[co-author: Zach Ulewicz, Summer Associate]
Note: We would like to thank co-author Zach Ulewicz, Summer Associate, for his contribution to this article.
Financial Crimes Enforcement Network (FinCEN) remains committed to the fight against money laundering, in all its forms, in connection with banking and financial systems. To this end, on June 30, 2021, FinCEN issued new sub-regulatory guidelines in the form of a Priorities for the fight against money laundering and the financing of terrorism (AML / CFT), as required by the anti-money laundering law of 2020 (AML law). FinCEN also issued a declaration provide guidance and clarification on new priorities for non-bank financial institutions (NBFIs)1, and a similar interagency declaration was issued for banking institutions. By publishing the new priorities, FinCEN made it clear that it was not making any immediate changes to the requirements of the Banking Secrecy Act (BSA); instead, FinCEN said it would issue new regulations at a “later date” that would directly address these new priorities and “specify how financial institutions should integrate these priorities into their risk-based AML programs. “. However, it is important that all covered financial institutions begin to assess their current AML protocols and determine any changes that may be required to incorporate the new priorities. It is clear that financial institutions are also subject to more scrutiny. FinCEN has identified eight priorities:
This includes both foreign and domestic corruption that threatens national security and the global financial system. Corrupt actors embezzle public funds, use bribes or commit other criminal acts, and attempt to exploit weaknesses in the U.S. financial system to cover their tracks.
2. Cybercrime, including relevant cybersecurity and virtual currency3 Considerations
This includes any illegal activity involving computers or other virtual devices. Cybercrime-related virtual crimes are increasingly used for theft, fraud, ransomware attacks and other scams, while virtual currencies can be used to facilitate illegal activities and launder ill-gotten gains.
3. Financing of terrorism
This category includes both international and national4 terrorism and consists of (1) individuals in the United States who fund international terrorist groups and (2) the funding of violent extremists or any group using force or violence to pursue ideological agendas in the United States
It is the largest category of illicit goods in the United States and includes banking, consumers, healthcare, securities and investments, and tax evasion. The profits from illegal fraud operations are then laundered in various ways.
5. Activity of a transnational criminal organization
This is a broad category that includes the activities of drug trafficking organizations that extend beyond international borders. Mexican and Russian criminal organizations remain a threat, while other national organizations have developed. These criminal organizations engage in a wide range of illegal activities, many of which are described in other priorities.
6. Activity of drug trafficking organizations
FinCEN notes that drug traffickers’ organizations often use professional money laundering networks, especially through China, which conduct trade-based money laundering programs.
7. Trafficking and smuggling of human beings
FinCEN worked with law enforcement agencies and other organizations and, in October 2020, published a advisory to help identify financial and behavioral indications of human trafficking, which complemented a previous advisory from 2014.
8. Financing proliferation
This includes a wide range of activities seeking to exploit the US financial system to fund the development of weapons of mass destruction or state-sponsored weapons programs, often trying to avoid UN sanctions or the United States.
The two additional statements that have been issued to NBFIs and banking institutions have both made it clear that these priorities have been issued in accordance with AML requirements and that there are no changes to the requirements yet. of the BSA. However, the AML law requires that within 180 days of setting these priorities, FinCEN revises and publishes new BSA regulations to incorporate the priorities. Covered financial institutions should remain vigilant in evaluating their risk-based AML programs and be prepared to incorporate new regulatory changes to BSAs when they are issued. Financial institutions should also expect further guidance on these revised BSA regulations when they are promulgated, as well as updates to review procedures for examiners. FinCEN has indicated that it will publish similar priorities every four years.
Key to take away
FinCEN has published this priority list to indicate areas of interest for anti-money laundering law and future BSA regulation and amendment. Although FinCEN has not yet issued enforcement measures or other specific guidelines, Covered Financial Institutions and Covered NBFIs should begin to assess their current AML programs against these priorities. In particular, FinCEN is likely to expect compliance programs to specifically address each priority as an item of action. Within 180 days of posting these priorities, FinCEN will issue new regulations under the BSA for compliance. At that time, FinCEN will also issue new guidance to covered institutions and updates to review procedures. Financial institutions should review current protocols and stay abreast of new and revised regulations.
1 Common NBFIs include casinos, securities and commodities companies, money services companies, insurance companies, venture capital firms, foreign exchange bureaus, loan or finance companies, credit card system operators and others.
2 It should be noted that President Biden also issued a statement focusing on corruption note June 3, 2021.
3 The regulation of cryptocurrencies is becoming a high priority as they are adopted by traditional financial institutions.
4 Especially in light of the January 6, 2021 attack on the United States Capitol and the recent National Strategy to Combat Domestic Terrorism published by the White House.
5 The priorities specifically refer to the recent increase in “COVID-19-related fraud patterns”.