12 Jun 2019
It is one of the most ambitious anti-money laundering (AML) bills presented to the US Congress in years, though its greater distinction may be that it arrives with something harder to come by than ambition on Capitol Hill: bipartisan support from well-placed lawmakers.
Four members of the Senate Banking Committee—Sens. Mark Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL) and Mike Rounds (R-SD)—introduced the Illicit Cash Act on Monday in an effort to strengthen the Treasury Department’s tools to fight financial crime, optimize the use of bank regulatory reports and mandate new disclosures by US businesses and other corporate entities.
The draft legislation would charge the Financial Crimes Enforcement Network (FinCEN) with approving transaction monitoring software, including in-house proprietary systems, used by financial institutions to meet AML obligations, and task the bureau with establishing standards for when covered businesses should file suspicious activity reports (SARs) based on payments flagged by the programs.
The bill would separately establish a new means for banks to share “de-identified” AML and counterterrorism financing data, and would permit financial institutions to share such information with their foreign branches and affiliates. Foreign banks operating in the United States would be obligated to comply with subpoenas and similar evidentiary requests under standards established by the measure or face contempt sanctions.
Under the legislation, the US Justice Department would seek to streamline the reporting of SARs and currency transaction reports, potentially by amending current transactional thresholds that mandate such filings.
In perhaps its most wide-ranging provision, the draft bill would obligate businesses and other corporate entities to disclose information on their beneficial owners to a comprehensive federal database that would be made accessible to federal and local law enforcement officials.
The proposal, which is intended to crack down on the misuse of shell companies by financial criminals, has been central to multiple bills of lesser scope, with fewer cosponsors, for well over a decade, but passage has remained elusive.
Under the Illicit Cash Act, title insurance companies throughout the country would also be required to obtain and report beneficial ownership data on foreign entities purchasing high-value real estate. FinCEN currently requires such companies to report ownership data on a provisional basis in metropolitan areas in nine states through its issuance of geographical targeting orders.
FinCEN, which would be tasked with maintaining the beneficial owner database, would also see its employee pay scale adjusted to one comparable to that of federal financial regulators, in part to accommodate newly created teams of financial investigators and technology experts at the bureau.
A similar bill with bipartisan support is expected to be introduced in the House of Representatives later this week.
“Our anti-money laundering laws have not kept pace with the increasingly sophisticated means by which criminals and terrorist organizations use our financial system to move their money around the world,” said Jones, in a statement. “This bipartisan legislation addresses both challenges and gives law enforcement the tools they need to protect Americans and prosecute criminals.”
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