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Key Anti-Money Laundering Legislation Heads to Conference, Giving Lawmakers an Additional Chance to Pass Crucial Reforms

“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and money laundering through the financial system.

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Here is the State of Play

Key Anti-Money Laundering Legislation Heads to Conference, Giving Lawmakers an Additional Chance to Pass Crucial Reforms

The bipartisan ENABLERS Act, which would put an end to the abuse of US markets by kleptocrats and international criminals that is aided by certain legal, administrative and financial professionals, is officially headed to a conference committee later this year as part of the must-pass annual defense bill. Though the Senate failed to include the legislation in their own version of the NDAA this month, the bill was passed by the House as an amendment to the FY2023 National Defense Authorization Act (NDAA) in July – keeping the legislation a key issue in negotiations in the weeks ahead.

The Act, which represents “a game changer for America’s frontline of defense against its greatest criminal and security threats”, was introduced to both chambers of Congress on a bipartisan basis and has been endorsed by a diverse collection of civil society organizations, law enforcement groups, and legal experts.

The exemption of non-bank financial service providers, accountants, lawyers, and other intermediaries that act as gatekeepers to the U.S. financial system from basic anti-money laundering (AML) responsibilities remains, in the words of FACT’s Executive Director Ian Gary, “a blindspot that has enabled criminals and kleptocrats to park their ill-gotten gains with ease in the U.S. financial system.” The ENABLERS Act would give the Department of the Treasury additional tools to require mandatory, specific risk-based AML protocols for certain non-bank financial service providers, including basic Know Your Customer (KYC) and other customer due diligence obligations, or the issuing of Suspicious Activity Reports (SARs) on clients believed to be engaged in the movement of illicit funds. 

White House’s New National Security Strategy Centers the Fight Against Corruption

The Biden-Harris Administration’s 2022 National Security Strategy, released on October 12, reaffirmed the White House’s commitment to “treating the fight against corruption as the core national security interest it is,” and specifically noted the importance of countering illicit finance flows both within the United States and abroad.

“The United States Strategy on Countering Corruption recognizes the unique threat corruption poses to our national security and places a special emphasis on recognizing the ways in which corrupt actors have used the U.S. financial system and other rule-of-law based systems to launder their ill-gotten gains.”

The FACT Coalition has long appreciated the importance of securing the U.S. financial system against abuse by international and domestic criminals, championing key anti-money laundering and financial transparency reforms like the landmark 2021 Corporate Transparency Act (CTA), and the ENABLERS Act, which is currently under consideration by Congress.

As the U.S. dramatically ramped up enforcement efforts on new and existing sanctions against Vladimir Putin and his allies in the aftermath of the Russian invasion of Ukraine in February, FACT once again sounded the alarm on the urgent need to close loopholes in U.S. AML law and adequately fund the agencies tasked with tracking down and freezing the funds of Russian oligarchs within the U.S.

News from FACT

Letter: FACT Submits Comments to the SEC Encouraging Additional Due Diligence and Reporting Requirements for Financial Advisors
October 12: The FACT Coalition submitted comprehensive comments in response to the SEC and CFTC’s proposed revisions to Form PF, the confidential reporting form filed by certain advisers to private funds. FACT’s recommendations included requiring financial advisers to adopt risk-based customer due diligence protocols to identify the beneficial owners of private funds being advised, and to provide country-by-country data on these beneficial owners on Form PF, in light of potential systemic risk stemming from private fund beneficial ownership.
Statement: FACT Meets with Senior Treasury Department Officials Working to Tackle America’s Dirty Money Problem
October 11: The FACT Coalition hosted a private civil society roundtable conversation with senior Treasury Department officials to discuss the first final rule of the Corporate Transparency Act, issues related to upcoming rulemakings, and additional steps that are needed to bring greater transparency to the U.S. financial system.

FACT in the News

Cited In: The U.S. Treasury expects millions of companies to name their owners
On October 12, the FACT Coalition was cited in analysis by Elizabeth Meehan for the Washington Post as being one of the central drivers of the ten-year long push to pass the landmark Corporate Transparency Act. “Enacting the CTA took more than the global outrage over [the Panama and Pandora Papers]…FACT’s advocacy kept ownership transparency on Congress’s agenda and contributed to building bipartisan consensus around change.”

Recent and Upcoming Events

October 27: GFI Report Launch – Made in China: China’s Role in Transnational Crime & Illicit Financial Flows
Join Coalition member Global Financial Integrity for the launch of a new report analyzing China’s role in four major categories of transnational crimes and the IFF’s associated with them, with authors Channing Mavrellis and John Cassara.
November 3-4: EU Tax Observatory Workshop – Transparency and Tax Avoidance: Country-by-Country Reporting by Multinational Enterprises 
FACT Executive Director Ian Gary will be participating in a policy panel at the EU Tax Observatory and CORPTAX’s fall conference at Charles University, Prague next month. See the link above for the conference schedule and live video.

About the FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan coalition of more than 100 state, national, and international organizations working toward a fair and honest tax system that addresses the challenges of a global economy and promotes policies to combat the harmful impacts of corrupt financial practices.
For more information, visit www.thefactcoalition.org.
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