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Anti money laundering compliance and the new standards on beneficial ownership
Journal of Financial Compliance,
2
(1),
66-77
(2018)
Abstract
This paper discusses the new Financial Crimes Enforcement Network (FinCEN) rule on beneficial ownership and the general due diligence challenges currently facing financial institutions. Covered financial institutions must comply with these rules by 11th May, 2018, and should consider the most effective means to take immediate steps to modify their anti money laundering (AML) compliance programmes to accommodate this latest expansion of the AML regulatory regime (specifically the USA’s BSA, AML and Counter-Terrorist Financing (CTF) regulations and associated guidance). Although narrated from a US jurisdictional perspective, non-US financial institutions and regulatory regimes (eg, European Union [EU] under the purview of the European Union’s Anti-Money Laundering Directive) are considered within the scope of discussion. It is acknowledged that non-US financial institutions may be required to adapt their compliance programmes to account for the new US beneficial ownership standards. Therefore, possible approaches toward development of universal operational solutions will be presented and assessed. Finally, this paper observes that the misuse of limited liability companies (LLCs) and offshore financial centres (OFCs) can serve as a harbinger of criminal activity and seeks to encourage further the discussion of due diligence governance and controls within the AML compliance community.
Keywords: anti-money laundering; beneficial ownership; customer due diligence; final rule; compliance; operations risk
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Author's Biography
Brian Arrington is an adviser with Deloitte, LLP’s Transactions and Business Analytics (DTBA) practice, where he assists clients with regulatory matters concerning Bank Secrecy Act/AntiMoney Laundering (BSA/AML) and Office of Foreign Assets Control (OFAC) compliance, economic sanctions and financial crimes. He has over 20 years of experience within the financial services industry in both the public and private sectors. Mr Arrington has previously served as: Senior BSA/AML Examiner with the Federal Reserve Bank of Chicago; Manager with Deloitte, LLP’s Regulatory Consulting practice; BSA/AML/OFAC Compliance Officer and process coordinator for a large Chicagoland area bank; corporate account and consumer data management liaison for one of the three primary US consumer credit bureaus; and various roles involving consumer credit card fraud prevention and investigations. Throughout his career, Mr Arrington has advised financial institutions and third party service providers on compliance matters; BSA/AML/OFAC and fraud internal controls and risk governance; policies, procedures and operations management strategies; and the process integration of BSA/AML and OFAC information technology solutions. Mr Arrington is a founding board member of the Association of Certified Anti-Money Laundering Specialists (ACAMS) Chicago Chapter, has served on ACAMS’ Editorial and Educational Committees since 2013, written a number of articles for ACAMS Today magazine and participated on industry panels at ACAMS’ Annual and International AML & Financial Crime conferences. Mr Arrington received his Master of Business Administration (MBA) from the Kellstadt Graduate School of Business, DePaul University, and holds the Certified Anti-Money Laundering Specialist (CAMS) designation.
