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  • U.S.-EU release statement on Joint Financial Regulatory Forum

    Financial Crimes

    On March 24 and 25, EU and U.S. participants, including officials from the Treasury Department, Federal Reserve Board, CFTC, FDIC, SEC, and OCC, participated in the U.S.-EU Joint Financial Regulatory Forum to discuss topics of mutual interest, including those related to (i) “next steps” for Covid-19 recovery and for mitigating financial stability risks; (ii) “sustainable finance”; (iii) banking and insurance multilateral and bilateral engagement; (iv) capital market regulatory and supervisory cooperation; (v) regulatory and supervisory developments pertaining to financial innovation, including the importance of promoting ongoing “responsible innovation and international supervisory cooperation”; and (vi) anti-money laundering and countering the financing of terrorism (AML/CFT) issues, including “the potential for enhanced cooperation to combat money laundering and terrorist financing bilaterally and in the framework of [the Financial Action Task Force].” Participants also discussed possible responses to climate-related financial risks, as well as “the progress in their respective legislative and supervisory efforts to ensure a smooth transition away from LIBOR.”

    Financial Crimes Department of Treasury OFAC EU Of Interest to Non-US Persons Covid-19 Climate-Related Financial Risks Fintech Anti-Money Laundering Combating the Financing of Terrorism LIBOR

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  • FATF updates virtual assets and service provider guidance

    Agency Rule-Making & Guidance

    In March, the Financial Action Task Force (FATF) updated pre-existing guidance on its risk-based approach to virtual assets (VAs) and virtual asset service providers (VASPs). The draft updated guidance revises guidance originally released June 2019, wherein FATF members agreed to regulate and supervise virtual asset financial activities and related service providers (covered by InfoBytes here) and place anti-money laundering and countering the financing of terrorism (AML/CFT) obligations on VAs and VASPs. According to FATF, the revisions “aim to maintain a level playing field for VASPs, based on the financial services they provide in line with existing standards applicable to financial institutions and other AML/CFT-obliged entities, as well as minimizing the opportunity for regulatory arbitrage between sectors and countries.” The revisions provide updated guidance in six main areas intended to:

    • Clarify VA and VASP definitions to make it clear that these definitions are expansive and that “there should not be a case where a relevant financial asset is not covered by the FATF Standards (either as a VA or as a traditional financial asset)”;
    • Provide guidance on how FATF Standards apply to so-called stablecoins;
    • Provide further guidance on risks and potential risk mitigants for peer-to-peer transactions;
    • Provide updated guidance on VASP licensing and registration requirements;
    • Provide additional guidance for public and private sectors on the implementation of the “travel rule”; and
    • Include principles of information sharing and cooperation among VASP supervisors.

    FATF intends to consult private sector stakeholders before finalizing the revisions, and is separately considering implementing revised FATF Standards on VAs and VASPs—as well as whether further updates are necessary—through a second 12-month review.

    Agency Rule-Making & Guidance FATF Virtual Currency Of Interest to Non-US Persons Anti-Money Laundering Combating the Financing of Terrorism Financial Crimes

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  • FinCEN updates AML/CFT deficiencies list

    Financial Crimes

    On March 11, the Financial Crimes Enforcement Network (FinCEN) issued an advisory identifying updates to the Financial Action Task Force’s (FATF) list of jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) and counter-proliferation financing deficiencies. The advisory notes that in response to the Covid-19 pandemic, FATF “prioritized its review by focusing on jurisdictions with expired or expiring action plan deadlines,” and provided jurisdictions identified under “increased monitoring” the option to provide a status report. FinCEN’s advisory reminds members that its February 2020 statement High-Risk Jurisdictions Subject to a Call for Action remains in effect and urges “all jurisdictions to impose countermeasures on Iran and the Democratic People’s Republic of Korea (DPRK) to protect the international financial system from significant strategic deficiencies in their AML/CFT regimes.” The advisory also notes that last month FATF updated its Jurisdictions under Increased Monitoring document, adding Burkina Faso, Cayman Islands, Morocco, and Senegal. Further, the advisory provides AML program risk assessment considerations and suspicious activity report filing guidance.

