Congress Overhauls AML Framework, Mandating Disclosure of Beneficial Ownership Information

December 17, 2020

As part of the National Defense Authorization Act for 2021 (the “NDAA”), Congress has passed the most significant U.S. anti-money laundering (“AML”) legislation since the USA PATRIOT Act of 2001, the “Anti-Money Laundering Act of 2020” (“AMLA 2020”).

Although President Trump has threatened to veto the NDAA, the majorities supporting the legislation would be sufficient to override the veto if members do not change their votes.

The legislation requires U.S. corporations and LLCs and non‑U.S. corporations and LLCs registered to do business in the United States to disclose information on their underlying beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”) of the Department of the Treasury, if there is no applicable exemption. After implementation, we expect financial institutions no longer to bear the primary burden of establishing the underlying beneficial ownership of many customers as they will have access to the disclosures (with customer consent).

AMLA 2020 also makes sweeping changes to other areas of the U.S. AML regime, including by: (i) providing more guidance and feedback to financial institutions on AML compliance programs required under the Bank Secrecy Act, (ii) increasing resources and enhancing enforcement tools to police AML compliance, and (iii) implementing initiatives to strengthen and modernize FinCEN and AML supervision writ large.

Please click here to read the full alert memorandum.