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The Regulators Are at the Gates: Significant New AML Legislation Nears Passage
Over the past few years, Congress and law enforcement have notably increased their scrutiny of companies' anti-money laundering (AML) compliance, and it appears that Congress is not yet finished with its drive for additional legislation and regulation. On Jan. 1, 2021, Congress passed the Anti-Money Laundering Act of 2020 (the AMLA), which was included in the National Defense Authorization Act for Fiscal Year 2021. The AMLA, which was widely perceived to represent one of the largest reforms of U.S. AML laws since the 2001 Patriot Act, included the creation of a national registry that tracks certain entities' beneficial ownership information, brought antiquities dealers and cryptocurrency exchanges, and transmitting businesses under the Bank Secrecy Act's (BSA) AML requirements, updated AML whistleblower provisions, and expanded law enforcement tools, including providing the Department of Justice and Treasury Department with the power to subpoena foreign banks with U.S. correspondent accounts for records related to any account at the bank. Since its passage, companies have been busy adapting their AML compliance programs to account for these significant changes to AML laws.
Before the dust has even settled, a new wave of major AML laws and regulations is under consideration. On July 15, 2022, the House passed the bipartisan "Establishing New Authorities for Business Laundering and Enabling Risks to Security Act," commonly known as the ENABLERS Act, as part of its version of the National Defense Authorization Act for Fiscal Year 2023 ( 2023 NDAA). The ENABLERS Act would amend the BSA to extend AML compliance obligations to certain so-called "gatekeeper professions" for the first time. Rep. Tom Malinowski (D-N.J.), who co-led the push to enact the ENABLERS Act, said, "If it passes, this will be the biggest money laundering reform since the Patriot Act." Additionally, as prompted by the ongoing conflict between Ukraine and Russia and the need to hold the Russian government and oligarchs accountable, the Biden administration recently asked Congress to enact additional significant changes to U.S. AML and asset forfeiture laws. Companies should monitor these major AML developments and stay ahead of the curve in case they must implement new BSA/AML compliance programs or update existing programs.
The ENABLERS Act arose out of a broad-based call for greater regulation of so-called financial "gatekeepers." In March 2022, SEC Commissioner Allison Herren Lee, duringPLI corporate governance conference, noted "the role of corporate lawyers as gatekeepers in the capital markets" and called on the SEC to fulfill "Congress's mandate under Section 307 of Sarbanes-Oxley to adopt minimum standards of professional conduct for attorneys appearing and practicing before the Commission in the representation of issuers." With respect to AML, as early as 2003, the Financial Action Task Force, an intergovernmental body formed by the U.S. and other nations that sets AML standards, recommended that certain non-financial businesses and professions at risk of being involved in money laundering should be subject to AML obligations when performing certain functions. The ENABLERS Act's "findings" highlighted this recommendation as well as recent impactful events, such as the October 2021 Pandora Papers, which, according to the bill, "revealed … how the United States plays host to a highly specialized group of enablers who help the world's elite move, hide, and grow their money."
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