The House Terrorism and Illicit Finance Subcommittee held a hearing this week to discuss the implementation and enforcement of the Financial Crimes Enforcement Network’s (FinCEN) new rule to improve anti-money laundering efforts and safeguard the U.S. financial system.
FinCEN’s Customer Due Diligence (CDD) Rule went into effect in mid-May to address shortcomings in the country’s efforts to counter terrorist financing and improve anti-money laundering efforts.
“I have heard testimony from a variety of experts in the field of detecting and pursuing criminals in the financial system, and many agree that a critical component of success in these investigations is law enforcement’s timely access to beneficial ownership information,” Subcommittee Chairman Rep. Steve Pearce (R-NM) said. “However, there are legitimate concerns about the application of this rule and the impact it could have on banks already struggling with BSA compliance. Adding additional requirements will likely lead to the de-risking of legitimate business accounts because of increased regulatory burdens. It is important for our federal regulators to strike the appropriate balance between ensuring safety as well as access to the financial system.”
FinCEN and the Department of the Treasury will remain engaged with stakeholders, including financial institutions, trade associations, regulators, and examiners to properly implement the CDD rule
“The misuse of legal entities to disguise illicit activity has been a key vulnerability in the U.S. financial system,” Kenneth Blanco, director, Financial Crimes Enforcement Network (FinCEN), said.
Blanco’s said the goal of the rule is to gain transparency necessary to prevent, deter, detect and disrupt money laundering, terrorist financing, and other crimes.
“It is important for us to continue to work with our regulatory partners, their examiners, and financial institutions to achieve these objectives through compliance with the rule,” Blanco said. “FinCEN will continue to engage industry groups and other stakeholders to understand any specific unintended challenges that the rule may present and, if necessary, FinCEN will provide further guidance. Likewise, we will work with regulatory and law enforcement partners to understand and address any compliance issues appropriately.”