On May 16, 2024, the U.S. Department of the Treasury unveiled the 2024 National Strategy for Combating Terrorist and Other Illicit Financing (2024 Strategy). This critical document addresses the primary threats highlighted in the 2024 National Risk Assessments released in February, which pinpointed dangers such as fraudulent schemes, ransomware, the opioid crisis, terrorist activities, corruption, and the misuse of technology in financial products and services.
In light of escalating global conflicts, the American financial system faces significant risks. Terrorist groups are adopting new fundraising techniques, drug and human traffickers are bypassing surveillance, cybercriminals are executing widespread fraud, and nation-states are using ransomware to finance weapons of mass destruction. Key vulnerabilities identified include the misuse of cash and financial products, the ease of creating legal entities with minimal information, and deficiencies in global AML/CFT regulations.
To counter these threats, the 2024 Strategy aims to dismantle illicit pathways and enhance enforcement. The U.S. Treasury has outlined four priorities and 15 actions to be implemented by 2026:
- Assessing and addressing regulatory vulnerabilities in the AML/CFT regime.
- Promoting a risk-focused and effective AML/CFT regulatory framework.
- Enhancing operational effectiveness in combating illicit finance.
- Supporting technological innovation to mitigate finance risks.
Key actions include enforcing the Corporate Transparency Act, increasing real estate transaction transparency, updating virtual asset regulations, improving supervision and enforcement, and enhancing public-private information sharing.
Recent measures include the launch of the Beneficial Ownership Information E-Filing System, a significant step towards greater transparency. The Treasury also focuses on prosecuting fraud, enhancing fraud reporting, and collaborating with non-traditional partners to identify complicit professionals. Efforts against drug trafficking involve providing guidance on detecting financing related to synthetic opioids and engaging with key international jurisdictions.
To combat ransomware, the Treasury will continue to prosecute cybercriminals and disrupt their financial networks, imposing sanctions on illicit virtual asset service providers. For human trafficking, it will enhance training and leverage financial intelligence to support investigations. Anti-corruption efforts will target proceeds used to purchase U.S. assets and enhance sanctions against corrupt facilitators.
Regarding terrorism, the Treasury will collaborate with international partners to disrupt financial networks supporting groups like Al-Qaeda, ISIS, Hamas, and Hezbollah.
For detailed information, Annexes 1 and 2 summarize the threats and vulnerabilities, while Annex 3 tracks progress on priorities and actions. The full 2024 Strategy is available here.
The Treasury’s strategies are invaluable for the regulated community in assessing and mitigating risks through informed, risk-based due diligence.
Beneficial Ownership Information Reference Guide
On July 26, 2024, the Financial Crimes Enforcement Network (FinCEN) issued an essential notice to financial institution customers about reporting beneficial ownership information.
The Corporate Transparency Act mandates that certain entities, including small businesses, report their ultimate owners or controllers to FinCEN. Financial institutions must also gather this information from customers opening accounts to meet Federal due diligence requirements. This notice clarifies key questions about these reporting obligations and urges financial institutions to share the reference guide with relevant customers.
Notice to Customers – Beneficial Ownership Information Reference Guide: Link
AGA – State of the States – The AGA Analysis Of The Commercial Casino Industry
The American Gaming Association’s (AGA) annual State of the States report provides a comprehensive overview of the commercial gaming industry’s financial performance in 2023. It includes detailed analyses of the 36 jurisdictions with commercial gaming operations, the legality of different types of gaming, and the number of casinos by state. Developed with VIXIO Regulatory Intelligence, the report also summarizes key gaming policy discussions and outlines future opportunities and challenges for the industry. Additionally, the companion State of Play map offers an interactive tool that highlights the report’s findings and key regulatory requirements for each state.
Read the report here: State of the States 2024.
FATF – United States’ progress in strengthening measures to tackle money laundering and terrorist financing
This Follow-Up Report (March 26, 2024) analyzes the United States’ progress in addressing the technical compliance deficiencies identified in its Mutual Evaluation Report. The United States has made significant progress in relation to Recommendation 24 on transparency and beneficial ownership of legal persons, resulting in an upgrade from Non-Compliant to Largely Compliant. Overall, the United States now has 9 Recommendations rated as Compliant, 23 as Largely Compliant, 5 as Partially Compliant, and 3 as Non-Compliant. The country will report back to the FATF on further improvements in implementing its AML/CFT measures in its 5th round mutual evaluation.
