise the FinCEN customer due diligence rule. Existing reporting companies must disclose beneficial ownership information to FinCEN within two years of the effective date of the beneficial ownership rules that the Secretary of the Treasury promulgates. After the new regulations’ effective date, newly incorporated companies must disclose beneficial ownership information to FinCEN at the time of incorporation. Reporting companies must also update their beneficial ownership information within one year of any change in beneficial ownership.
Safe Harbor for Cooperation with Law Enforcement (Sec. 6306): Beginning January 1, 2021, AMLA provides financial institutions a safe harbor from liability with respect to keeping open any customer account or customer transaction by written request of a federal law enforcement agency, as long as that enforcement agency provides advance notice to FinCEN of the intent to submit such written request to the financial institution.
Foreign Bank Records from U.S. Correspondent Accounts (Sec. 6308): AMLA broadens Treasury and Department of Justice (“DOJ”) authority to subpoena documents from a non-U.S. bank that maintains a correspondent account in the United States. AMLA grants DOJ authority to subpoena records from non-U.S. banks related to correspondent accounts as before, but now includes records from any account at the foreign bank that are the subject of U.S. criminal law, civil forfeiture actions, and AML-related investigations. These subpoenas shall list return dates, but prior to the return date, the non-U.S. bank will have the opportunity to ask the proper U.S. district court to quash the subpoena.
FinCEN No-Action Letter Process (Sec. 6305): AMLA requires the FinCEN Director, in consultation with the Attorney General, federal and state financial services regulators, and other government agencies to determine whether to establish a process for the issuance of no-action letters in response to inquiries from financial institutions regarding interpretations of the Bank Secrecy Act (“BSA”) and USA PATRIOT Act. These agencies must submit findings and any related rulemakings to the Senate Committee on Banking, Housing, and Urban Affairs and the House of Representatives Committee on Financial Services by June 30, 2021.
Whistleblower Awards (Sec. 6314): AMLA updates the whistleblower reward program at Treasury to improve incentives for reporting of potential AML violations, substantially increasing award thresholds. Though this section is self-executing, the Secretary of the Treasury also retains the ability to issue rules and regulations necessary to carry out provisions of this section.
Cross-Border Information-Sharing Pilot (Sec. 6212): AMLA requires Treasury to establish a pilot program by January 1, 2022, for financial institutions’ sharing of SARs and SAR information with their foreign branches, subsidiaries and affiliates, except in sanctioned jurisdictions, for the purpose of combating illicit activities. The pilot program will terminate after three years, but Treasury may extend it for two years.
Anti-Money Laundering/Combatting the Financing of Terrorism (“AML/CFT”) Priorities (Sec. 6101): Treasury, in consultation with the DOJ, functional regulators, state regulators, and national security regulators, is required to establish AML/CFT priorities that align with national security strategy by June 30, 2021. Financial institutions must incorporate these priorities into their AML/CFT programs, and FinCEN has 180 days after these priorities are established to promulgate regulations to carry them out. FinCEN must review and update the AML/CFT priorities every four years, in consultation with the other regulators. FinCEN must publish threat pattern and trend information at least twice every year. To share these priorities, AMLA requires FinCEN to communicate regularly with, and to give and receive feedback from, financial institutions and regulators.
De-Risking by Financial Institutions (Sec. 6215): AMLA requires minimum standards to cover de-risking (avoiding or closing accounts) of higher-risk customers by financial institutions. By January 1, 2022, the Comptroller General is required to deliver a report on financial services de-risking to the Senate Committee on Banking, Housing, and Urban Affairs and the House of Representatives Committee on Financial Services. After delivery of the report, the Secretary of the Treasury, along with other public and private stakeholders, must conduct a formal review and propose changes. One year after that analysis is produced, the Secretary of the Treasury must submit a report to the congressional committees with findings and an ongoing de-risking strategy.
FinCEN Domestic Liaison (Sec. 6107): Upon enactment, AMLA authorizes FinCEN to create an Office of Domestic Liaison within FinCEN responsible for conducting outreach to BSA officers at financial institutions. By January 1, 2022, and every two years thereafter for five years, the FinCEN Director will send a report to the Senate Committee on Banking, Housing, and Urban Affairs and the House of Representatives Committee on Financial Services with progress updates.
FinCEN Foreign Financial Intelligence Liaisons (Sec. 6108): Upon enactment, AMLA expands FinCEN’s international coordination efforts, by authorizing FinCEN to create at least six foreign financial intelligence unit liaisons at U.S. embassies to establish relationships and promote engagement with their foreign counterparts. AMLA appropriates $60 million to Treasury each year for the next four years for technical assistance abroad and to promote compliance with international standards and best practices for establishing AML/CFT programs.
Innovation Officers (Sec. 6208): Upon enactment, AMLA authorizes FinCEN to establish the position of BSA Innovation Officer. A year after FinCEN promulgates regulations on establishing a FinCEN Exchange, the FinCEN Director must appoint a BSA Innovation Officer to conduct outreach to law enforcement agencies and assist in implementing new financial services technology that promotes the objectives of the BSA. The federal financial services agencies must also establish the position of BSA Innovation Officer within their agencies.
Streamlining Reporting (Sec. 6204): Treasury must evaluate SAR and currency transaction reports, sending a report to Congress by January 1, 2022, that reflects its findings designed to reduce burdensome requirements and related rulemakings. At least once every five years until 2032, Treasury must reevaluate reporting thresholds and propose rulemakings as appropriate (Sec. 6205).
Senior Foreign Political Persons (Sec. 6313): Upon enactment, AMLA expands penalties for concealing or misrepresenting ownership of certain assets, specifically prohibiting senior foreign political figures and their immediate family members from hiding their control of those assets.