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Implementing the Corporate Transparency Act: A Guest Blog
By Peter D. Hardy & Shauna Pierson on July 19, 2021
Posted in AMLA of 2020, Bank, Beneficial Ownership, BSA AML Reform, Compliance Program, Corporate Transparency Act, Customer Due Diligence, Financial Crimes Enforcement Network (FinCEN), Know Your Customer (KYC), Suspicious Activity Report (SAR)
A Guest Blog by Angelena Bradfield
Today we are very pleased to welcome guest blogger Angelena Bradfield, who is the Senior Vice President of AML/BSA, Sanctions & Privacy for the Bank Policy Institute. BPI is a nonpartisan public policy, research and advocacy group, representing the nation's leading banks. Its members include universal banks, regional banks and the major foreign banks doing business in the United States. BPI has been engaged in efforts to modernize the U.S. anti-money laundering/ countering the financing of terrorism (AML/CFT) regime for almost half a decade and worked closely with Senate and House leadership throughout the introduction and final passage of the Anti-Money Laundering Act of 2020 (AML Act). Angelena previously was a Vice President at The Clearing House Association, where she supported its regulatory affairs department in similar policy areas. Before that, she supported comprehensive immigration reform efforts at ImmigrationWorks USA and worked on various domestic policy issues at the White House where she served as a staff assistant in both the Domestic Policy Council and Presidential Correspondence offices.
We reached out to Angelena regarding BPI's recent letter to the Financial Crimes Enforcement Network (FinCEN) commenting on its implementation of the Corporate Transparency Act (CTA). Congress passed the CTA on January 1, 2021, as part of the AML Act. The CTA requires certain legal entities to report their beneficial owners to a directory accessible by U.S. and foreign law enforcement and regulators. This directory also will be accessible to U.S. financial institutions seeking to comply with their own AML obligations, particularly the beneficial ownership regulation, otherwise known as the Customer Due Diligence Rule (CDD Rule), already applicable to banks and other financial institutions. The CTA's beneficial ownership directory is one of the most important and long-awaited changes to the BSA/AML regulatory regime, but it presents many challenges, both legal and logistical. On April 5, 2021, FinCEN issued an advance notice of proposed rulemaking to solicit public comment on the CTA's implementation. In response, FinCEN received over 200 letters from industry stakeholders – including the letter from BPI.
This blog post again takes the form of a Q&A session, in which Angelena responds to questions posed by Money Laundering Watch about the CTA and how it should be implemented. We hope you enjoy this discussion on this important topic. – Peter Hardy and Shauna Pierson…
Continue Reading Implementing the Corporate Transparency Act: A Guest Blog
AML Act Deadlines Through January 1, 2022 – A Daunting List
By Peter D. Hardy, Mary K. Treanor, Terence M. Grugan & Beth Moskow-Schnoll on July 15, 2021
Posted in AMLA of 2020, BSA AML Reform, Department of Justice (DOJ), Financial Crimes Enforcement Network (FinCEN)
The Financial Crimes Enforcement Network ("FinCEN") recently complied with two important deadlines under the Anti-Money Laundering Act ("AML Act") — issuing national priorities for AML and countering the financing of terrorism ("CFT"), and issuing an assessment on potential "no-action" letters. Both of these publications were due on June 30, 2021. This development prompted us…
FinCEN Issues Assessment on Possible "No-Action" Letters for Industry
By Peter D. Hardy on July 7, 2021
Posted in AMLA of 2020, BSA AML Reform, Financial Crimes Enforcement Network (FinCEN), Technological Innovation
Assessment Gives "Thumbs Up" to No-Action Letters but Notes Logistical Challenges
As required by the Anti-Money Laundering Act ("AML Act"), the Financial Crimes Enforcement Network ("FinCEN") issued on June 30, 2021 its 14-page assessment regarding the feasibility of FinCEN issuing so-called "no-action" letters to financial institutions (the "Assessment"). FinCEN issued this Assessment on the same day that it issued the first government-wide list of national priorities for anti-money laundering ("AML") and countering the financing of terrorism ("CFT"), as we have blogged. In arguable contrast to the AML priorities, FinCEN's Assessment is full of specific, concrete details and offers interesting insights into how no-action letters may (or may not) work in practice.