    Financial Crimes FinCEN Of Interest to Non-US Persons FATF Anti-Money Laundering Combating the Financing of Terrorism Covid-19

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  • FATF steps up combating terrorist and proliferation financing

    Financial Crimes

    On February 25, the U.S. Treasury Department announced that the Financial Action Task Force (FATF) concluded another plenary meeting, in which it “advanced its work on several important issues, including finalizing a non-public report on terrorist financing and agreeing to seek public comment on updated guidance documents on virtual assets and proliferation finance.” Among other things, FAFT finalized three non-public reports outlining best practices for investigating and prosecuting terrorist financing for FATF member states, as well as an internal ISIS/Al Qaeda financing update and internal guidance designed “to assist investigative authorities trace financial flows between illicit arms traffickers and terrorists.” FATF also approved new guidance (to be published early March) intended to clarify and improve the adoption of risk-based supervision, which outlines ways supervisors should apply risk-based approaches to their activities, highlights common implementation challenges to risk-based supervision, and provides examples of effective strategies. Additionally, FAFT noted it has agreed to seek public consultation on amendments to its 2019 guidance concerning anti-money laundering/countering the financing of terrorism obligations concerning virtual assets and virtual asset service providers, and expects to release final updated guidance this summer. FATF also stated it intends to issue new guidance this summer on ways countries and the private sector can understand and mitigate proliferation financing threats, vulnerabilities, and risks.

    Financial Crimes FATF Agency Rule-Making & Guidance Combating the Financing of Terrorism Of Interest to Non-US Persons Anti-Money Laundering Virtual Currency

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  • Congress overrides veto of NDAA with significant BSA/AML provisions

    Financial Crimes

    On January 1, the U.S. Senate voted to override President Trump’s veto of the National Defense Authorization Act (NDAA) for Fiscal Year 2021, following a similar vote in the House a few days prior. As previously covered by InfoBytes, the NDAA includes significant changes to the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws under the Anti-Money Laundering Act of 2020, such as:

    • Establishing federal disclosure requirements of beneficial ownership information, including a requirement that reporting companies submit, at the time of formation and within a year of any change, their beneficial owner(s) to a “secure, nonpublic database at FinCEN”;
    • Expanding the declaration of purpose of the BSA and establishing national examinations and supervision priorities;
    • Requiring streamlined, real-time reporting of Suspicious Activity Reports;
    • Establishing a Subcommittee on Innovation and Technology within the Bank Secrecy Act Advisory Group to encourage and support technological innovation in the area of AML and countering the financing of terrorism and proliferation (CFT);
    • Expanding the definition of financial institution under the BSA to include dealers in antiquities;
    • Requiring federal agencies to study the facilitation of money laundering and the financing of terrorism through the trade of works of art; and
    • Including digital currency in AML-CFT enforcement by, among other things, expanding the definition of financial institution under the BSA to include businesses engaged in the transmission of “currency, funds or value that substitutes for currency or funds.”

    Financial Crimes Federal Issues Anti-Money Laundering Bank Secrecy Act Combating the Financing of Terrorism Virtual Currency Of Interest to Non-US Persons U.S. House U.S. Senate Veto Federal Legislation Anti-Money Laundering Act of 2020

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  • Senate passes NDAA with significant AML provisions

    Federal Issues

    On December 11, the U.S. Senate passed the National Defense Authorization Act (NDAA) for Fiscal Year 2021 in a 84-13 vote, which was passed by the U.S. House of Representatives earlier in the week. As previously covered by InfoBytes, the NDAA includes a number of anti-money laundering provisions, such as (i) establishing federal disclosure requirements of beneficial ownership information, including a requirement that reporting companies submit, at the time of formation and within a year of any change, their beneficial owner(s) to a “secure, nonpublic database at FinCEN”; (ii) expanding the declaration of purpose of the Bank Secrecy Act (BSA) and establishing national examinations and supervision priorities; (iii) requiring streamlined, real-time reporting of Suspicious Activity Reports; (iv) expanding the definition of financial institution under the BSA to include dealers in antiquities; and (v) including digital currency in the AML-CFT enforcement regime by, among other things, expanding the definition of financial institution under the BSA to include businesses engaged in the transmission of “currency, funds or value that substitutes for currency or funds.” The NDAA has been sent to President Trump, who has publicly threatened to veto the measure; however, the legislation passed both the Senate and the House with majorities large enough to override a veto.

