Bank Secrecy Act / Anti-Money Laundering Snapshot

For many years, banks have identified Bank Secrecy Act (BSA) / Anti-Money Laundering (AML) compliance as one of the most costly and burdensome regulations. Banking, law enforcement, and technology have undergone rapid change in recent years but the basic BSA/AML compliance structure is still heavily based on manual processing. There is a growing consensus that now is the time to update BSA, and ABA recommends that work focus on the following priorities:

Create a Federal Beneficial Ownership Registry

The major challenge facing banks today is the beneficial ownership rule. The new rule sets a higher bar for legal-entity customers by requiring transparency about the owners and one identified manager, but banks have no independent means to obtain the information. A single federal registry of beneficial ownership information would facilitate law enforcement access to the data while also easing the pressure on the financial sector.

Streamline the Information Sharing Process

Better and more consistent feedback from law enforcement is critical to help banks focus resources efficiently and effectively. There is also a need to streamline and expand how banks may share information internally and with each other.

Raise the Currency Transaction Report Threshold

The current $10,000 threshold for filing a CTR has not been changed since it was adopted in 1970. If adjusted using the Consumer Price Index, the threshold would have been over $65,000 in 2020. Congress has considered increasing the threshold to $30,000 but law enforcement opposes any increase, arguing that cash transactions stand out much more today than they did in 1970. Changes are needed to eliminate unnecessary reports.

Why it Matters

The U.S. Treasury identified the lack of a requirement to collect beneficial ownership information at the time of company formation and after changes in ownership as one of the most significant vulnerabilitiesexploited by illicit actors in the United States. Law enforcement needs transparency into the true ownership of businesses in order to identify and dismantle the networks of terrorist organizations, human traffickers, and other criminal enterprises. Banks invest a great deal of time and energy to assist law enforcement with those efforts by complying with BSA/AML requirements, but despite their efforts, success is limited. Bettercommunication between law enforcement and banks and more efficient and streamlined reporting is needed to fight illicit finance effectively.

Recommended Action Items

• Support and pass the ILLICIT CASH Act (S. 2563) which addresses many of the ABA recommendations outlined above. This bill and its companion, the Corporate Transparency Act (H.R. 2513), which passed the House in October, would create a federal beneficial ownership registry, which in turn would help alleviate bank burden while simultaneously creating a more reliable source of information for law enforcement. The legislation would also facilitate information sharing and take other steps to streamline the BSA/AML compliance process, especially improving feedback from law enforcement.