Ultimately, the Assessment posits that no-action letters are a desirable step, but that practical challenges remain – including sufficient funding for FinCEN. According to the Assessment, no-action letters will be the subject of future regulations promulgated by FinCEN. Although the details of a no-action letter process will be a debated topic, the Assessment gives reassurance that FinCEN takes the issue seriously and that no-action letters likely will occur in some form.
Continue Reading FinCEN Issues Assessment on Possible "No-Action" Letters for Industry
FinCEN Identifies AML/CFT "Priorities" For Financial Institutions
Posted in AMLA of 2020, BSA AML Reform, Compliance Program, Cybersecurity, Examination, Financial Crimes Enforcement Network (FinCEN), Risk Assessment
Breadth of List Undermines Usefulness to Industry
As required by the Anti-Money Laundering Act ("AML Act"), the Financial Crimes Enforcement Network ("FinCEN") issued on June 30, 2021 the first government-wide list of priorities for anti-money laundering and countering the financing of terrorism ("AML/CFT") (the "Priorities"). The Priorities purport to identify and describe the most significant AML/CFT threats facing the United States. The Priorities have been much-anticipated because, under the AML Act, regulators will review and examine financial institutions in part according to how their AML/CFT compliance programs incorporate and further the Priorities, "as appropriate."
Unfortunately, and as we will discuss, there is a strong argument that FinCEN has prioritized almost everything, and therefore nothing. …
Continue Reading FinCEN Identifies AML/CFT "Priorities" For Financial Institutions
Congress Regulates the Antiquities Market – and Perhaps the Art Market – for AML Compliance: A Guest Blog.
By Peter D. Hardy & Alexa L. Levy on June 28, 2021
Posted in AMLA of 2020, Art and Antiquities, Beneficial Ownership, BSA AML Reform, Financial Crimes Enforcement Network (FinCEN)
Today we are very pleased to welcome guest blogger Tess Davis, who is the Executive Director of the Antiquities Coalition. Tess, a lawyer and archaeologist by training, oversees the organization's work to fight cultural racketeering worldwide, as well as its award-winning think tank in Washington. She has been a legal consultant for the U.S. and foreign governments and works with both the art world and law enforcement to keep looted antiquities off the market. She writes and speaks widely on these issues — having been published in the New York Times, the Wall Street Journal, CNN, Foreign Policy, and top scholarly journals — and featured in documentaries in America and Europe. She teaches cultural heritage law at Johns Hopkins University, and is a Term Member of the Council on Foreign Relations. In 2015, the Royal Government of Cambodia knighted Tess for her work to recover the country's plundered treasures, awarding her the rank of Commander in the Royal Order of the Sahametrei.
We reached out to Tess because Congress passed the Anti-Money Laundering Act of 2020 ("AMLA") on January 1, 2021. This sprawling legislation in part applies the Bank Secrecy Act ("BSA") to antiquities dealers by defining them as "financial institutions" – and suggests that the BSA later may apply to the art trade as well by requiring a study on money laundering and the art trade. We have blogged repeatedly on the fascinating intersection between the art and antiquities industry and BSA/AML compliance and money laundering concerns. This also is a topic that has garnered significant media interest, including in a recent article in the New York Times. For ease of reference, the AMLA's requirements for factors to be considered for forthcoming regulations on the antiquities trade, and for the factors relevant to the study on the art trade, are described here.
