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Treasury Notes

 Importance of Cooperation with the Financial Industry to Combat Money Laundering

By: Anthony Reyes

Earlier this week, Under Secretary for Terrorism and Financial Intelligence David Cohen delivered remarks at the 24th annual Money Laundering Enforcement Conference in Washington, DC, where he discussed ongoing efforts by the U.S. Department of the Treasury to combat illicit finance and support the national security objectives of the United States. During the conference, which was hosted by the American Bankers Association and the American Bar Association, Under Secretary Cohen stressed the importance of the private sector as “an absolutely crucial partner in all aspects” of this mission.

Speaking about the necessary cooperation between regulators and banks, Under Secretary Cohen laid out the importance of ensuring the U.S. anti-money laundering (AML) regulatory framework is well-designed and appropriately tuned:

We all want our financial institutions to be able to comply with well-designed and sensibly implemented regulatory requirements without incurring undue burden.

And we all have been driving at this goal… The regulators have promulgated a range of rules designed to combat money laundering and terrorist financing. And the banks and other financial institutions have devoted substantial human and capital resources to compliance. 

This all highlights the importance of ensuring that the domestic AML regulatory framework is appropriately designed, and that compliance efforts are appropriately tuned to meet the real challenges that we face in combating money laundering and other forms of illicit finance. 

Under Secretary Cohen also described Treasury’s efforts to ensure maximum consultation and transparency with the private sector in its customer due diligence rulemaking process.  FinCEN issued an advance notice of public rulemaking earlier this year on an explicit customer due diligence obligation for financial institutions; one component of this would be to include a requirement to collect information on an account’s beneficial owner. Under Secretary Cohen explained why this is an important element of customer due diligence requirements: 

Our focus on beneficial ownership is the result of years of engagement with the financial services industry, law enforcement, international counterparts, NGOs, government agencies and Congressional committees – you name it – that all have emphasized one overarching point: Real financial transparency – that is, accurate information about who benefits from activity in an account – is essential to identifying elevated risks and stopping illicit activity and illicit actors.

Beneficial ownership information is invaluable to financial institutions seeking to understand their risk exposure and to ensure that illicit actors do not abuse their institutions.  And it is tremendously useful to regulators, law enforcement agencies and national security authorities seeking to deter, detect, and punish criminal conduct and protect our safety.

Under Secretary Cohen also spoke about Treasury’s plans to examine the U.S. AML framework by setting up a new task force composed of federal policymakers, regulators and enforcement agencies that will produce recommendations to address any identified gaps or redundancies in the regulations that have developed over the past four decades. To learn more about Treasury’s efforts to combat money laundering, terrorist financing, kidnapping for ransom, organized crime, and increase financial pressure on the Iranian regime, please read his complete remarks here.​

​Anthony Reyes is the New Media Specialist at the U.S. Department of the Treasury.

Posted in:  Terrorism and Financial Intelligence
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