A bipartisan group of Senators, with the support of the American Bankers Association, recently introduced bill S.2563, known as the ILLICIT Cash Act.  The acronym “ILLICIT” stands for “Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings.”  As that name suggests, the bill’s primary purposes are to close loopholes involving shell companies, improve information collection, and encourage communication between financial institutions and law enforcement.  The ILLICIT Cash Act proposes several changes to anti-money laundering laws, including the following reforms that could be of significant interest to financial institutions and other businesses:

  • Requiring shell companies to identify their beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”) and report any changes in ownership;
  • Requiring FinCEN to maintain a comprehensive database of shell company ownership information;
  • Permitting financial institutions to share information with their foreign branches and affiliates, as well as with outside institutions if identifying information is removed;
  • Requiring law enforcement to provide periodic feedback to financial institutions concerning their suspicious activity reports;
  • Reviewing and streamlining the reporting requirements for suspicious activity reports and currency transaction reports; and
  • Enabling FinCEN to review and approve transaction monitoring software.

The Senate has referred the Illicit Cash Act to the Committee on Banking, Housing, and Urban Affairs.  We will continue to monitor the bill as it moves through the legislative process.