In this session with Elizabeth “Paige” Baumann, she'll cover the Anti-Money Laundering Act of 2020, which also includes the Corporate Transparency Act. She'll take a deep dive into the catalysts that brought on the act, current implications of the act, and what impacts the act has for the future of banking and finance.

1. THE ANTI-MONEY LAUNDERING ACT OF 2020:
INITIAL CATALYSTS,
CURRENT IMPLICATIONS,
AND FUTURE IMPACTS Elizabeth Paige Baumann
Founder and CEO of Paige
Baumann Advisory, LLC
featuring
Tara Dwyer
Webinar Coordinator,
Community Banking Brief
March 22nd, 2023
9:30am PDT
12:30pm EDT
5:30pm GMT
moderated by

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4. Elizabeth Paige Baumann
Founder and CEO of Paige Baumann Advisory, LLC
THE ANTI-MONEY LAUNDERING ACT OF 2020:
INITIAL CATALYSTS, CURRENT IMPLICATIONS, AND FUTURE
IMPACTS

5. Agenda
 Bank Secrecy Act of 1970 (BSA)
 Background
 Purposes of Anti-Money Laundering Act of 2020 (AML Act)
 Corporate Transparency Act (CTA)
 Overview of Other Key Provisions
 Current Implications
 Potential Future Impacts
5

6. Bank Secrecy Act of 1970 (BSA)
 Foundation of U.S. AML Regulatory Regime
 Maintenance of Records & Reporting with “High Degree of Usefulness”
 U.S. Treasury - Financial Crimes Enforcement Network (“FinCEN”)
 Amendments:
 Money Laundering Control Act (1986)
 Annunzio-Wylie Anti-Money Laundering Act (1992)
 Money Laundering Suppression Act (1994)
 Money Laundering & Financial Crimes Strategy Act (1998)
 USA PATRIOT Act (2001)
 Anti-Money Laundering Act (2020)
 Codified at Chapter X of Title 31 of Code of Federal Regulations
6

7. Background
 Division F of National Defense Authorization Act for Fiscal Year 2021 (“NDAA”)
 Enacted on January 1, 2021 w/ historic override of presidential veto
 Enhance FinCEN’s authority to safeguard financial system
 Catalysts:
 Update laws to keep pace with emerging risks (e.g., virtual currencies)
 FinCEN BSA Value Project
 Address use of shell companies to obscure beneficial ownership, facilitate criminal
acts
 FATF Mutual Evaluation Report RE: U.S. regulatory regime
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8. Purposes of AML Act
 Improve Coordination & Information Sharing Among Government Agencies &
Financial Institutions
 Modernize AML & Countering the Financing of Terrorism (“CFT”) Laws
 Encourage Technological Innovation & New Technology by Financial
Institutions
 Reinforce Risk-Based AML/CFT Policies, Procedures, Controls
 Establish Uniform Beneficial Ownership Information Reporting Requirements
 Establish Secure & Nonpublic Database for Beneficial Ownership Information
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9. Corporate Transparency
Act (CTA)
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10. Corporate Transparency Act (CTA)
 Title LXIV of AML Act
 Drivers
 Lack of transparency with company formation at U.S. state level
 Shell companies hiding criminal proceeds, laundered funds, sanctions evasion,
threatening national security & the U.S./global financial systems
 Creation of Beneficial Ownership Secure System (“BOSS”)
 Beneficial Ownership Information (BOI) Reporting Requirements
 CTA required rule promulgated no later than 1/1/22
 ANPRM: 4/5/21; NPRM: 12/8/21; Final Rule: 9/30/22
 BOI Access and Safeguards (NPRM: 12/15/22)
 Revision of CDD Rule to conform to CTA (Deadline: 9/30/23)
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11. Corporate Transparency Act (CTA)
 BOI Reporting Requirements (Eff. Date: 1/1/24)
 “Reporting Companies” required to disclose BOI
 U.S. & Non-U.S. companies registered in U.S. required to comply
 23 exempted entities
 BO Definition: Any individual who, directly or indirectly:
 Exercises substantial control over company –or-
 Owns or controls at least 25% of ownership interests of company
 Companies pre-1/1/24: filing required by 1/1/25
 New companies on/after 1/1/24: filing required w/in 30 days
 Inaccurate reports or changes in reporting co. status: filing required w/in 30 days
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12. Corporate Transparency Act (CTA)
 Beneficial Ownership Information (BOI) Access & Safeguards
 Proposed effective date to align with BOI reporting rule (1/1/24)
 Financial institutions must obtain reporting company consent & may only access
BOSS for BOI information to facilitate compliance with CDD requirements
 Written certification must be provided to FinCEN per BOI request
 Strict data protection protocols on security and confidentiality
 BOI reported to FinCEN confidential & may not be disclosed w/out authorization
 Financial institutions prohibited from disclosing information to employees or agents not
physically present in the U.S.
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13. Corporate Transparency Act (CTA)
 Beneficial Ownership Information (BOI) Access and Safeguards Concerns
 FIs prohibited from using BOI for other AML/Sanctions Compliance
 Verification of reported information not included in NPRM
 Prohibition from sharing within organizational structure & with auditors
 Request process is cumbersome
 Employees/service providers outside U.S. may be responsible for aspects of CDD
 Firms may be deterred from using BOSS
 Potential regulatory risk if FIs choose not to use BOSS
 NPRM strays from congressional intent & erects barriers to usage
 3/15/2023 Senate bi-partisan letter
13

