National Defense Authorization Act | What is NDAA?

The National Defense Authorization Act is the law that guides US defense agencies to change their policies and organizations and spend military funds. The first NDAA was adopted in 1961, and the law is passed by Congress every year. The National Defense Authorization Act is determined by the institutions responsible for defense and includes the Armed Services Committee and the Home Armed Services Committee's powers. 


The NDAA is a bill that allows Congress to set rules for defense policy. The reasons why Congress applied to NDAA are generally determined defense priorities. And also, it guides organizational changes in military institutions and how to use the funding.


Besides, the law covers the Ministry of Defense activities, as well as other agencies that run military programs, such as the Ministry of Energy and the Federal Bureau of Investigation. Nuclear weapons programs or intelligence activities are examples of such military programs. 


History of NDAA 

NDAA passed by Congress for the 60th time in 2021. President Trump vetoed the bill for the first time, but Congress overruled this veto. 


The US defense budget was the primary domain of House and Senate Allocation Committees until 1961. Beginning in 1961, a two-stage process was initiated, including authorization and allocation to legalize defense spending and provide greater control over the purse string to committees overseeing defense policy.


Process of NDAA 

While the NDAA guides how defense financing should be spent, Congress can approve actual funding.


As of February, the White House sends a federal budget to Congress for the fiscal year that runs from October to September. So the process begins, and the senate armed services committees initiate the NDAA creation process.


After several sessions held by various committees, the House and Senate Armed Services Committees come up with a typical NDAA bill. The parliamentary version of this draft is prepared and put to the vote. On the other hand, if differences are detected between these two drafts designed for the parliament and the Senate, the parliament and the Senate fill the gaps. Finally, the law is passed and forwarded to the president for signing. 


Money Laundering and NDAA

Money laundering and terrorist financing activities are the target of the NDAA during the 2021 fiscal year. Accordingly, it is aimed to identify shell companies that are used to hide their financing resources. 


Also, the bill should be prepared following the Corporate Transparency Act, and responsible companies should disclose information about business owners. Under the draft, companies are obliged to inform the US Treasury Department about "beneficial owners" and "persons with significant control" who hold at least 25% of the shares. 


The Anti-Money Laundering Control Act is another piece of legislation in the NDAA. This law aims to strengthen the analytical capabilities of institutions and their relationship with the financial sector. It also aims to improve FinCEN's campaign against illegal financing. 



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