U.S. Treasury Department Is Soliciting Comments on New Anti-Money Laundering Rule

A quick public service announcement:

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department is seeking public comments on a proposed rule that is intended to make it harder to hade the proceeds of corruption (or other criminal activities, like drug trafficking) in the U.S. financial system. The full text of the proposed rule is here. That proposed rule is fairly lengthy and complicated (taking up close to 20 pages in the Federal Register, in 3-column small print), but the basic gist of the rule is that it would impose new “know-your-customer” obligations on U.S. financial institutions, and in particular would require banks to identify the “beneficial owner” — the actual person (human person, not corporate person) who benefits from an account owned by an artificial legal entity.

I’m not an expert in this area, but this strikes me as a very good idea. Some supporters, though, have argued that the rule does not go far enough. Global Witness, in a useful post summarizing and discussing the proposed rule, points out some of the deficiencies of the proposed rule, including the fact that although the rule requires financial institutions verify the identify the beneficial owner of an account — that is, to attach the account to a real live human being — the rule does not require banks to independently verify that the listed beneficial owner is in fact the real beneficial owner.

The Treasury Department, following standard procedures under U.S. Administrative law, is seeking pubic comments on the rule. Comments can be submitted in hardcopy, but can also be submitted online. Just go to the regulations.gov site, and in the “search” field type FINCEN-2014-0001. That should take you to the docket, where you can view the rule, read the comments that have already been submitted online (very few so far), and submit any comments of your own.  (A direct link to the docket is here, but I included the above instructions because the direct links to dockets sometimes stop working.) The notice of the proposed rule also lists specific questions and issues that the FinCEN would like commenters to address. Among other things, FinCEN seeks comments on:

  • The proposed definitions of “beneficial owner” and “legal entity customer,” as well as the proposed exemptions (and possible additional exemptions);
  • Whether the rule should apply retroactively to existing accounts, or only to accounts established after the new rule goes into effect;
  • Whether the proposed processes for verification of beneficial owners, updating of beneficial ownership information, and ongoing monitoring of suspicious transactions are sufficiently clear and appropriate.

Comments are due by midnight on October 3rd.

One thought on “U.S. Treasury Department Is Soliciting Comments on New Anti-Money Laundering Rule

  1. Pingback: The British Academy/DFID Anti-Corruption Evidence Programme | Anti Corruption Digest

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