Treasury and FinCEN Execs Give Update on AML/CFT Developments
Before the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions, Under Secretary Brian E. Nelson and FinCEN Acting Director Himamauli Das reviewed efforts to combat illicit finance and strengthen the U.S. AML/CFT regime.
Testimony
In his testimony, Mr. Nelson asserted that sanctions continue to be an effective tool and a "first resort to address a range of threats to the national security, foreign policy and economy of the United States." Mr. Nelson said that Treasury is focusing on the ways Russia seeks to evade U.S. sanctions. He referred to U.S. efforts, in coordination with several other countries, to implement a "price cap" policy to maintain a supply of oil for the global market while reducing revenues earned through oil by the Russian Federation. Mr. Nelson also drew attention to "the strategic challenge the People’s Republic of China poses to the effective functioning of the international, rules-based order," as well as Treasury's response to a host of challenges, among them, North Korean ransomware attacks, Iran’s procurement of missiles, "state capture and significant corruption in Eastern Europe, Central America, and Sub-Saharan Africa, and targeting the proceeds of fentanyl trafficking and human smuggling networks operating along our southern border."
Mr. Das reported that FinCEN's priorities include (i) implementing a "more effective" risk-based AML/CFT framework by working with financial institutions to submit critical information to law enforcement and communicating regularly with stakeholders to ensure responsible innovation and (ii) identifying Bank Secrecy Act ("BSA") violations, especially within the virtual currency industry.
Mr. Das highlighted FinCEN actions, including:
- providing data and analysis relevant to Russian efforts to avoid sanctions;
- combatting ransomware attacks by continuing to analyze Suspicious Activity Reports, especially for attacks coming from actors in Russia;
- preventing fraud by (i) analyzing BSA information and (ii) assisting financial institutions with understanding fraud and recognizing red flags;
- bringing transparency to the ownership of legal entities that purchase real estate in the United States; and
- promoting responsible innovation in the cryptocurrency industry by deterring companies with a "build first, comply later" mindset that continue to undermine trust in crypto-related finance and threaten national security.
On the "beneficial ownership" requirements under the Corporate Transparency Act of 2020 taking effect in January 1, 2024 (see related news), Mr. Das emphasized, based on consideration of public comments on the rule, that FinCEN has made several changes including (i) extending the timeline for filing initial reports for new entities, (ii) modifying the definitions of "ownership interest" and "substantial control" and (iii) clarifying the definition of "company applicant" to reduce burdens on filers.
Legislation
Current bills being considered by the Committee include:
- H.R. __, "Accountability through Confirmation Act";
- H.R. __, "FinCEN Inspector General Act of 2023";
- H.R. __, "Civil Liberties Protection Act of 2023";
- H.R. __, "FinCEN Record Keeping Act of 2023";
- H.R. __, ‘‘Financial Privacy Act of 2023";
- H.R. __, "Financial Reporting Threshold Modernization Act";
- H.R. __, "Financial Technology Protection Act of 2023";
- H.R. __, "Time Is Up Act of 2023";
- H.R. __, "Stop Chinese Fentanyl Act of 2023";
- H.R. __, "AML Examiners Academy Act"; and
- H.R.__, "Exposing China’s Support for the Taliban Act."