Banking

House passes AML reforms with veto-proof majority

WASHINGTON — The House of Representatives voted overwhelmingly to finalize reforms to the nation’s anti-money-laundering framework, moving the legislation supported by banks one step closer to the finish line.

The defense reauthorization package includes a measure requiring new businesses to report their beneficial owners directly to the Financial Crimes Enforcement Network. Currently, the burden rests on banks to verify the identities of their customers and crack down on the use of anonymous shell companies.

“Advancing this AML legislation will bring the nation closer to locking global criminals out of the U.S. banking system by unmasking anonymous shell companies and modernizing the process for detecting illicit behavior,” said Greg Baer, president and CEO of the Bank Policy Institute.

Notably, the defense spending bill passed the House Tuesday night with a veto-proof majority of 335-78, despite threats from President Donald Trump to axe the bill over its lack of restrictions — unrelated to the AML measure — for social media companies. However, the bill would have to clear the Senate by a similar margin to override any majority. The Senate could vote on the package as early as this week.

“The Corporate Transparency Act is the most important anti-money laundering and anti-corruption bill in 20 years, and it will make our country substantially safer,” said Rep. Carolyn Maloney, D-N.Y.

Bloomberg News

The push to include AML legislation in the military spending bill was led in large part by Rep. Carolyn B. Maloney, D-NY, who hailed the decision from lawmakers to add reforms from the Corporate Transparency Act — a bill passed by the House in October 2019 — to the defense bill.

“The Corporate Transparency Act is the most important anti-money laundering and anti-corruption bill in 20 years, and it will make our country substantially safer,” Maloney said in a press release. “Anonymous shell companies have become the vehicle of choice for terrorist financing, money laundering, and organized crime — and unfortunately, the U.S. is one of the easiest places in the world to set up these shell companies.”

The package also included a new program intended to incentivize whistleblowers to report violations of the nation’s anti-money-laundering laws. Tipsters who approach the Treasury Department with information that leads to enforcement activity under the Bank Secrecy Act will be eligible to receive up to 30% of the resulting monetary penalty.


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