4 Things Bankers Need to Know About Proposed Anti-Money Laundering Law

Bank leaders, compliance officers and independent contractors would all face increased scrutiny and penalties under proposed anti-money laundering legislation. The “Holding Individuals Accountable and Deterring Money Laundering Act” (H.R. 3317) would strengthen anti-money laundering laws in the U.S. by increasing accountability, improving regulations and broadening government reach. The bill would allow the government to hold individuals – not just financial institutions – liable for violations of the Bank Secrecy Act (BSA).

The following are the four most important changes proposed by the bill:

1.  Promoting individual accountability

The proposed law emphasizes penalties for individuals over penalties for financial institutions. Among other things, it would raise the existing prison-sentence cap from five to 20 years for individuals convicted of any money laundering offense. Bank regulators would be empowered to take direct action against any banking executive, official or independent contractor (including attorneys, accountants, appraisers and consultants) who commits an infraction. Monetary penalties for individuals and financial institutions would increase, and individuals would be required to pay their own fines out-of-pocket.

2.  Broadening government reach

In an effort to increase accountability, the bill would permit the Financial Crimes Enforcement Network (FinCEN), which currently acts as an extension of the U.S. Department of the Treasury, to independently pursue legal action in anti-money laundering cases. It also gives the government more direct access to top banking executives in the event of a BSA violation.

3.  Encouraging information sharing

To incentivize compliance, the bill would increase rewards for whistleblowers and protect them against employer discrimination, now and in the future. It also broadens the definition of “safe harbor protection” to include all crimes, not only money laundering and drug-related offenses.

4.  Strengthening global enforcement

The Secretary of the Treasury would be tasked with developing and improving global anti-money laundering law enforcement and closing loopholes caused by differing international laws.

Proponents of the law believe that this is the best way to crack down on major financial institutions violating the BSA. They hope that, by implicating both persons and financial institutions, they will make the stakes for money laundering too high. Opponents believe that the bill’s stringent penalties for individuals could have career-ending implications; a punishment they don’t believe fits the crime. There is also concern that the bill would discourage job seekers from attaining positions in financial institutions where they could be implicated under H.R. 3317.

The bill, introduced in October by Rep. Maxine Waters (D-CA), was directed to the House Subcommittee on Crime, Terrorism, Homeland Security and Investigations last month.