Pub. 17 2020 Issue 4

Issue 4 • 2020 17 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 N E W M E X I C O R E A L I Z E D R E A M S The NDAA will also require the Treasury, in conjunction with the Justice Department and other agencies, to evalu - ate 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 Con- gress to reduce burdensome requirements and adjustment thresholds accordingly, with the expectation of these thresh - old adjustments 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 Attachés program at U.S. embassies abroad and work with internation- al organizations including the Financial Action Task Force, International Monetary Fund, and Organization for Economic Cooperation and Development to promote global AML frame- works. Additionally, FinCEN will appoint a Foreign 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 com - pany.” This has posed a roadblock for enterprise-wide compli- ance within global banks. It is important to note that the Act does prohibit participants in this pilot program from sharing SARs with branches, subsidiaries and affiliates in China, Rus - sia, 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 intelli - gence, blockchain and other emerging technologies; (ii) beneficial ownership reporting requirements; (iii) trade- based money laundering; and (iv) money laundering by the People’s Republic of China. • Modifies various definitions relative to virtual currencies and other non-traditional 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 pub - lic-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 Elizabeth K. MadlemVice President of Compliance Operations and Deputy General Counsel. “Elizabeth is the Vice President of Compliance Operations and Deputy Gener- al Counsel at Compliance Alliance. She served as both the Operations Compli- ance Manager and Enterprise RiskManager for Washington Federal Bank, a $16 billion organization headquartered in Seattle, WA. She has 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 CumLaude, Phi Beta Kappa, Delta Epsi- lon Sigma graduate of Saint Michael’s College in Burlington, VT, and a Juris Doctor fromValparaiso 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 initia- tives. Elizabeth plays an important part in all operational areas of C/A.”