The recent international scandal of the investigation of the International of the Consortium of Investigative Journalists ("ICIJ"), known as the Pandora Papers, has revealed how the international measures of financial security and fight against financial malfeasance in the twenty-first century are still weak and fragile to criminal infiltration, in particular, the establishment of shell companies in tax havens to hide the sums of illicit money, the anonymity of beneficiaries and beneficial owners.
Relatedly On October 6, 2021, a U.S. Congressional panel introduced a bill entitled "Establishment of New Enterprise Money Laundering and Security Risk Enabling Authorities," House Resolution No. 5524 (amending the "ENABLERS ACT"), remains pending Congressional approval en pleno.
The ENABLERS Act is a particular AML provision of the U.S. Bank Secrecy Act, the text of which would impose stringent 'enabling' due diligence requirements on persons and professionals in the business and financial sector, which are covered by the regulatory definition of 'financial institution' and 'financial activity' (as defined in 31 USC § 5312 (a) (2). The ENABLERS Act also requires the U.S. Department of the Treasury to provide tools for monitoring and verifying the origin of funds in one of the most involved areas of AML/CFT.
The Enablers ACT would be involved in this legislation:
- Investment advisors
- Art dealers, antiques
- Lawyers involved in financial activities, law firms
- Notary involved in financial activity
- Providers of business and accounting services
- Public relations professionals and third-party payment service providers
- Professionals engaged in the business of providing investment advice on a compensation basis
- Trust service providers (trusts and for multiple corporate entities)
These provisions, it says, would have to be made available and operational by December 31, 2023. It would also require enablers to have established due diligence programs in place by June 30, 2024.
This proposed bill apparently incorporates in some operational respects recent provisions enacted by the AML Act of 2020, which took effect in 2021.
The Treasury would also be directed, not later than 90 days after the date of enactment of the ENABLERS Act, to promulgate rules requiring that objective and subjective information about transactions deemed suspicious be reported through appropriate channels to the offices of the Secretary of the Treasury.
Similarly, the European Union, through the Anti-Money Laundering Directives (AMLD) already with the III and IV Directive (in 2007 and 2017), has provided for the transposition of these obligations of Due Diligence "enabling" some professionals such as lawyers, notaries, accountants, providers of payment services, financial intermediaries and professionals in the sale, purchase, and evaluation of art, etc. ..) that during the exercise of economic activities such as purchase, transfer, and sale of goods and services, the obligation to identify according to general and particular guidelines to AML/CFT risks, also record and store the documentation relating to the subject, contractor, beneficiary and the type of good.
Written by Dimitri Barberini