Treasury Notes

 Financial Action Task Force Report Recognizes U.S. AML CFT Leadership, Action Needed on Beneficial Ownership

By: Jennifer Fowler


​The United States has long been a leader in the global effort to develop, implement and promote the strong anti-money laundering and counter terrorist financing regimes (AML/ CFT) that are critical to protecting the international financial system from those who want to use it for illicit means.  In support of this global effort, the Financial Action Task Force (FATF) — the international standard-setting body for AML/ CFT — established global AML/ CFT standards and regularly conducts peer reviews, also called mutual evaluations, to ensure compliance with the standards.  Today, the FATF published its Mutual Evaluation Report of the United States.

The report acknowledges our strong AML/ CFT regime and recognizes the success of the government architecture we have built since September 11, 2001 to cut off the flow of funds and resources to terrorists and their supporters.  The United States received the highest ratings possible for our efforts to combat terrorist financing by using both criminal prosecutions and financial sanctions against terrorist financiers and supporters.  The report notes the strong collaboration and information sharing between the intelligence community and law enforcement, the formation of specialized units focused on investigating and prosecuting terrorist financing activity, and our robust use of sanctions to prevent terrorists from accessing the U.S. and global financial system. 

We also received the highest rating for our efforts to combat the financing of proliferation of weapons of mass destruction, and for our efforts in pursuing civil and criminal asset forfeiture to deprive criminals of their illicit proceeds.

While the report recognizes areas where the United States excels, it also identifies areas where we have more work to do.  We received the lowest rating for our efforts to prevent criminals from using legal entities, or companies, to hide and move money or carry out illicit schemes.   FATF based its rating primarily on the lack of a requirement in the United States to disclose the identity of the person who owns or controls a company – also known as the beneficial owner – to the government when the company is formed. 

Earlier this year, the Department of the Treasury published the final Customer Due Diligence Rule requiring financial institutions to collect beneficial ownership information when they open an account for a company, but beneficial ownership legislation is also needed to collect beneficial ownership information when companies are formed.  The Treasury Department has advocated for the passage of such legislation for 10 years but putting such a law in place will require Congressional action.

Most recently, in May 2016, the Obama Administration sent to Congress proposed legislation that would require companies formed within the United States to file beneficial ownership information with the Treasury Department, or face penalties for failure to comply.  This legislation has not been introduced, and without it, the United States continues to lag behind our global partners in preventing the flow of illicit money through our banking system and financial markets.

The United States has an unmatched AML/ CFT regime, but there is room for improvement.  We will continue to work with Congress on beneficial ownership legislation, while continuing to demonstrate leadership in the global effort to protect the international financial system from abuse.

Jennifer Fowler is the Deputy Assistant Secretary for Terrorist Financing at the Department of Treasury.

Posted in:  AML/CFT
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