The recently passed Anti-Money Laundering Act of 2020 (AMLA)1 represents the most significant reform to U.S. anti-money laundering (AML) laws since the USA PATRIOT Act. As the AMLA takes final shape, it is already clear the new law will have overarching impacts on nearly every aspect of your financial crime compliance program. Our webinar series walks through expected business impacts under the expanded regulatory scope of the AMLA. In this blog, we outline areas to focus on to help ease the transition toward positioning your business for successful compliance with the AMLA.
Proactively evaluate risk policies
The AMLA proposes widespread updates to current AML requirements that are likely to increase the scope of your current due diligence policies and decisioning rules, including:
- Extension of ultimate beneficial ownership (UBO) requirements
- Proposed changes to thresholds for Currency Transaction Reporting (CTR) and Suspicious Activity Reporting (SAR)
- Establishment of national AML and counter-terrorism priorities for inclusion in risk-based AML/Countering the Financing of Terrorism (CFT) programs
- Expanded definition of financial institution to include virtual currencies, Electronic Funds Transfer Networks, Clearing and Settlement Firms and dealers in antiquities
In addition to these changes, the new provisions of the AMLA emphasize a financial institution’s ability to articulate and demonstrate the policies and procedures that underpin their approach to model risk management. Your ability to provide regulators with end-to-end transparency around core compliance decisioning protocols will play a paramount role in meeting these expectations. Evaluating your current AML/CFT internal control framework is an essential first step. Important considerations include:
- Reviewing existing approaches against new AMLA expectations
- Identifying any gaps and areas that need additional focus to meet new requirements
- Developing risk thresholds and tolerances around specific use cases
- Completing data mapping and optimizing how your data functions to support your policies
It is critical that businesses allow ample time to assess core policies and update critical processes and workflows. Advance planning helps ensure you’ve established effective due diligence screening policies and procedures to support a strong AML/BSA compliance program that meets the final AMLA requirements.
Take a targeted look at current technology
The advent of the AMLA creates an opportunity to consider how well your current compliance technology supports your business and compliance objectives. Ensuring key compliance workflows take full advantage of advances in automation, machine learning and other technology-driven efficiencies is a valuable step in preparing for new AMLA expectations. Several components of the AMLA may test your current compliance technology and warrant a more specific assessment:
- Changes to thresholds for CTRs and SARs may surpass the capacity of legacy systems
- Requirements that encompass a new or increased regulatory focus may demand additional compliance technology resources and internal controls for development, testing and implementation
- An increased remote workforce may need technology accommodations as they navigate and implement new compliance expectations or procedures
Assessing compliance technologies up-front allows your business to identify additional requirements and effectively plan technology spend and resource allocation in advance. Building in the advantage of newer, best-in-class tools can drive greater decisioning efficiencies that improve your overall compliance program. Taking time up-front to -align compliance technology to fully and efficiently support AMLA requirements can help your compliance team work smarter and realize long-term enterprise value from technology investments.
Prioritize planning in advance
Your business faces many considerations as the AMLA is finalized. It is important to stay aware as the regulations are proposed, and comment periods expire and proactively participate if you have specific areas of concern. Understanding the law’s potential impacts on core compliance policies and rules and making plans to accommodate these changes gives your organization the benefit of lead time and can minimize disruptions to day-to-day operations. Getting ahead of the AMLA allows your business to focus on building a compliance program that balances operational efficiencies and effective compliance.
LexisNexis® Risk Solutions is here to work with your business as you navigate the coming changes and business impacts of the AMLA. Our Professional Services team can help evaluate your compliance policies, rules and settings and create an effective plan to keep your compliance program at the forefront of regulatory changes. Our industry-trusted solutions can optimize your compliance program in a way that prioritizes business goals and promotes strong compliance with the AMLA. Count on us for the compliance expertise, innovative solutions and advanced technologies that are the cornerstone of an effective compliance program that contributes value to your overall business.
For more information about this significant legislation, view our on-demand webinar “The AML Act of 2020 – What You Need to Know.” presented by American Banker.