This week, as the United States’ Senate held the confirmation hearings on presidential nominations, Janet Yellen, Biden’s nominee for the Treasury secretary, “lauded Congress for passing reforms to the U.S. anti-money-laundering system. The Treasury Department oversees the system through the Financial Crimes Enforcement Network,” and stated her intention to “quickly” implement the AML provisions of the annual defense spending bill, which established the Anti-Money Laundering Act of 2020 (2020 AMLA), the most significant overhaul of the AML regime in the two decades since the USA PATRIOT Act of 2001 (PATRIOT Act).
Yet, despite the historic nature of the AML overhaul, several of the field’s leading advocates have expressed some reservations.
According to the ICIJ, the reforms contain “several loopholes, exemptions and shortcomings that may become key vulnerabilities in the fight against corruption and financial secrecy,” which was highlighted in a piece outlining the 7 major areas with shortcomings that necessitate future legislative action. The concerns identified by experts warrant redress as the intended “transparency is not [yet] complete,” especially with respect to the AML registry highlighted in this week’s confirmation hearings as a key priority. Yet, as the ICIJ rightly notes, the legislation was “supported by both the U.S. Chamber of Commerce and left-leaning Public Citizen — an unusual Washington alliance” in an era of hyper-partisanship. Most notably though, the reforms included in the legislation was the culmination of years of negotiation sparked by the groundbreaking investigation known as the Panama Papers in 2016.
While there might be mixed reactions to the significance of the legislation, the centuries-old proverb, “Rome wasn't built in a day,” certainly provides the needed perspective to appreciate its historical importance. Aside from the PATRIOT Act, which was enacted in 45 days as a direct response to the September 11 attacks, legislative action to combat financial crime has never commanded the urgency seen in the 21st century. As the 2020 AMLA and PATRIOT Act rank as the most significant of the 9 major AML laws following the nation’s first and pre-eminent legislation, the Bank Secrecy Act of 1970, it’s essential to highlight that it took nearly two decades until the Money Laundering Control Act of 1986 established money laundering as a federal crime. As legislation continues to evolve and, according to JWG, a London-based think tank, over 300 million pages of financial regulations are in effect globally today, the need for regulatory technology to ensure that institutions are compliant with new and existing regulations is increasingly important.
To understand the history of Anti-Money Laundering laws check out this article.