Draft ILLICIT CASH Act Addresses BSA/AML Burdens

Credit unions support efforts to track money laundering and terrorist financing, but also believe it is important to strike the right balance between the compliance costs and benefits to the federal government, CUNA wrote to Senate Banking Committee leadership Wednesday before a hearing in which it will discuss draft legislation.

“We are encouraged by draft legislation the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act This draft bill addresses the redundancies, unnecessary burdens, and opportunities for efficiencies within the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) statutory framework,” the letter reads.

CUNA appreciates several areas addressed in the draft legislation, including:

• Title I:

o Requires that Treasury establish national exam and supervision priorities intended to supplement and guide financial institutions, financial regulators, and law enforcement on handling AML-CFT (combatting the financing of terrorism) threats;

o Establishes a Treasury financial institution liaison to seek and receive comments from financial institutions regarding AML-CFT rules and regulations and examinations, including regarding the banking regulators.
• Title II:

o Requires annual reports from DOJ to Treasury on the use of BSA reporting by law enforcement;

o Requires periodic law enforcement feedback to financial institutions on their suspicious activity reports. This periodic feedback shall also be coordinated and conducted in the presence of financial regulators;

o Reviews and streamlines reporting requirements to ensure a “high degree of usefulness” for CTR/ SAR filings, including a review of reporting fields, as well as a review of appropriate ways to promote financial inclusions and avoid unnecessary de-risking;

o Requires Treasury and the Attorney General to review the CTR and SAR thresholds and determine whether any changes are necessary; and

o Requires a formal review of all AML-CFT regulations and guidance with public comment to remove outdated or unnecessary regulations and guidance.
• Title III:

o Establishes a path for financial institutions to share de-identified AML-CFT information for purposes of identifying suspicious activity.

The letter also notes concern with at least one provision in the bill that CUNA believes could cause examination issues for some small credit unions.

“In Title III, we support the objective of the provision regarding transaction monitoring software intended to improve the risk-based system of tracking individual transactions,” the letter reads. “However, regardless of the Rule of Construction, it has been our experience that some examiners will expect the credit unions to comply with such ‘recommendations.’ We are concerned that ‘approved’ transactions monitoring software could cause a significant financial burden.”