On Thursday, August 13th, the ACAMS New York Chapter hosted a panel discussion titled Impact of Potential AML Reform Legislation, which was sponsored by Refinitiv, Thomson Reuters Special Services and Thomson Reuters. The discussion was moderated by Susan White, CAMS (Head of Business Development at kompany and ACAMS New York Chapter Committee Board member) and included Catherine Banks (Risk Proposition Specialist at Refinitiv), Jim Richards (Founder and Principal of RegTech Consulting LLC), Chris Tocin (Head of Risk Data Analytics and Automation at M&T Bank), and Rachel Woolley (Global Director of Financial Crime at Fenergo).
The discussion opened with a comprehensive overview of the House and Senate versions of AML reform bills, which may be included to the final version of the National Defense Authorization Act (NDAA), depending on the outcome of the bill conference process. The most significant component of the reform legislation is to require a national beneficial ownership registry that would be owned and maintained by FinCEN. There are, however, some uncertainties regarding how this registry might work in practice. For example, whether the US Government would ensure the accuracy of the registry’s data, and also the way in which financial institutions will be able to access the data for their CDD compliance processes.
The panel also focused on constraints to effectively implement the Payment Protection Program (PPP) Loans under the CARES Act. One of the risks that was raised is the documentation of analytics pertaining to loan fraud that may be subject to regulations such as DFS Part 504 (Transaction Monitoring Certification). The discussions also covered the need to maintain some manual processes, and the need for “clean” data.
Alerts for individual bills are available at https://www.congress.gov/ if you create a login:
NDAA (House—still active) has beneficial ownership language: click here for bill text
NDAA (Senate—still active) does not have beneficial ownership language: click here for bill text
Corporate Transparency Act (stalled after passing in the House): click here for bill text
ILLICIT CASH Act (stalled in the Senate): click here for bill text
PPP Loan level data: click here for loan level data
There are lessons to be learned from the beneficial ownership registers that were created because of the European Union AML Directives—specifically around who will be obligated to maintain the data.
When leveraging data elements as part of digitization and automation it is critical not to fall into a Data In, Gospel Out trap.
Applying AI and Machine Learning without understanding and cleaning data is like buying a high-speed train without having the tracks.
Compliance roles are requiring an increased understanding of technology.
Institutions have accelerated their automation and digitization projects as a result recent regulation, specifically relating to Payment Protection Program PPP and the Economic Injury Disaster Loans EIDL.
Please find the slides from the presentation here.