The Antiquities Coalition convened the Financial Crimes Task Force; their materials, including a detailed joint report, Reframing U.S. Policy on the Art Market: Recommendations for Combating Financial Crimes, are available here. Antiquities, art and money laundering also was the subject of a panel at PLI's May 2021 Anti-Money Laundering Conference, at which Tess was a panelist.
This blog post again takes the form of a Q&A session, in which Tess responds to questions posed by Money Laundering Watch about potential AML regulations regarding the antiquities and art markets. We hope you enjoy this discussion on this important topic. – Peter Hardy and Alex Levy…
Continue Reading Congress Regulates the Antiquities Market – and Perhaps the Art Market – for AML Compliance: A Guest Blog.
President Biden Unveils Broad Vision to Crack Down on Foreign and Domestic Corruption
By Henry E. Hockeimer, Jr., Andrew N. D'Aversa & Kaitlin M. Gurney on June 8, 2021
Posted in AMLA of 2020, Beneficial Ownership, Bribery, Corporate Transparency Act, Extraterritorial Application of US Law, Foreign Corrupt Practices Act (FCPA), Freedom of the Press, International Tax Evasion
Agenda Highlights Intersection of National Security, Corruption and Anti-Money Laundering
On June 3, 2021, President Biden unveiled a National Security Study Memorandum entitled Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest (the "Memo"). It reveals—as the title might suggest—that the Biden administration views "countering corruption as a core United States national security interest." Corruption "corrodes public trust" in foreign nations, and—because of its cross-border nature—threatens "United States national security . . . and democracy itself." This threat to democracy is created by, for example, "[a]nonymous shell companies, opaque financial systems, and professional service providers [that] enable the movement and laundering of illicit wealth, including in the United States." Under the rubric of curbing illicit finance and promoting transparency, the Memo amplifies the importance of the Corporate Transparency Act (the "CTA").
To combat these risks, the Biden administration will use a whole-of-government approach. The Memo calls for an interagency review to tap the expertise of a wide array of agencies and executive departments, including the Departments of the Treasury, Justice, Homeland Security, State, Commerce, and Energy. Within 200 days, an interagency review must be completed and a report and recommendations (the "Report") must be submitted to the President. The Report will serve as the basis for the Biden administration's strategy in its fight against corruption, both at home and abroad.
The Report has significant implications for many stakeholders: domestic and foreign financial institutions, U.S. corporations transacting business abroad, and foreign businesses and individuals operating or seeking to operate in the U.S. – as well as their professional advisors.
The Financial Accountability and Corporate Transparency Coalition (the "FACT Coalition") has already heaped praise on the Memo, stating it represents "real progress in combating this global scourge" of corruption. And the Memo represents just one part of a broader federal focus on corruption. The Memo comes about a month and a half after President Biden's Executive Order targeting Russia's use of "transnational corruption to influence foreign governments." It also comes just a day after the announcement of a bipartisan Congressional caucus, the Congressional Caucus against Foreign Corruption and Kleptocracy (the "Caucus"). The Caucus will focus exclusively on foreign corruption, what Sen. Ben Cardin calls a "national security priority of the highest order." The Caucus will provide a means of educating members of Congress and coordinating efforts across committees. Additionally, the Memo's release preceded by just a few days Vice President Harris' visit to Latin America. According to a senior administration official, a major focus of Vice President Harris' trip will be conversations on anti-corruption measures.
Continue Reading President Biden Unveils Broad Vision to Crack Down on Foreign and Domestic Corruption
American Bankers Association Weighs in on the Corporate Transparency Act
By Shauna Pierson on May 13, 2021
Posted in AMLA of 2020, Bank, Beneficial Ownership, Corporate Transparency Act, Customer Due Diligence, Cybersecurity, Financial Crimes Enforcement Network (FinCEN)
As we recently blogged, the Financial Crimes Enforcement Network ("FinCEN") issued an advance notice of proposed rulemaking ("ANPRM") on April 5, 2021 to solicit public comment on the implementation of the Corporate Transparency Act ("CTA"). In response, FinCEN received over 200 letters from industry stakeholders. This post will focus on one such letter, from the American Bankers Association ("ABA"), which highlights the industry perspective of large financial institutions.
