Legal Brief: Reviewing Recent Legislative, Regulatory Efforts at AML Reform

By Silas Bartels

Editor’s Note: As the 116th U.S. Congress nears conclusion, the ACAMS legal team examines the legislative push to update the Bank Secrecy Act and related regulations.

On May 3, 2019, soon after the 116th Congress convened, Rep. Carolyn Maloney (D-NY) reintroduced the Corporate Transparency Act, which would require corporations and limited liability companies to declare their beneficial owners to the Treasury Department.

Sens. Marco Rubio (R-FL), Ron Wyden (D-OR) and Sheldon Whitehouse (D-RI) pitched companion legislation in the Senate the following month.

On the same day that Maloney introduced her legislation, Rep. Emanuel Cleaver (D-MO) unveiled the Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act to enhance training of federal examiners, increase privacy protections for Bank Secrecy Act data and expand anti-money laundering obligations to cover antiquities dealers.

The largely bipartisan legislation, also known as the COUNTER Act, gained the support of the American Bankers Association and other organizations as a much-needed solution to end criminal abuse of anonymous shell companies.

Building on the momentum, the House passed the Corporate Transparency Act on Oct. 22, 2019, with provisions from the COUNTER Act, roughly a month after a bipartisan group of eight senators introduced a wide-ranging bill to update the Bank Secrecy Act, or BSA.

The bill, the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings Act, or ILLICIT Cash Act, would grant the Financial Crimes Enforcement Network authority over federal anti-money laundering supervision.

This legislation also includes proposals to enhance data exchanges and enable compliance-related innovations under the BSA, and would require legal entities to disclose their beneficial owners at the time of incorporation to FinCEN.

Progress on anti-money laundering reform stalled amid the COVID-19 pandemic and competing legislation until July of this year, when the House overwhelmingly voted to fold the Corporate Transparency Act and COUNTER Act into the country’s primary defense budget bill, the National Defense Authorization Act for Fiscal Year 2021.

Similarly, after the ILLICIT Cash Act failed to gain traction in the Senate, Mike Crapo (R-ID) and Sherrod Brown (D-OH) included a revised version of the bill, renamed the Anti-Money Laundering Act, as an amendment to the Senate’s version of the NDAA.

These efforts were widely embraced by industry groups, including the Credit Union National Association, the Securities Industry and Financial Markets Association and the American Bankers Association. While not finalized, the 116th Congress may still enact these impactful BSA and AML reforms before adjourning in January 2021.

U.S. regulators have also sought to improve U.S. AML rules and supervision, including by updating sections of the manual that federal examiners in the field use to evaluate compliance.

In August, the Federal Deposit Insurance Corp., Federal Reserve, Office of the Comptroller of the Currency and other regulatory agencies issued a joint statement to clarify the due-diligence expectations to which U.S. financial institutions should adhere when serving overseas authorities and other customers who qualify as politically exposed persons.

The agencies also published a separate, updated statement in August to further outline the steps they take when evaluating whether a financial institution’s AML compliance failures merit an enforcement action.

On Sept. 16, FinCEN proposed requiring that financial institutions subject to AML obligations maintain an “effective and reasonably designed” compliance program that provides useful intelligence to law enforcement. The bureau’s proposal immediately raised questions over which programs will qualify as “effective.”

On Nov. 12, Acting Comptroller of the Currency Brian Brooks told lawmakers in testimony that the primary goal of U.S. AML regulatory reform is to reduce the compliance burden while continuing to meet the needs of law enforcement.

Contact Silas Bartels at

Topics : Anti-money laundering , Counterterrorist Financing
Source: ABA/Trade Associations , U.S.: Congress , U.S.: FinCEN , U.S.: Federal Reserve Board , U.S.: OCC , U.S.: FDIC , U.S.: SEC , U.S.: NCUA
Document Date: November 17, 2020