Pub. 10 2020-2021 Issue 6

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S March • April 2021 17 decision within 180-days, the whistleblower will be free to file a claim in federal district court. Third, the Act considerably increases the penalties for BSA/ AML violations for both companies and individuals. For repeat violations, additional civil penalties of either (i) three times the profit gained or loss avoided (if practicable to calculate) or (ii) two times the otherwise applicable maximum penalty for the violation are now in play. A new BSA provision will allow for fines “equal to the profit gained by such person by reason” of the violation. It will also include bonuses paid out the year in which the violation occurred or the following year for financial institu - tion directors and employees. Those who have been determined to have engaged in “egregious” violations of BSA/AML provi - sions may even be barred from serving on the board of directors of a U.S. financial institution for 10 years from the date of the conviction or judgment. Lastly, the Justice Department will, for the next five years, submit reports to Congress on the use of non-prosecution and deferred prosecution agreements during BSA/AML concerns. Fourth, the NDAA will also require the Treasury, in con- junction with the Justice Department and other agencies, to evaluate how it plans to streamline SAR and CTR requirements, thresholds and processes. Within one year of the NDAA’s enactment, the Treasury must propose regulations to Congress to reduce burdensome requirements and adjustment thresholds accordingly, with the expectation of these threshold adjust- ments taking place once every five years, for the next 10 years. Fifth, the Act highlights the importance of law enforce- ment’s involvement with international AML issues. FinCEN’s mission requires working with foreign law enforcement authorities to safeguard the U. S’s financial system. To assist, the Treasury will be required to establish a Treasury At- tachés program at U.S. embassies abroad and work with in - ternational organizations including the Financial Action Task Force, International Monetary Fund, and Organization for Economic Cooperation and Development to promote global AML frameworks. Additionally, FinCEN will appoint For- eign Financial Intelligence Unit Liaisons at U.S. embassies to engage with their foreign counterparts. Over $60 million per year has been allocated between 2020 and 2024 to the Treasury to provide technical assistance to foreign countries promoting compliance with international standards and best practices for establishing effective AML and counter-terrorist financing (CTF) programs. Additionally, the NDAA expands financial institutions’ ability to share SARs with foreign branches, subsidiaries and affiliates, and requires the Treasury and FinCEN Secretary to create a pilot program to achieve this objective. Currently, financial institutions are only permitted to disclose SARs to foreign affiliates that are a “head office” or “controlling company.” This has posed as a roadblock for enterprise-wide compliance within global banks. It is important to note that the Act does prohibit participants in this pilot program from Elizabeth K. Madlem Vice President of Compliance Operations and Deputy General Counsel Elizabeth is the Vice President of Compliance Operations and Deputy General Counsel at Compliance Alliance. In the past, she served as both the Operations Compliance Manager and Enterprise Risk Manager for Washington Federal Bank, a $16 billion organization headquartered in Seattle, WA. She has the industry expertise and real -world solutions surrounding bank-enterprise initiatives and knowledge of contract law and bank regulatory compliance. An attorney since 2010, Elizabeth was a Summa Cum Laude, Phi Beta Kappa, Delta Epsilon Sigma graduate of Saint Michael’s College in Burlington, VT, and a Juris Doctor from Valparaiso University School of Law in Indiana. As the Vice President of Compliance Operations, Elizabeth will be overseeing C/A’s day-to-day operations of the Hotline and leading our Education initiatives. Elizabeth plays an important part in all operational areas of C/A. sharing SARs with branches, subsidiaries and affiliates in China, Russia, and other specific jurisdictions. Lastly, the NDAA significantly modifies the U.S. BSA/AML program in the following areas: • Introduces several studies relating to (i) artificial intel - ligence, blockchain and other emerging technologies; (ii) beneficial ownership reporting requirements; (iii) trade-based money laundering; and (iv) money laun - dering by the People’s Republic of China. • Modifies various definitions relative to virtual curren - cies and other nontraditional cash substitutes; • Introduces antiquities dealers (but not art dealers) to BSA’s applicable scope; • Expands ability to subpoena foreign banks’ records that maintain correspondent accounts in the U.S.; • Creates a “FinCEN Exchange” to oversee voluntary public-private information sharing between law enforcement, national security agencies and financial institutions; and • Envisions a no-action letter process for FinCEN; Apart from these topics, the NDAA reincorporates an em- phasis on risk-based approaches to AML program requirements and discusses prior proposed rulemaking from FinCEN. It even includes discussions on the Treasury being required to periodi- cally publish on national AML and CTF initiatives. There is no doubt that the NDAA’s initiatives will be extend- ed over several years and require continued efforts by public and private sectors. The cost of these initiatives to the financial industry and small businesses has yet to be determined and remains a cry of protest from those against the reform. But this does appear to be the start of a more globally-centric effort to combat financial terrorism and money laundering crimes. n