Five BSA Hot Topics for 2021

By Kevin Eaton

The passage of the National Defense Authorization Act in December 2020—that included a number of anti-money laundering/Bank Secrecy Act reforms packaged as the Anti-Money Laundering Act of 2020 has actually been called the most substantial AML costs considering that the U.S.A. Patriot Act. The bipartisan law consists of a number of essential modifications that ABA has actually been seeking for a long time.
“We are very pleased, because we met with some of the drafters of the legislation at the beginning of the Congress and there are a lot of things in there that ABA specifically recommended,” states Rob Rowe, ABA’s VP and senior counsel, customer and regulative compliance, speaking at ABA’s Regulatory Compliance Conference in June.

The brand-new guidelines cover a range of subjects, however there are 5 crucial areas that banks must understand more about.

1. Beneficial ownership computer system registry

The guideline needs banks to gather details on helpful owners when an account is opened, utilizing details offered by the client. A helpful owner, as specified by the guideline, owns more than 25 percent of the equity interests in a business or is the bachelor working out control.

ABA has actually made a number of suggestions that must direct the Financial Crimes Enforcement Network as it establishes the database—consisting of that FinCEN make sure functionality and ease of gain access to for reporting business, police and banks. Questions stay how the computer system registry will operate in practice.

“How do you figure out a beneficial owner?” Rowe asks. “It sounds simple, but when you say look at the equity prong, which is that 25 percent ownership element that defines a beneficial owner? How do you calculate that 25 percent? Is it indirect? Is it only direct? Clarity on that is going to be important.”

ABA has actually mentioned that for a pc registry, reporting must construct on existing requirements in FinCEN’s client due diligence guideline. The association likewise suggested that FinCEN take actions to confirm the details sent by reporting business; that meanings for terms such as “beneficial ownership” be clear and basic; which FinCEN take proper actions to alert reporting business about the requirements.

2. Whistleblower rewards and securities

AMLA updates the rewards and securities for whistleblowers and offers awards for initial details. The award depends on 30 percent of any funds gathered since of the details offered. This does not use to details gathered in the regular course of the worker’s tasks. A whistleblower can act anonymously through a lawyer however should reveal their identity prior to the payment of any awards and whistleblowers are secured from retaliation.

“They’re going to have to set guard rails in place about who’s qualified because they don’t want to upset the internal reporting mechanism,” states Rowe. “You know, you don’t want a bank employee thinking ‘Oh, I can get a reward on this if I don’t report this to our BSA officer.’ It’s not supposed to work that way. So setting up the guardrails for that is going to be important. Law enforcement and FinCEN are very excited about this whistleblower provision.”

3. Public/Private Information Exchange

The Public/Private Information Exchange was at first revealed in 2017 and is a voluntary collaboration in between banks and police. Through this program, FinCEN welcomes regional police and regional banks together to discuss what police is trying to find and the kinds of activity banks are seeing. During the private conferences, the groups have frank discussions about the kind of illegal activity they are seeing, a procedure that offers police the chance to get more information about how the monetary sector works.

“In Puerto Rico, we have started a conversation with the agencies,” states Marilú Jimenez, senior advisor at the Isaac Milstein Group and a previous chief compliance officer at Banco Popular in San Juan. “We’re listening about [suspicious activity reports]that have been submitted and what is happening with those and I think this is what it’s all about. It’s not the regulations and complying with your regulator, it’s about making it meaningful for law enforcement.”

Having the chance to develop that individual connection in between a bank and police is indispensable, Rowe states—“just having their name, so if something comes up or a questions comes up you can pick up the phone [they say], ‘Oh, I remember you.’”

4. No-action letters

AMLA needed FinCEN to evaluate whether to develop a no-action letter procedure, and in July, FinCEN indicated that it means to continue with a rulemaking to develop the procedure. Through the no-action letter procedure, a firm informs an organization that it will not take enforcement action versus the sending celebration for the particular conduct provided to the firm. The technique would resemble ones taken by other companies, consisting of the CFPB.

“I’m not sure how enthusiastic FinCEN is about it,” Rowe includes. “But the idea of no-action letters—where a bank would submit a ‘Here’s what we want to do’ and FinCEN comes back and says ‘Fine, if you do this, we think it looks fine and as long as you stick to what you say you’re going to do, we’re not going to bring an enforcement action’—that kind of thing should help encourage innovation and make people a little less reluctant to try it.”

5. Examiner training

The brand-new guidelines need Bank Secrecy Act inspectors to go through yearly training consisting of on danger profiles, monetary criminal activity patterns and patterns and why AML guidelines are needed for police. ABA has actually long prompted companies to perform routine, consistent training on taking a look at for AML/BSA compliance.

“Clearly the training is important,” states Rowe. “There are provisions in there that depending on how they play out will be beneficial.”

The upcoming modifications to AML/BSA guidelines have the chance to move the procedure far from a “check the box” mindset to one laser-focused on defense of the stability of the monetary system and nationwide security, Rowe includes. At completion of the day, the objective of AML/BSA guidelines “is to protect the system and protect us, protect our husbands and wives and children, which really when you think about is what it’s all about.”

Kevin Eaton is associate editor at the ABA Banking Journal.


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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