With US money-laundering laws, dating back to the 1970s, some appear out of date, which according to Senator Elizabeth Warren, “makes it hard for law enforcement trying to stop money laundering and bad for financial institutions trying to comply with these laws.” US proposed legislation, the Counter Terrorism and Illicit Finance Act (CTIFA), is currently being debated, not least as a result of strong Industry advocacy. Nine leading domestic Industry Groups submitted a proposal in March 2019 to Congress, which critiqued the existing system and advocated for 4 overreaching reforms.

The joint trade letter states that: “The current regime is nearly 50 years old, and has not fundamentally changed since its adoption in 1970. It is still operated as an individual, bilateral reporting system despite advances in technology that could improve its efficiency and effectiveness. A core problem is that today’s regime incentivises financial institutions to achieve compliance with technical requirements that bear little relationship to the actual goal of preventing, detecting, or halting financial crime. Moreover, the regime fails to consider collateral damage that may impact national security or financial inclusion goals. In other words, bank examiners focus on technical compliance, not the provision of valuable information to law enforcement or other measurements of effectiveness. Fundamental change is required to make this system an effective law enforcement and national security tool.”

In concluding the letter states that “We believe these reforms would represent great steps towards reducing the burden on customers, while at the same time improving the quality of information given to law enforcement.”

Key Recommendations from the US Bank Trade Bodies
The joint trade letter then goes on to make 4 recommendations; that new legislation should require the Treasury Secretary to be required to:

• “Publish regularly updated national priorities for the AML/CFT regime; and take steps to better align the examination/compliance framework with these priorities (e.g., ensuring examinations focus on identification and management of risk, versus emphasis on technical compliance absent risk indicators);
• Facilitate information sharing and feedback from law enforcement to financial institutions and further facilitate information sharing between financial institutions;
• Update and streamline the process of filing Suspicious Activity Reports and Currency Transaction Reports to provide more timely and relevant information to law enforcement; &;
• Encourage and support the use of technology and artificial intelligence within financial institutions’ AML programs.”