United States Tightens Noose on Money Laundering with Sweeping Regulatory Changes

In a move to strengthen the country’s anti-money laundering (AML) and combating the financing of terrorism (CFT) framework, the Financial Crimes Enforcement Network (FinCEN) has outlined significant updates and new regulations aimed at protecting the financial system from illicit activities.

180-Day Update on AML Act Implementation and Achievements

In a statement issued by FinCEN Director, the agency highlighted its progress in implementing key provisions of the AML Act, including:

Establishment of priorities for AML/CFT: FinCEN has identified specific areas where financial institutions should focus their efforts to prevent money laundering and terrorist financing.
Program requirements for financial institutions: Financial institutions are now required to implement robust AML/CFT programs that include risk-based approaches, employee training, and independent audits.
Enhanced reporting requirements for beneficial ownership information: FinCEN has introduced new rules requiring financial institutions to report beneficial ownership information on a regular basis.

New Regulations and Guidance

FinCEN has proposed new rules to strengthen AML/CFT programs, including:

Threat pattern and trend information: Financial institutions are now required to analyze and report on threat patterns and trends related to money laundering and terrorist financing.
SAR sharing: FinCEN has introduced a pilot program for sharing Suspicious Activity Reports (SARs) between financial institutions to improve the detection of illicit activities.
Review of existing regulations and guidance: FinCEN has committed to reviewing its existing regulations and guidance to ensure they are effective in combating money laundering and terrorist financing.

Enhanced Beneficial Ownership Reporting

The Corporate Transparency Act has led to significant changes in beneficial ownership reporting requirements for entities in the United States. FinCEN has issued final rules on beneficial ownership information reporting, including:

Deadlines for submission: Financial institutions are required to submit beneficial ownership information on a regular basis.
Use of FinCEN identifiers: Financial institutions are now required to use FinCEN identifiers when submitting beneficial ownership information.

Safeguards for Access to Beneficial Ownership Information

To balance the need for access to beneficial ownership information with concerns around data protection, FinCEN has introduced regulations on safeguards for accessing such information. The new rules require financial institutions to implement robust measures to protect sensitive data while ensuring compliance with AML/CFT requirements.

Timeline of Key Developments

June 30, 2021: FinCEN Director issues statement on 180-day update on AML Act implementation and achievements.
September 23, 2021: Advance notice of proposed rulemaking on arts and antiquities issued.
December 8, 2021: Notice of proposed rulemaking on beneficial ownership information reporting issued.
December 14, 2021: News release on review of regulations and guidance issued.
January 24, 2022: News release on SAR sharing pilot program issued.
February 8, 2022: FinCEN statement regarding beneficial ownership information reporting and next steps.
June 3, 2022: Advance notice of proposed rulemaking on assessment of no-action letters issued.

Conclusion

The United States is taking a comprehensive approach to combating money laundering and terrorist financing. The new regulations and guidance outlined by FinCEN are designed to strengthen the AML/CFT framework, enhance beneficial ownership reporting, and provide safeguards for access to sensitive information.