The incoming US Treasury Secretary Janet Yellen has told the Senate that cleaning up America’s corporate transparency problem is a “very high priority”.

Yellen, speaking at Senate confirmation hearing on Tuesday, thanked Congress for passing wide-ranging legislation to improve corporate transparency and anti-money laundering.

She pledged to “get up and running” and try and build the beneficial ownership registry as quickly as possible.

The corporate transparency measures require businesses to report their true beneficial owner to the Financial Crimes Enforcement Network (FinCEN)

 Yellen said that money laundering and the use of shell corporations is a “very important problem” for the US.

She added: “The act that was recently passed by Congress gives us an enormous potent tool to address this problem, we will try to get up and running as quickly as possible and devote ourselves to building that database, so that we can address these issues and we will be certainly looking to give this very high priority”

Yellen has previously held high-profile positions in Democrat administrations. She was nominated by Barack Obama to chair of the Federal Reserve and served in that role from 2014 to 2018 but was not re-appointed by Donald Trump. She also chaired the Council of Economic Advisers under President Bill Clinton.

 

The US Legislation explained

The National Defense Authorization Act for Fiscal Year 2021, was passed on New Year’s Day after congress overrode President Trump’s veto.

The over-arching bill includes a new Corporate Transparency Act and the Anti Money Laundering Control Act of 2020.

The measures at-a-glance:

-An established, secure, non-public database shall be established at FinCEN for companies’ beneficial ownership information. Companies that do not do business in the US but are registered there will be required to report their true beneficial owners

-The Treasury Secretary will be required to make public national priorities on AML/CFT and FinCen will be required to adopt regulations to ensure compliance.

-Definitions of “currency exchange and monetary instruments” are expanded to include substitutions for fiat currency, clarifying the ability to regulate virtual assets.

-The Act provides for the establishment of a “FinCEN exchange” to aid better information sharing among law enforcement and national security agencies.

-The Attorney General would prepare an annual report on the usefulness of information reported by financial institutions. FinCEN would also be required to seek feedback from law enforcement agencies on the usefulness of SARs and produce a report on this for financial institutions. FinCEN is also required to semi-annually report on threat patterns and trends.

-The Treasury would permit streamlined reporting and automated reporting for less complex SARs.

-The Bank Secrecy Act Advisory Group of regulators, bank representatives and public officials, will be required to form a subcommittee on technology and innovation in AML and CTF. FinCEN and other regulators will be required to appoint BSA “Innovation Officers”

-The US Treasury is given a year to carry out a study on money laundering and the financing of terrorism through trade in works of art and antiquities and report the findings

–FinCEN will be authorised to establish a pilot programme to allow US financial institutions to share information regarding SARs with foreign branches, subsidiaries and affiliates. This would not be permitted in certain jurisdictions. This followed criticism of current disclosure rules following the FinCEN Files leak last year.

-Increased ability of the Treasury Department and the Department of Justice to subpoena records from non-US banks that maintain correspondent accounts with banks in the US.

-Repeat offenders breaching the Bank Secrecy Act, could face increased penalties. The act provides for the imposition of additional penalties that would be based on three times the profit gained or loss avoided by the repeat offender or double the penalty amounts that would otherwise apply

-Whistleblowers who provide information that results in a successful enforcement of the BSA be awarded up to 30 percent of the amount that is collected in monetary sanctions.

 

 

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