Congress is expected this week to vote for the first overhaul of the country’s anti-money laundering (AML) laws in decades, the Financial Times reports.
Demands for making major changes in the laws have been building for more than a decade. The forces for reform include a wide variety of players — including national security officials, banks and regulators.
For their part, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve Board had sought comment this fall on a proposed rule that would amend record-keeping and travel rule regulations under the Bank Secrecy Act (BSA) of 1970, the two agencies said in a joint statement.
The pressure on Congress only built this fall after thousands of so-called suspicious activity reports were leaked. The Wall Street Journal reported that the leaks put a spotlight long-known ways that criminals use the financial system to move money.
Over time, concerns have grown that terrorists can use the system as well to finance their networks.
According to the Financial Times, the new proposed legislation would require, in part, all U.S. corporations to register the identity of their beneficial owners in a database operated by FinCEN. That means that any individual who owns — either directly or indirectly — 25 percent or more equity interest in a legal entity would have to be identified.
The goal is to prevent criminals from using shell companies to hide their loot.
Under the current laws, identifying beneficial owners was the responsibility of banks when corporations applied for bank accounts.
“This is the most significant piece of AML legislation since the Patriot Act 20 years ago,” said Daniel Stipano, a partner at the law firm Buckley LLP, who has worked on such laws as a regulator and lawyer. “It helps bring the whole regime into the 21st century,” he told the news outlet.
Under the law, banks will no longer act as information-collecting middlemen between companies and law enforcement.
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