On September 26, 2019, Senate Banking Committee members, U.S. Sens. Mark R. Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL), Mike Rounds (R-SD), Bob Menendez (D-NJ), and John Kennedy (R-LA), Catherine Cortez Masto (D-NV), and Jerry Moran (R-KS) today introduced bipartisan legislation to improve corporate transparency, strengthen national security, and help law enforcement combat illicit financial activity being carried out by terrorists, drug and human traffickers, and other criminals.
This post highlights the major provisions in the bill and then the international provisions.
The Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act (S.2563) would, for the first time, require shell companies to disclose their true owners to the U.S. Department of Treasury. It would also update decades-old anti-money laundering (AML) and combating the financing of terrorism (CFT) policies. The bill provides Treasury and law enforcement new tools they need to fight criminal networks. This includes improving overall communication between law enforcement, financial institutions, and regulators, and facilitating the adoption of critical 21st century technologies.
Specifically, this legislation would:
Establish federal reporting requirements mandating that all beneficial ownership information be maintained in a comprehensive federal database, with strict privacy protections, accessible by federal and local law enforcement. (Sec. 401) and expand FinCEN geographic targeting order authority to commercial real estate (Sec. 402).
Help recruit and retain top talent at the Financial Crimes Enforcement Network (FinCEN) by putting employees on a pay scale comparable to that of federal financial regulators. (Sec. 102)
Create a hub of financial expert investigators at FinCEN to investigate potential AML-CFT activity in collaboration with federal government agencies. (Sec. 103).
Facilitate communications between the Treasury and financial institutions by establishing a Treasury financial institution liaison to seek and receive comments regarding AML-CFT rules, regulations, and examinations. (Sec. 104)
Require the Department of Justice (DOJ) to provide the Treasury Department with metrics on the usefulness of AML-CFT data from financial institutions for law enforcement purposes, as well as data on the past and current trends identified by DOJ in the AML-CFT landscape. (Sec. 201)
Require law enforcement to coordinate with financial regulators to provide periodic feedback to financial institutions on their suspicious activity reports. (Sec. 202)
Prioritize the protection of personally identifying information while establishing a clear path for financial institutions to share AML-CFT information for the purposes of identifying suspicious activity. (Sec. 303)
Ensure the inclusion of current and future payment systems in the AML-CFT regime by updating the definition of “coins and currency” to include digital currency. (Sec. 308)
Some of the provisions are designed to strengthen the international aspects of AML/CFT laws:
Prevent foreign banks from obstructing money laundering or terrorist financing investigations by requiring these banks to produce records in a manner that establishes their authenticity and reliability for evidentiary purposes, and compelling them to comply with subpoenas. This legislation would also authorize contempt sanctions for banks that fail to comply and increase penalties on repeat BSA violators. (Sec. 306);
Start a pilot program for information sharing between a financial institution and its foreign branches and affiliates that are located in OECD jurisdictions (Sec. 305).
Require the Treasury to work with foreign counterparts, including through the Financial Action Task Force, the International Monetary Fund, the World Bank, and the United Nations, to promote stronger AML frameworks and enforcement of AML laws.
Require the Treasury Department to carry out a study on the extent and effect of illicit finance risk relating to the Government of the People’s Republic of China and to develop a strategy to combat money laundering through Chinese firms.
Require the Treasury Department to conduct a study and submit to Congress a report that considers how authoritarian regimes in foreign countries and their proxies use the financial system of the U.S. and to conduct political influence operations, sustain kleptocratic regimes, export corruption, and otherwise undermine democratic governance in the U.S.
A press release from Senator Warner’s office is available.