The CTA, passed as part of the Anti-Money Laundering Act of 2020 ("AMLA"), requires certain legal entities to report their beneficial owners to a database accessible by U.S. and foreign law enforcement and regulators, and to U.S. financial institutions seeking to comply with their own Anti-Money Laundering ("AML") compliance obligations, particularly FinCEN's existing BO regulation which is part of the Customer Due Diligence Rule ("CDD Rule") implemented in 2018. The beneficial ownership database is one of the most important and long-awaited changes to the AML legal framework in the United States.
To understand the paradigm shift, it is useful to recall the CDD rule currently in existence. Under FinCEN's existing regulations, covered financial institutions have the requirement to collect and verify beneficial ownership information from their customers, and maintain records of such information. But until now their customers, which may include individuals and companies of all sizes, did not have to report such information to the government. The CTA makes companies (like LLCs and corporations) subject to such beneficial ownership reporting requirements. The CTA also requires FinCEN to revise the CDD Rule to try to make it consistent with the CTA and remove any unnecessary or duplicative burdens on financial institutions and legal entity customers.
In anticipation of these significant changes, industry groups have submitted comments to FinCEN on topics ranging from who will be covered to the logistics of implementation. The ABA, representing large banks, submitted a lengthy comment letter showcasing a strong interest in how these regulations shake out. The ABA first makes clear its support for Congress and FinCEN in ramping up efforts to combat money laundering and terrorism financing. It then lays out its recommendations for filling in gaps left by the CTA, largely tracking the questions that FinCEN solicited in its ANPRM. We summarize the most salient points below.
Continue Reading American Bankers Association Weighs in on the Corporate Transparency Act
FinCEN Again Extends GTO Regarding Real Estate and Money Laundering
By Peter D. Hardy, Richard J. Andreano, Jr. & Mary K. Treanor on April 29, 2021
Posted in AMLA of 2020, Beneficial Ownership, Financial Crimes Enforcement Network (FinCEN), Geographic Targeting Order (GTO), Real Estate
Meanwhile, Congress Wants a Report on Russian Money Laundering and Its Relationship to the Real Estate Industry
FinCEN announced today that, once again, it is extending the Geographic Targeting Order, or GTO, regarding real estate transactions.
FinCEN's press release is here. The new GTO is here. It is identical to the most recently…
PLI Anti-Money Laundering Conference to Address Key Issues in BSA/AML
By Peter D. Hardy on April 25, 2021
Posted in 18 USC 1956, 18 USC 1957, AMLA of 2020, Art and Antiquities, Attorney Liability, Beneficial Ownership, Bribery, BSA AML Reform, Criminal Enforcement, Department of Justice (DOJ), Extraterritorial Application of US Law, Foreign Corrupt Practices Act (FCPA), Individual Liability, Information Sharing, Whistleblower
Art & Antiquities; Beneficial Owners; Foreign Corruption — and More
We are really pleased to be moderating, once again, the Practising Law Institute's 2021 Anti-Money Laundering Conference on May 11, 2021, starting at 9 a.m. This year's conference again will be entirely virtual — but it will be as informative, interesting and timely as…
The New BSA Whistleblower Law: A Podcast
By Peter D. Hardy & Meredith S. Dante on April 23, 2021
Posted in AMLA of 2020, Bank, Civil Liability to Private Parties, Credit Union, Whistleblower
As we have blogged, the Anti-Money Laundering Act of 2020 ("AMLA") amended the Bank Secrecy Act ("BSA") to expand greatly the options for whistleblowers alleging anti-money laundering ("AML") violations and potentially create a wave of litigation and government actions, similar to what has occurred in the wake of the creation of the Dodd-Frank whistleblower…