THE ANTI-MONEY LAUNDERING ACT OF 2020:
INITIAL CATALYSTS,
CURRENT IMPLICATIONS,
AND FUTURE IMPACTS Elizabeth Paige Baumann
Founder and CEO of Paige
Baumann Advisory, LLC
featuring
Tara Dwyer
Webinar Coordinator,
Community Banking Brief
March 22nd, 2023
9:30am PDT
12:30pm EDT
5:30pm GMT
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Elizabeth Paige Baumann
Founder and CEO of Paige Baumann Advisory, LLC
THE ANTI-MONEY LAUNDERING ACT OF 2020:
INITIAL CATALYSTS, CURRENT IMPLICATIONS, AND FUTURE
IMPACTS

Agenda
 Bank Secrecy Act of 1970 (BSA)
 Background
 Purposes of Anti-Money Laundering Act of 2020 (AML Act)
 Corporate Transparency Act (CTA)
 Overview of Other Key Provisions
 Current Implications
 Potential Future Impacts
5

Bank Secrecy Act of 1970 (BSA)
 Foundation of U.S. AML Regulatory Regime
 Maintenance of Records & Reporting with “High Degree of Usefulness”
 U.S. Treasury - Financial Crimes Enforcement Network (“FinCEN”)
 Amendments:
 Money Laundering Control Act (1986)
 Annunzio-Wylie Anti-Money Laundering Act (1992)
 Money Laundering Suppression Act (1994)
 Money Laundering & Financial Crimes Strategy Act (1998)
 USA PATRIOT Act (2001)
 Anti-Money Laundering Act (2020)
 Codified at Chapter X of Title 31 of Code of Federal Regulations
6

Background
 Division F of National Defense Authorization Act for Fiscal Year 2021 (“NDAA”)
 Enacted on January 1, 2021 w/ historic override of presidential veto
 Enhance FinCEN’s authority to safeguard financial system
 Catalysts:
 Update laws to keep pace with emerging risks (e.g., virtual currencies)
 FinCEN BSA Value Project
 Address use of shell companies to obscure beneficial ownership, facilitate criminal
acts
 FATF Mutual Evaluation Report RE: U.S. regulatory regime
7

Purposes of AML Act
 Improve Coordination & Information Sharing Among Government Agencies &
Financial Institutions
 Modernize AML & Countering the Financing of Terrorism (“CFT”) Laws
 Encourage Technological Innovation & New Technology by Financial
Institutions
 Reinforce Risk-Based AML/CFT Policies, Procedures, Controls
 Establish Uniform Beneficial Ownership Information Reporting Requirements
 Establish Secure & Nonpublic Database for Beneficial Ownership Information
8

Corporate Transparency
Act (CTA)
9

Corporate Transparency Act (CTA)
 Title LXIV of AML Act
 Drivers
 Lack of transparency with company formation at U.S. state level
 Shell companies hiding criminal proceeds, laundered funds, sanctions evasion,
threatening national security & the U.S./global financial systems
 Creation of Beneficial Ownership Secure System (“BOSS”)
 Beneficial Ownership Information (BOI) Reporting Requirements
 CTA required rule promulgated no later than 1/1/22
 ANPRM: 4/5/21; NPRM: 12/8/21; Final Rule: 9/30/22
 BOI Access and Safeguards (NPRM: 12/15/22)
 Revision of CDD Rule to conform to CTA (Deadline: 9/30/23)
10

Corporate Transparency Act (CTA)
 BOI Reporting Requirements (Eff. Date: 1/1/24)
 “Reporting Companies” required to disclose BOI
 U.S. & Non-U.S. companies registered in U.S. required to comply
 23 exempted entities
 BO Definition: Any individual who, directly or indirectly:
 Exercises substantial control over company –or-
 Owns or controls at least 25% of ownership interests of company
 Companies pre-1/1/24: filing required by 1/1/25
 New companies on/after 1/1/24: filing required w/in 30 days
 Inaccurate reports or changes in reporting co. status: filing required w/in 30 days
11

Corporate Transparency Act (CTA)
 Beneficial Ownership Information (BOI) Access & Safeguards
 Proposed effective date to align with BOI reporting rule (1/1/24)
 Financial institutions must obtain reporting company consent & may only access
BOSS for BOI information to facilitate compliance with CDD requirements
 Written certification must be provided to FinCEN per BOI request
 Strict data protection protocols on security and confidentiality
 BOI reported to FinCEN confidential & may not be disclosed w/out authorization
 Financial institutions prohibited from disclosing information to employees or agents not
physically present in the U.S.
12

