Congress Approves Anti-Money-Laundering (AML) Measure

Background

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

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.

Closing

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Best,

Jonathan T. Marks, CPA, CFF, CFE

Steve Goldberg

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