Bills aiming to crackdown on money laundering, financing of illicit activities subject of subcommittee hearing

Witnesses testified before a House subcommittee on Wednesday about the impact that two bills would have on efforts to eliminate access to banks by terrorist organizations, human traffickers, and drug cartels.

The Financial Institutions and Consumer Credit and Terrorism and Illicit Finance Subcommittees heard testimony from a panel of witnesses about the End Banking for Human Traffickers Act and the Counterterrorism and Illicit Finance (CTIF) Act.

“From the Treasury Department down to local law enforcement, many moving parts are involved in thwarting the funding of terrorist activities and criminal schemes,” U.S. Rep. Steve Pearce (R-NM), the chairman of the subcommittee, said. “As the threat of terrorism evolves, so should the regulations that are used to detect and disrupt the illicit financing within our nation’s financial system.”

The End Banking for Human Traffickers Act would amend the Victims of Trafficking and Violence Protection Act of 2000 to add the secretary of the treasury to the President’s Interagency Task Force to Monitor and Combat Trafficking. Additionally, the Federal Financial Institutions Examination Council would be directed to review and make recommendations to enhance training procedures, anti-money laundering programs and procedures for referring human trafficking cases to law enforcement.

Meanwhile, CTIF would update the Bank Secrecy Act (BSA) to help financial institutions, small businesses, and law enforcement better identify and crackdown on financing for illicit activities. Reporting thresholds would be adjusted under the measure to ensure that quality, actionable information is provided the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

“The proposed change in reporting thresholds would be the most immediately and positively impactful in terms of increasing information usefulness and reducing burden,” Daniel Bley, the executive vice president and chief risk officer of Webster Bank, testified.

John Byrne, the president of Condor Consulting, testified that partners have struggled to find ways to provide useful information to law enforcers since the current anti-money laundering (AML) regime was implemented in 1986.

“We support the concept in the draft Counter Terrorism and Illicit Finance Act that would require the treasury secretary to set national priorities for our AML/CFT regime and study Treasury’s delegation of examination authority for complex, cross-border institutions that file a significant number of BSA reports,” William Fox, the managing director and global head of financial crimes compliance at Bank of America, testified.

Chip Poncy, the president and cofounder of the financial Integrity Network, said this marks a “pivotal moment” in the 48-year-long effort to combat illicit finance under BSA.

“As our counter-illicit financing efforts have expanded and become ever more important, they are also increasingly challenged — provoking fundamental questions of effectiveness, cost, roles and responsibilities, and, ultimately, sustainability,” Poncy said. “The combination of these developments necessitates fundamental reform of the BSA and the expanded AML/CFT regime it supports.”