The Anti-Money Laundering Act of 2020

Share this Article
Facebook Icon LinkedIn Icon Twitter Icon
Jason B. Freeman

Jason B. Freeman

Managing Member


Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

In January of 2021, the Anti-Money Laundering Act of 2020 (AMLA) went into effect, marking the most significant changes to federal anti-money laundering laws since the USA Patriot Act of 2001. The AMLA represents an attempt to modernize the federal approach to fighting terrorism financing and money laundering.

This sweeping legislation contains some 56 sections.  Some of the most important changes are discussed below.

The AMLA Broadens the Purpose of the Bank Secrecy Act

The AMLA significantly broadens the scope of the Bank Secrecy Act (BSA). The BSA is a tool to fight financial crimes. It requires banks and other financial institutions to record transactions and file reports with the Department of Treasury. Law enforcement officers then analyze the reports to support their investigations into financial crimes.

Historically, the BSA has focused on combatting transactions that involve funds from certain illegal activities.  While the BSA has long served as a weapon against money laundering, the AMLA expanded the BSA’s purpose to emphasize the prevention of terrorism-related financing.

By broadening the scope, the AMLA recognizes the difference between these crimes and the importance that identifying the parties to a transaction plays in preventing both.

The AMLA is a Response to the Rise in Cryptocurrency

With the rise of the cryptocurrency market, the AMLA also expanded several definitions in an attempt to adapt to new phenomena such as cryptocurrency. The term “value that substitutes for currency” has been added to the definitions of financial institutions and money transmitting businesses.

This insertion is a response to virtual currency and the perception that cryptocurrency plays an integral role in money laundering and funding terrorism. As a result, the AMLA requires entities to report certain cryptocurrency transactions and transmissions to the Department of Treasury.

The AMLA also expanded the definition of “financial institution” to include people engaged in the trade of antiquities, like historical artifacts. This change was a response to terrorist organizations and sympathizers that may sell stolen and pillaged antiquities to fund terrorism.

Risk-based Programs are the Cornerstone

It is clear from the AMLA that Congress favors a risk-based approach to anti-money laundering and funding terrorism. As such, the purpose of the BSA was also expanded to develop a risk-based program based on priorities determined by the Department of Treasury.

As a result, financial institutions must change how they look at each client and transaction, and they must ultimately incorporate these priorities into their own internal risk-based programs.

Congress also required that the Department of Treasury set minimum anti-money laundering and terrorism financing standards that are evaluated during compliance examinations. The risk-based programs must be:

These standards emphasize the importance of a risk-based system that uses resources efficiently, instead of a system that requires the same amount of reporting across the board.

The AMLA Modernizes Federal Anti-Money Laundering Efforts

The AMLA modernizes anti-money laundering efforts well beyond just incorporating cryptocurrency and a broadened scope. It imposes new ultimate beneficial ownership reporting requirements.  It also requires that the Department of Treasury develop a rule for testing technology used for BSA compliance. Furthermore, it mandates the creation of a BSA Advisory Group subcommittee on innovation and technology and that the Department of Treasury perform a financial technology assessment.

The AMLA Expands Law Enforcement Powers

In addition to modernizing the law to match our technological era, Congress emphasizes a prioritization of prosecuting money laundering. The AMLA significantly broadens enforcement and investigation powers under the BSA and allows the Department of Treasury and Department of Justice to subpoena any record relating to the correspondent account.

This is true even if it is a foreign bank account with a correspondent banking account in the US. Additionally, the government can also subpoena records entirely maintained outside of the US during certain categories of investigations.

The AMLA Increases Civil and Criminal Penalties for Violations

Congress also increased penalties for violating the BSA. The civil penalty under 31 U.S.C. section 5321 now includes additional fines for repeat violations. The fine is now set at either three times the profit gained or losses avoided, or two times the maximum penalty, whichever is greater. Additional sanctions, including a fine equal to the profit gained from the violation, were also added as the criminal penalty under 31 U.S.C. section 5322.

The increased penalties and broadening of enforcement and investigation powers reflect a Congressional effort to prioritize efforts to combat money laundering and the funding of terrorism. The AMLA provides a renewed focus on technology and risk-based programs.


Money Laundering Defense

Freeman Law assists clients in anti-money laundering (AML) compliance and defends clients’ interests in white-collar matters involving allegations of money laundering and Bank Secrecy Act violations. Schedule a consultation or call (214) 984-3000 to discuss your money laundering allegations or concerns.