Federal regulators are increasing their scrutiny of companies' compliance with Anti-Money Laundering and Bank Secrecy Act obligations. It appears that 2021 is likely to be a record year for penalties.
The National Defense Authorization Act for 2021 was passed by Congress and included the Anti-Money Laundering Act of 2020 (AML Act). The AML Act includes provisions for the creation of a federal database of beneficial owners; expanded coverage of the Bank Secrecy Act of 1970 (BSA) to include areas such as dealers in antiquities and virtual currencies; made available additional tools for law enforcement; heightened penalties for violations; and enhanced the AML whistleblower law.
In light of this increased regulatory scrutiny, the Federal Reserve, FDIC, National Credit Union Administration, and Office of the Comptroller of the Currency issued a joint statement on Aug. 13, 2020, which guides companies on minimum requirements of an effective BSA/AML compliance program.
The agencies specified four pillars that make up an adequate BSA/AML compliance program: (1) a system of internal controls that assure ongoing compliance; (2) independent testing; (3) a designated individual or individuals responsible for monitoring BSA/AML compliance, and (4) training for appropriate personnel. They added that the compliance program also must include a customer identification program with risk-based procedures to ensure the institution has a reasonable basis for knowing the identity of its customers, donors, vendors, and others with whom the company has financial transactions.
Corporate counsel should be aware that it is not only banks and other financial institutions that have these obligations. The FBI reportedly issued a bulletin in May 2020, calling for greater scrutiny on private investment funds to determine if they are adequately complying with AML programs. Further, while FinCEN has stated that charities and nonprofit organizations are not viewed as high risk entities for money laundering, it also reminded them that they must still have adequate AML safeguards in place.
Listen as a panel, including Lowenstein partner Rachel Maimin, discusses the landscape of AML compliance in 2021 with regulators and law enforcement using the new tools they have been given through the AML Act, assessing increased monetary penalties, and making concerted efforts to monitor AML compliance of non-banking entities.
Panelists:
- Rachel Maimin, Partner, Lowenstein Sandler LLP
- Michael M. Rosensaft, Partner, Katten Muchin Rosenman
Time: 1-2:30 p.m. ET
