House bill

Internal Bill to “Modernize” FinCEN’s Special Measures Authorities Finance and Banking


United States: Internal bill to “modernize” FinCEN’s special measures authorities

To print this article, all you need to do is be registered or log in to Mondaq.com.

the America COMPETES Act of 2022 (Full Name: “America Creating Opportunity for Manufacturing Preeminence in Technology and Economic Strength”) was introduced in the United States House of Representatives. The bill would, among other things, modernize FinCEN’s Special Measures Authority to “empower FinCEN to adapt its existing tools, monitor and counter global financial threats, and address the challenges of fighting global crime.” 21st century”.

The bill states that innovations in financial services — such as digital assets and informal value transfer systems — have “transformed and expanded” international commerce since FinCEN received its special measures power ago. 20 years. Additionally, the bill claims that while the innovations are “beneficial to legitimate consumers,” they are a “boon to bad actors,” allowing perpetrators to attack US companies with ransomware and use the financial system. to “move and conceal the proceeds of their crimes”. “

The bill would allow the Secretary of the Treasury “to prohibit or impose conditions on certain transmissions of funds” to or from any national financial institution or national financial agency if the Secretary finds that the transmission involves:

  • a foreign jurisdiction primarily concerned with money laundering;

  • one or more types of accounts in or involving a foreign jurisdiction primarily concerned with money laundering; Where

  • one or more categories of transactions within or involving a foreign jurisdiction primarily concerned with money laundering.

Remark

In 2001, the USA PATRIOT Act gave the Treasury the power to impose five “special measures” on U.S. financial institutions when the Treasury determines that an account, transaction, foreign financial institution, or foreign jurisdiction is “of major concern in matters of money laundering”. Most of the “special measures” create information gathering and reporting obligations for US financial institutions. But the fifth and strongest “special measure” allows the Treasury to impose prohibitions or conditions on the operation of correspondent accounts and transit accounts.

This legislative proposal rightly points out that the world has changed since 2001: while the vast majority of cross-border payments passed through correspondent and transit accounts 20 years ago, a significant number of cross-border payments today do not they may not be.

In particular, cryptocurrency, even when intermediated by a US financial institution, is used in cross-border payments that do not go through a correspondent or transit account. The bill aims to fill this gap. In the past year alone, there has been a massive increase in cryptocurrency-denominated ransomware payments and heightened interest from regulators. In this context, the Treasury might welcome the bill’s broader grant of authority to “prohibit or impose conditions on certain funds transmissions,” a term that federal agencies have interpreted to include crypto- change.

Primary sources

  1. House Financial Services Committee Press Release: America COMPETES Act Contains Key Provisions Drafted by Committee Democrats

  2. House.gov: America COMPETES Act of 2022

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

POPULAR ARTICLES ON: Finance and Banking of the United States