The Treasury Department has announced that addressing regulation loopholes contributing to money laundering in the U.S. financial system will be a top priority in its 2024 national illicit finance strategy.
The strategy, unveiled on Thursday, highlights four key recommendations. The primary focus is on implementing previously announced rule changes to enhance the country’s anti-money laundering and countering the financing of terrorism (AML/CFT) framework.
The other three priorities are:
- Promoting a more effective and risk-focused AML/CFT regulatory and supervisory framework for financial institutions.
- Enhancing the operational effectiveness of law enforcement, government agencies, and international partnerships in combating illicit finance.
- Harnessing innovation to develop new payment technologies, support private sector compliance, and use automation to combat illicit finance.
This year, the Treasury has actively addressed perceived AML loopholes in the U.S. regulatory system. On January 1, the agency’s beneficial ownership information (BOI) registry took effect, requiring reporting companies to file information about their beneficial owners with the Financial Crimes Enforcement Network (FinCEN). Despite a March court ruling questioning the constitutionality of the Corporate Transparency Act, which mandated the BOI registry, these efforts continue.
In February, FinCEN issued a notice of proposed rulemaking to categorize registered investment advisers (RIAs) and exempt reporting advisers (ERAs) as financial institutions under the Bank Secrecy Act. The agency is collaborating with the Securities and Exchange Commission, which oversees RIAs and ERAs, on additional rulemaking to require these firms to establish, document, and maintain written customer identification programs.
Additionally, FinCEN proposed a rule in February requiring the disclosure of beneficial owners in all-cash residential real estate transactions across all U.S. cities and counties.
“In this critical moment for our national and economic security, we need to continue to close the pathways that illicit actors seek to exploit for their schemes,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson in a press release. “We recognize the threat illicit financial activity represents to our national security, economic prosperity, and our democratic values and are focused on addressing both the challenges of today and emerging concerns.”
The 2024 strategy includes 15 supporting actions to guide the U.S. government’s efforts in the four priority areas, such as assessing the need for additional measures to address AML loopholes, considering updates to frameworks for virtual asset activities, and enhancing risk-focused supervision and enforcement.
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