Disclaimer: The contents of this article are intended to provide a general understanding of the subject matter. However, this article is not intended to provide legal or other professional advice, and should not be relied on as such.
It can be challenging to stay up to date on anti-money laundering (AML) compliance requirements. Regulatory bodies and financial compliance legislation are constantly changing and evolving to try and stay ahead of financial crime. One of the most important developments for AML compliance in recent years was the introduction of the Anti-Money Laundering Act of 2020 (AMLA). AMLA has been called by some, the most consequential AML legislation passed by Congress in decades. As a result, it is vital for compliance professionals to understand an overview of the law and its implications for the AML compliance landscape.
AMLA: An Overview
AMLA made a variety of changes to the AML landscape intended to strengthen the United States’ AML regime. These changes have a direct impact on much of the daily work of a compliance professional, implementing new AML requirements and reforming existing ones.
When Did AMLA Go Into Effect?
AMLA was enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act (NDAA). For a more in-depth look into the history of compliance legislation, view our timeline of BSA/AML regulations.
Key Provisions of AMLA
- Beneficial Ownership
- The act establishes a new beneficial ownership database. It sets a requirement that U.S. businesses must disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
- Reforms to the Bank Secrecy Act (BSA)
- Introduces new violations, as well as enhanced BSA penalties for repeat and egregious violators
- Expands AML regulations into new sectors
- Art and antiquities trading and cryptocurrency
- Expanded subpoena powers
- Grants law enforcement agencies the power to subpoena international financial institutions that hold correspondent accounts in the U.S.
- Expanded whistleblower rewards and protections
- Established key AML/CFT priorities
- Made changes to the filing of non-complex suspicious activity reports (SARs)
- Increased information sharing
Beneficial Ownership
One of the most impactful provisions of AMLA is the Corporate Transparency Act (CTA). The CTA calls for the establishment of a federal beneficial ownership registry to be administered by FinCEN. Both domestic and foreign reporting companies that are registered to do business in the U.S. and meet certain criteria must disclose certain identifying information to be recorded in the database. There are exemptions, which are outlined in our CTA blog linked above.
Enforcement agencies with court orders and financial institutions, if given permission by their corporate customers, will be able to view this information.
For more information, view our answers to frequently asked questions about beneficial ownership
Reforms to BSA Penalties
AMLA has introduced new criminal BSA violations to Title 31 for knowingly deceiving or withholding information from financial institutions.
It prohibits politically exposed persons (PEPs) from knowingly hiding, falsifying, misrepresenting or attempting to hide, falsify or misrepresent a material fact, from or to a financial institution, about the ownership or control of assets involved in a monetary transaction.
Specifically, AMLA prohibits:
- The hiding, falsifying or misrepresenting of material facts about the source of funds in a monetary transaction involving an entity that is found to be a primary money laundering concern.
- An individual from knowingly hiding, falsifying, misrepresenting or attempting to hide, falsify or misrepresent a material fact, from or to a financial institution, about the ownership or control of assets involved in a monetary transaction, if the entity who owns or controls the assets is a senior political figure, or an immediate family member or close associate of a senior political figure and the aggregate value of the asset(s) is $1,000,000 or more.1
For additional information on Title 31, view our Guide to Title 31 Casino Compliance.
AMLA additionally adds increased civil penalties for those who repeatedly and egregiously violate the BSA.
Expanded Regulations
AMLA has expanded the responsibility of the BSA to include art and antiquities trading. The Anti-Money Laundering Act now permits banks and other financial organizations to exchange data related to anti-money laundering and Bank Secrecy Act regulations with their international subsidiaries, partners, and affiliates to include cryptocurrencies. It states that the exchange or transmittal of products as a substitute for money, such as cryptocurrencies and art are now subject to BSA registration and AML compliance requirements.
Expanded Subpoena Powers
AMLA allows law enforcement agencies in the US to subpoena international financial institutions that possess correspondent accounts in the US, whereas previously law enforcement agencies were only permitted to subpoena foreign banks with correspondent accounts in the US, in regard to transactions processed through these accounts.
AMLA has removed the requirement that limits subpoena power to transactions processed through correspondent bank accounts in the US, and allows law enforcement agencies to subpoena any information from foreign banks with correspondent accounts, even if the information does not concern these accounts.
Expanded Whistleblower Rewards
AMLA has expanded both the rewards and protections for whistleblowers. It has eliminated the previous payment cap of $150,000 for BSA/AML whistleblowers, instead implementing a payment ceiling of 30% of the government’s collection if the monetary sanctions imposed are more than $1 million. The reward amount is dependent upon the significance of the information provided by the whistleblower, the degree of assistance and the programmatic interest of the Treasury in deterring violations.
An important distinction made is that forfeitures of assets, restitution and victim compensation are excluded from the calculation of the reward. It also states that there is no right to appeal the amount awarded.
Expanded Whistleblower Protection
AMLA has added a new provision for whistleblower protection prohibiting retaliatory acts from employers to employees who provide information that relates to money laundering and BSA violations. These protections, however, exclude employees of Federal Deposit Insurance Corporation (FDIC) and Federal Credit Union Act (FCUA) institutions.
Established AML/CFT Priorities
After consultation with the U.S. Department of the Treasury’s (Treasury’s) Offices of Terrorist Financing and Financial Crimes, Foreign Assets Control (OFAC), and Intelligence and Analysis, as well as the Attorney General, Federal functional regulators, relevant state financial regulators, and relevant law enforcement and national security agencies, FinCEN has established the first government-wide priorities for AML/CFT policy.
These priorities are:
- Corruption
- Cybercrime
- Foreign and domestic terrorist financing
- Fraud
- Transnational criminal organization activity
- Drug trafficking organization activity
- Human trafficking and human smuggling
- Proliferation financing
Non-Complex SAR Filing
As part of its provisions, AMLA has required FinCEN to establish a new streamlined automated process for the filing of noncomplex SARs. It has also required that the Treasury complete a study on the dollar thresholds of both SARs and currency transaction reports (CTRs) to determine whether they should be amended.
Increased Information Sharing
Under AMLA, financial institutions are now allowed to relay AML and BSA-related information with their international divisions, subsidiaries, and partners. It has also required that both FinCEN and the Treasury conduct a three-year study on the impact of information sharing on AML/CFT.
What Does AMLA Mean For Your Compliance Program?
AMLA has had various significant impacts on financial institutions’ compliance programs. The established AML/CFT priorities must be incorporated into existing risk-based compliance programs. Regulatory agencies have been instructed to assess the effectiveness of compliance programs in countering these priorities.
Increased regulatory oversight, newly established national AML priorities and the introduction of a beneficial ownership database mean that your compliance program needs to be more robust and adaptable than ever. The modernization of your compliance program is vital in limiting false positives and automating many of the tedious tasks necessary for compliance.
With increased scrutiny on PEPs stemming from AMLA, a watchlist and sanctions screening solution allows your compliance team to screen in real time with greater accuracy.
An AML compliance software allows for information sharing across different areas of compliance for increased accuracy in areas such as business-specific risk models.
Modernizing Your Compliance Program
Alessa strengthens your compliance program by allowing for a truer, more complete view of risk. Bundle or select from a variety of compliance modules, including:
- Real-time transaction monitoring
- Watchlist and sanction screening
- KYC & identity verification
- Risk scoring
- Regulatory reporting
To learn more about how Alessa can more effectively allow you to adhere to compliance regulations such as AMLA, contact us today for a free demo or to speak to a risk specialist.
Sources
1New Criminal Offenses related to Foreign Political Figures and Money Laundering Entities
