Pub. 9 2021 Issue 1

ISSUE 1. 2021 7 reporting companies to provide FinCEN with updated information within a year. FinCEN has stated it will maintain a registry of this beneficial ownership information, but it will not be public. However, this does not prevent FinCEN from sharing this information with federal, state, local and tribal law en- forcement agencies if there is appropriate court approval. FinCEN can also share the beneficial ownership information with financial institutions for customer due diligence purposes, but only with the reporting company’s consent. Second, this NDAA creates a new whis- tleblower program and establishes a private right of action for whistleblowers who have experienced retaliation. Aim- ing to incentivize reporting of BSA/AML violations, this program will award whis- tleblowers who give tips with as much as 30% of the monetary penalties assessed against the company if it leads to mon- etary penalties in excess of $1 million. This will depend on the significance of the information, the degree of assistance provided, and the government’s interest in deterring BSA violations through these awards. Additionally, a private right of action for whistleblowers who suffer retaliation will be available — whis- tleblowers can file complaints with the Occupational Safety and Health Admin- istration (OSHA) where, if OSHA fails to issue a 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 re- peat 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 viola- tion. 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 pro- visions may even be barred from serving on the board of directors of a U.S. finan- cial 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. The NDAA will also require the Trea- sury, in conjunction with the Justice De- partment and other agencies, to evaluate how it plans to streamline SAR and CTR requirements, thresholds and processes. Within one year of the NDAA’s enact- ment, the Treasury must propose regula- tions to Congress to reduce burdensome requirements and adjustment thresholds accordingly, with the expectation of these threshold adjustments taking place once every five years, for the next 10 years. Fifth, the Act highlights the importance of law enforcement’s involvement with inter- national AML issues. FinCEN’s mission requires working with foreign law enforce- ment 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 international organiza- tions 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 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 count- er-terrorist financing (CTF) programs. Additionally, the NDAA expands finan- cial institutions’ ability to share SARs with foreign branches, subsidiaries, and affiliates and requires the Treasury and FinCEN Secretary to create a pilot pro- gram to achieve this objective. Currently, financial institutions are only permitted to disclose SARs to foreign affiliates Changes in beneficial ownership will require reporting companies to provide FinCEN with updated information within a year. FinCEN has stated it will maintain a registry of this beneficial ownership information, but it will not be public. →