Draft Bipartisan BSA/AML Reform Released

A bipartisan group of senators has released draft legislation to reform aspects of the Bank Secrecy Act (BSA), specifically targeted at anti-money laundering (AML)-combating the financing of terrorism (CFT) requirements. The draft comes as the House Financial Services Committee marks-up a bill related to beneficial ownership disclosure.

The draft from Senate Banking Committee members Mark Warner (D-VA), Tom Cotton (R-AR), Mike Rounds (R-SD) and Doug Jones (D-AL) aims to modernize the AML-CFT regime and create a more transparent corporate ownership system.

According to a press release from the senators, the legislation 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 (FinCEN) 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 (DOJ) 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.
  • Ensure the inclusion of current and future payment systems in the AML-CFT regime by updating the definition of “coins and currency” to include digital currency.

An in-depth look at this bill is available here. The full text of the draft bill is available here.  

Wednesday the House Financial Services Committee marked up eight bills, including one to help financial institutions comply with the new customer due diligence (CDD) rule by requiring companies to disclose their true "beneficial owners" to FinCEN for creation of a database of beneficial ownership information that would be available to law enforcement agencies and financial institutions. The eight bills now await consideration by the full House.