The New US Anti-Money Laundering Legislation

Blog / The New US Anti-Money Laundering Legislation

The New US Anti-Money Laundering Legislation, The Anti Money Laundering Act 2021

On 1 January 2021, a regulatory package aimed at strengthening defense and national security, known as the NDAA (National Defense Authorization Act), came into force in the United States with the approval of Congress. In particular, the normative content presents some important innovations in the economic-fiscal ambit, among which is the reform of The US Patriot Act 2001, which is substituted by The Anti Money Laundering Act. AML experts are familiar with the Patriot Act as it was a package of laws, enacted by then-President W. Bush on 26 October 2001, to combat money laundering. Bush on 26 October 2001, to counter the phenomena of Countering the Financing of Terrorism (CFT) and Anti Money Laundering (AML) immediately after the terrorist attacks of 2001, giving more powers to government bodies of public and economic surveillance (such as the FBI, CIA, and NSA) to identify illicit financial flows with the support and cooperation of foreign authorities.

Ten years after the last act, The Money Laundering Act presents important innovations in the field of anti-money laundering; an update is a must, if only because it is necessary given the evolution of time that sees the introduction of new obliged parties, new procedures to be learned, the anomaly indices have also been revised, the suspicious transaction reports and the sanctions for those who commit violations will be further tightened.

The Program

  1. The creation of a register of owners of companies and firms, such as managing directors and CEOs (Chief Executive Officer).
  2. Strengthen the AML reporting system, similar to the operational and regulatory systems defined by the SEC Security Exchange Act and Dood-Frank.
  3. Increase the powers of US regulators vis-à-vis foreign institutions.
  4. Bring AML/CFT regimes to bear on financial markets for investment protection, strengthening the domestic sanctions system, and interagency cooperation.
  5. Increase the issuance of AML sanctions by introducing new violations into the Bank Secrecy Act (BSA).
  6. Update and share Suspicious Activity Reports (SAR), Suspicious Transaction Reports (STR) to authorities in other foreign states.
  7. Review priorities and policies for AML/CFT governance and mitigation.
  8. Strengthen regulatory powers under the DSA law with respect to planned information activities to the Department of Justice (DOJ) and the Department of the Treasury.

Details Of The Program 

Point 1.

The establishment of the register of beneficial owners will be taken care of by the Government Authority FinCen (The Financial Crimes Enforcement Network), the register will be privately accessible, and only to identified persons with concrete interests, it will have to conform to the principles issued by the Corporate Transparency Act with regard to the protection and confidentiality of the data within it. It will have to contain, in the form of a database, the personal details of the person who is the owner of the company, owner or director, which can be understood as anyone who directly or indirectly operates the company and who has a share capital of more than 25%. This supervisory policy is new for the United States; until then, only a few European countries had implemented measures to identify owners, including non-residents. It will include companies, trusts, profit-making associations, even those organizational corporate structures of LLC (Limited Liability Company) nature and similar, considered by the American system to be supervised.

Point 2.

They are economically incentivizing AML reporting. In relation to confidentiality principles (Whistleblower), the possibility of remuneration for whistleblowers who report suspicious AML activity is not common in Europe, but US law provides for it. In particular, greater protections have been added to labor relations and to judicial discretion in the process between the whistleblower and the reported person (in many cases, it is the employee who reports the employer to the AML authorities) by giving greater confidentiality to cause repercussions or violence to the whistleblower. The requirement is that the reports must be true, original, and with damage to the State of at least $1 million.

Point 3.

Increased powers of inspection and cooperation between foreign financial authorities and US financial authorities, particularly with respect to foreign bank accounts, any account that is solely for law enforcement purposes and strictly for financial investigations (provisions of Section 6308). In addition, the regulatory text provides that if the bank does not cooperate or does not provide the necessary cooperation, it shall immediately inform the Department, which will issue specific sanctions in relation to the refusal to cooperate).

Point 4.

The priority of this new regulatory system is to require public and private institutions, in charge of the AML function, to simplify the processes of storage and processing of data to be analyzed; making them as digital as possible by using the OCC system (Office of the Comptroller of the Currency), modernizing the latter also in view of the issuance of new monetary forms (crypto-currencies) and greater IT availability for police support. Harmonization mandate was given to FinCen.

Point 5.

The Anti-Money Laundering Act gives the Secretary of the Treasury the power to impose sanctions in the event of a violation; the legislation provides for the imposition of economic sanctions of a compensatory nature and the disqualification of persons holding specific positions as directors, officers, or employees in financial institutions from holding positions or functions on the Board of Directors for ten years (formerly White Collar Crime).

Point 6.

Suspicious transaction/activity reports (SARs, STRs) will only be shared with central financial supervisors in the respective countries with an initial cooperation period of three years. They may subsequently establish relationships with branches, subsidiaries. Such cooperation is also open to countries under US sanctions, an initial cooperation project of 2 years.

Point 7.

Within 180 days of its publication, the Department of the Treasury, the Department of Justice, and relevant government authorities must issue AML/CFT priority policies. Policies to be relevant, consistent, and coherent with national policy and defense strategies with updates every four years.

Point 8.

The report to Congress, as governed by ALMA Regulatory Section No. 6311, is to be prepared by the DOJ and that it will report annually on actual violations to the BSA; the report must contain the actions taken to combat and mitigate the risks, and the factors and indices used to determine the actions taken. Lastly, the DOJ must always indicate to Congress the ways and results in which it has established information and judicial cooperation with other government authorities.

Written by Dimitri Barberini

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