Read the report here: United States 7th follow up report
OFAC – Sanctions Compliance Guidance For The Virtual Currency Industry
Virtual currencies are increasingly significant in the global economy, bringing greater exposure to sanctions risks, such as involvement by sanctioned individuals or entities in transactions. The virtual currency industry—including technology companies, exchangers, administrators, miners, wallet providers, and users—plays a crucial role in preventing these actors from using virtual currencies to evade sanctions and undermine U.S. foreign policy and national security. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued guidance in October 2021 to help the virtual currency industry mitigate these risks. OFAC sanctions compliance obligations apply equally to virtual and traditional fiat currency transactions. Industry members must ensure they do not engage, directly or indirectly, in prohibited transactions, such as dealings with blocked persons or property. This guidance helps the virtual currency industry evaluate sanctions-related risks, build a risk-based compliance program, protect against sanctions violations, and understand OFAC’s recordkeeping, reporting, licensing, and enforcement processes. OFAC is committed to working with the virtual currency industry to promote compliance and due diligence best practices.
Read the guidance here: Sanctions Compliance Guidance For The Virtual Currency Industry
OFAC – Sanctions Compliance Guidance for Instant Payment Systems
In recent years, the financial sector has introduced instant payment systems that allow users to send and receive funds almost instantly, at any time, on any day of the year. These systems, being developed in the United States and abroad, enable real-time transmission and availability of funds to payees. The rapid pace and increasing volume of instant payments have raised questions, particularly from banks, about implementing effective sanctions compliance measures. Each instant payment system has unique characteristics, such as domestic-only or cross-border capabilities. As the financial system innovates for greater efficiency, the Office of Foreign Assets Control (OFAC) encourages financial institutions to adopt a risk-based approach to ensure their sanctions compliance controls and technology solutions match the risks presented by instant payment systems. This guidance issued in September 2022 reaffirms the need for a risk-based approach, highlights relevant factors in determining such an approach, encourages the development of innovative compliance technologies, and urges developers to consider sanctions compliance in new payment technologies. This guidance aims to help financial institutions allocate their compliance resources effectively based on their specific sanctions risks.
Read the guidance here: Sanctions Compliance Guidance for Instant Payment Systems
The Bank Secrecy Act (‘BSA’)
The Currency and Foreign Transactions Reporting Act of 1970, along with its amendments and related statutes, is collectively known as the Bank Secrecy Act (BSA). This Act authorizes the Department of the Treasury to impose reporting and other requirements on financial institutions and businesses to help detect and prevent money laundering. Under BSA regulations, financial institutions must keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (in aggregate daily), and report suspicious activities that may indicate money laundering, tax evasion, or other criminal activities. The BSA, often referred to as an “anti-money laundering” (AML) law or jointly as “BSA/AML,” is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1960, and 31 U.S.C. 5311-5314, 5316-5336, including associated notes.
Read the statutes here: BSA statutes
USA PATRIOT Act
The official title of the USA PATRIOT Act is “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.” The purpose of this Act is to deter and punish terrorist acts in the United States and globally, enhance law enforcement investigatory tools, and address several key areas, including:
- Strengthening U.S. measures to prevent, detect, and prosecute international money laundering and terrorism financing.
- Subjecting foreign jurisdictions, financial institutions, and certain types of international transactions or accounts to special scrutiny to prevent criminal abuse.
- Requiring the financial services industry to report potential money laundering activities.
- Implementing measures to prevent the use of the U.S. financial system for personal gain by corrupt foreign officials and facilitating the repatriation of stolen assets to their rightful owners.
Read the law here: USA PATRIOT Act
U.S. – The Antimoney Laundering Act of 2020
On January 1, 2021, Congress enacted the FY2021 National Defense Authorization Act (NDAA), bringing significant reforms to the U.S. anti-money laundering (AML) regime. The NDAA includes the Anti-Money Laundering Act of 2020 (AML Act) and the Corporate Transparency Act (CTA). The AML Act aims to strengthen, modernize, and streamline AML measures by promoting innovation, regulatory reform, and industry engagement through forums like the Bank Secrecy Act Advisory Group (BSAAG) and FinCEN Exchange. It mandates FinCEN to collaborate with regulatory, national security, and law enforcement partners to identify risks and priorities and provide feedback to the industry. The CTA establishes uniform beneficial ownership reporting requirements for U.S. corporations and similar entities, authorizing FinCEN to collect and share this information with government authorities and financial institutions under strict safeguards. Key provisions of the AML Act and CTA include rulemaking, periodic reporting to Congress, establishing beneficial ownership reporting standards, creating an IT system for data security, setting national AML priorities, enhancing whistleblower protections, reviewing and revising reporting requirements, expanding BSA obligations to the trade of antiquities and potentially art, codifying the FinCEN Exchange program, hosting a Financial Crimes Tech Symposium, forming new subcommittees, creating a BSA Analytical Hub, improving feedback mechanisms, and allowing financial institutions to share SARs with foreign branches.
Read the law here: WILLIAM M. (MAC) THORNBERRY NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2021