Anti-Money Laundering Act of 2020 (United States)
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| Anti-Money Laundering Act of 2020 (United States) | |
|---|---|
| Name | Anti-Money Laundering Act of 2020 |
| Enacted by | 116th United States Congress |
| Enacted | 2020 |
| Signed by | Donald Trump |
| Legislation history | National Defense Authorization Act for Fiscal Year 2021 |
| Citations | Pub.L. 116–283 |
Anti-Money Laundering Act of 2020 (United States) The Anti-Money Laundering Act of 2020 (AMLA) is a major statutory reform enacted as part of the National Defense Authorization Act for Fiscal Year 2021 and signed by Donald Trump during the COVID-19 pandemic in the United States. It significantly amended the Bank Secrecy Act framework, adding new tools for the Financial Crimes Enforcement Network and expanding mandatory reporting and enforcement authorities across federal agencies including the Department of Justice, Department of the Treasury, and Securities and Exchange Commission.
Background and Legislative History
AMLA emerged amid bipartisan concerns after high-profile cases such as the exposure of the Panama Papers, the investigations into Danske Bank and Deutsche Bank, and the implications of illicit finance highlighted by FinCEN advisory activity. Drafting drew on proposals from lawmakers including Senator Chuck Grassley, Senator Sherrod Brown, Representative Carolyn Maloney, and Representative Maxine Waters. The bill incorporated recommendations from entities like the Financial Action Task Force and incorporated stakeholder input from American Bankers Association, Independent Community Bankers of America, and civil-society groups such as Transparency International and Global Witness. Negotiations in the United States Senate and the United States House of Representatives culminated in passage as part of broader defense authorization negotiations in late 2020.
Key Provisions
AMLA expanded the scope of anti-money laundering by amending the Bank Secrecy Act and creating several structural changes: enhanced whistleblower incentives modeled on Securities and Exchange Commission programs; expanded subpoena authority reflecting precedents from New York County District Attorney and Manhattan District Attorney practices; mandatory risk assessments influenced by Basel Committee on Banking Supervision principles; and broadened information-sharing frameworks drawing on the USA PATRIOT Act amendments. It increased penalties applicable under statutes such as the Money Laundering Control Act of 1986 and clarified standards for civil forfeiture applied in cases like United States v. $506,231.00 in U.S. Currency. The act also authorized funding boosts for FinCEN and enhanced coordination with Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation.
Beneficial Ownership Reporting Program
A centerpiece of AMLA is the Beneficial Ownership Reporting Program, which directed the creation of a registry requiring reporting companies to disclose ultimate beneficial owners to FinCEN. The program addresses anonymity exploited in cases linked to the Panama Papers, Paradise Papers, and investigations involving entities tied to Vladimir Putin associates or oligarchs addressed in responses by the European Union. Reporting obligations affect corporate forms recognized under state law such as those registered with Delaware (state), Nevada (state), and Wyoming (U.S. state), and respond to recommendations by G20. Implementation required coordination with state-level secretaries of state like the Secretary of State of Delaware and business registries such as Companies House-equivalent systems. Exemptions include certain disclosures already available to regulators like the Securities and Exchange Commission and entities regulated by Federal Deposit Insurance Corporation or National Credit Union Administration.
Enforcement and Penalties
Enforcement under AMLA involves expanded civil and criminal authorities across agencies including Department of Justice, FinCEN, Securities and Exchange Commission, Commodity Futures Trading Commission, and state attorneys general such as the New York Attorney General and California Attorney General. Penalties may invoke enhanced fines, asset forfeiture under statutes like the Civil Asset Forfeiture Reform Act of 2000, and corporate compliance requirements reminiscent of settlements in cases against HSBC, Standard Chartered, and Wachovia. The act strengthened coordination for cross-border investigations with partners including Europol, INTERPOL, and foreign financial intelligence units such as the UK Financial Intelligence Unit.
Impact on Financial Institutions and Compliance
AMLA required banks, broker-dealers, money services businesses, and other covered financial institutions under Bank Secrecy Act to upgrade anti-money laundering programs, risk assessments, and customer due diligence. Firms such as JPMorgan Chase, Bank of America, Citigroup, and regional banks faced operational changes to comply with beneficial ownership reporting, recordkeeping, and suspicious activity reporting procedures. Compliance costs and technology investments involved vendor ecosystems including firms like Palantir Technologies and Thomson Reuters in the trade compliance sector, and impacted relationships with correspondent banks such as those in SWIFT. Training programs referenced standards from American Bar Association guidance and guidance by Institute of International Finance.
Criticisms and Legal Challenges
Critics from organizations including National Small Business Association and some state officials raised concerns about privacy, state preemption, and burdens on small entities resembling arguments advanced in litigation challenging Administrative Procedure Act actions. Civil-liberties groups like the American Civil Liberties Union and privacy advocates such as Electronic Frontier Foundation questioned data security and potential mission creep similar to controversies surrounding mass surveillance policies and USA FREEDOM Act debates. Litigation and administrative petitions have challenged rulemaking timelines and confidentiality protections before federal courts, and prompted scrutiny by committees such as the United States Senate Committee on Banking, Housing, and Urban Affairs.
Implementation and Regulatory Guidance
FinCEN issued rulemakings, compliance timelines, and guidance for the Beneficial Ownership Information access and verification protocols, coordinating with agencies including Office of Foreign Assets Control, Federal Reserve System, Office of the Comptroller of the Currency, and National Association of Secretaries of State. Implementation programs referenced technical standards from National Institute of Standards and Technology and interoperability considerations with international frameworks like FATF Recommendations. Ongoing rulemaking, enforcement actions, and guidance documents continue to refine reporting thresholds, privacy safeguards, and access controls in response to stakeholder feedback from institutions such as American Bankers Association and nongovernmental organizations including Global Financial Integrity.