The new Director of FinCEN, Andrea Gacki, addressed several key topics on October 3, 2023 at the Association of Certified Anti-Money Laundering Specialists (“ACAMS”) conference in Las Vegas, Nevada. Specifically, Director Gacki addressed the issues of beneficial ownership under the Corporate Transparency Act (“CTA”); the real estate industry; investment advisers; fentanyl trafficking; and whistleblowers under the Bank Secrecy Act (“BSA”).
Link to The CTA The CTA
Director Gacki referenced various recent publications by FinCEN on the CTA, and stated that “we’ll be standing up a dedicated beneficial ownership information contact center. Based on the questions received through the Regulatory Helpline, we will issue additional FAQs on a rolling basis.” Further, Director Gacki stated that, “[t]o say there is a significant amount of work happening would be an understatement. But there is more work to be done.” This oblique statement does not indicate whether the CTA database in fact will be functional by its statutory effective date of January 1, 2024. As we have blogged, FinCEN has been criticized for being slow in rolling out regulations and information regarding the CTA.
Link to Real Estate and Investment Advisers Real Estate and Investment Advisers
Switching gears and referencing the White House’s 2021 U.S. Strategy on Countering Corruption, Director Gacki explained that FinCEN has been examining the money laundering risks and vulnerabilities with certain so-called “gatekeeper” industries such as real estate and investment advisers. In regards to real estate, Director Gacki stated that, “[f]or too long, the U.S. real estate market has been susceptible to manipulation and use as a haven for the laundered proceeds of illicit activity, including corruption.” Director Gacki noted that FinCEN issued on December 6, 2021 an Advanced Notice of Proposed Rulemaking (“AMPRM”) to solicit public comment on potential requirements under the Bank Secrecy Act for certain persons involved in real estate transactions to collect, report, and retain information. As we have blogged, the ANPRM envisions imposing nationwide recordkeeping and reporting requirements on specified participants in transactions involving non-financed real estate purchases, with no minimum dollar threshold. According to Director Gacki, FinCEN is “currently developing a Notice of Proposed Rulemaking, the contours of which are still being determined. FinCEN aims to issue this NPRM later this year.”
Turning to investment advisers, Director Gacki observed that “investment advisers are not generally subject to comprehensive AML/CFT requirements under the [BSA]. Although certain categories of investment advisers may undertake some AML/CFT obligations in limited circumstances, the absence of comprehensive regulation under the BSA in this industry creates gaps in the U.S. AML/CFT regime.” Indeed, unlike broker-dealers, investment advisers are not currently required to maintain AML compliance programs under the BSA, or file Suspicious Activity Reports (“SARs”). In 2015, during President Obama’s second term, FinCEN proposed exactly such a rule for certain investment advisers, but never moved forward. According to Director Gacki, FinCEN is assessing the relevant AML risks “and identifying the best ways to mitigate those risks.” She did not, however, reference any potential rule making.
Link to Fentanyl Fentanyl
We previously blogged on an advisory issued by FinCEN alerting financial institutions to the various financial mechanisms used by traffickers of fentanyl and synthetic opioids to launder the burgeoning proceeds of their illicit activities. Noting that “[t]racing and tracking the flow of funds related to fentanyl and its precursors is critical to disrupting the illicit supply chain and holding accountable those responsible for bringing fentanyl into the United States,” Director Gacki stated that “financial institutions and law enforcement agencies need to work together—they each have a critical role to play—and FinCEN has a role to play in building the bridges for these two groups to collaborate.”
To that end, Director Gacki explained that FinCEN has been holding “public-private partnership information exchanges focused on fentanyl—domestically through FinCEN Exchange and internationally through a roundtable with Mexican authorities and financial institutions alongside their U.S. counterparts.” Further, FinCEN has been sharing law enforcement investigation information and money laundering typologies, tools and best practices through a Trilateral Illicit Finance Working Group involving Canada and Mexico.
Link to Whistleblower Program Whistleblower Program
Finally, Director Gacki stated that FinCEN also will issue a Notice of Proposed Rulemaking for FinCEN’s new AML and sanctions whistleblower program. “While we work on the rulemaking necessary to fully implement this program, FinCEN is already receiving tips, investigating information received through those tips and making referrals to its enforcement colleagues at OFAC and the Department of Justice.” As we have blogged, the former Acting Director of FinCEN previously emphasized the fact that FinCEN created an “Office of the Whistleblower,” hired “key personnel” to build and supervise the whistleblower program, and now accepts whistleblower tips while FinCEN develops a “more formal” system. Although FinCEN suggested in June 2023 that proposed whistleblower regulations would be forthcoming soon, there is currently no public schedule regarding the publication of such proposed rules.
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