Beneficial Ownership, AML Reform Bill Advances to US Senate

By Valentina Pasquali

A comprehensive bill to reform U.S. anti-money laundering rules and shine a light on the true owners of U.S. legal entities cleared the House of Representatives and now awaits consideration by the Senate.

The Corporate Transparency Act, the latest iteration of a decade-long effort to require U.S. legal entities to disclose their beneficial owners and thus combat money laundering through shell companies, passed largely along partisan lines Tuesday, six months after its introduction by Rep. Carolyn Maloney (D-NY).

Lawmakers also adopted dozens of proposals to modernize the 1970 Bank Secrecy Act, or BSA, by merging Maloney’s bill with a second bill ahead of the vote.

Provisions of the COUNTER Act, which Rep. Emanuel Cleaver (D-MO) first pitched in May, would require more thorough training of federal examiners, promote data exchanges between financial institutions’ domestic and foreign operations and extend anti-money laundering rules to antiquities dealers.

In a statement Tuesday, Sen. Mark Warner (D-VA), one of eight sponsors of companion legislation in the Senate, said he was “optimistic” Congress would finalize bipartisan AML reform.

Similar to Maloney’s legislation, Warner’s bill, the ILLICIT CASH Act, would give the U.S. Treasury Department a larger role in AML supervision and enforcement by tasking the Financial Crimes Enforcement Network with collecting and maintaining corporate ownership data.

The bills would separately bolster FinCEN’s budget and staffing, enhance privacy protections for BSA-related data, encourage financial institutions to deploy the latest technologies for identifying and reporting suspicious transactions, and require law enforcement to provide institutions with more feedback on those reports.

Both would also require FinCEN to revise its due diligence rule to reflect the creation of a central database for storing and querying owners’ personal information. The rule, which took effect last year, currently requires banks to collect ownership data from new legal-entity clients but generally does not obligate them to verify its accuracy.

“This is clearly the most comprehensive adjustments to the AML regime since 2001,” said John Byrne, former vice president of ACAMS. “In legislation you can never hold out for perfection … but those are all areas the entire AML community thought were in need of reform.”

The House and Senate versions differ in that the former directs the Treasury Department to adjust the $10,000 threshold for reporting cash transfers in line with inflation while the latter only requires the department to consider doing so.

Maloney’s bill may face stiffer opposition in the Senate, according to Dan Stipano, former deputy chief counsel for the Office of the Comptroller of the Currency.

“The overall atmosphere in Congress at the moment is not one of cooperation,” Stipano, now an attorney with the Buckley law firm in Washington, D.C., wrote in an email.

Contact Valentina Pasquali at

Topics : Anti-money laundering , Counterterrorist Financing , Know Your Customer
Source: U.S.: Congress
Document Date: October 23, 2019