This Week in AML

Is it Time for the ENABLERS Act?

A bi-partisan group from the US Congress has attached the ENABLERS Act to the FY 2023 National Defense Authorization Act (NDAA). The ENABLERS Act would bring a number of groups and individuals who assist in anonymizing organizations and their transactions under the recordkeeping and recording regime of the Bank Secrecy Act. John and Elliot discuss the impact that passage of the Act would have on closing current holes in BSA coverage and the likelihood of passage of the Act, now that it is linked to adoption of the NDAA.



Is it Time for the ENABLERS Act? TRANSCRIPT


Elliot Berman: Hi, John, how are you today?

John Byrne: Hey, Elliot, it took quite a while this time, and it must be I'll blame it on COVID since, as you can tell from my wonderful voice, I was able to put it off for two and a half years, but, came down with COVID the other day. So we're gonna push on and still have a conversion.

Elliot Berman: Okay. Well, I think we've got something really interesting to talk about. So I am assuming that you saw that a bipartisan group in the house have proposed to attach the enablers act, which we'll talk about in a minute, to the national defense authorization act. That's moving through Congress.

John Byrne: Yeah, I did. And it sort of came outta left field. I'm sure. Obviously, congressional staff were well aware that this was going on, but I was not till I saw a story, frankly, in the Washington Post that reported on it getting attached. So this bill, as you know, was introduced last year, and it has similar provisions to what was in AMLA.

But some vastly different ones as well that I know you were focusing on.

Elliot Berman: Yeah. So let's put something out of the way for a moment. Just like the Patriot act, the enablers act is actually an acronym, and I'm gonna try to read it with the proper emphasis. So it makes sense. It's an acronym for establishing new authorities for business laundering and enabling risks to the security act.

And it covers some interesting things. So as you mentioned, there are some parallels and actually overlaps with AMLA too. It would extend the anti-money laundering programs in the Patriot Act, including the related regulations, or require related regulations to the following area, groups of folks.

So persons who trade in works of art, as we know, the antiquities and collectibles component is in AMLA persons who provide investment advice for compensation which is a significant role in the regime that has been discussed for years. Attorneys, law firms, or notaries involved in the financial or related activity on behalf of another person.

Certain trusts and company service providers. Again, that's a whole in the process that was identified in detail in the Pandora papers. Certified public accountants and, public accounting firms, certain trusts. Oh, I said that certain trusts in company service providers. Sorry, persons engaged rather in the business of public relations, marketing communications, or other similar services in such a manner as to provide another person anonymity or deniability, which is extraordinarily broad. And then persons engaged in the business of providing third-party payment services. Now many organizations and financial services companies already do that, but others that are not currently covered would be brought in.

So that's a big new group that have thus far been outside the scope of the Patriot Act.

John Byrne: Yeah, that's true. You know you and I talked offline about art dealers and antiquities. And so why is that in there if AMLA had the antiquities covered and they're going through rule making and art was the subject of a study. But it could be that it's gonna require those entities to report suspicious activity because the way there, I have to go back and check. But the way the law was crafted under AMLA. I don't think it necessarily resulted in antiquities if covered under the BSA that they would have seen reporting requirements. That sort of yet to be determined. So maybe this is a way to say that when you go through that process, you have to make sure that they report suspicious activity to the treasury. I get it's an educated guess, but that would seem to be the only reason why they haven't yet decided to amend this. Or it could just simply be a timing issue.

Elliot Berman: Right. The interesting thing I think about this is not the enablers act itself, which you already mentioned was actually introduced in the house last fall, but more interestingly, connecting it to the national defense authorization act. Now for those of our listeners who were with us back then, that is actually how AMLA came up.

It was attached to that defense authorization act and actually unusually passed in 2021. Usually, they're done by the end of the proceeding calendar year. But in that case, I think it was very early January when it was adopted, but it certainly gives the Enablers Act, I think, a better chance to be adopted because, in the end, an NDAA always gets adopted. And so, you know, it's significant leverage to get this piece front and center with direct consideration because it's attached to something that everybody knows they have to pass.

John Byrne: Right. And it's bipartisan, as you reference.

So that gives it additional emphasis in addition to it being in the NDAA, the fact that it's bipartisan means that it's got a good chance of making it through the process.

Elliot Berman: Yeah. You know, it's still subject to refinement. We saw AMLA when it was initially attached to the 2021 NDAA go through some amendments. You know, the legislative negotiation process. I would expect that there will be some proposed amendments. I don't know what they will be, but you know this is when the actual legislative process kicks into gear because when the enablers act was initially introduced in the house, there wasn't a ton of movement.

I believe there was a hearing, but John, you can correct me if I'm wrong about that. And while obviously there are constituencies that are covered by this, the enablers act. It is, you know, a more difficult argent to make when you're talking about an anti-corruption bill. A group shouldn't be covered.

I'm not saying it's IPO. But it's kind of hard to say you sort of almost have to prove the negative, you know, nobody in our industry is involved in corruption. Therefore don't include us. That's, you know, that's tough.

John Byrne: Right. And as we know, our colleagues in the legal profession have adamantly opposed being part of the BSA from this perspective. Obviously, they advise clients constantly, but this will be interesting to see what the American bar association and others say about that.

So there'll be some heavy lobbying, I would imagine.

Elliot Berman: Yes. And we would not be the first country to bring attorneys and accountants under an anti-corruption reporting regime. The UK has it and other countries. So we would not be breaking ground here, but you're right. It will be very interesting to see. The provision bringing lawyers and law firms it is not broad in the sense that it doesn't cover everything they do, but it is more than the proverbial camel's nose under the tent too. So I expect there'll be a lot of conversation.

John Byrne: Yeah. The last thing I mentioned in the international consortium of investigative journalists wrote a piece on this, and they point out that real estate is not included. So you can imagine there'll be more. I know FinCEN is looking at the real estate industry in an advanced notice proposed rulemaking, but it'll be interesting to see how that gets covered if it does.

Elliot Berman: Yes. Agreed. And that could be in the amendments.

Well, I hope you feel better and get better soon. And, I'd like to wish you a good 4th of July. I think the 4th of July, in many ways, is taking on a different meaning than maybe I thought it did all the years I was going to picnics and not thinking about what it really meant.

John Byrne: Yeah. That's no question. And I apologize to our audience for having to listen to this voice, but hopefully, it'll be better by next week.

Elliot Berman: All right, John, have a great weekend and a great holiday, and I will talk to you next. Feel better. Take care.

John Byrne: Yeah. Thanks, talk soon.

Elliot Berman: Bye.