Corporate Transparency Act (CTA)
 Beneficial Ownership Information (BOI) Access and Safeguards Concerns
 FIs prohibited from using BOI for other AML/Sanctions Compliance
 Verification of reported information not included in NPRM
 Prohibition from sharing within organizational structure & with auditors
 Request process is cumbersome
 Employees/service providers outside U.S. may be responsible for aspects of CDD
 Firms may be deterred from using BOSS
 Potential regulatory risk if FIs choose not to use BOSS
 NPRM strays from congressional intent & erects barriers to usage
 3/15/2023 Senate bi-partisan letter
13

Corporate Transparency Act (CTA)
 Revision of CDD Rule to conform to CTA (Deadline: 9/30/23)
 CDD rule issued in May 2016 & effective May 2018
 “Legal entity customers” required to disclose BOI
 CDD Rule & CTA Differences:
 One control person vs. potentially multiple control persons
 TIN vs. number on identity document (e.g., passport) for U.S. citizens
 Different exemptions from “legal entity customer” vs. “reporting company” definitions
 “legal entity customer” definition covers both U.S./non-U.S. companies vs. “reporting
company” definition only covers non-U.S. companies registered in U.S.
14

Overview of Other Key
Provisions
15

Establishment of National Exam &
Supervision Priorities
 Expansion of BSA Purpose
 Preventing ML/TF through reasonably designed AML/CFT programs
 Facilitating tracking of illicit money
 Assessing ML/TF & tax evasion & fraud risks to financial institutions
 Establish information sharing frameworks
 Minimum Standards for AML/CFT Programs & Regulatory Supervision
 9/17/20 ANPRM RE: AML Program Effectiveness pre-dated AML Act
 “Effective and reasonably designed” standard for AML programs
 Codification of risk assessment requirement
 AML programs provide “information with a high degree of usefulness”
16

Establishment of National Exam &
Supervision Priorities
 AML/CFT Policy Priorities
 Within 180 days of enactment of NDAA (6/30/2021)
 Promulgate regulations within 180 days of priorities publication (12/30/21)
 Update priorities at least 4 years
 FinCEN issued 8 priorities on 6/30/21
 Corruption
 Cybercrime (including relevant cybersecurity and virtual currency considerations)
 Foreign and Domestic Terrorist Financing
 Fraud
 Transnational Criminal Organization Activity
 Drug Trafficking Organization Activity
 Human Trafficking and Human Smuggling
 Weapons Proliferation Financing
17

Modernizing The AML/CFT System
 Law Enforcement Feedback on Suspicious Activity Reports (SARs)
 Streamlining Requirements for Currency Transaction Reports (CTRs) & SARs
 CTRs & SARs Thresholds Review
 Sharing Threat Pattern and Trend Information
 Financial Activity of Russian Oligarchs (12/22/22)
 Ransomwear (11/1/22)
 Wildlife Trafficking (10/15/21)
 Sub-Committee on Innovation and Technology
 Testing Methods Rulemaking
 SAR Sharing Pilot Program (NPRM: 1/25/22)
 Encouraging Information Sharing & Public-Private Partnerships
 Reviews of Regulations & Guidance (RFI: Issued 12/15/21)
18

Current Implications &
Potential Future
Impacts
19

Current Implications
 Execution of AML Act deliverables dependent on adequate FinCEN funding/staffing
 Financial institutions commit resources to review output from AML Act deliverables
& take action, where appropriate.
 Public/private sector comments regarding RFIs, ANPRMs, NPRMs
 Increased regulatory scrutiny of AML programs RE: new or changed requirements
 New Whistleblower Program increases incentives/protections to report violations
 Stakes are higher with increased penalties for BSA violations
 CTA broader impact than other BSA requirements applicable only to financial
institutions
20

Potential Future Impacts
 FinCEN may encounter legal challenges to actions taken pursuant to AML Act/CTA
 Increased collaboration/information sharing impeded by inability to increase
staffing
 Streamlining reporting and elimination of duplicative, outdated, ineffective
regulations & guidance allows limited resources to be re-allocated
 Increased feedback from law enforcement alters view that SARs go into a “black
hole”
 Setting standards supports common understanding & consistency but risk of “one
size fits all” without some flexibility
 Accessing the BOSS not viable alternative to reaching out directly to legal entity
customers to obtain beneficial ownership
 Previously undetected activity discovered as result of innovation viewed as gap in
AML program vs. new output of enhancement
21

Tara Dwyer
Webinar Coordinator,
Community Banking Brief
/in/dwyertara
communitybankingbrief.com
Q&A
Elizabeth Paige Baumann
Founder and CEO of Paige Baumann Advisory, LLC
/in/elizabeth-paige-baumann-8bb92710/