U.S. anti-money laundering regulations well-developed, analysis finds

By Ken Tysiac

U.S. anti-money laundering regulations are well-developed, and domestic coordination to prevent money laundering and terrorist financing is sophisticated and has improved over the past 10 years, according to a Financial Action Task Force (FATF) evaluation issued Thursday.

The FATF is an independent intergovernmental body that promotes policies to protect the global financial system against money laundering and terrorist financing.

In the first evaluation of the U.S. regulatory system undertaken by the FATF since 2006, the report states that the U.S. regulatory framework has made “significant progress” since the previous assessment and states that the United States effectively investigates and prosecutes money laundering and terrorist financing.

The FATF’s report also states that under the Bank Secrecy Act, U.S. financial institutions have an evolved understanding of money laundering risks. Financial sectors bear most of the burden in combating money laundering in the United States, and the evaluation found that financial institutions have systems and processes for implementing preventive measures, including onboarding of customers, transaction monitoring, and reporting suspicious transactions.

The evaluation did note some gaps in U.S. anti-money laundering regulations. FATF guidelines call for member governments to establish anti-money laundering responsibilities and oversight over practicing accountants in firms as well as lawyers, casino operators, real estate agents, dealers in precious metals and stones, and other independent legal professionals.

The United States has not adopted the FATF recommendation to establish anti-money laundering responsibilities over these professions. In the case of the accounting profession, the money-laundering provisions in the Bank Secrecy Act do not separately regulate accountants. But accountants working for financial institutions covered by the Bank Secrecy Act are subject to the anti-money laundering requirements imposed on those entities.

Nonetheless, the FATF cited gaps in U.S. regulations, including:

  • Minimal coverage of certain institutions and businesses.
  • Minimal measures imposed on certain nonfinancial businesses and professions. The FATF found that casinos are the only one of a number of key sectors in the United States outside of financial services/banking that are required to report suspicious transactions. Professionals who are not subject to sufficient anti-money laundering regulations include accountants, investment advisers, lawyers, real estate agents, and certain trust company and service providers, according to the FATF.
  • Lack of access to adequate, accurate, and current beneficial ownership information. This inability to determine the true owner of a company, such as a shell company, creates opportunities for money launderers to hide illicit proceeds, according to the FATF.
  • Lack of a uniform approach to state-level anti-money laundering efforts. The FATF reported that it is not clear that all states devote enough priority to preventing and detecting money laundering.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

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