On January 1, 2021, Congress overrode a presidential veto to enact the Anti-Money Laundering Act of 2020 (the "Act"). As part of the National Defense Authorization Act for Fiscal Year 2021, the Act creates a broad range of new AML obligations for federal agencies, financial institutions and other entities.
The Act creates a federal beneficial ownership registry that will require many U.S. entities to periodically report beneficial information directly to FinCEN.
The Act creates a new whistleblower program for Bank Secrecy Act violations. The new program removes an earlier program's cap on whistleblower rewards and includes additional protections from retaliatory acts by employers.
In addition, the Act creates two new criminal offenses relating to any misrepresentation to a financial institution of material information concerning assets connected with senior foreign political figures or entities designated as "primary money laundering concerns."
The Act also includes (1) increased penalties for persons who repeatedly violate the Bank Secrecy Act, (2) an additional fine in the amount of any profit gained due to a violation of the Bank Secrecy Act and (3) a requirement that individual directors, officers, partners or employees of financial institutions repay any bonus earned during a year in which the individuals committed a violation of the Bank Secrecy Act.
A new provision permits the Treasury and the DOJ to subpoena the foreign records of foreign banks that maintain correspondent accounts with U.S. financial institutions.
Other provisions of the Act require FinCEN to (1) establish national AML priorities, (2) assess the utility of a Bank Secrecy Act-focused no-action letter process and (3) evaluate the adequacy of the current thresholds for filing currency transaction and suspicious activity reports.
Additional Cadwalader analysis of the Anti-Money Laundering Act of 2020 will be forthcoming.
The Anti-Money Laundering Act of 2020 is the most comprehensive overhaul of the Bank Secrecy Act since the USA PATRIOT Act of 2001. Spanning more than 85 pages of new statutes, the Act contains significant changes, minor tweaks and mandated government studies. Many of the new provisions, including those creating a Federal beneficial ownership registry, call for regulations that will be promulgated months or years from now. Other provisions, such as the new criminal offenses, take effect immediately.
The beneficial ownership requirements for those private equity or family office ownership structures, as well as the significant expansion of the DOJ's subpoena authority over foreign banks with U.S. correspondent accounts, warrant significant attention and represent a sea change from the previous AML regime.
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