No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Finally, an Overhaul for AML Legislation

by Alex Feldman
October 15, 2018
in Compliance
stack of bitcoin against shadow of terrorists

A New Anti-Money Laundering Regime for a New Century

The landscape of AML regulations is scattered, with its primary legislative supports coming from 1970, 1996, and 2001. This article discusses the proposed bill, its bipartisan support as identified by hearings already conducted on the subject, and its implications for financial institutions if enacted.

In 1970, a Big Mac cost $0.49,[1] and the average new car cost about $3,500.[2] Today, a Big Mac costs $5,[3] and a new car costs $35,000.[4] In contrast, in 1970, banks were required to file a currency transaction report (CTR) for cash transactions greater than $10,000. Forty-eight years later, that threshold is still $10,000.

The CTR requirement was a component of the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970, commonly referred to as the Bank Secrecy Act (BSA), which was enacted into law in 1970. It was the first major regulation for the modern Anti-Money Laundering/Terrorist Financing (AML/TF) industry, but not the last. In addition to the BSA, there have been eight major pieces of AML/TF legislation.[5] Similar to the CTR requirement, they have been sparsely (if at all) modified since their passage. The result is an inefficient regulatory regime which does not provide financial institutions the flexibility and encouragement needed to truly tackle money laundering and terrorist financing. There are modern methods of laundering money and funding terrorism which were not contemplated until a few years ago. However, that could change soon.

The Counter Terrorism and Illicit Finance Act, (CTIFA)[6] is working its way through the committee structure in the U.S. Senate[7] and promises to be the biggest overhaul for the AML Regulatory framework in a generation. From increasing reporting thresholds to promoting technological advances, it is the clearest evidence of real commitment from Congress and regulators to work with financial institutions and shift away from the heavy-handed enforcement model in recent years.

Details of the CTIFA

The current iteration of the bill is 38 pages long and has a number of clauses salient to the AML industry. The most relevant ones are discussed here.

Firstly, the draft bill recommends increasing the CTR threshold to $30,000 from $10,000 and increasing the Suspicious Activity Reporting (SAR) threshold to $10,000 from $5,000. For reference, if the BSA had been tied to inflation starting in 1970, these thresholds would be roughly $60,000 for CTR filing and $30,000 for SAR filing.

The draft bill opens with a recommendation for the Secretary of the Treasury to “undertake a formal review of the current financial institution reporting requirements” to ensure that the information provided by financial institutions to the federal government is of a “high degree of usefulness” to law enforcement.

The bill goes on to discuss the specifics of the above review, requiring it to study the timing of the SAR filing, collapsing the CTR and SAR forms into one and tying future threshold increases to inflation, among other elements.

The bill broadens the topics under which financial institutions can share details about a customer and their transactions with another financial institution. Under Section 314b of the USA PATRIOT Act, safe harbor is given to financial institutions that disclose otherwise confidential information on customers and transactions in an effort to combat “terrorist or money-laundering activities.” CTIFA broadens that language to include ‘”terrorist activities, money-laundering activities or a specified unlawful activity.”

Other noteworthy items of CTIFA include: establishing a no-action letter policy specific to BSA/AML laws and regulations; establishing and making public priorities for anti-money laundering and combatting the financing of terrorism (AML/CFT); and providing legal certainty to financial institutions that use technological innovation in AML programs.

Impact on the AML Industry

Those with working knowledge are eagerly awaiting CTIFA or some similar regulation.

The possibility of collapsing CTR and SAR filings into one form promises to streamline operations. The broadening of the safe harbor provision of 314b of the USA PATRIOT Act will allow investigators more freedom to chase meaningful leads of potentially suspicious activity.

The renewed spirit of providing reports which are “useful” to law enforcement will help to remove the rigid filing requirements and allow investigators to better leverage their judgment in finding truly suspicious activity. The legal certainty about the use of new technologies will allow financial institutions to innovate ways to better capture suspicious activity and lessen operational burdens.

In an industry where SARs are constantly filed out of an irrational abundance of caution, the formula provided by CTIFA will reduce the volume of defensive SAR filings — thus increasing the usefulness of the average SAR reviewed by law enforcement.

Moving Forward

The legislation was drafted by Rep. Steve Pearce (R-New Mexico) and Rep. Blaine Luetkemeyer (R-Missouri), but it shows real bipartisan support. Senator Elizabeth Warren, one of the most high-profile financial watchdogs in Washington, has demonstrated her support for AML reform. “[Senator] Warren said she supported [..] changing the threshold for reporting suspicious transactions in order to make life easier for small lenders and law enforcement.”[8]

It is unlikely that anything will happen soon, however. Midterm elections loom large, and it’s unlikely that both parties will willingly abandon their ideological entrenchment before the next Congress is gaveled into session. But as one of the few areas with bipartisan support, optimism from AML industry stakeholders is not misplaced.