14. Corporate Transparency Act (CTA)
 Revision of CDD Rule to conform to CTA (Deadline: 9/30/23)
 CDD rule issued in May 2016 & effective May 2018
 “Legal entity customers” required to disclose BOI
 CDD Rule & CTA Differences:
 One control person vs. potentially multiple control persons
 TIN vs. number on identity document (e.g., passport) for U.S. citizens
 Different exemptions from “legal entity customer” vs. “reporting company” definitions
 “legal entity customer” definition covers both U.S./non-U.S. companies vs. “reporting
company” definition only covers non-U.S. companies registered in U.S.
14

15. Overview of Other Key
Provisions
15

16. Establishment of National Exam &
Supervision Priorities
 Expansion of BSA Purpose
 Preventing ML/TF through reasonably designed AML/CFT programs
 Facilitating tracking of illicit money
 Assessing ML/TF & tax evasion & fraud risks to financial institutions
 Establish information sharing frameworks
 Minimum Standards for AML/CFT Programs & Regulatory Supervision
 9/17/20 ANPRM RE: AML Program Effectiveness pre-dated AML Act
 “Effective and reasonably designed” standard for AML programs
 Codification of risk assessment requirement
 AML programs provide “information with a high degree of usefulness”
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17. Establishment of National Exam &
Supervision Priorities
 AML/CFT Policy Priorities
 Within 180 days of enactment of NDAA (6/30/2021)
 Promulgate regulations within 180 days of priorities publication (12/30/21)
 Update priorities at least 4 years
 FinCEN issued 8 priorities on 6/30/21
 Corruption
 Cybercrime (including relevant cybersecurity and virtual currency considerations)
 Foreign and Domestic Terrorist Financing
 Fraud
 Transnational Criminal Organization Activity
 Drug Trafficking Organization Activity
 Human Trafficking and Human Smuggling
 Weapons Proliferation Financing
17

18. Modernizing The AML/CFT System
 Law Enforcement Feedback on Suspicious Activity Reports (SARs)
 Streamlining Requirements for Currency Transaction Reports (CTRs) & SARs
 CTRs & SARs Thresholds Review
 Sharing Threat Pattern and Trend Information
 Financial Activity of Russian Oligarchs (12/22/22)
 Ransomwear (11/1/22)
 Wildlife Trafficking (10/15/21)
 Sub-Committee on Innovation and Technology
 Testing Methods Rulemaking
 SAR Sharing Pilot Program (NPRM: 1/25/22)
 Encouraging Information Sharing & Public-Private Partnerships
 Reviews of Regulations & Guidance (RFI: Issued 12/15/21)
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19. Current Implications &
Potential Future
Impacts
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20. Current Implications
 Execution of AML Act deliverables dependent on adequate FinCEN funding/staffing
 Financial institutions commit resources to review output from AML Act deliverables
& take action, where appropriate.
 Public/private sector comments regarding RFIs, ANPRMs, NPRMs
 Increased regulatory scrutiny of AML programs RE: new or changed requirements
 New Whistleblower Program increases incentives/protections to report violations
 Stakes are higher with increased penalties for BSA violations
 CTA broader impact than other BSA requirements applicable only to financial
institutions
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21. Potential Future Impacts
 FinCEN may encounter legal challenges to actions taken pursuant to AML Act/CTA
 Increased collaboration/information sharing impeded by inability to increase
staffing
 Streamlining reporting and elimination of duplicative, outdated, ineffective
regulations & guidance allows limited resources to be re-allocated
 Increased feedback from law enforcement alters view that SARs go into a “black
hole”
 Setting standards supports common understanding & consistency but risk of “one
size fits all” without some flexibility
 Accessing the BOSS not viable alternative to reaching out directly to legal entity
customers to obtain beneficial ownership
 Previously undetected activity discovered as result of innovation viewed as gap in
AML program vs. new output of enhancement
21

22. Tara Dwyer
Webinar Coordinator,
Community Banking Brief
/in/dwyertara
communitybankingbrief.com
Q&A
Elizabeth Paige Baumann
Founder and CEO of Paige Baumann Advisory, LLC
/in/elizabeth-paige-baumann-8bb92710/