NASCUS Regulatory Summaries Recently Published
- *NEW* Financial Crimes Enforcement Network (FinCEN): Notice of Proposed Rulemaking and Request for Comment—Proposal of Special Measure Regarding Convertible Virtual Currency Mixing
11/07/2023 The Financial Crimes Enforcement Network (FinCEN) is issuing a final rule that specifies the circumstances in which a reporting company may report an entity’s FinCEN identifier in lieu of information about an individual beneficial owner.
A FinCEN identifier is a unique number that FinCEN will issue upon request after receiving required information. Although there is no requirement to obtain a FinCEN identifier, doing so can simplify the reporting process and allows entities or individuals to provide the required identifying information directly to FinCEN.
The final rule, which amends FinCEN’s final Beneficial Ownership Information (BOI) Reporting Rule, specifically responds to commenter concerns that the reporting of entity FinCEN identifiers could obscure the identities of beneficial owners in a manner that might result in greater secrecy or incomplete or misleading disclosures. The final rule provides clear criteria that must be met in order for a reporting company to report an intermediate entity’s FinCEN identifier in lieu of information about the individual beneficial owner.
“This final rule is another concrete step towards implementing a beneficial ownership information reporting regime that will enhance corporate transparency in the United States,” said FinCEN Director Andrea Gacki.
The final rule will be effective January 1, 2024, to align with the effective date of the BOI Reporting Rule.
11/06/2023 On November 2, the Financial Crimes Enforcement Network (FinCEN) hosted a FinCEN Exchange focused on the threat posed by the illicit use of convertible virtual currency in light of Hamas’ brutal terrorist attacks in Israel and the critical role the financial industry plays in detecting terrorism financing. The Exchange included presentations by FinCEN and Federal law enforcement agencies, followed by discussions on information sharing mechanisms and observations related to terrorism financing in a dialogue involving U.S. financial institutions, technology, and social media companies.
Engagement with the U.S. private sector plays a critical role in Treasury’s work in identifying and mitigating terrorists’ use of our financial system. The FinCEN Exchange is part of a whole-of-government response to deny Hamas the ability to raise and use funds worldwide for its terrorist activities, and exchanges like the one held yesterday are critical to identifying and stopping funding channels to terrorist groups, including Hamas. The U.S. Department of the Treasury will continue to use all available tools to identify and stop terrorist financing funding channels.
FinCEN appreciates the critical support that financial institutions provide to law enforcement and national security agencies in fighting illicit activities through their suspicious activity reporting and their allocation of resources to national security priorities. On October 20, FinCEN issued an alert to aid financial institutions in identifying suspicious activity relating to financing Hamas and reporting it to FinCEN. FinCEN Exchanges provide an important mechanism to enhance law enforcement feedback and to help financial institutions more effectively implement their anti-money laundering programs.
FinCEN strongly encourages all financial institutions to register under USA PATRIOT Act Section 314(b) and to form associations to engage in voluntary information sharing. Section 314(b) information sharing can reveal networks of illicit activity that no single financial institution can detect alone, compounding the benefits for both the financial institution and law enforcement. In fiscal year 2023, there were more than 7,600 314(b) registered financial institutions, making extensive network analysis possible.
11/06/2023 Today, the Department of Commerce’s Bureau of Industry and Security (BIS) and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a joint notice highlighting a new Suspicious Activity Report (SAR) key term (“FIN-2023-GLOBALEXPORT”) for financial institutions to reference when reporting potential efforts by individuals or entities seeking to evade U.S. export controls not related to Russia’s invasion of Ukraine. FinCEN and BIS previously issued two joint alerts in June 2022 and May 2023 urging financial institutions to be vigilant against potential Russian export control evasion in response to Russia’s illegal invasion of Ukraine. Financial institutions are encouraged to continue to use the key term “FIN-2022-RUSSIABIS” when filing SARs related to suspected Russian export control evasion.
The joint notice emphasizes the importance of financial institutions applying a risk-based approach to trade transactions and remaining vigilant against efforts by individuals or entities seeking to evade export controls globally. This joint notice highlights global red flag indicators of export control evasion, with a focus on advanced and critical technologies, that also can be applicable to due diligence efforts of exporters in addition to financial institutions.
“The purposeful evasion of U.S. export controls, regardless of where it occurs or the adversary it supports, is a serious national security issue,” said FinCEN Director Andrea Gacki. “FinCEN is proud to partner with BIS in issuing this Notice and providing financial institutions with a new key term which they can use to file suspicious activity reports when they suspect such activity.”
“Disrupting the diversion of critical U.S. technologies to nation-state adversaries and malign actors around the globe is our highest priority,” said Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod. “This powerful new SAR key term will enable even more BIS investigative and Entity List actions against global threats.”
BIS leverages SARs to investigate violations of U.S. export control regulations. Investigations involving advanced technologies (e.g., advanced semiconductors, quantum, hypersonics) sought by nation state adversaries to support military modernization efforts designed to overcome U.S. military superiority, or mass surveillance programs that enable human rights abuses are being prioritized and worked through the interagency Disruptive Technology Strike Force, co-led by BIS and the Department of Justice.
The joint notice is part of the ongoing efforts by BIS and the U.S. Department of the Treasury to strengthen export controls and prevent global evasion of U.S. export controls. By working together and leveraging their respective expertise, BIS and FinCEN aim to disrupt illicit acquisition activities and enhance the overall security and integrity of the international trade and financial systems. Read more
Financial Action Task Force Identifies Jurisdictions with Anti-Money Laundering and Combating the Financing of Terrorism and Counter-Proliferation Deficiencies
11/03/2023 The Financial Crimes Enforcement Network (FinCEN) is informing U.S. financial institutions that the Financial Action Task Force (FATF), an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF), issued a public statement at the conclusion of its plenary meeting last month, and, among other issues, adopted a report on how terrorist groups like Hamas use crowdfunding techniques to raise money for their attacks. Additionally, the FATF continues to reiterate that all jurisdictions should be vigilant to current and emerging risks from the circumvention of measures taken against the Russian Federation in order to protect the international financial system. The FATF noted that the Russian Federation’s war of aggression against Ukraine continues to run counter to FATF’s principles, and, thus, the suspension of the membership of the Russian Federation continues to stand.
The FATF also updated its lists of jurisdictions with strategic AML/CFT/CPF deficiencies. U.S. financial institutions should consider the FATF’s stance toward these jurisdictions when reviewing their obligations and risk-based policies, procedures, and practices.
On October 27, 2023, the FATF added Bulgaria to its list of Jurisdictions Under Increased Monitoring and removed Albania, the Cayman Islands, Jordan, and Panama from that list.
The FATF’s list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran and the Democratic People’s Republic of Korea (DPRK) still subject to the FATF’s countermeasures. Burma remains on the list of High-Risk Jurisdictions Subject to a Call for Action and is still subject to enhanced due diligence, not counter-measures.
As part of the FATF’s listing and monitoring process to ensure compliance with its international standards, the FATF issued two statements: (1) Jurisdictions Under Increased Monitoring, which publicly identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline; and (2) High-Risk Jurisdictions Subject to a Call for Action, which publicly identifies jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply enhanced due diligence, and, in the most serious cases, apply counter-measures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from the identified countries. Read more