The Financial Action Task Force (FATF), the leading international body setting standards for anti-money laundering and combating the financing of terrorism, has upgraded the United States’ compliance rating to “largely compliant” concerning beneficial ownership transparency. This rating focuses on legal entities and is outlined in FATF Recommendation 24. This increase is a major boost for US authorities who have strived to enhance financial transparency and tackle financial crime.

Recognition of Proactive Measures – US Enhances Financial Transparency

In its Seventh Enhanced Follow-Up Report, the FATF acknowledged the significant strides made by the US Treasury to bolster transparency around the beneficial ownership of corporations. This progress is part of a broader initiative to fortify the American anti-money laundering and counter-terrorism financing (AML/CFT) framework.

The FATF are proactive in their approach to tackling financial crime, continuously monitoring how criminal networks and individuals will use and move their funds. Its essential authorities across the globe put effective measures in place to stop the movement of illicit funds. Upgrading the United States compliance rating shows the good work being done to implement effective measures and close down the criminal networks.

One of those networks was run by a former senior vice president of a bank. Gyanendra Asre was an experienced specialist in anti-money laundering, he managed to manipulate several high profile transactions securing the passage of $1 billion through credit union and other entities. A major win for the US authorities and this further highlights the concerted efforts made to tackle financial crime.

The upgrade of status and recognition from the FTAF coincides with the US’ authorities efforts to combat money laundering. The Biden administration introduced the Beneficial Ownership Registry, an initiative aimed at tackling financial crime which was and is a huge boost for businesses working within the finance and legal sector.

Treasury’s Decade of Dedication

Secretary of the Treasury Janet L. Yellen highlighted the persistent efforts spanning nearly ten years, involving various government agencies, aimed at curbing the flow of illicit funds through undisclosed company ownerships. “As the world’s largest economy, we have a unique responsibility to safeguard our financial system from criminal exploitation. We’re fully committed to strengthening the implementation of the FATF’s global standards as we work to advance transparency and fairness across the U.S. financial system,” Yellen stated.

Legislative Steps and Ongoing Implementation

The report elaborated on the measures taken to address previous shortcomings in the US AML/CFT regime, particularly those related to Recommendation 24. A significant development has been the enactment and ongoing enforcement of the Corporate Transparency Act. This bipartisan law mandates that many businesses operating in the US disclose key ownership details to the Financial Crimes Enforcement Network (FinCEN), aiming to prevent the misuse of anonymous entities by nefarious actors.

Educational Outreach and Future Compliance Deadlines

The Treasury has not only made significant headway in implementing the Corporate Transparency Act but has also launched extensive educational campaigns targeting small businesses. These initiatives aim to clarify the new reporting requirements, which stipulate that companies existing before 2024 must submit their beneficial ownership information to FinCEN by January 1, 2025. Newly established or registered companies in 2024 are given 90 days post-registration to comply with the reporting obligations.

This upgraded rating and the ongoing efforts underline the United States’ commitment to upholding and enhancing global financial standards, ensuring a transparent, fair, and secure financial environment domestically and internationally.