This Week in AML

Some Things to Watch in the Anti-Money Laundering Act

This week, Executive Vice President John Byrne, and Creative Director Elliot Berman of the AML RightSource staff talk about some provisions of the Anti-Money Laundering Act of 2020. John and Elliot discuss a recent posting by the International Consortium of Investigative Journalists which identifies some of the possible shortcomings in the Act and how these provisions may be come to be during the legislative process.

Some Things to Watch in the Anti-Money Laundering Act Transcript

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

John Byrne: I'm good Elliot. Before we get started, I wanted to ask you...[shameless plug for AML RightSource's newest podcast series, Frankly Speaking - go listen/watch the first episode right after this!]

Elliot Berman: Thanks for bringing that up. I'm sitting monthly with our CEO, Frank Ewing, and we're going to talk about business related topics. [more details about Frankly Speaking - seriously, give it a listen!]

Yeah, thanks for bringing that up.

John Byrne: Great. And let's just dive into it. You and I talked about this offline, obviously one of the things we've been covering in our weekly conversations has included the major change and potential changes to AML infrastructure included in the national defense authorization act.

We both took a look and saw something on social media that we thought was worth talking about. That was an article by Spencer Woodman, who's part of an ICIJ which is the "international consortium of investigative journalists", well-known for a lot of things, including Panama papers and the FinCEN files.

And they talked a bit about the legislation, and both the potential impact and frankly, some of the things they thought should have been included.

Elliot Berman: Yeah. I saw that. I think one of the ones that caught my eye was just the new ownership registry that's in the act and the concern expressed by the author of the article that it will not be a public registry. In the UK they have a similar registry and it is public, - but I know you were involved in in getting the act passed, at least in terms of some of the technical components - what did you think about that issue that he raised?

John Byrne: Yeah, obviously he's right. The UK does have a public registry as do some other countries, but I think you have to walk before you run. And I think the key here is there will be a registry that will be accessed, from federal law enforcement, state and local - although you have to go to court for that. So there are some hurdles, but also for the financial sector, our industry is going to have access when they're going to need it.

And we recognize the rationale for this registry is because even with the CDD rule of a couple of years ago, there's still a gap in information that's critical to figuring out beneficial ownership. So, I think we should be more "clapping from the sidelines" and it's not that they are not, but they expect that there'll be further debate on this going forward. And I think that's probably what's going to happen.

Elliot Berman: Yeah, I think that's right. Another point that they made is they noted that in the act that art dealers don't have a suspicious transaction reporting obligation. And I know this is a topic we've discussed a great deal about and we're a big champion of it. The view is again, they're talking about the glass being half empty, but there was a really important component that did get in and art dealers weren't left entirely behind as I recall. Give us your insights on that, John.

John Byrne: Yeah, that's right. So obviously those that sell and purchase antiquities will be covered under the bank secrecy act. That's a big win for the AML infrastructure, because clearly that's a space in which some of those products were used to move illicit funds.

And that also is the case in the art world. Now, part of what I recall the rationale for them not being included right now, although there is a study, we'll mention in the second, is because there was quite a bit of a debate with the House and Senate staff and others regarding definitions. I think a fair point that we're trying to do a lot at the same time, but they're not completely left off the list. So, there's going to be a study with a strategy connected to it. And at the end of that period of time, if the study shows that art is a way to move illicit funds, they're going to be covered. And I cannot imagine under any scenario where that study won't show that.

So if they consult with all the proper stakeholders, law enforcement, the regulatory community, and obviously those in the private sector, they're going to find clear examples of this, right? Wouldn't say a free pass for now, they're being watched. There'll be a study, watch that study closely. And I think at the end of that process, art dealers will be in the same bucket as antiquities dealers. And that's only going to be a good thing for the AML regime.

Elliot Berman: Yeah, I agree with you. This study did not feel like some of the studies, which are the, "kick it down the road, we really don't want to talk about it" [kind].

This really did seem to be a "prove you shouldn't be, and if you can't then the strategy will be let's go forward and get you under the umbrella of a regime". So I think that's a good thing.

John Byrne: Yeah, I agree with that.

Elliot Berman: Okay - good talk and thanks for the chance to plug the new podcast. I'll talk to you next week.

John Byrne: Sounds good. Take care. Elliot, stay safe.

Elliot Berman: You too. Bye. Bye.