Congress Beefs Up U.S. Anti-Money Laundering Regulations

The recently enacted Anti-Money Laundering Act of 2020 (AMLA or Act) represents the most sweeping revision to U.S. anti-money laundering regulation in decades. The AMLA includes a variety of updates to the federal Bank Secrecy Act (BSA) and addresses numerous aspects of money laundering regulation, including whistleblower rewards and protections as well as criminal penalties for those intentionally deceiving or withholding information from financial institutions. The legislation also includes updates intended to address risks surrounding virtual currencies.

Among its many provisions, AMLA includes:

Creation of a beneficial ownership database. Newly formed companies must now submit a report to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) detailing identification information specific to each beneficial owner. FinCEN will then issue each beneficial owner a unique identification number. Building upon the existing framework, companies will be required to submit updated beneficial ownership information if an individual owns 25% or more of a controlling interest. Any falsification of the information will be punishable by civil and criminal penalties.

Expansion of BSA penalties. Penalties have been increased. Also, two new violations have been added for intentionally deceiving or withholding information. The first is specific to assets owned by a senior foreign political figure (or a close associate), and the second is specific to entities identified as being a primary money laundering concern.

New requirements for risk-based programs. To support financial institutions in preventing and detecting money laundering operations and terrorist financing, the AMLA specifies that transactions involving currency substitutes are subject to BSA compliance requirements.  Essentially, the AMLA formalizes a position long held by regulators and directly impacts how virtual currency transactions are processed.

Modernization and streamlining of reporting processes. Anti-money laundering programs must, continually, be updated to address ongoing threats from bad actors seeking to take advantage of vulnerabilities in technology. Modernizations included in the AMLA are intended to streamline reporting processes, though it now requires additional BSA coverage for virtual currencies. The AMLA also covers antiquities trading and expands information sharing channels originating from FinCEN.

Expansion of subpoena power. The AMLA significantly increased the government’s ability to issue subpoenas for foreign correspondent accounts. Foreign banks will be required to not only provide records relating to the foreign correspondent account authorized under the PATRIOT ACT 319(b), but also “any account at the foreign bank, including records maintained outside of the United States, that are the subject of any investigation.”  This will allow the United States to widen its investigation scope of potential money laundering or terrorist financing.

Whistleblowers. The AMLA improves whistleblower incentives. For purposes of the Act, “whistleblowers” are defined as individuals that report a violation, including those who report violations as part of their job responsibilities. With the goal of achieving a greater impact on money laundering enforcement, the Act establishes more favorable terms for whistleblowers, with increases in reward caps, protections for whistleblowers specific to money laundering, and loosening of the government’s discretion in paying rewards.

For more information about AMLA and how its provisions may affect your business, contact us. We are here to help.

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