Money laundering issues have haunted many over the years. To promote greater transparency, the U.S. Senate has approved legislation requiring companies in the U.S. to register their true owners. This change would help combat money laundering and the financing of terrorism.
Senate Intelligence Committee Vice-Chair Sen. Mark Warner said it is “past time to put an end to the secrecy that allows drug cartels, human traffickers, arms dealers, terrorists and kleptocrats to exploit the United States’ banking system in order to carry out anti-American activities.”
If approved by the president, the Treasury Department would have a year to issue regulations spelling out the finer points of how companies would comply. The thought is new companies created in the U.S. would immediately have to disclose the name, birth date, address, and a government-issued identification number—such a driver’s license number or passport number—of the company’s beneficial owner. This information would be reported to and kept in a registry by the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The registry won’t be available to the public, but federal law enforcement would have access to the data. Financial institutions would have access with customer consent.
Sen. Warner added that “the current holes in our financial system pose a serious threat to national security. “
Existing companies would have two years to comply. Companies would only have to update the information when there is a change in ownership. Many companies would be exempt. Publicly listed companies and certain firms that are regulated by the federal government would not have to report, for instance. Nor would companies with more than 20 full-time employees, $5 million in annual sales, and a physical place of business. Those who fail to disclose their ownership or provide false information face fines of up to $10,000 and up to two years imprisonment. The legislation passed this week also establishes a new FinCEN whistleblower program for financial crimes. This is all part of the National Defense Authorization Act (NDAA), which addresses many other issues identified in the FinCEN Files.
Fraud related to money laundering is a major problem for financial institutions: an estimated $800 billion to $2 trillion gets laundered every year through the global financial industry, turning these businesses into the unwitting financier for terrorist networks, drug cartels, and other criminal groups threatening national security. Regulators have and continue to emphasize the need to properly train staff and ensure procedures are in place to investigate any transactional red flags.
Customer due diligence and training seem to be the biggest areas of concern by many. Our team of professionals can help! Baker Tilly reduces risk and creates sustainable solutions by combining industry-leading experience with current regulatory insights. I welcome your thoughts and comments. Best,
We know This and have Done this Before
Baker Tilly understands financial crimes compliance, BSA, and AML because we are former compliance professionals, regulators, and federal law enforcement with expertise in this space. Baker Tilly’s team of global financial crimes experts can help your organization design and maintain robust and sustainable financial crimes compliance programs—Anti-Money Laundering/Bank Secrecy Act (AML/BSA), Economic Sanctions/Office of Foreign Assets Control (OFAC), Anti-Bribery/Corruption and Anti-Fraud.
Feel free to contact us – click on our names below to get our bios and contact information.