The AMLA 2020 includes sweeping reforms updating and modernizing U.S. anti-money laundering laws, many of which have implications beyond financial institutions regulated under the Bank Secrecy Act.
Expansion of AML Law to Codify Jurisdiction Over Virtual Currency Activities. The AMLA 2020 codifies prior FinCEN guidance that requires entities that conduct certain virtual currency business activities to register as money services businesses. By expanding the definitions of terms like “financial institution” and “money transmitting business” the new law includes businesses that exchange or otherwise transmit virtual currency or “value that substitutes for currency.” FinCEN guidance was controversial in the industry, and its codification in statute will create additional challenges and opportunities.
Developing an Emerging Financial Technology Focus. The AMLA 2020 puts in place the impetus for financial regulatory agencies and the Government Accountability Office to conduct studies and provide reports to Congress and develop capabilities to better understand and adapt regulatory frameworks to address emerging fintech technologies. The law directs FinCEN to maintain emerging technology experts to identify emerging technologies such as artificial intelligence, digital identity technology, and distributed ledger technologies that may be able to assist the government and financial institutions to counter money laundering and terrorist financing. The federal financial regulators are directed to study emerging payment methods like virtual currencies and peer-to-peer payment systems and provide reports to Congress on their use in money laundering and illicit activities. The federal financial regulators have been advancing the use of emerging technologies by financial institutions, and the AMLA 2020 directs FinCEN to establish a no-action letter process, which provides the opportunity for the industry to better understand the technology solutions acceptable to regulators for BSA compliance.
To learn more, click here (Perkins Coie Virtual Currency Report).