Posted by Brian Monroe - bmonroe@acfcs.org 10/24/2019
Fincrime Briefing: In historic vote, House passes bill to counter shells, bolster AML, Finra fines BNP $15 million on AML, penny stocks, and more
The skinny:
In today’s ACFCS Fincrime Briefing, the House in a historic vote moves forward bill targeting anonymous shell firms, strengthening AML defenses, Finra fines BNP Paribas $15 million on compliance, penny stock failings, embattled Swedbank confirms U.S., EU laundering probes, and more.
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Congress
In historic move, House passes bill to counter criminals working through opaque, anonymous shell companies, update, modernize U.S. AML regime
In a historic vote this week, the U.S. House passed legislation that holds the potential to strengthen the country’s defenses against illicit entities working through anonymous shell companies and bolster anti-money laundering rules that have remained roughly stagnant for decades.
The House Tuesday voted 249-173 to pass the American Bankers Association-backed Corporate Transparency Act (H.R. 2513), a piece of legislation recently amended to bolster the country’s counter financial crime compliance defenses, encourage bank innovation and alleviate certain burdens on smaller institutions.
The move is a powerful one on many fronts for updating the country’s chief laws to stop illicit funds from moving through the United States and makes history as many similar pieces of legislation – even those in recent years with powerful bi-partisan political, public and private support – have died in committee.
The legislation, sponsored by Rep. Carolyn Maloney (D-N.Y.), would direct the Financial Crimes Enforcement Network (FinCEN), the country’s financial intelligence unit and administrator of AML rules, to create a national database that banks could use to verify a business’s beneficial ownership information.
The bill was amended before passage to include legislation championed by Rep. Emanuel Cleaver (D-Mo.), called the COUNTER Act, that would modernize the existing anti-money laundering/Bank Secrecy Act framework.
The legislation, if passed, would do so by, among other things, enhancing bank-law enforcement communications along with fostering a new federal regulatory-ushered era of innovation by nudging examiners to create “innovation labs” with the banks under their charge, (via the U.S. House Committee on Financial Services).
To read more about the bill’s passing by Congressman Cleaver, one of it’s key architect’s click here.
To read more analysis and listen to a podcast on the bill by the American Bankers Association, which supported the updates to AML rules, click here.
Monroe’s Musings: These moves have been a long time coming and hold the potential to make it harder for money launderers, corrupt oligarchs and terrorists to game the system in the U.S. by working through anonymous shell companies.
The U.S. has lagged far behind countries and regions like the European Union, United Kingdom and other jurisdictions in this area.
These areas have made commitments to eliminate the ability for attorneys, company service providers and other gatekeepers to create anonymous shell firms.
Moreover, these countries have gone further to be in line with international best practices by including requirements for these company creation operations to capture beneficial ownership details and send them to the government to be published in a central registry – one that in some cases will be made public and available to public and private watchdog groups.
So while it’s clear the U.S. has a long way to go, these legislative moves are a powerful step.
Securities
Enforcement
Embattled Swedbank, reeling from continued connections to Danske Bank laundering scandal, confirms its being investigated by U.S., EU authorities: quarterly report
The issue of financial crime compliance for Nordic and Baltic banking giant Swedbank has jumped from a typically less public unit, that would be a line or a footnote in a quarterly or annual financial report, to a top chief executive and board responsibility – one that received serious ink in the company’s latest quarterly filing.
The state of anti-money laundering (AML) compliance at Swedbank was the top of three priorities spelled out by freshly-minted bank President and Chief Executive Jens Henriksson in the latest quarterly report, which noted that compliance remediation spending on consultants to solve the bank’s AML challenges has swelled to 133 million Swedish Krona, or nearly $14 million.
“I have now been CEO for a little over three weeks and can say that…we have to get to the bottom of the money laundering accusations against our bank and address the shortcomings in our AML work,” he wrote in a message to shareholders.
The move is “not only because of the ongoing investigations, but because it’s the right thing to do,” he said.
“In concrete terms, it means I will be spending much of my time making sure that the internal investigation is completed promptly and that the authorities have access to all the information they need to complete their investigations,” he stated. “It also means strengthening the bank’s work to fight financial crime by allocating more resources and improving our processes.”
In recent months, three top executives at the Estonian branch of Swedbank AB, including a one-time candidate for central bank governor, have been jettisoned amid an ongoing investigation into a vast money-laundering scandal involving hundreds of billions of dollars from Russia and other risky regions.
These funds came to Swedbank after moving through the Estonian branch of Danske Bank – revelations that have sparked accusations, recriminations and remediations at a bevy of EU banking groups and member state regulatory bodies.
As a result, Swedbank confirmed in its third quarter filing that it is being investigated for its possible involvement in the Danske saga with formal probes by supervisory authorities in Sweden and Estonia, the Latvian police department for combating economic crime (LECED) and the European Central Bank (ECB).
As well, the Swedish Economic Crime Authority is investigating whether employees of the bank “violated communication laws related to money laundering.” In tandem, a “number of US authorities are also currently investigating Swedbank. These investigations may take years to conclude,” (via Swedbank).
Monroe’s Musings: The Swedbank quarterly report, along with everything that happened at the institution in the wake of the Danske scandal, including the latest revelations of EU and U.S. investigations, should be required reading for financial crime compliance officers at large international banking groups.