AML Reform - What Has Congress Agreed To?

This week, Executive Vice President John Byrne, and Creative Director Elliot Berman of the AML RightSource staff discuss the Congressional Conference Report of the National Defense Authorization Act. The Act contains the Anti-Money Laundering Act of 2020, the first major reform to the AML infrastructure since adoption of the USA PATRIOT Act. During the conversation they identify some of the interesting items contained in the final language.  

Elliot Berman: Hi, John, how are you doing today?

John Byrne:  Hi Elliot. Great. My daughter, Melissa got married and, socially distant a beach wedding of only 10 of us, rather than 80 in California for the weekend so we were happy too, that she was able to do that. And everybody got back safely.

Elliot Berman:  Sounds like a pretty good result given the environmental circumstances these days.

So, I know we've talked about this a number of times, but, I thought it would, given what's going on, it would make sense for us to talk about the, anti money laundering act of, 2020, which is embedded in the national defense authorization act, which, has been, kicking around Congress for a while.

There was a conference report from the conference committee of the Senate and the house passed the conference report on Tuesday, December 8th. As you and I are speaking, late in the afternoon on, December 10th, the Senate is, taking action on the floor as we speak, they have not yet voted.

I know we've talked a lot about it, but as we, as we got a chance to take a look at the language, the actual language that's in the conference report, what did you see that, maybe is a little more buried if you will, but really has some values.

John Byrne: [00:01:19] Yeah. So we're going to spend a lot of time on this in 2021. Obviously there's going to be regulations that come out of this, there's going to be a number of ports and strategies, and there's gonna be a lot of work for us in the AML community, but - good work because a lot of these things over time have become pretty important for the members of our community.

So a couple of things that jumped out at me besides the obvious one about beneficial ownership, which a lot of people will comment on -  there's some things in there that we've constantly opined on. And those are training for examiners. While examiners do get trained, there is always been concern that sometimes because of what they're focused on, they don't always see the forest from the trees. Not an overt criticism, but one I think is justified.

So in this bill, in the conference report, a training program for examiners from the various federal agencies, will be created and it's got to include risk profiles, financial crime patterns and to me, what's very important, an understanding of why the programs are necessary for law enforcement and how they can result sometimes in de-risking.

So I think that in addition to the current training that goes on, this is a welcomed addition. Other things that I've seen in there that I think are valuable, are that FinCEN is going to be tasked with soliciting additional feedback from institutions on SARS and discussing trends. They've done some of that in the past - I was personally involved with their SAR activity review, which sadly disappeared, but this will require them to share feedback with regulators, and in some cases disclose to individual institutions when they can, information on the utility of SARS filed. I think that's very valuable. And then there's a couple of studies in there to look at the reporting regime.

The value of SARS, the value of CTR should be threshold increases. Whether there should be in the SAR regime, perhaps what I would call a "short SAR" and things like structuring, where you wouldn't have to spend a ton of time. You could simply provide that information. So a number of those I think could really improve the environment.

There's a number of other things in there as well, but those are a few that jumped out at me. And like I said, we both, as well the company, will look at a lot of these other sections and provide input as we go forward.

Elliot Berman: Yeah, and it will be all of 2021 to get things written. all the, all the studies launched and all of those kinds of things so I think that it's going to be an interesting year. We've also talked about how FinCEN, has put out other requests for input about how things ought to look in the entire regime. So as they're working on regulations, that specifically will support, what's in the conference report, I wouldn't be surprised to see them bake in some of the things that they learned in the advanced notice of proposed rulemaking and other things. So, this will be as busy a year on the regulatory side, as we've seen in quite some time.

Exactly. And again, there's so much in here for you guys out there that are in the community that have been here for awhile. Biggest change since the Patriot act without question, but it's going to task us with filing comments, being engaged as stakeholders and -

John Byrne: I know Elliot and I will talk in a few weeks and months regarding the Biden administration and how they plan to address these issues through the justice department, through the treasury - and let's make it very clear folks, there will be a Biden administration. So, we're going to go forward and learn as much as we can about what their priorities are, and we will present those and have additional dialogue going forward.

Elliot Berman: Well, thanks, John. You have a good safe, rest of the week and I will talk to you next week.

John Byrne: Take care of Elliot. 

Elliot Berman: Yep. bye-bye.