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1 1 (June 9, 2021)

handle is hein.crs/govedoz0001 and id is 1 raw text is: C rSS Sn, S Updated June 9, 2021 U.S. Efforts to Combat Money Laundering, Terrorist Financing, and Other Illicit Financial Threats: An Overview The United States maintains a multifaceted policy regime for tackling anti-money laundering (AML), combating the financing of terrorism(CFT), and countering other forms of illicit financial threats. Key is sues for the 117Congress may include oversightofthe U.S. government's robust leg al, regulatory, enforcement, and diplomatic AMIJCFT effort-with specialfocus onthe Biden Administration's implementation of significant changes to the AMJCFT regime that were enacted as partof the FY2021 National Defense Authorization Act (NDAA; P.L. 116-283). Background Misuseof the internationalfmancial system, including for the purposes of money laundering and terrorist financing, can result in significanteconomic, political, and security consequences at both national and international levels. Money laundering, which broadly refers to the process of disguising financialassets so they canbe used without revealing theirunderlying illicit source ornature (e.g., proceeds of fraud, corruption, and contraband trafficking), is globally ubiquitous. Terroristfinancing, akey global security concern, refers to the process of fundraising, throughboth licit and illicit means, and financially sus taining terrorist groups. Other illicit financial threats span a wide range of concerns, including proliferation finance, taxevasion, sanctions evasion, andthe financial facilitation of malign threat actors. Despite robust AMLefforts in the United States, policymakers face challenges in their ability to counter money laundering effectively, including the diversity of illicit methods to move and store ill-gottenproceeds through the international financial s y stem (e.g., trade-based money laundering and mis use of anonymous shell companies); the introduction of new and emerging threats (e.g., cyber-enabledfmancialcrimes); the ongoing use of old methods (e.g., bulkcash smuggling); gaps in legal, regulatory, and enforcementregimes, including uneven availability of international training and technical as sistance for AMLpurposes; the rise of new payment technologies, such as cryptocurrency; and costs associated with financial institution compliance with global AML laws. Legal Framework In the United States, the legislative foundation for domestic AMLregulation originated in 1970 with the Bank Secrecy Act (BSA; P.L. 91-508) and its major component, the Currency and Foreign Transactions Reporting Act. Amendments to the BSA and related provisions in the 1980s and 1990s expanded AMLpolicy tools available to combat crime-particularly drug trafficking-and prevent criminals from laundering their illicitly derived profits. Key elements to the BSA's AMLlegalframework, which are codified in Titles 12 (Banks and Banking) and 31 (Money and Finance) of the U.S. Code, include requirements for customer identification, recordkeeping, reporting, and compliance programs intended to identify and prevent money laundering. Substantive criminal statutes in Titles 31 and 18 (Crimes and Criminal Procedures) of the U.S. Code prohibit money laundering and related activities and establish civil and criminal penalties and forfeiture provisions. Federal authorities have also applied administrative forfeiture, nonconviction-based forfeiture, and criminal forfeiture tools to combat money laundering. In response to the September 11, 2001, terrorist attacks, Congress expanded the BSA's AMLpolicy frameworkto incorporate additionalprovisions to combatthe financing of terrorismthroughtheUSA PATRIOT Act (P.L.107-56). This provided the executivebranch with greater authority and additionaltools to counter the convergence of illicit threats, including the financial dimensions of organized crime, corruption, and terrorism. Most recently, the Anti- Money Laundering Actof2020 (Division F of the FY2021 NDAA) provided for a wide-ranging update to the BSA and establishes a systemin which many small and medium- sized legal entities must disclose information abouttheir beneficial owners to the U.S. Dep artment of the Treasury. Regulatory Framework The BSA's AMLframeworkis premised on banks and other covered fmancial entities filing a range ofreports with Treasury's Financial Crimes Enforcement Network (FinCEN) when their clients engage in suspicious financial activity, large cash transactions, or certain other financial behavior. The accurate, timely, and complete reporting of such activity to FinCEN flags situations that may warrant further investigation by law enforcement. Otherreports must be submitted to FinCENby individuals transporting large amounts of cash internationally, persons with certain foreign financial accounts, and nonfinancial entities conducting large cash transactions. In December 2020, FinCEN proposed a new rule on cryptocurrency and digital asset transaction reporting and recordkeepingrequirements similar to those for currency transactions. Federal financial institution regulators-including the Federal Res erve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency-conduct oversight and examine entities under theirs upervis ion for compliance with BSA/AMLrequirements. Theseregulatois are responsible for the safety-and-soundness examinations of the institutions they supervise and generally conduct .conqgress.qov

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