WASHINGTON — A bipartisan group of senators have unveiled draft legislation to reform anti-money-laundering requirements, in another attempt to modernize a regime that bankers deem outdated.
The bill sponsored by Sens. Mark Warner, D-Va., Doug Jones, D-Ala., Tom Cotton, R-Ark., and Mike Rounds, R-S.D., would require companies to disclose to the Financial Crimes Enforcement Network their beneficial owners and create a comprehensive federal database for beneficial ownership information.
The reform legislation would also require the Department of Justice to provide metrics on the utility of AML reporting submitted by banks and other financial institutions. It would also bolster coordination between financial regulators and law enforcement to combat AML threats. Yet the bill omits changes to the thresholds that require financial firms to report suspicious transactions.
The new bill means lawmakers in both the House and the Senate are zeroing in on a beneficial owner requirement as part of an AML reform bill. The draft legislation’s release comes a day before the House Financial Services Committee is set to mark up a bill led by Rep. Carolyn Maloney, D-N.Y., to require companies to report their true owners at incorporation. The Senate Banking Committee will also hold a hearing on beneficial ownership June 20.
“As a former U.S. Attorney, I am all too familiar with criminals hiding behind shell corporations to enable their illegal behavior,” Jones said in a press release. “At the same time, our anti-money-laundering laws have not kept pace with the increasingly sophisticated means by which criminals and terrorist organizations use our financial system to move their money around the world. This bipartisan legislation addresses both challenges and gives law enforcement the tools they need to protect Americans and prosecute criminals.”
Senators have held
Rounds added that the legislation aims to find a compromise between providing law enforcement tools to combat illicit crime, while not placing undue burdens to small businesses.
"Fighting crime and depriving terrorists of the tools they use to engage in illicit activity within our financial system is vital to protecting Americans,” Rounds said. “Our legislation seeks to protect our financial system from bad actors by streamlining our government's anti-money-laundering system and simultaneously protecting small businesses from undue compliance burdens.”
Existing companies would have two years to report relevant beneficial ownership information within two years, while companies formed after the bill’s passage will need to provide beneficial ownership information at incorporation.
The AML legislation would impose criminal and civil penalties on companies that willingly violate beneficial ownership reporting requirements, but would give exemptions to companies that take reasonable steps to update minor errors. And it would prioritize the protection of personally identifiable information.
The bill would also bolster Fincen by creating a hub of financial expert investigators to collaborate with other federal regulators. It would also require law enforcement to coordinate with financial regulators.
The banking industry has pushed for AML reforms that would include updates to suspicious activity report and currency transaction report thresholds. The Senate draft bill does not directly change the thresholds, but requires the Treasury Department to review the thresholds and determine if they need to be updated.
