The Implementation of FinCEN’s New Rule
Washington,
May 16, 2018 -
WASHINGTON – The Terrorism and Illicit Finance Subcommittee met today to examine the implementation and enforcement of the Financial Crimes Enforcement Network’s (FinCEN) Customer Due Diligence (CDD) Rule to improve anti-money laundering efforts while safeguarding the U.S. financial system for its proper use.
“Last week the Customer Due Diligence rule went into effect, capping a 6-year effort by FinCEN to address shortcomings in our anti-money laundering and countering terrorist financing regulatory regime. I have heard testimony from a variety of experts in the field of detecting and pursuing criminals in the financial system, and many agree that a critical component of success in these investigations is law enforcement’s timely access to beneficial ownership information,” said Subcommittee Chairman Steve Pearce (R-NM). “However, there are legitimate concerns about the application of this rule and the impact it could have on banks already struggling with BSA compliance. Adding additional requirements will likely lead to the de-risking of legitimate business accounts because of increased regulatory burdens. It is important for our federal regulators to strike the appropriate balance between ensuring safety as well as access to the financial system.”
Key Takeaways
- As strong as the U.S. anti-money laundering (AML) and countering the financing of terrorism (CFT) frameworks are, malicious actors will continue to exploit vulnerabilities to further their illicit and terrorist activities.
- FinCEN and other components of the Department of the Treasury will remain engaged with stakeholders, including financial institutions, trade associations, regulators, and examiners to achieve objectives of the CDD Rule through proper implementation.
Topline Quotes from Witnesses
“The misuse of legal entities to disguise illicit activity has been a key vulnerability in the U.S. financial system… Our goal in this rule is to gain the transparency needed to protect the U.S. financial system and to prevent, deter, detect and disrupt money laundering, terrorist financing, and other serious crimes. It is important for us to continue to work with our regulatory partners, their examiners and financial institutions to achieve these objectives through compliance with the rule… FinCEN will continue to engage industry groups and other stakeholders to understand any specific unintended challenges that the rule may present and, if necessary, FinCEN will provide further guidance. Likewise, we will work with regulatory and law enforcement partners to understand and address any compliance issues appropriately,” stated Kenneth A. Blanco, Director, Financial Crimes Enforcement Network (FinCEN).
