On December 3, the U.S. House and Senate Armed Services Committees reached an agreement on the National Defense Authorization Act (“NDAA”), an annual defense spending bill. Within this huge bill (well over 4,500 pages) are widespread changes to the Bank Secrecy Act (“BSA”), coupled with other related changes dealing with money laundering, anti-money laundering (“AML”), counter-terrorism financing (“CTF”) and foreign corruption in general. It’s hard to overstate the breadth of the BSA/AML legislation, at least in terms of the sheer amount of provisions and detail. We have discussed BSA/AML reform for years, and major portions of proposed legislation on which we have blogged — specifically, the Corporate Transparency Act (“CTA”), the ILLICIT CASH Act, and the Kleptocracy Asset Recovery Rewards Act — are all included within the NDAA. But, there is a catch: the NDAA is not yet law, and although the full House and Senate are expected to vote on and pass the NDAA this week, President Trump has threatened to veto the NDAA because it does not repeal provisions of the 1996 Telecommunications Act which shield tech companies from civil liability related to content posted by their users.
If the NDAA is signed into law, we will blog repeatedly on its various components, many of which deserve their own particular attention, and which will have a major impact on many financial institutions and their customers. Although the change that has (appropriately) received the most attention is the CTA’s requirement for the reporting of beneficial ownership to a national database by entities at the time of their creation, the NDAA includes a huge array of other changes, including expanding the stated purpose of the BSA (which will have ripple effects on future regulation and examination priorities); requiring numerous process-related studies tied to the effectiveness and costs of certain BSA requirements, including SAR and CTR reporting (many of these studies may lead to additional, future substantive regulation or legislation); enhancing penalties under the BSA for repeat offenders; provisions designed to enhance information sharing; adding a whistleblower provision to the BSA; and including dealers in antiquities to the definition of “financial institutions” covered under the BSA (and requiring an assessment of also including art dealers within that definition).
Because the fate of the NDAA is unclear, this post simply will list below the sections pertaining to the BSA, AML, CTF, money laundering and foreign corruption. The list speaks for itself as to the breadth of what may be coming very soon. Although this blog does not purport to make political predictions, it’s hard to imagine that there would not be bipartisan support in Congress to override any veto and pass into law the necessary spending bill for the nation’s armed forces. So please stay tuned.
Title LXI—Strengthening Treasury Financial Intelligence, Anti-Money Laundering, and Countering the Financing of Terrorism Programs
Sec. 6101. Establishment of national exam and supervision priorities.
Sec. 6102. Strengthening FinCEN.
Sec. 6103. FinCEN Exchange.
Sec. 6104. Interagency anti-money laundering and countering the financing of terrorism personnel rotation program.
Sec. 6105. Terrorism and financial intelligence special hiring authority.
Sec. 6106. Treasury Attaché program.
Sec. 6107. Establishment of FinCEN Domestic Liaisons.
Sec. 6108. Foreign Financial Intelligence Unit Liaisons.
Sec. 6109. Protection of information exchanged with foreign law enforcement and financial intelligence units.
Sec. 6110. Bank Secrecy Act application to dealers in antiquities and assessment of Bank Secrecy Act application to dealers in arts.
Sec. 6111. Increasing technical assistance for international cooperation.
Sec. 6112. International coordination.
Title LXII—Modernizing the Anti-Money Laundering and Countering the Financing of Terrorism System
Sec. 6201. Annual reporting requirements.
Sec. 6202. Additional considerations for suspicious activity reporting requirements.
Sec. 6203. Law enforcement feedback on suspicious activity reports.
Sec. 6204. Streamlining requirements for currency transaction reports and suspicious activity reports.
Sec. 6205. Currency transaction reports and suspicious activity reports thresholds review.
Sec. 6206. Sharing of threat pattern and trend information.
Sec. 6207. Subcommittee on Innovation and Technology.
Sec. 6208. Establishment of Bank Secrecy Act Innovation Officers.
Sec. 6209. Testing methods rulemaking.
Sec. 6210. Financial technology assessment.
Sec. 6211. Financial crimes tech symposium.
Sec. 6212. Pilot program on sharing of information related to suspicious activity reports within a financial group.
Sec. 6213. Sharing of compliance resources.
Sec. 6214. Encouraging information sharing and public-private partnerships.
Sec. 6215. Financial services de-risking.
Sec. 6216. Review of regulations and guidance.
Title LXIII—Improving Anti-Money Laundering and Countering the Financing of Terrorism Communication, Oversight, and Processes
Sec. 6301. Improved interagency coordination and consultation.
Sec. 6302. Subcommittee on Information Security and Confidentiality.
Sec. 6303. Establishment of Bank Secrecy Act Information Security Officers.
Sec. 6304. FinCEN analytical hub.
Sec. 6305. Assessment of Bank Secrecy Act no-action letters.
Sec. 6306. Cooperation with law enforcement.
Sec. 6307. Training for examiners on anti-money laundering and countering the financing of terrorism.
Sec. 6308. Obtaining foreign bank records from banks with United States correspondent accounts.
Sec. 6309. Additional damages for repeat Bank Secrecy Act violators.
Sec. 6310. Certain violators barred from serving on boards of United States financial institutions.
Sec. 6311. Department of Justice report on deferred and non-prosecution agreements.
Sec. 6312. Return of profits and bonuses.
Sec. 6313. Prohibition on concealment of the source of assets in monetary transactions.
Sec. 6314. Updating whistleblower incentives and protection.
Title LXIV—Establishing Beneficial Ownership Information Reporting Requirements
Sec. 6401. Short title.
Sec. 6402. Sense of Congress.
Sec. 6403. Beneficial ownership information reporting requirements.
Sec. 6501. Investigations and prosecution of offenses for violations of the securities laws. [Editor’s note: this does not pertain to the BSA. Rather, this is a Congressional reaction to the Supreme Court opinions in Liu v. SEC and Kokesh v. SEC, which pertained to the ability of the Securities and Exchange Commission to obtain “disgorgement” in certain cases.]
Sec. 6502. GAO and Treasury studies on beneficial ownership information reporting requirements.
Sec. 6503. GAO study on feedback loops.
Sec. 6504. GAO CTR study and report.
Sec. 6505. GAO studies on trafficking.
Sec. 6506. Treasury study and strategy on trade-based money laundering.
Sec. 6507. Treasury study and strategy on money laundering by the People’s Republic of China.
Sec. 6508. Treasury and Justice study on the efforts of authoritarian regimes to exploit the financial system of the United States.
Sec. 6509. Authorization of appropriations.
Sec. 6510. Discretionary surplus funds.
Sec. 6511. Severability.
Title XCVII—Financial Services Matters
Subtitle A—Kleptocracy Asset Recovery Rewards Act
Sec. 9701. Short title.
Sec. 9702. Sense of Congress.
Sec. 9703. Department of the Treasury Kleptocracy Asset Recovery Rewards Pilot Program.
Subtitle B—Combating Russian Money Laundering
Sec. 9711. Short title.
Sec. 9712. Statement of policy.
Sec. 9713. Sense of Congress.
Sec. 9714. Determination with respect to primary money laundering concern of Russian illicit finance.