WASHINGTON–While the credit union focus on a massive defense bill now before Congress has been on provisions related to giving banks access to military bases, the legislation also includes what are being described as “widespread” changes to the Bank Secrecy Act and anti-money laundering (AML) laws.
It also includes enhanced incentives for whistleblowers.
“It’s hard to overstate the breadth of the BSA/AML legislation, at least in terms of the sheer amount of provisions and detail,” stated the law firm Ballard Spahr, LLP on JDSupra.com, noting provisions related to the Corporate Transparency Act, Kleptocracy Asset Recovery Rewards Act and more are included in the 4,500-page National Defense Authorization Act for 2021. “If the NDAA is signed into law…(it) will have a major impact on many financial institutions and their customers. Although the change that has (appropriately) received the most attention is the CTA’s requirement for the reporting of beneficial ownership to a national database by entities at the time of their creation, the NDAA includes a huge array of other changes, including expanding the stated purpose of the BSA (which will have ripple effects on future regulation and examination priorities).”
Other Provisions
Ballard Spahr said the law, if passed, will:
- Require numerous process-related studies tied to the effectiveness and costs of certain BSA requirements, including SAR and CTR reporting (many of these studies may lead to additional, future substantive regulation or legislation)
- Will enhance penalties under the BSA for repeat offenders
- Includes provisions designed to enhance information sharing
- Adds a whistleblower provision to the BSA
- Includes dealers in antiquities to the definition of “financial institutions” covered under the BSA (and requiring an assessment of also including art dealers within that definition)
- Includes digital currency in the BSA’s definition of “coins and currency”
As CUToday.info has reported, President Trump has threatened to veto the bill for several reasons, but the legislation is expected to have enough bipartisan support to override the veto.
Wetting the Whistle
As for the new whistleblower reward program, it would incentive the reporting of potential violations of anti-money-laundering laws by offering awards to tipsters who voluntarily provide original information to the Treasury Department or the Justice Department on possible violations of the Bank Secrecy Act.
Awards would be granted in cases where the tips lead to successful enforcement actions and the monetary sanctions exceed $1 million, the Wall Street Journal reported.
Under the proposed rules, a tipster or joint tipsters can receive up to 30% of the monetary penalties collected in an enforcement action brought by the Treasury or the attorney general and from related actions. The amount would be determined by factors such as the significance of the information and the degree of assistance from the tipster, according to the Journal. The rules would also provide tipsters protection against retaliation from employers, including demotion, suspension and industry blacklisting
Existing regulations permit the Treasury, at its discretion, to pay a reward of either $150,000 or 25% of the fine or penalty, whichever is less. Proponents of a new whistleblower program have said the existing incentives aren’t strong enough and haven’t attracted much attention, the Journal added.