On January 31, 2022, the ACAMS New York Chapter hosted a virtual event titled AML Act - One Year Later. The event was moderated by Kelly Cooper, Senior Vice President, AML Compliance, Citi; and the panel included Angelena Bradfield, Senior Vice President, AML/BSA, Sanctions & Privacy, Bank Policy Institute; Kimberly Lacey, Chief AML Officer, KeyBank; and Jeff Lavine, Partner, PwC.
Materials from the event can be downloaded here.
The event opened with thoughts on expectations of Financial Institutions (FIs) around the impact of the Corporate Transparency Act (NPRM on Beneficial Ownership Reporting Requirements), which is part of the Anti-Money Laundering Act of 2020 and establishes beneficial ownership information reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States. Panelists discuss the unknowns regarding how beneficial ownership reporting requirements will eventually impact financial institutions.
The discussion then moved to FinCEN’s list of National Priorities, as proposed regulations around priorities and effectiveness are targeted to be published in April 2022. Panelists encouraged all institutions to ensure that these topics are built into the risk assessment at some stage, training plans, and monitoring and testing functions. The runway for implementation here will be long and AML reform will naturally begin to focus on transaction monitoring evolution, including the incorporation of AI elements to focus on anomaly detection and general problem statement for efficiency. FI’s will likely be pushed to invest in technology growth.
The event then moved into a key timely topic as FinCEN Seeks Comments on Modernization of U.S. AML/CFT Regulatory Regime by February 14, 2022. Panelists stressed the importance of explaining our pain points and what we want to see changed. Responding to this RFI is a unique opportunity to speak about technological efficiencies that could be introduced, such as a direct feed of CTR information.
Another key topic included in the panel discussion was ‘SAR Sharing’ (FinCEN Issues Proposed Rule for Suspicious Activity Report Sharing Pilot Program to Combat Illicit Finance Risks). Financial institutions need to be able to manage their financial crime risk globally. Some institutions have been able to share information outside of sharing actual SARs, but this pilot helps the institutions that are not as sophisticated. Data protections will be important to consider, so be sure to review the details of this proposed rule.
Throughout the event, the panelists noted a theme of encouraging innovation and the expectation that a greater focus will be placed on innovation as we move forward. Financial institutions will be using more sophisticated technologies and should have a higher yield of discovering suspicious activity in a more cost-effective manner.
Key Takeaways:
Engage early and often. Think about the impact for financial institutions as well as for regulators. Think about getting law enforcement information that is highly useful. The more you can illustrate how changes you are making will impact your firm the better.
Privacy implications are also important. Regulators’ biases should be considered when implementing your technologies.
Be conscious that comments to FinCEN’s RFI are due on February 14th. How are you going to respond to the RFI? It’s a one-in-a-generation opportunity to be able to comment on improvements across the US’ AML regime.
Don’t pop the champagne on beneficial ownership yet. Banks are still going to be required to collect this information. Pay attention to the CTA rulemaking as they are issued. The requirements under the CDD Rule are very different to the CTA, however, we should remain optimistic that efficiencies will be implemented through future regulations.