Congress Moves Closer to Providing AML Relief

November 23, 2020 at 9:30 am 1 comment

On Thursday, Congress moved closer to passing legislation which would relieve banks and credit unions of the most burdensome new Bank Secrecy Act requirement imposed on them in recent years. Negotiators have tentatively agreed to include the Corporate Transparency Act in the National Defense Authorization Act, which provides military funding for Fiscal Year 2021. It is considered must-pass legislation, although given the dysfunction in Washington, is there really any such thing anymore?

Enactment of the legislation would be a major victory for longtime Manhattan Congresswoman Carolyn Maloney, who has advocated for the passage of legislation like this for several years. In 2018, regulations took effect which required banks and credit unions to identify the beneficial owner of corporations and trusts. The intent of the regulation makes an awful lot of sense. One of the easiest ways for people to hide money is to create corporations that act as a front for their personal use. But the smartest way to get this information is to place disclosure requirements on the corporation. 

Under Representative Maloney’s bill, an applicant for a corporation or a limited liability company (LLC) would be required to file a report with FinCEN containing the identities of an entity’s beneficial owners. Under this legislation, as is required by existing FinCEN regulations, a beneficial owner is an individual who, directly or indirectly, controls a corporation or LLC; owns a certain percentage of such an entity; or generally receives “substantial economic benefits” from the company. We should know in a few weeks if this is going to become law. 

Drama at the NCUA

Maybe there was something in the water in our nation’s capital, but governing dysfunction has even infected the three-person NCUA Board. In case you missed it, J. Mark McWatters resigned on Thursday, ending a colorful six-year run in which he became the de-facto gadfly at the agency with his strict adherence to the plain text of NCUA’s regulation and governing law. You always got the feeling that he was not completely comfortable at NCUA. As early as 2016, he was in line to take another job at the Export-Import Bank of the United States. According to David Baumann, if McWatters did not resign, he was going to be fired by the White House, which it had the authority to do as McWatters’ term had already ended. If all goes according to plan, McWatters’ seat will soon be filled by Kyle Hauptman, but nothing seems to go smoothly in Washington these days.

Entry filed under: Federal Legislation, Political, Regulatory. Tags: , , , , .

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1 Comment Add your own

  • 1. Georgia On My Mind | new york's state of mind  |  January 6, 2021 at 11:32 am

    […] for implementing operationally. On that front, here is some good news. As I explained in this blog, the National Defense Authorization Act included legislation championed by New York Congresswoman […]

    Reply

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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