Pub. 10 2020-2021 Issue 5

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 www.coloradobankers.org 14 AML/BSA Reform Is on the Horizon W hen Congress pushed through the National De- fense Authorization Act for the fiscal year 2021, the banking industry was relieved and hopeful for the potential elimination of excessive regulatory burdens under the Bank Secrecy Act. The reason for hope is the section within the legislation dedicated solely to improvements to anti-money laundering rules, including to: • Improve coordination and information sharing among the agencies tasked with administering requirements for anti-money laundering and coun- tering the financing of terrorism, the agencies that examine financial institutions for compliance with those requirements, Federal law enforcement agen- cies, national security agencies, the intelligence com- munity and financial institutions; • Modernize anti-money laundering and countering the financing of terrorism laws to adapt the government and private sector response to new and emerging threats; • Encourage technological innovation and the adoption of new technology by financial institutions to more effectively counter money laundering and the financing of terrorism; • Reinforce that the policies, procedures, and controls of financial institutions for anti-money laundering and countering the financing of terrorism shall be risk-based; • Establish uniform beneficial ownership information reporting requirements to: ◦ Improve transparency for national security, intelli- gence, and law enforcement agencies and financial in - stitutions concerning corporate structures and insight into the flow of illicit funds through those structures; ◦ Discourage the use of shell corporations as a tool to disguise and move illicit funds; ◦ Assist national security, intelligence, and law en- forcement agencies with the pursuit of crimes; and ◦ Protect the national security of the United States; and • Establish a secure, nonpublic database at FinCEN for beneficial ownership information. The main purpose of this immense undertaking will continue to focus on safeguarding the United States financial system and those financial institutions that make up that sys - tem from the abuse of money laundering, terrorist financing and other illicit financial crimes. Today, banks must develop and implement an effective risk-based AML program consistent with rules that transcend roughly 50 years of banking. Over that time, many things have changed, especially the recent digital innovations relating to how consumers interact and conduct their banking and transactions. Unfortunately, the same cannot be said for the regulatory burden to file reports under archaic and arbi - trary thresholds. Under the current BSA Currency Transaction Reports (CTRs) requirements (not considering exemptions, as they are a burden unto themselves), financial institutions must report currency transactions over $10,000 conducted by, or on behalf of, one person, as well as multiple currency trans- actions that aggregate to be over $10,000 in a single day. In addition to filing CTRs, the industry must report suspi - cious activity under the following thresholds: • Criminal violations involving insider abuse in any amount. • Criminal violations aggregating $5,000 or more when a suspect can be identified. • Criminal violations aggregating $25,000 or more regardless of a potential suspect. This includes trans- actions conducted or attempted by, at or through the bank (or an affiliate) and aggregating $5,000 or more, if the bank or affiliate knows, suspects, or has reason to suspect that the transaction involves money laundering BY STEVE MANDERSCHEID, COMPLIANCE OFFICER, COMPLIANCE ALLIANCE