8 Things to Know About the New Anti-Money Laundering Act of 2020 Posted by AVCU on 8:52 AM

  

Last week Congress passed the voluminous National Defense Authorization Act (NDDA), which includes over 200 pages of BSA/AML changes. The following are a few highlights of these changes:

1. Exam & Supervisory Priorities: To help financial institutions efficiently use limited resources, while ensuring that BSA reporting is highly useful to law enforcement, Treasury will establish national BSA/AML priorities. These priorities will serve as a measure on which credit unions are supervised and examined for BSA/AML compliance. 

2. Beneficial owner information collected at business formation: At the time of formation or registration with the appropriate state agency, legal entities will be required to submit beneficial owner information directly to FinCEN. FinCEN will share this information with financial institutions upon request. While this new provision does not repeal credit union’s current beneficial owner requirements, FinCEN’s customer due diligence requirements will be revised to conform with this new law. Be prepared to comment on proposed regulations. 

3. “Safe harbor” when a credit union is directed to keep a suspicious account open: When a law enforcement agency requests that a credit union keep an account open during an investigation, the new law clarifies that the credit union will not be liable for maintaining the account, and no agency can take adverse supervisory action due to the account staying open. Additionally, each request by law enforcement to keep an account open must include a termination date, which is good news for those credit unions that have struggled with “keep open” requests that have continued for years. 

4. FinCEN’s “Domestic Liaison”: FinCEN will establish an Office of Domestic Liaison, which will perform outreach to BSA officers at financial institutions. Among its responsibilities, the Chief Domestic Liaison will receive feedback regarding examinations, promote coordination and consistency of supervisory guidance, and act as a liaison between credit unions and NCUA with respect to information sharing. The Office of Domestic Liaison will have no authority over supervision, examination or enforcement processes. 

5. Risk-based BSA/AML Compliance Programs: One of the express purposes of this new Anti-Money Laundering law is to reinforce that a credit union’s BSA/AML policies, procedures, and controls are to be risk-based. This means that more of the credit union’s attention and resources should be directed toward higher-risk members and activities, and less toward lower-risk members. 

6. Streamlining CTR and SAR Reporting: Treasury will perform a formal review of the reporting requirements related to currency transaction reports and suspicious activity reports, including their thresholds. Other areas of review will include: circumstances that warrant a continuing activity SAR; critical fields included on the SAR; the categories, types and characteristics that are of greatest and least value to investigations; ways to promote financial inclusion (particularly for embassies, charities and money service businesses); and CTR aggregation for common ownership businesses. 

7. GAO De-risking Analysis: Concerns that nonprofit organizations are being underserved due to the perception of a higher risk for money laundering and that such “de-risking” is driving money into less transparent “shadow channels”, the GAO will conduct an analysis to review profitability, reputational risk, and the risk tolerance of financial institutions. Within the year, Treasury will issue a report of its findings and recommend options to promote financial inclusion. 

8. NCUA’s New BSA-Related Officers: The new law requires FinCEN and each federal regulator to appoint a BSA Innovation Officer to provide outreach to law enforcement agencies, state regulators, financial institutions, trade groups, and others with respect to innovative methods, processes, and new technologies that may assist in compliance with BSA/AML requirements.  Additionally, the IRS, FinCEN and each federal regulator will appoint a BSA Information Security Officer with expertise in federal information security, privacy laws, or BSA disclosure policies and procedures. These new officers will be consulted on new regulations, information sharing, development of new technologies and the protection of confidential information.