2020 Journal of Community Bank Studies

2020 COMMUNITY BANK CASE STUDY COMPETITION

institutions and law enforcement. With the introduction of the Illicit Cash Act , there is legislation on the table in D.C. to amend the BSA and work towards meaningful and consistent communication between banks, law enforcement, and government agencies. The community banking industry hopes that the passing of the Illicit Cash Act will alleviate some of the stress that is currently on their hand and modernize the BSA to prevent fraudulent bank activity in the technology age. 4. Policy Recommendation & The Future of BSA/AML Reform 4.1: Policy Recommendation Based on our overall research, we recommend that policymakers implement the measures expressed in the Illicit Cash Act . We believe that it will solve many common issues with BSA compliance by adapting technologies to modernize provisions in the Bank Secrecy Act , enhancing communication between federal agencies and law enforcement, and amending FinCEN’s beneficial ownership policies. The Illicit Cash Act addresses the shortcomings of many BSA provisions as modern technology has made 1970’s standards obsolete. It would create an Innovation Subcommittee within the U.S. Treasury Department to encourage and support technological innovation to fight money laundering (United States). The legislation accomplishes this by removing any existing obstacles that arise from current regulation, practices, and guidance related to the BSA.

The Illicit Cash Act proposes several changes regarding BSA reporting to create better communication chains. These changes will improve the quality of shared information. The first of these changes is the requirement of annual law enforcement reports for the Treasury Department. This will allow the Treasury Department to address frequently occurring issues. A second major change that the Illicit Cash Act proposes is the review of the current CTR and SAR thresholds. A primary complaint F&M Bank cited in our discussion was the outdated $10,000 threshold for transaction reports (Hise). This threshold has not once been adjusted for inflation or other economic factors. A third major proposal from the Illicit Cash Act modifies the requirements for beneficial ownership collections. This amendment would force shell companies to disclose beneficial ownership information to FinCEN at incorporation and within 90 days of any change in beneficial ownership. In addition, it would devise a study to determine whether the lack of beneficial ownership has stunted investigations into entities suspected of financial misconduct. In summary, the passing of the Illicit Cash Act would reduce financial burdens of BSA compliance for community banks by updating BSA standards for modern technology, forming improved communication channels between financial institutions, law enforcement, and federal agencies, and implementing more structured policies related to beneficial ownership reporting.

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