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Reps. Royce and Gonzalez Kickstart Bipartisan Effort to Crack Down on Money Laundering and Terrorism Financing

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Washington, November 13, 2017 | comments

WASHINGTON, D.C. – Today, U.S. Representatives Ed Royce (R-CA) and Vicente Gonzalez (D-TX) introduced H.R. 4373, the bipartisan Anti-Money Laundering and Counter-Terrorism Financing Modernization Act or the AML and CTF Modernization Act which strengthens the United States anti-money laundering (AML) and counter-terrorism financing (CTF) system. 

“Financial criminals and terrorists have evolved in the decades since our anti-money laundering regime was built but our regulatory structure hasn’t kept pace,” said Rep. Royce. “By some estimates, nearly 70 percent of spending on AML compliance is focused on inputs over outcomes. This does little to thwart criminal syndicates, rogue nations, and terrorist networks but it strips away resources that could be better spent on new technologies and other innovations to support national security. The AML and CTF Modernization Act will refocus our regime on quality over quantity, providing new tools to assist law enforcement.”

Rep. Royce also echoed previous calls for passage of legislation to combat anonymous shell companies involved in money laundering saying, “Tackling beneficial ownership is an essential part of comprehensive reform.” Specifically, he is a cosponsor of the bipartisan Corporate Transparency Act, sponsored by Reps. Carolyn Maloney (D-NY) and Peter King (R-NY).

“Money laundering poses a serious threat to the legitimacy and stability of our local, national, and international financial institutions,” said 
Rep. Gonzalez. “The Anti-Money Laundering and Counter Terrorism Financing Modernization Act establishes a protocol that allows banks to share targeted information without liability; requires regulators to produce rulings that will advance financial institutions’ ability to abide by Anti-Money Laundering and Counter-Terrorism Financing regimes; and will require the U.S. Department of the Treasury to share helpful Anti-Money Laundering and Counter-Terrorism Financing intelligence that would empower our financial institutions to fight against money launderers. Enacting this important legislation will bolster the transparency and efficiency of our financial system while enhancing our ability to prevent money laundering schemes in a timely manner.” 


In July, Representatives Royce and Nydia Velázquez (D-NY) sent a letter to the Treasury Secretary with several recommendations for improving the U.S. AML regime. Several of their recommendations are contained in the legislation introduced today, including adjusting for inflation the thresholds for filing suspicious activity reports (SARs) and currency transaction reports (CTRs) which haven’t been updated since 1996 and 1972, respectively.  Doing so would reduce the number of filings which now total over 55,000 per day and allow FinCEN to prioritize those of the highest law enforcement and national security consequence.

H.R. 4373 would expand the ability of financial institutions to share suspicious activity reports within their organization to improve enterprise-wide risk management and require the Treasury Department to improve qualitative feedback for financial institutions and Federal financial regulators on their AML/CTF efforts. Lastly, the legislation would improve FinCEN’s administrative rulings process and require Treasury to explore the potential for artificial intelligence, machine learning, and other technologies to help detect and prevent money laundering and terrorist financing. Rep. Royce gave keynote remarks at the Bipartisan Policy Center in September about his efforts to curb money laundering and terrorism financing. You can watch his remarks HERE

Last week, Rep. Royce questioned the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, Sigal Mandelker, at a Subcommittee hearing where he asked her about adjusting the threshold for SARs and CTRs, to which the Under Secretary responded by calling on Congress to go even further, saying “I think it’s time for us to revisit the [anti-money laundering] regime writ large.  We have to get out of the 1970s and the 1990s and move way past 2017…” You can watch the video from that hearing HERE.

Rep. Royce is Chairman of the House Foreign Affairs Committee and both Rep. Royce and Rep. Gonzalez are members of the House Financial Services Committee. Full text of the bill can be viewed HERE and a section-by-section can be found HERE.

For more information, contact:
Steven Smith (Royce) at or (202) 225-4111
Aryn Fields (Gonzalez) at or (202) 225-2531

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