Forward in the Fight Against Financial Crime

Sir Isaac Newton’s third law of motion―“every action has an equal and opposite reaction”―has been applied beyond physical science to understand various social phenomena. Humanities scholars, for example, create political, cultural and intellectual narratives by juxtaposing events and broader social movements as a series of actions and reactions between ideas, governments and peoples.

Finding examples of action and reaction to global anti-financial crime (AFC) efforts is not difficult, but the Heritage Foundation’s “Project 2025: Mandate for Leadership,” offers a timely example.

AFC professionals have helped drive a global wave of unparalleled consensus for financial transparency and cooperation. Catalysts for that wave include a series of terror attacks worldwide, including 9/11, revelations generated by the efforts of the International Consortium of Investigative Journalists (ICIJ) starting with the “Panama Papers,” and the ICIJ’s subsequent reporting on global financial crime and corruption networks.

Central to the push for transparency has been the Financial Action Task Force’s (FATF) pressure via anti-money laundering/counter-terrorist financing examinations and guidance that call for countries to create beneficial ownership registries. The U.S. response, albeit belated, was Congress’ adoption of the Corporate Transparency Act (CTA) in 2021 and subsequent rulemaking for the CTA by the Financial Crime Enforcement Network (FinCEN) promulgating the collection of beneficial ownership information (BOI) for a national database.

The Heritage Foundation’s 922-page missive “Project 2025,” which asserts that “Congress should repeal the Corporate Transparency Act and FinCEN should repeal its overbroad beneficial ownership rule,” can be understood as a Newtonian reaction to that wave.

Among the foundation’s objections to regulation is their concern that the CTA and related FinCEN rules are too onerous for small businesses, which comprise the majority of the approximately 33 million entities required to register.

The backlash against greater transparency around corporate ownership goes beyond the Heritage Foundation and is not limited to concerns over BOI.

Those challenges have caused confusion, perhaps contributing to the fact that at this writing, only 3.3 million entities have registered with FinCEN ahead of the CTA’s January 1, 2025, deadline. The consequences of missing the deadline can include fines and penalties, although FinCEN Director Andrea Gacki says the financial intelligence unit will pursue education over punitive measures.¹

The pushback is manifested globally and includes some legitimate concerns about privacy. Several U.S. states, led by Florida’s example, have also passed “fair access” laws in the name of stamping out ESG (environmental, social and governance) policies adopted by financial institutions (FIs). Court tests are likely to decide how much these state laws impinge on federal Bank Secrecy Act requirements for FIs.²

Yet the importance of accessible, comprehensive BOI for fighting financial crime remains central both directly and indirectly to ACAMS’ ongoing focus as evidenced by this Annual Assembly issue of ACAMS Today, notably in the articles “Shell Companies: The Misuse of Business Entities” and “Global Push for Beneficial Ownership Transparency.”

It is safe to say that our 110,000 members worldwide are generally in favor of greater BOI transparency, information sharing related to suspicious financial transactions, and the empowerment of law enforcement and FIs to block and freeze illicit funds.

The devastating post-COVID-19 spike in online fraud is an urgent reminder of the need to protect all the legal and technological tools that enable our members to fight financial crime, and as new threats emerge, to thoughtfully pursue additional legislative, regulatory and information technology (IT) powers. The centrality of complex new fraud schemes to AFC efforts is also amply documented here in ACAMS Today in “Scanned and Scammed: QR Code Fraud,” “The Money Laundering-Fraud Connection" and “AI Outsmarts Fraudsters: Boiler Rooms Busted.”

Without BOI transparency, the faceless corporate structures used to bank the proceeds of crime will continue to harm real victims: hundreds of thousands killed by illicit drug overdoses, millions trafficked for sexual and/or labor exploitation, vast numbers of elderly people denied a secure retirement as a result of fraud, and those who suffer foreign invasion aided by sanctions busting―I could go on.

Recognizing, as we do, the harm perpetrated by financial criminals, ACAMS members share an understanding that we cannot go back from the cooperation and transparency achieved thus far, even as we look for new AFC measures to beat ever-innovating criminals.