NDAA Passed to Strengthen the Financial Crime Monitoring in the USA

  • Richard Marley
  • December 30, 2020
  • 3 minutes read
  • 3873

The House of Representatives has passed the National Defense Authorization Act to strengthen the monitoring system of financial crimes in the USA for the year 2021. This act includes the Anti-Money Laundering Act of 2020. 

The most important part of this act is the creation of the registry that will keep a check on the beneficial owners of the business organizations that are registered in the USA. AMLA 2020 will expand on the BSA and Patriot Act and have recommended FinCEN to consider the digital currency under this new act. This time, the act will also cover the art and antique dealers and will amplify the protection for whistleblowers. The implementation of the law will occur as FinCEN and the Department of Treasury will initiate the rulemaking process. 

AML Act of 2020 requires a reporting organization to report on the names and identifiable information of the beneficial owners to the FinCEN.
Although the AMLA does not define “substantial control,” it is likely the functional definition will reflect FinCEN’s customer due to diligence rules, which define control as an individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager”, states the Act.

The reporting company must register with FinCEN within two years if they have been made before the date of the regulation, however, they must immediately register with FinCEN if they were developed after the regulation has been passed. The company must provide FinCEN with the names, date of birth, driver’s license, passport, or any government-issued identity of the beneficial owners. 

The law also laid out the penalties in case of the violation of the requirements. The penalty includes $500 for each day the violation continues or has not been amended. The criminal offense includes a fine of up to $10,000 and imprisonment for more than two years. 

AMLA expands on the requirement of reporting of the customers in the money service business including the virtual assets this time.

The Secretary of the Treasury is also asked to work towards the rules regarding high-value trade including antiques and art. Research suggests that these high-value trading can be a source of financing terrorism and crime. Certain limitations must be applied to develop registration requirements with FinCEN. The exact compliance framework of such trades is yet to be disclosed but it has been noted that the authorities are concerned about this particular market for money laundering. 

The importance of international Anti-Money Laundering compliance has been highlighted to law enforcement as well. A foreign financial intelligence unit will be created, which will be responsible to establish relationships with the foreign intelligence body to counter money laundering and terrorist financing. The amount of $60 million will be appointed from the year 2020-2024 to the treasury so technical assistance to promote regulations internationally. 

The implementation of these regulations will fall to FinCEN, a primary regulator for financial institutions.