Innovation, Communication Needed to Address Emerging Illicit Finance Threats, Say Regulators

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Shifting regulatory obligations and new technologies that help catch financial criminals were at the top of an annual conference on financial crime.

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In January of last year, US lawmakers passed legislation that requires the US Treasury Department’s Financial Crimes Enforcement Network – known as FinCEN – to create a corporate ownership registry that lawmakers hope will track bad actors. Will help prevent anonymous shell companies from being used for nefarious purposes.

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The law includes a number of provisions that encourage regulators and the financial sector to find ways to spur innovation, including the use of new technologies such as artificial intelligence to select suspicious transactions from draws processed by banks each day. can help.

“FinCEN is of the view that our regulatory framework needs to approach these innovations in a way that recognizes not only the risks they present, but the opportunities they present as well,” said Mr. Das said at a virtual conference on Financial Crimes Enforcement organized by the US. Bankers Association and American Bar Association.

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Mr Das said FinCEN was exploring a way to innovate around automated processes for monitoring transactions, reviewing customer risk ratings, digital identities and suspicious activity reports required for banks to file.

In December, FinCEN proposed a set of rules specifying which companies must submit information to the new beneficial ownership database, and who qualifies as a covered company owner. Officials say the rules will be a useful tool to help prevent and hinder the use of shell companies for illegal activities.

The creation of the new database will shift some of the responsibility for collecting ownership information to FinCEN, and away from banks and other financial institutions that are required to collect information about their customers under existing rules, a change Which has been largely supported by the banking sector.

But financial institutions and other stakeholders have expressed differing views on how the new collection process should work in public comments on the proposed database. One source of concern is whether, and how, ownership information will be verified, as well as who will have access to it.

James Martinelli, director of FinCEN’s Office of Regulatory Policy, said on Thursday that the issue of verification remains “an open question.”

“We specifically highlight this very important issue of verification,” he said, referring to the agency’s proposed rulemaking notice from December.

“I can’t say much at this stage,” Martinelli said. “To the extent this is an important issue for the public, I encourage you to comment on the proposal.”

Last year FinCEN also took other steps to implement parts of the anti-money-laundering reform law, including issuing a set of national priorities that can be used by financial institutions to better focus their anti-money laundering resources. can to do.

Some areas of international crime are not mentioned in the comprehensive list of priorities released by FinCEN, and compliance officials have expressed concerns that they may be able to allocate resources to high-risk areas rather than their institution’s overall regulatory authority. can add to the burden.

Regulators on Thursday assured bankers that their respective agencies would provide further guidance on the priorities. FinCEN officials have said they expect to propose a framework in April outlining how banks should incorporate priorities into their compliance programs.

“There are a lot of elements that need to be explained, including how we’re going to assess and investigate this,” said Suzanne Williams, deputy associate director of the Federal Reserve Board of Governors.

“We want … a coherent approach [for] How we measure the effectiveness and inclusion of priorities, and this will require not only rule changes, but accompanying guidance,” Ms Williams said.

Write Dylan Tokar [email protected] . Feather

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