Holding Individuals Accountable and Deterring Money Laundering Act

Short title— This Act may be cited as the “Holding Individuals Accountable and Deterring Money Laundering Act”.

Table of contents— The table of contents for this Act is as follows:

Money laundering is a serious threat to our national and economic security. The scale, efficiency, and complexity of the U.S. financial system make it a prime target for those who seek to conceal and move the proceeds of illicit activity.

The spate of recent high-profile enforcement actions against some of the largest and most sophisticated financial institutions raises troubling questions about the effectiveness of U.S. domestic anti-money laundering and counter-terrorism financing regulatory, compliance and enforcement efforts.

Money launderers have proven to adapt quickly in order to avoid detection. U.S. anti-money laundering laws and regulations must be rigorously reviewed and constantly updated to close loopholes and address the changing tactics employed by bad actors.

Given the global nature of money laundering and terrorist financing and the increasing interrelatedness of the global financial system, a secure global framework is essential to the integrity of the U.S. financial system.

Efforts to stanch the flow of illegal money across the world to drug cartels and terrorist organizations should be a top U.S. priority. To achieve this mission, extensive collaboration among financial regulators, the Department of Treasury, the Department of State, the Department of Justice and state and federal law enforcement agencies is required.

U.S. anti-money laundering laws should meet international standards set by the Financial Action Task Force.

Without serious consequences for institutions and individuals who fail to protect financial institutions from illicit financial activity – including significant fines, banning individuals from the industry, and prison sentences for those who seek to actively evade anti-money laundering controls, financial institutions and individuals will continue to avoid compliance with U.S. anti-money laundering rules and regulations.

Effective anti-money laundering programs must emphasize sound corporate governance including business line accountability and clear lines of legal responsibility for individuals, including board members and chief executive officers.

Avoiding money laundering risks requires an effective anti-money laundering program and a strong institutional compliance culture, with written standards, knowledgeable and adequate staff, strong monitoring processes, effective anti-money laundering training, and compensation structures that reward compliance.

Anti-money laundering deficiencies often reflect weaknesses in the management of a financial firm, which can in turn adversely affect the firm’s overall safety and soundness. Failure to account for management deficiencies in this context may perpetuate a false perception of the stability of financial firms.

Anti-money laundering examinations in recent years at times failed to recognize the cumulative effect of the violations they cited, instead narrowly focusing their attention on individual banking units. The failure to review the cumulative effect of such violations permitted national banks to avoid and delay correcting problems, which allowed massive problems to occur before serious enforcement actions were taken.

Independent contractors often play a central role in monitoring and auditing the overall adequacy and effectiveness of a bank’s compliance program under the Bank Secrecy Act. Any failure to hold these independent entities to the same standard as any other party who participates in the affairs of a bank may jeopardize the efficacy of a bank’s anti-money laundering program.

Collaboration is an essential component of the U.S. strategy against money laundering, and is critical to our national security. U.S. law enforcement agencies are most effective when they work together by sharing information, insight, and data.

The flow of information related to suspicious activity from financial institutions to law enforcement plays a key role in facilitating the disruption of terrorist networks that seek to harm the United States. The flow of such information depends on a high degree of certainty that financial institutions will be protected from civil liability when sharing such information with federal law enforcement agencies.

Whistleblower rights and protections play an important role in helping to ensure corporate integrity. Robust protections for whistleblowers and enhanced rewards for informants will incentivize compliance with anti-money laundering rules and procedures, and encourage the provision of valuable information to regulators and law enforcement agencies.