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Bank of Mingo in Williamson, W.Va., will pay a total of $4.5 million in fines and legal settlements after it was investigated for violating anti-money-laundering laws.
June 15 -
Capital One has received requests for information from federal regulators about its anti-money-laundering program and check casher clients, as authorities lean on banks to do a more thorough job policing their customers and their customers' customers.
February 24 -
The Treasury Department and its anti-money laundering unit find themselves on the defensive as bankers say they're cutting ties with entire business sectors as a result of blunt enforcement efforts.
November 10
WASHINGTON Congress should pass legislation requiring businesses that incorporate and open bank accounts to specify who is the venture's "beneficial owner," witnesses said in a hearing Wednesday.
Last year, the Financial Crimes Enforcement Network proposed requiring banks to know who really stands behind or controls a legal entity that opens an account. The proposal is meant to curb the use of shell companies to launder money.
But testifying before a House Financial Services Committee task force, a law enforcement official and a terrorism finance expert said legislation forcing companies to state beneficial owners would have more teeth and could ease the compliance burden on banks.
"A simple requirement to identify beneficial owners on state incorporation forms would vastly improve the capacity of American law enforcement to attack terrorism finance, and disrupt terror plots," New York County District Attorney Cyrus Vance said in prepared remarks at the hearing held by the Task Force to Investigate Terrorism Financing.
The witnesses explained how the ease with which criminals can open shell companies makes it difficult for both law enforcement and banks to police potential laundering activities. They noted that banks could still gain from receiving "beneficial owner" information.
Chip Poncy, a senior advisor at the Center on Sanctions and Illicit Finance and a former Treasury official, said he supported the Fincen proposal, which would require banks themselves to seek owner information about any person who has more than 25% interest in the company that holds an account.
But adopting legislation requiring the companies to list "meaningful beneficial ownership information in company formation processes" may be a better solution, he said. A bill would "address the systemic challenges posed by the chronic abuse of legal entities to mask the identities and illicit financing activities of the full scope of criminal and illicit actors," Poncy said.
He said the best path is a two-pronged approach: companies submitting beneficial ownership information upon incorporation to the state and banks acquiring beneficial ownership information when a company looks to open an account. He said if companies were required to submit beneficial ownership information upon incorporation it would also likely make way for the adoption of the Fincen proposal.
"Company information reform is a bank's friend because there is no burden on the bank," Poncy said about companies providing beneficial ownership information when incorporating.
Any legislative changes would require lawmakers to make reforms to the Bank Secrecy Act. But Rep. French Hill, R-Ark., a member of the Financial Services Committee, said Congress should proceed cautiously considering changes to the landmark anti-money laundering bill.
"I am certainly open to new ways to look at the Bank Secrecy Act, but I want to make sure we do this in as thoughtful a way as we can and not rush into one proposed solution that is supposed to be a silver bullet," Hill said.
Poncy said independent of the Fincen proposal or any legislative moves, U.S. authorities and the financial industry have made substantial progress in weeding out financial crimes.
"Banks are in a different place than they were five years ago," he said. But, he added, "When it comes to beneficial ownership we have work to do."