 

Thanks and credit to Charles (Chuck) Pine for providing thought leadership on this piece. Chuck is a Managing Director in BDO’s USA Financial Services, Investigations and Consulting practice. He has over 32 years of financial investigative and law enforcement experience dealing with complex and high-profile criminal investigations involving money laundering, tax evasion, international and domestic bank related crimes, mortgage fraud and other criminal activity where there is a financial nexus or motive. 


[1] https://www.reviewjournal.com/business/12-fast-food-prices-then-versus-now/

[2] http://articles.chicagotribune.com/1996-06-16/travel/9606160132_1_family-income-car-prices-household

[3] https://www.reviewjournal.com/business/12-fast-food-prices-then-versus-now/

[4] https://mediaroom.kbb.com/2018-02-01-Average-New-Car-Prices-Rise-Nearly-4-Percent-For-January-2018-On-Shifting-Sales-Mix-According-To-Kelley-Blue-Book 

[5] https://www.fincen.gov/history-anti-money-laundering-laws

[6] https://financialservices.house.gov/uploadedfiles/bills-115hr-pih-ctifa.pdf

[7] https://financialservices.house.gov/uploadedfiles/061418_fc_markup_memo.pdf

[8] https://www.reuters.com/article/us-usa-senate-moneylaundering/senator-warren-says-u-s-needs-to-rethink-money-laundering-laws-idUSKBN1EY28B?il=0


Tags: AMLBank Secrecy Act (BSA)Counter Terrorism
Previous Post

The Changing Role of Electronic Information Archiving

Next Post

Donnelley Financial Solutions’ “Guide to Effective Proxies” Identifies Leading Trends in 2018

Alex Feldman

Alex Feldman

Alex Feldman is a Manager in BDO’s Risk and Regulatory Advisory practice. Mr. Feldman has 5 years of experience working within, developing, and testing anti-money laundering compliance programs. He has extensive experience in numerous elements of AML Compliance including Know Your Customer (KYC), Client Due Diligence (CDD), Transaction Monitoring, Suspicious Activity Reporting (SARs), and AML Training. Mr. Feldman has a strong knowledge base from on working with/for financial institutions with a wide variety of products and services such as retail banking, correspondent banking, trade finance, political exposure, credit cards, remote deposit capture, and securities. Mr. Feldman has experience working with a number of AML compliance software programs including but not limited to; Norkom, Scion, Unified Case Management, Actimize, CAMP. Mr. Feldman has significant experience working with/for institutions with an international focus Prior to joining BDO, Mr. Feldman worked within HSBC Bank USA in their Financial Crime Compliance Division. He contributed to the efforts of organizational redevelopment which satisfied regulators and released HSBC from its Deferred Prosecution Agreement. In his time with HSBC, he served secondments to HSBC Hong Kong and HSBC Bermuda. This skillset has further developed while at BDO, with Mr. Feldman working with several domestic branches of foreign financial institutions. Recent projects with BDO include; the developing of a model AML Manual for the domestic branch of a foreign financial institution, advising on and documenting the data governance and system tuning efforts of a large pre-paid card processor, an assessment of a fintech institution’s AML program, and a data in/data out validation effort. He is presently writing an article on a new regime of AML regulation and its operational impacts.

Related Posts

Danske Bank: Money Laundering at Its Finest

Danske Bank: Money Laundering at Its Finest

by Corporate Compliance Insights
January 23, 2023

Something rotten in Denmark: Unpack the $2B settlement Danske Bank made with the U.S. government DOJ, SEC Settlements & Fines...

kleptocracy

Using FinCEN Alerts as a Roadmap to Comply With New Anti-Kleptocracy Regulations

by Jason Ross
January 11, 2023

FinCEN’s mandate to create a beneficial ownership database will continue creating ripple effects for businesses and individuals across all sectors....

Fox Lafarge Criminal Action_f

Lafarge Criminal Action

by Corporate Compliance Insights
November 9, 2022

Explore the details of criminal terrorism proceedings against French cement manufacturer Lafarge and its Syrian subsidiary. Criminal Terrorism-Support Charges Lafarge...

lafarge trucks

Lafarge Terrorism Pleas Highlight Importance of Due Diligence in High‑Risk Regions

by Paul | Weiss
November 9, 2022

In mid-October, the DOJ announced it had reached a guilty plea agreement with Lafarge, a French cement manufacturer, and its...

Next Post
group voting with hands raised

Donnelley Financial Solutions’ “Guide to Effective Proxies” Identifies Leading Trends in 2018

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT