On January 13, 2022, Him Das, Acting Director of the Financial Crimes Enforcement Network (FinCEN), addressed the annual Financial Crimes Enforcement Conference hosted by the American Bankers Association and American Bar Association to discuss FinCEN’s changing approach to anti-money laundering and counter-terrorist financing (AML/CFT). FinCEN is a bureau of the U.S. Department of Treasury that safeguards national security and aims to counteract global crime by “following the money” — that is, strategically collecting and analyzing financial intelligence. FinCEN was established in 1990 to administer the Bank Secrecy Act, and its authority was expanded in 2021 when Congress passed the Anti-Money Laundering Act of 2020, which allowed FinCEN to “streamline, modernize, and update the AML/CFT regime of the United States.”
After 9/11, FinCEN narrowed its focus to identify and disrupt money flows of terrorist organizations. Now, it has revamped its operations to address new challenges facing the U.S. financial system and world at large, most notably the proliferation of state-sponsored corruption. FinCEN also investigates cybercrime—particularly ransomware attacks—that has grown exponentially during the COVID-19 pandemic, as individuals, organizations, and governments adapt to an online existence, making their data and financial information more vulnerable than ever.
FinCEN not only seeks to alleviate the threat of money being stolen, but also investigates whether money is being hidden and laundered. Mr. Das stated that the U.S. itself has recently been fertile ground for money laundering “because of how we allow people to establish shell companies” whose true owners FinCEN has been unable to uncover. That changed with the Corporate Transparency Act, passed a year ago, “directing FinCEN to build a national database for beneficial ownership information.” In December 2021, FinCEN issued a proposed rule that “will require many U.S. and foreign companies to report their true beneficial owners to FinCEN[.]” It has also begun the rulemaking process on a proposal to require transparency in cash real estate transactions.
Mr. Das announced innovations and new collaborations with the private sector that will help FinCEN use modern tools and technology. As “the digital world increasingly becomes the financial world—and vice versa,” FinCEN is, inter alia, putting pressure on virtual currency exchanges to come into compliance with current anti-money laundering law. It recently assessed a $100 million penalty against BitMEX (one of the oldest and largest exchanges) that had not filed a single Suspicious Activity Report (SAR) for nearly 600 “suspicious” transactions identified by FinCEN. FinCEN is exploring an approach to AML/CFT that relies increasingly on artificial intelligence and machine learning. This approach would automate enormous amounts of work, save money, and speed the process of identifying suspicious transactions — potentially with more effective results than manual review produces.
Lastly, Acting Director Das announced that FinCEN will improve its engagement with the private sector. Financial institutions already send data to FinCEN via SARS and other means; FinCEN will begin responding with real-time feedback about how FinCEN has used that data. Through this “feedback loop” FinCEN will influence private institutions’ risk assessment and compliance decisions and help identify both new threats and new technologies. FinCEN’s multi-faceted new approach—which includes “new approaches to customer risk rating and institutional risk assessment, digital identity tools and utilities, and automating the adjudication and filing of SARs,” will help counter-terrorism and expand FinCEN’s ability to investigate money laundering. Click here for more information on the proposed rule and to read Acting Director Das’s full remarks.