The Anti-Money Laundering Act of 2020 (AMLA) is the most important anti-money laundering legislation passed by the United States Congress in several decades. Moreover, the Corporate Transparency Act (CTA) is part of AMLA which, in turn, is part of the National Defense Authorization Act enacted on January 1, 2021.
The CTA provisions in the AMLA authorize the Financial Crimes Enforcement Network (FinCEN) to collect beneficial ownership information and disclose it to appropriate recipients, including federal law enforcement.
The AMLA provisions comprise approximately 1,500 pages of updates to the BSA and AML laws providing new requirements and guidance regarding AML and counter terrorist financing. Many of the sections of the statute require government agencies to conduct further analyses, actions, studies and reports.
Therefore, the full effect of AMLA on financial institutions and private companies can be evaluated only after AMLA has been fully implemented, but AMLA will likely have a broad impact on the way that the government investigates and prosecutes financial crimes.
Other requirements at AMLA
Propuesta reciente de FinCEN
FinCEN issued an announcement about a series of actions it will take regarding the implementation of the CTA. The CTA provisions in AMLA require certain entities to submit beneficial ownership information to a national registry and authorize FinCEN to disclose the information to appropriate recipients, such as federal law enforcement.
The aim is to create more transparency with respect to the people who ultimately own or control the companies required to report.
Beneficial Ownership Registration for Business Entities
The CTA requires FinCEN to maintain beneficial ownership information reported by certain business entities in a confidential, secure, and non-public national registry.
Supporters of this provision believe that the lack of beneficial ownership reporting has provided a loophole for criminals to conduct business and transfer money through opaque ownership structures.
Changes to Customer Due Diligence Process
The CDD rule requires covered financial institutions to identify and verify the identity of their customers. This includes identifying each natural person that directly or indirectly owns 25% or more of the equity interests of a legal entity customer and identifying at least one natural person that has “significant responsibility to control, manage or direct” a legal entity customer.
It is anticipated that, upon implementation of the national registry by FinCEN, financial institutions will be able to depend on the reporting companies to supply beneficial ownership and control information.
Reporting Companies
The definition of a “Beneficial Owner” is an entity or individual who directly or indirectly owns or controls 25% or more of the entity’s ownership interest or has substantial control over the entity.
Time Frame for Reporting
The time frame for Reporting Companies to provide beneficial ownership information depends on the date of formation of the entity. Reporting Companies formed before the effective date of the AMLA are required to report beneficial ownership information within two years of the effective date of the AMLA requirement.
Those who do not comply with the provisions of the Act may pay civil and criminal penalties. Including the imposition of monetary fines of up to $10,000 and imprisonment of up to two years.
PEPs, SFPFs and Entities of Primary Money-Laundering Concern
The AMLA contains provisions prohibiting politically exposed persons (PEPs) from falsifying the source of funds, ownership or control of assets, or concealing or misrepresenting such information to a financial institution. Any violations of the above prohibitions are subject to fines, imprisonment, or forfeiture. Entities that are of primary money-laundering concern face similar prohibitions.
Expanded Whistleblower Rewards
AMLA seeks to change that by eliminating the government’s discretion to pay an award and mandating payments, increasing the potential amount of whistleblower awards, and providing additional protection specific to money laundering whistleblowers.
AMLA eliminates the $150,000 cap on BSA/AML whistleblower awards, replacing it with a payment ceiling of 30 percent of the government’s collection if the monetary sanctions imposed exceed $1 million.
Source: https://bit.ly/3uWtPHg
