Compliance professionals at large financial institutions are wondering if the new business register will help them comply with customer due diligence requirements or if it will just create new burdens and legal risks.

The answer depends largely on how government officials implement the sweeping anti-money laundering law passed in January. The Ministry of Finance’s Financial Crimes Enforcement Network (FinCEN) is responsible for drafting regulations and creating a database under the Act to help authorities track the flow of illegal funds.

The Anti-Money Laundering Act requires that certain entities, such as. B. limited liability companies, register their true owners to limit the use of anonymous shell companies.

There are many questions to be answered,

Sarah Runge,

Head of financial crime

Credit Suisse Group AG

said Wednesday at the virtual Compliance Week conference.

On Thursday, FinCEN took the first step toward the creation of a registry by inviting the private sector to submit information on how to design regulations to implement the database. FinCEN is required by law to complete its registration requirements by January.

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Runge and others who spoke during the panel on anti-money laundering legislation said it could be difficult to meet the deadline. Everyone needs to realize that the introduction of the registry will take a lot of time, for all the changes combined, she said.

One of the key issues arising from the Anti-Money Laundering Act is whether and how asset data collected from companies should be audited.

The Act will require certain entities to report information on beneficial owners to FinCEN after their formation. However, it does not specify whether FinCEN or any other party, such as. B. Financial institutions or even government officials should be specific.

Banks expect to have a say in any verification process that FinCEN establishes in its rules. Ms. Runge stated that whether or not the data collected by FinCEN is verified can have a significant impact on its usefulness to the financial industry. As there is no obligation to verify this information, it is of little use to the financial institution at this stage, she added.

Compliance officers also check whether new rules increase costs or legal risks or make it more difficult for the company to comply with existing rules.

Under the Customer Due Diligence Rules finalized in 2016, banks and certain other financial institutions must collect certain information about their customers’ assets. Another big challenge is how this engagement will evolve as FinCEN begins to collect its own asset data.

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The absence of a verification requirement raises the question of what happens if it turns out that the asset information collected by the bank is different from the information submitted to FinCEN. Under the anti-money laundering law, banks would be able to access the FinCEN database with the consent of their customers.

What happens if we discover that the organization is not registered?

Jeffrey Harvin,


Deutsche Bank AG

Financial crime function for America. What if [the data] contradicts itself?

There are a number of issues we need to take into account when developing concrete procedures to apply the rule in the day-to-day context of our operations, he added.

If it turns out that a customer has not provided information to FinCEN or has provided materially false information, the financial institution may be forced to consider refusing to do business with the customer or filing a Suspicious Activity Report with FinCEN, the panelists said.

This may be especially true when other suspicious factors are involved, they said.

Another unknown is the dynamics of interaction with regulators, who regularly monitor financial institutions for their anti-money laundering policies and procedures. At some point, an expert comes along and asks you how to proceed if you have a client who is not registered [with FinCEN], Harvin said.

Banks should not be required to check the FinCEN database or ensure it is accurate, he said.

Daniel Stipano,

a partner at the law firm of Davis Polk & Wardwell LLP.

That’s really not their job, Stipano said, and I think that task will cause a lot of difficulties and problems if it’s not done by default and they end up having to play that role.

Email Dylan Tokar at [email protected].

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