Senate Hearing Examines Overhauling Ant-money Laundering Regulations

January 9, 2018

The Senate Banking Committee held a hearing Jan. 9 discussing the potential of overhauling regulations aimed at curbing money laundering.

Participating in the hearing titled “Combating Money Laundering and Other Forms of Illicit Finance: Opportunities to Reform and Strengthen BSA Enforcement,” were:

  • Greg Baer, president, The Clearing House Association
  • Dennis Lormel, president and CEO, DML Associates (and former chief, FBI Financial Crimes Program)
  • Heather Lowe, Legal Counsel and Director of Government Affairs, Global Financial Integrity.

The hearing debated how to address concerns of regulatory burden while making sure information used to identify criminals is cultivated in the most effective ways.

In August, the Financial Crimes Enforcement Network (FinCEN) renewed and expanded existing Geographic Targeting Orders (GTO) that require U.S. title insurance companies—along with their subsidiaries and agents—to identify the individuals behind companies used to conduct high-end, all-cash real estate transactions in certain major jurisdictions.

According to FinCEN, the data collected so far through the GTOs indicate that about 30 percent of reported transactions involve a beneficial owner or purchaser representative that was also the subject of a previous suspicious activity report.

Toward the end of the Senate hearing, Lowe said that the reporting of beneficial owners by title companies to FinCEN is an example of successful data collection.

Additionally, in her written testimony, Lowe mentioned that those involved in real estate closings are classified as financial institutions per the definition established by the USA PATRIOT Act in 2001. However, those handling real estate closings were given a temporary exemption from anti-money laundering (AML) compliance requirements in 2002. Lowe believes this exemption should be removed and urged Congress to do so.

“Some types of entities and persons should be required to have AML programs in place that currently do not, such as those involved in real estate closings, lawyers, and others,” Lowe wrote. “The banking sector cannot and should not carry this responsibility alone, especially where these persons act as a proxy to open the door to the financial system for criminals and their money.”

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