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Shifting The Burden

This week, both the United States House of Representatives and Senate, through the “must-pass” annual defense spending bill, voted overwhelmingly to finalize reforms to the country’s AML framework through the Anti-Money Laundering Act of 2020 (AMLA). The bill, which added reforms passed by the House from its 2019 Corporate Transparency Act, represents the most significant overhaul of the AML regime in over two decades.

So, what does it all mean?
Notably, in addition to rectifying a centuries-old problem, which Sigma covered in a piece titled ‘227 Years Later...’ in response to the 2019 Corporate Transparency Act, the legislation includes a beneficial ownership requirement, which would essentially force all U.S. companies to disclose their ultimate beneficial owners to U.S. regulators shifting the burden from the financial sector. While the United States actually increased its financial secrecy in 2020 by 15%, thereby overtaking Switzerland as the top destination for people looking to hide their money according to Tax Justice Network, the pressure on the U.S. Congress to act increased tremendously following the recent publication of the FinCEN Files as the spotlight shifted towards ensuring financial crime compliance.

In fact, according to Duff & Phelps’
Global Enforcement Review 2020 report,  AML enforcement actions and the associated fines are on track this year to more than double those issued in 2019. With the new legislation, the AMLA would also establish a whistleblower reward program at FinCEN that is inspired by the success achieved by the SEC’s whistleblower program instituted through the Dodd-Frank Act.
Most notably though, and as we’ve advocated in the past, the Anti-Money Laundering Act of 2020 directly addresses two of the three key areas of reform that the industry highlighted would have the greatest immediate impact on the fight against financial crime, which are “increased public/private sector cooperation [and] meaningful reforms to beneficial-ownership regimes.” The third key area, the increased use of technology, is at the core of Sigma’s mission, and one of several recommendations highlighted in Sigma’s forthcoming white paper ‘The State of the Investigative Landscape’, which addresses both the challenges of the current financial crime investigative landscape and the solutions to address them.
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