Senate Banking Committee members have unveiled draft bipartisan legislation: the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act.
For the first time, it would require shell companies, often used as fronts for criminal activity, to disclose their true owners to the U.S. Department of Treasury.
Sponsors include Sens. Mark R. Warner (D-Va.), Tom Cotton (R-Ariz.), Doug Jones (D-Ala.), and Mike Rounds (R-S.D.)
The proposed legislation would also update decades-old anti-money laundering and combating the financing of terrorism policies by giving Treasury and law enforcement “the tools they need to fight criminal networks,” the senators wrote in a statement. This would include improving overall communication between law enforcement, financial institutions, and regulators, “and facilitating the adoption of critical 21st century technologies.”
“We must be vigilant and ensure that our financial system is not being misused to fund individuals and groups who intend harm to the United States and our allies,” Warner said in a statement. “This legislation will empower the Treasury Department and other appropriate agencies to better protect our financial system from such abuse and will ensure that we are using all the tools at our disposal to protect our national security.”
Jones added: “As a former U.S. Attorney, I am all too familiar with criminals hiding behind shell corporations to enable their illegal behavior. At the same time, our anti-money laundering laws have not kept pace with the increasingly sophisticated means by which criminals and terrorist organizations use our financial system to move their money around the world. This bipartisan legislation addresses both challenges and gives law enforcement the tools they need to protect Americans and prosecute criminals.”
Rounds says the legislation seeks to protect our financial system from bad actors by streamlining our government’s anti-money laundering system and “simultaneously protecting small businesses from undue compliance burdens.”
“I’m proud to partner with my colleagues on this important legislation and look forward to advancing it in the Senate,” Rounds said.
Specifically, the proposed legislation would:
- Establish federal reporting requirements mandating that all beneficial ownership information be maintained in a comprehensive federal database, accessible by federal and local law enforcement.
- Help recruit and retain top talent at the Financial Crimes Enforcement Network by putting employees on a pay scale comparable to that of federal financial regulators.
- Create a hub of financial expert investigators at FinCEN to investigate potential AML-CFT activity in collaboration with federal government agencies.
- Create a team of FinCEN technology experts to further the development of new and essential technologies that can assist financial institutions and the federal government in their efforts to combat money laundering.
- Facilitate communications between the Treasury and financial institutions by establishing a Treasury financial institution liaison to seek and receive comments regarding AML-CFT rules, regulations, and examinations.
- Require the Department of Justice to provide the Treasury Department with metrics on the usefulness of AML-CFT data from financial institutions for law enforcement purposes, as well as data on the past and current trends identified by DOJ in the AML-CFT landscape.
- Require law enforcement to coordinate with financial regulators to provide periodic feedback to financial institutions on their suspicious activity reports.
- Prioritize the protection of personally identifying information while establishing a clear path for financial institutions to share AML-CFT information for the purposes of identifying suspicious activity.
- Prevent foreign banks from obstructing money laundering or terrorist financing investigations by requiring these banks to produce records in a manner that establishes their authenticity and reliability for evidentiary purposes and compelling them to comply with subpoenas. This legislation would also authorize contempt sanctions for banks that fail to comply.
- Ensure the inclusion of current and future payment systems in the AML-CFT regime by updating the definition of “coins and currency” to include digital currency.
Sens. Warner, Cotton, Jones, and Rounds are seeking input from stakeholders regarding their draft legislation by July 19, 2019.
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