FinCEN Releases Top US Anti-Money Laundering and Terrorist Financing Priorities | Jones Day

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The situation: The Office of Financial Crimes Enforcement Network (“FinCEN”) of the US Department of the Treasury has published the first national policy priorities for combating money laundering and terrorist financing (“AML / CFT Priorities”).

The result: FinCEN and regulators of federal and state financial institutions (the “Agencies”) have said they will issue revised regulations over the next six months on how to incorporate national policy priorities into bank secrecy law (“BSA”) and the AML / CFT Compliance Programs.

Look ahead: To prepare for the implementation of regulations, financial institutions should assess the risks associated with AML / CFT priorities related to the clients they serve, the products and services they offer, and the geographic areas in which they operate.

On June 30, 2021, FinCEN announced the first set of government-wide AML / CFT priorities, as required by the Anti-Money Laundering Law of 2020 (“AML Law”). In line with the National Strategy to Combat Terrorism and Other Illicit Financing, AML / CFT priorities reflect a mix of new and long-standing threats to the US financial system and national security. These threats involve attempts to exploit perceived legal, regulatory, supervisory, or enforcement vulnerabilities in the U.S. financial system that may be associated with a particular product, service, activity, or jurisdiction.

The national AML / CFT priorities identified by FinCEN are, in no specific order: (1) corruption; (2) Cybercrime, including cybersecurity and virtual currencies; (3) Financing of foreign and domestic terrorism; (4) Fraud; (5) activity of transnational criminal organization; (6) Organizing activity of drug trafficking; (7) Human trafficking and smuggling; and (8) proliferation financing. To identify these AML / CFT priorities, FinCEN consulted with the Treasury Department’s Office of Terrorist Financing and Financial Crimes, the Office of Foreign Assets Control and the Bureau of Intelligence and Analysis, as well as the prosecutor. General of the United States, federal and state financial regulators, law enforcement and national security agencies.

Along with the announcement of the AML / CFT Priorities, the Agencies issued an interagency statement explaining that the AML / CFT Priorities do not create immediate changes to BSA requirements or prudential expectations. Rather, the Agencies will revise their BSA regulations within six months to clarify how financial institutions should integrate AML / CFT Priorities into their risk-based BSA programs. Financial institutions are not required to incorporate AML / CFT Priorities into their risk-based BSA compliance programs before the date of entry into force of these new regulations.

The Agencies will begin to review the BSA compliance programs of financial institutions to assess the extent to which they incorporate the AML / CFT Priorities once the new regulations incorporating the priorities become final. In the meantime, financial institutions should assess the risks associated with the customers they serve, the products and services they offer, the businesses they engage in, and the geographies in which they operate to understand how they will integrate the AML / CFT priorities in their BSA. compliance programs.

FinCEN’s announcement aligns with President Biden’s National Security Study Memorandum, released on June 3, 2021, making anti-corruption efforts a core national security interest and indicating that corrupt domestic actors and foreigners and their financial enablers seek to take advantage of vulnerabilities in the US financial system. launder their assets and hide the proceeds of crime. For example, the FinCEN announcement highlights the sophistication of Mexican and Colombian drug cartels that rely on professional money laundering networks in Asia (primarily in China) that facilitate Chinese and US currency exchanges or serve as money brokers in money laundering, drug trafficking, and money laundering in the United States. Accordingly, BSA programs of financial institutions should reflect increased AML / CFT risks, including those posed by drug trafficking organizations, transnational criminal organizations, fraud and corruption. Financial institutions should also ensure that their current policies regarding politically exposed persons and senior foreign officials are up to date. Additionally, FinCEN’s particular mention of Russia and other countries suspected of facilitating cybercrime in the United States or against the United States indicates that financial institutions should closely review and revise their policies and practices to ensure vigilance against malicious cyber actors.

The Biden administration and FinCEN have expressed increased concerns about cyber financial crime, ransomware attacks and the use of virtual assets to undermine innovation and launder illicit proceeds. According to FinCEN, convertible virtual currencies (“CVCs”) are emerging as “the currency of preference in a wide variety of illicit online activities”, many of which target financial institutions. Financial institutions should assess the typologies and red flags issued by FinCEN regarding cybercrime and take action to tackle ransomware by identifying and reporting suspicious activity regarding how criminals and bad actors exploit CVCs .

Additionally, given that financial activities related to human trafficking, human smuggling and child exploitation may overlap at any point in the legal financial system, FinCEN said it is imperative that financial institutions detect and report suspicious transactions by understanding the current methodologies that traffickers and facilitators use. Financial institutions should recognize the financial and behavioral red flags associated with these activities in order to identify and report suspicious transactions, and may share information about the proceeds of one or more specified illegal activities based on the protection safe harbor against third party liability in the United States. Patriotic act.

Four key points to remember

  1. FinCEN and regulators of federal and state financial institutions have said they will issue new regulations in the next six months to implement national AML / CFT priorities. These regulations will require financial institutions to incorporate into their BSA compliance programs new and long-standing threats to the US financial system and national security identified in AML / CFT priorities.
  2. Financial institutions’ compliance programs should reflect increased AML / CFT risks, including those posed by drug trafficking organizations, transnational criminal organizations, fraud and corruption.
  3. Financial institutions should assess the typologies and red flags issued by FinCEN regarding cybercrime and take action to combat ransomware by identifying and reporting suspicious activity regarding how criminals and bad actors exploit convertible virtual currencies, which FinCEN considers “the currency of preference in a wide variety of illicit online activities.”
  4. Financial institutions should recognize the financial and behavioral red flags associated with human trafficking, human smuggling and child exploitation in order to identify and report suspicious transactions.



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