Regarding assets belonging to Senior Foreign Officials, Section 6313 of the AML Act of 2020 prohibits the concealment of the source of those assets in monetary transactions or involving Institutions of primary Money Laundering concern as two new criminal offenses.  Both offenses are punishable by a fine of up to $1,000,000 or 10 years of imprisonment, or both.
 

The Criminal Offenses

  1. Senior Foreign Political Figures:  The Act specifically prohibits a person from knowingly concealing, falsifying or misrepresenting, or attempting to conceal, falsify or misrepresent, from or to a financial institution, a material fact concerning the ownership or control of assets involved in a monetary transaction if  the person or entity who owns or controls the assets is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure and the aggregate value of the assets involved in one or more monetary transactions is not less than $1,000,000.
  2. Primary Money Laundering Concern:  The Act also prohibits the knowing concealment, falsification, or misrepresentation of a material fact concerning the source of funds in a monetary transaction that involves an entity found to be a primary money laundering concern.   A violation of this provision is punishable by up to ten years’ imprisonment and up to $1 million in penalties (or both), and subject to criminal and civil forfeiture of assets.

Definitions under Section 6313

  • MONETARY TRANSACTION:  the term the term ‘monetary transaction’ means the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument by, though, or to a financial institution, includes any transaction that would be a financial transaction.  
  • PROHIBITION: No person shall knowingly conceal, falsify, or misrepresent, or attempt to conceal, falsify, or misrepresent, from or to a financial institution, a material fact concerning the ownership or control of assets involved in a monetary transaction if  the person or entity who owns or controls the assets is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure, and  the aggregate value of the assets involved in one or more monetary transactions is not less than $1,000,000.
  • SOURCE OF FUNDS: No person shall knowingly conceal, falsify, or misrepresent, or attempt to conceal, falsify, or misrepresent, from or to a financial institution, a material fact concerning the source of funds in a monetary transaction that involves an entity found to be a primary money laundering concern.
  • PENALTIES: A person convicted of an offense or a conspiracy to commit an offense shall be imprisoned for not more than 10 years, fined not more than $1,000,000, or both.

Does your Financial Institution Know its Clients?

Financial Institutions need to figure out if senior foreign political figures (or their family members or close associates) and entities found to be of primary money-laundering concern are in their client roster. 

Financial institutions should evaluate the effectiveness of their existing KYC and BSA/AML process and ensure the process is working to document these types of clients and monitor their activity.

To the extent that a Financial Institution does not have a sound process in place, it should immediately consult with a Corporate Governance Expert.

Who is your Corporate Governance Expert? 

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