Banking and Finance Law Daily Senate bill would crack down on anonymous shell companies and modernize anti-money laundering laws
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Tuesday, June 11, 2019

Senate bill would crack down on anonymous shell companies and modernize anti-money laundering laws

By Lauren Bikoff, MLS

Senate Banking Committee members Mark Warner (D-Va), Tom Cotton (R-Ark), Doug Jones (D-Ala), and Mike Rounds (R-SD) have introduced bipartisan legislation that would improve corporate transparency, strengthen national security, and help law enforcement combat illicit financial activity. The bill, The Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act, would require shell companies to disclose their true owners to the Treasury Department, update anti-money laundering (AML) and combating the financing of terrorism (CFT) policies, and provide the Treasury department and law enforcement officers with tools necessary to fight criminal networks. Comments on the draft legislation should be directed to Warner at [email protected] by July 19, 2019.

"We must be vigilant and ensure that our financial system is not being misused to fund individuals and groups who intend harm to the United States and our allies," said Warner."This legislation will empower the Treasury Department and other appropriate agencies to better protect our financial system from such abuse, and will ensure that we are using all the tools at our disposal to protect our national security."

In May 2019, a bipartisan bill with similar goals was introduced in the House of Representatives (see Banking and Finance Law Daily, May 6, 2019).

Legislation specifics. The ILLICIT CASH Act would:

  • establish federal reporting requirements mandating that all beneficial ownership information be maintained in a comprehensive federal database, accessible by federal and local law enforcement;
  • help recruit and retain top talent at the Financial Crimes Enforcement Network by putting employees on a pay scale comparable to that of federal financial regulators;
  • create a hub of financial expert investigators at FinCEN to investigate potential AML-CFT activity in collaboration with federal government agencies;
  • create a team of FinCEN technology experts to further the development of new and essential technologies that can assist financial institutions and the federal government in their efforts to combat money laundering;
  • facilitate communications between the Treasury and financial institutions by establishing a Treasury financial institution liaison to seek and receive comments regarding AML-CFT rules, regulations, and examinations;
  • require the Department of Justice to provide the Treasury Department with metrics on the usefulness of AML-CFT data from financial institutions for law enforcement purposes, as well as data on the past and current trends identified by DOJ in the AML-CFT landscape;
  • require law enforcement to coordinate with financial regulators to provide periodic feedback to financial institutions on their suspicious activity reports;
  • prioritize the protection of personally identifying information while establishing a clear path for financial institutions to share AML-CFT information for the purposes of identifying suspicious activity;
  • prevent foreign banks from obstructing money laundering or terrorist financing investigations by requiring these banks to produce records in a manner that establishes their authenticity and reliability for evidentiary purposes, and compelling them to comply with subpoenas. This legislation would also authorize contempt sanctions for banks that fail to comply; and
  • ensure the inclusion of current and future payment systems in the AML-CFT regimeby updating the definition of "coins and currency" to include digital currency.

Several industry groups, including the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Institute of International Finance, have expressed support for this legislation.

Companies: American Bankers Association; Bank Policy Institute; Consumer Bankers Association; Financial Services Forum; Institute of International Finance

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