ANALYSIS: FinCEN Strives to Fulfill AML Act of 2020’s Mandates

The Anti-Money Laundering Act of 2020 (AMLA), which took effect Jan. 1, mandated that the Financial Crimes Enforcement Network (FinCEN) complete a wide range of regulatory actions before the end of the year. The statute and regulatory actions are intended to address persistent problems in the U.S. anti-money laundering/ countering the financing of terrorism (AML/CFT) regime.

In late June, FinCEN announced actions that put it on schedule to implement the AMLA’s mandates.

AMLA Mandates for 2021

The AMLA, enacted as part of the 2021 National Defense Authorization Act, is the first major legislative action to amend the main U.S. AML/CFT law, the Bank Secrecy Act (BSA), since the USA PATRIOT Act of 2001. The AMLA’s provisions address a wide variety of aspects of the U.S. AML/CFT regime that have been in need of reform during the past two decades.

Two of those provisions require regulatory action by mid-2021, with a deadline 180 days after the Jan. 1 enactment date of the AMLA:

AML/CFT priorities. AMLA Section 6101 amended the BSA with a new subsection 31 U.S.C. § 5318(h)(4) that requires the Department of the Treasury to establish priorities for AML/CFT policy that financial institutions will incorporate into their risk-based AML/CFT compliance programs. Treasury must establish and make public these priorities not later than 180 days after the enactment of the AMLA.

No-action letters. AMLA Section 6305 requires Treasury to assess whether FinCEN should establish a process for issuing no-action letters on BSA compliance issues. Not later than 180 days after the enactment of the AMLA, Treasury must submit a report to Congress on this assessment and, if appropriate, propose rulemakings to implement its findings and determinations.

Numerous major actions required by the AMLA have deadlines one year or approximately one year after Jan. 1. They include:

Corporate Transparency Act rulemaking. The Corporate Transparency Act, in AMLA Sections 6401–6403, adds to the BSA a new 31 U.S.C. § 5336 that requires corporate entities to submit reports identifying their beneficial owners to FinCEN. Section 6403 requires Treasury to promulgate regulations on beneficial ownership reporting procedures not later than one year after the enactment of the AMLA.

AML/CFT priorities regulations. AMLA Section 6101 requires that Treasury promulgate regulations for financial institution implementation of the AML/CFT priorities. This rulemaking must be completed within 180 days after the date of establishing the priorities, which occurred on June 30.

Antiquities dealers rulemaking, and report to Congress on art dealers. AMLA Section 6110 requires that Treasury issue proposed rules on AML/CFT requirements for antiquities dealers within 360 days after the enactment of the AMLA. A report to Congress on money laundering and terrorist financing through trade in art has the same deadline.

Report to Congress on reducing SAR and CTR filing burdens. AMLA Section 6204 requires Treasury to submit a report to Congress on reducing the burdens of filing suspicious activity reports (SARs) and currency transaction reports (CTRs) within 1 year after the enactment of the AMLA.

Review of SAR and CTR dollar thresholds. AMLA Section 6205 requires Treasury to review the dollar thresholds for SAR and CTR filings and publish a report within one year after the enactment of the AMLA.

Information-sharing pilot program rulemaking. AMLA Section 6212 adds to the BSA a new subsection 31 U.S.C. § 5318(g)(8) that requires Treasury to issue rules establishing a pilot program for financial institutions to share information related to BSA reports with their foreign branches, subsidiaries, and affiliates. Treasury must issue these rules within one year after the enactment of the AMLA.

Mid-2021 FinCEN Actions

FinCEN, acting to fulfill Treasury’s obligations under the AMLA, met the mid-2021 deadlines with its actions on June 30.

FinCEN issued the AML/CFT priorities in cooperation with federal and state financial regulators. Eight priorities were specified: corruption; cybercrime, including relevant cybersecurity and virtual currency considerations; terrorist financing (international terrorism and domestic violent extremists); fraud; transnational criminal organization activity; drug trafficking organization activity; human trafficking and human smuggling; and proliferation financing.

FinCEN issued the report to Congress assessing whether to establish a process for issuing no-action letters. The report found that AMLA Section 6305 appears to contemplate the possibility of a cross-regulator no-action letter process in which FinCEN could issue a no-action letter that would apply both to FinCEN and other regulators, which possess separate enforcement authorities, but that such a process would be unprecedented and would present legal and practical challenges. FinCEN concluded that it should undertake a rulemaking to establish a no-action letter process limited to the exercise of its own enforcement authority.

Earlier actions in March and April indicated that the agency had begun to address its end-of-2021 obligations before June. A FinCEN Notice issued March 9 informed the financial industry of the AMLA-mandated antiquity dealer rulemaking and report to Congress on art dealers. An advance notice of proposed rulemaking (ANPRM) issued April 5 solicited public comment on questions relating to the Corporate Transparency Act rulemaking, as a prelude to FinCEN issuing proposed rules.

Considerable work remains to be done to meet the year-end deadlines set by the AMLA, however. From July through December, FinCEN must issue proposed rules and final rules on numerous regulatory issues: the AML/CFT priorities, the beneficial ownership information disclosure under the Corporate Transparency Act, the AML/CFT requirements for antiquities dealers, and the information-sharing pilot program. FinCEN also must issue the reports on SAR and CTR filing and on art dealers.

Institutions subject to the BSA and their legal counsel should follow the progress of these numerous regulatory actions for impacts significant to them, and prepare to submit comments on proposed rules where necessary to protect their interests.

Bloomberg Law subscribers can find related content, including information on Anti-Money Laundering Act of 2020 implementation, on our AML Compliance resource.

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