The New Anti-Money Laundering Act: What You Need to Know

Passed as part of the 2021 National Defense Authorization Act is a new anti-money laundering act that will significantly strengthen the government’s authority to combat money laundering in the United States. Called the Anti-Money Laundering Act of 2020, this new law establishes a wide-ranging set of reforms that present significant implications for financial institutions.

While there are a lot of details and nuances to this new anti-money laundering act, the key takeaway is that this act will expand the Justice and Treasury Department’s ability to both investigate and punish financial institutions for Bank Secrecy Act (BSA) and anti-money laundering (AML) violations. By sharply increasing the penalties for such violations, the Anti-Money Laundering Act of 2020 provides prosecutors with much more leverage to enforce prohibitions as well as much more motivation to actively pursue criminal activity in the money laundering space. Lastly, this new act has also created a new anti-money laundering crime. Under the new law, anyone who knowingly misrepresents the source of funds to a financial institution in certain transactions or knowingly misrepresents the ownership or control of certain assets to a financial institution in transactions totaling over $1 million will be subject to a $1 million fine and up to ten years in prison.

For financial institutions and their employees, the Anti-Money Laundering Act of 2020 has made it more essential than ever before to create a thorough and robust AML compliance program. By giving prosecutors more leverage, resources, and motivation to investigate institutions that fall short of AML and BSA requirements, this new act has all but ensured that these financial institutions will soon find themselves under a much more severe level of scrutiny. Faced with this higher level of scrutiny as well as the increased penalties that the Anti-Money Laundering Act of 2020 has created, ensuring complete compliance with all BSA and AML regulations has never been more crucial for financial institutions.

Note: The Knowledge Group continuously produces webcasts on this topic and other hot-button issues relating to the Financial Services Industry to keep you ahead of the curve.