On 1 January the US Congress overrode a presidential veto to enact the Anti-Money-Laundering Act 2020. As part of the National Defence Authorisation Act for the fiscal year of 2021, this statute creates a broad range of new AML obligations for financial institutions.
The Act creates a federal beneficial ownership registry that will require many US entities to report beneficial information directly to FinCEN periodically.
It creates a new "whistleblower programme" for offences against the Bank Secrecy Act 1970. The new programme removes an earlier programme's cap on rewards to informants and protects them more thoroughly from retaliatory acts by employers.
In addition, the Act creates two new criminal offences relating to any misrepresentation to a financial institution of significant information concerning assets connected with senior foreign political figures or entities that the Government has designated as "primary money laundering concerns."
The Act also includes (1) heavier penalties for persons who repeatedly violate the Bank Secrecy Act, (2) an additional fine in the amount of any profit gained due to an offence against the BSA and (3) a requirement that directors, officers, partners or employees of financial institutions should repay any bonuses they might have earnt as individuals during a year in which they offended against the BSA.
A new provision permits the Treasury and the Department of Justice to subpoena the foreign records of foreign banks that maintain correspondent accounts at US financial institutions.
Other provisions of the Act require FinCEN to (1) establish national AML priorities, (2) assess the usefulness of a "Bank Secrecy Act-focused no-action letter process" and (3) evaluate the adequacy of the thresholds above which financial institutions have to send off currency transaction and suspicious activity reports to the authorities. [Editor's note: a no-action letter - banned in the UK by the regime set up by the Financial Services and Markets Act 2000 - is a declaration on the part of a regulator that it will not penalise the recipient if he commits an illegal (or legally questionable) act.]
The Anti-Money Laundering Act 2020 is the most comprehensive overhaul of the Bank Secrecy Act since the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act 2001 (the USA PATRIOT Act). Spanning more than 85 pages of new statutes, the Act contains significant changes, minor tweaks and calls on government bodies to conduct studies. Many of the new provisions, including some to create a federal registry of beneficial ownership, call for regulations that will be promulgated months or years from now. Other provisions, such as the new criminal offences, take effect immediately.
Requirements that relate to the beneficial ownership of private equity or family office ownership structures, as well as the expansion of the DoJ's authority to issue subpoenas to foreign banks with US correspondent accounts, warrant significant attention and represent a sea change from the previous AML regime.
* Jodi Avergun can be reached on +1 202 862 2456 or at firstname.lastname@example.org; Christian Larson can be reaached on +1 202 862 2402 or at email@example.com