Featured Expert Contributor, White Collar Crime and Corporate Compliance
Gregory A. Brower is Chief Global Compliance Officer for Wynn Resorts. He also serves on WLF Legal Policy Advisory Board and is a former U.S. Attorney.
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Despite last minute support from the White House, an amendment to the National Defense Authorization Act (“NDAA”) that would have expanded the scope of the Bank Secrecy Act (“BSA”) to include certain attorneys, accountants, trust companies, and other “middlemen,” was deleted from the bill before passage by the U.S. House of Representatives this week. This legislation was intended to expand the BSA’s existing anti-money laundering provisions and was supported by a host of anti-corruption advocacy organizations. With the Senate version of the NDAA also not including the bill’s language, it is not likely to become law during this Congress.
The proposed legislation was first introduced in the House as a stand-alone bill known as the Enabling New Authorities for Business Laundering and Enabling Risks to Security (“ENABLERS”) Act. The bill would have amended the BSA to extend its application to certain attorneys, accountants, investment funds, trust companies, art dealers, and other types of professional service providers. Specifically, under the proposed to requirements, these types of businesses would be subjected to the same suspicious-activity reporting obligations currently imposed on financial institutions including banks and casinos. The bill’s sponsors pitched it as the most significant anti-money laundering reform since 9/11, arguing that it would close the BSA’s largest remaining loopholes. The bill was, in part, a reaction to the Pandora Papers investigation, which revealed certain potential vulnerabilities in the current law, and to assist in the enforcement of Russia-related sanctions. Proponents argued that many types of professional service providers who are not currently subject to the BSA are nevertheless key points of entry for the laundering of illicit funds in the U.S.
Despite bipartisan support for the measure, a broad range of interest groups opposed the bill, including the American Bar Association. The organization expressed concern that the bill would regulate attorneys and other professional service providers under the BSA in a way that would require the reporting of confidential information to the government in an unprecedented way that could conflict with ethical obligations. More than 70 other trade associations representing real estate firms, trust companies, venture capital firms, and other types of professional service organizations including the Air Conditioning Contractors of America also opposed the bill for a range of reasons including undue burden, data privacy, cost, among others. On such group, the S Corporation Association, argued that the proposal was overbroad in its potential impact and would “touch every business or non-profit in America other than those who are already ‘appropriately regulated’ – whatever that means.”
With the ENABLERS Act language now absent from both the House and Senate versions of the NDAA and the current Congress rapidly approaching its end, the bill is likely dead for now. However, with committed sponsors and bi-partisan support, it is sure to reemerge in the next Congress though it will face the same broad-based opposition.