Senators call for Fincen to accelerate money laundering reforms

WASHINGTON —  A bipartisan group of senators urged the Treasury Department and Financial Crimes Enforcement Network to implement the Corporate Transparency Act more quickly, the latest instance of lawmakers pressing the Biden administration on anti-money laundering reform amid the Russian invasion of Ukraine. 

In a letter addressed to Treasury Secretary Janet Yellen and acting director of the Financial Crimes Enforcement Network Himamauli Das, a bipartisan group of lawmakers demanded that the Biden administration provide a timeline for the implementation of the CTA, which was passed in 2020 in an effort to crack down on the use of anonymous shell companies in the U.S. 

“The Treasury Department has yet to finalize the implementation of the CTA — or even set a timetable for its completion,” the lawmakers wrote in a letter signed by Sens. Elizabeth Warren, D-Mass., Sheldon Whitehouse, D-R.I., Marco Rubio, R-Fla., Ron Wyden, D-Ore., Bob Menendez, D-N.J., Chuck Grassley, R-Iowa, and Bill Cassidy, R-La. 

Bloomberg News

“We appreciate that FinCEN is working with limited resources, and Congress is working to remedy that through the appropriations process,” the lawmakers wrote in the letter dated May 9. “Still, over four months after the statutory deadline for implementation, FinCEN has only proposed one of its three CTA rules.” 

The group of lawmakers pointed to the conflict in Ukraine and subsequent sanctions regime leveled by the U.S. and its allies, arguing that the war “only amplified” the CTA’s importance.

“The federal government cannot properly implement sanctions against Putin and his oligarchs if it does not know the full extent of their holdings,” the lawmakers said. “But recent reporting suggests that the Treasury Department presently lacks this information, underscoring the urgent need for beneficial ownership disclosure as required by the CTA to protect America’s financial stability and national security.” 

The senators behind Tuesday’s letter are not the first batch of federal lawmakers to complain about Fincen’s regulatory pacing to implement the CTA. In November, several House lawmakers urged the Treasury Department to move more quickly in the hopes of meeting a Jan. 1, 2022 implementation deadline. (Fincen did not make that deadline but introduced the first of three major proposed rules in December.) 

In a statement, a spokesperson for Fincen said that the agency was "working diligently to implement these requirements and giving full consideration to the many complex issues associated with the implementation of the CTA. We do not yet have a timeline for the publication of the final beneficial ownership information reporting rule."

Beyond limiting the use of anonymous shell companies, the Corporate Transparency Act was designed in part to lessen the regulatory burden of financial institutions, who are currently responsible for a bevy of customer due diligence reporting regulations. It remains to be seen just how much regulatory burden will be removed as the Treasury Department continues to implement the law in the coming months and years. 

Later on Tuesday, Yellen testified before the Senate Banking Committee, where she called for stablecoin legislation and fielded questions on the proper authorities of the Financial Stability Oversight Council. 

The Corporate Transparency Act was mentioned only in passing by lawmakers — Sen. Chris Van Hollen, D-Md., told Yellen that the U.S. must “accelerate the implementation of the Corporate Transparency Act and the Anti-Money Laundering Act, and I look forward to working with you on that.”