    Federal Issues Financial Crimes Anti-Money Laundering Bank Secrecy Act Combating the Financing of Terrorism Virtual Currency SARs Of Interest to Non-US Persons U.S. Senate Federal Legislation

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  • House passes NDAA with significant AML/CFT provisions

    Federal Issues

    On December 8, the U.S. House of Representatives passed the National Defense Authorization Act (NDAA) for Fiscal Year 2021 in a 335-78 vote, which includes significant language from the September 2019 proposed legislation, the “Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act,” among other proposed laws. Highlights of the anti-money laundering (AML) provisions include:

    • Establishing federal disclosure requirements of beneficial ownership information, including a requirement that reporting companies submit, at the time of formation and within a year of any change, their beneficial owner(s) to a “secure, nonpublic database at FinCEN”;
    • Expand the declaration of purpose of the Bank Secrecy Act (BSA) and establish national examinations and supervision priorities;
    • Require streamlined, real-time reporting of Suspicious Activity Reports;
    • Establish a Subcommittee on Innovation and Technology within the Bank Secrecy Act Advisory Group to encourage and support technological innovation in the area of AML and countering the financing of terrorism and proliferation (CFT);
    • Expand the definition of financial institution under the BSA to include dealers in antiquities;
    • Require federal agencies to study the facilitation of money laundering and the financing of terrorism through the trade of works of art; and
    • Inclusion of digital currency in AML-CFT enforcement by, among other things, expanding the definition of financial institution under the BSA to include businesses engaged in the transmission of “currency, funds or value that substitutes for currency or funds.”

    Federal Issues Financial Crimes Anti-Money Laundering Bank Secrecy Act Combating the Financing of Terrorism Virtual Currency SARs Of Interest to Non-US Persons U.S. House Federal Legislation

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  • FinCEN updates FATF-identified jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On July 14, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to inform financial institutions of updates to the Financial Action Task Force (FATF)-identified jurisdictions with “strategic deficiencies” in their anti-money laundering and combating the financing of terrorism (AML/CFT) and counter-proliferation financing deficiencies. FATF notes that in response to measures taken by countries in response to the Covid-19 pandemic, it has temporarily paused reviewing most counties with strategic deficiencies. The advisory reminds members that its February 2020 statement High-Risk Jurisdictions Subject to a Call for Action remains in effect and urges “all jurisdictions to impose countermeasures on Iran and the Democratic People’s Republic of Korea (DPRK) to protect the international financial system from significant strategic deficiencies in their AML/CFT regimes.” The advisory also emphasizes that financial institutions should consider the Jurisdictions under Increased Monitoring document and consult the list of identified countries when reviewing due diligence obligations and risk-based policies, procedures, and practices. The advisory also outlines AML program risk assessment considerations, as well as suspicious activity report filing guidance.

    Financial Crimes FinCEN Anti-Money Laundering Combating the Financing of Terrorism Of Interest to Non-US Persons FATF

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  • FATF highlights financial crime risks related to Covid-19 pandemic

    Federal Issues

    On May 4, the Financial Action Task Force (FATF) released a report identifying challenges, good practices, and policy responses to new money laundering and financing threats arising from the Covid-19 pandemic. The report notes that the global response to the Covid-19 pandemic is limiting the ability of the government and public sector to implement oversight of anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. Among other things, FATF noted that Covid-19 threats and corresponding vulnerabilities could result in the following: (i) increased misuse of online financial services and virtual assets to move illicit funds; (ii) the bypassing of customer due diligence measures; and (iii) the misuse and misappropriation of domestic and international financial aid. Additionally, FATF noted that the increased use of online platforms for social interaction, consumer shopping, and banking measures may also lead to increased fraud by criminal actors, such as impersonation of officials, counterfeiting essential goods, and fundraising for fake charities. To address these concerns, FATF emphasized that domestic coordination assessing the impact of Covid-19 on AML/CFT risks, the use of a risk-based approach to customer due diligence, and strengthened communication with the private sector may help support the implementation of measures to manage the new risks and vulnerabilities.

    Federal Issues Financial Crimes FATF Covid-19 Bank Secrecy Act Anti-Money Laundering Combating the Financing of Terrorism Of Interest to Non-US Persons

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  • OFAC designates Hizballah-associated companies and officials as global terrorists

    Financial Crimes

    On February 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated three individuals and 12 entities—all based in Lebanon—as Specially Designated Global Terrorists (SDGTs). Pursuant to Executive Order 13224, as amended, OFAC designated two of the individuals as leaders or officials of a Hizballah-related foundation that was previously designated for supporting terrorism in 2007. The entities are also associated with the foundation. One of the entities controlled by the foundation and a number of its subsidiaries reportedly did business with a Lebanon-based bank, which had been designated as an SDGT in August, allowing Hizballah to avoid close examination of its transactions by Lebanese banking authorities.

    OFAC reiterated that “all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons. In addition, persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to an enforcement action.”

    Financial Crimes Department of Treasury OFAC Of Interest to Non-US Persons Sanctions Combating the Financing of Terrorism

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