Lack of clear data on beneficial ownership is named as one of the “serious gaps” in the US anti-money laundering regime, according to FATF's first Mutual Evaluation report in 10 years.

The Financial Action Task Force (FATF) in the US has published a report on the current state of anti-money laundering and combating the financing of terrorism (AML/CFT) measures in place in the US. The Mutual Evaluation Report on AML/CFT found that there is a well-developed and robust AML/CFT regime in place in the US, although the system has “serious gaps that impede timely access to beneficial ownership information”. Beneficial ownership (BO) was one of the key issues highlighted in the report.

The US is at substantial risk of money laundering due to its global dominance and also the large volume of daily transactions. The report notes that the “unique openness and global reach of its financial system” also expose the US to significant terrorist financing risks. However, the US is highly effective in tackling these risk areas and it proactively and aggressively investigates, prosecutes and convicts individuals for terrorist financing. In 2014, it confiscated more than $4.4 billion and there are about 1,200 money laundering convictions each year. The report says: “The US appears to have kept terrorist funds out of its financial system to a large extent by effectively implementing targeted financial sanctions.”

3 fundamental improvements

The last Mutual Evaluation on AML/CFT was conducted in 2006 and the latest report found that national coordination and cooperation on AML/CFT issues have improved significantly since then. However, the report noted some areas in which “fundamental improvements” are necessary:

1. It found there are “significant gaps” in risk mitigation through the regulatory framework, “including minimal coverage of investment advisers, lawyers, accountants, real estate agents, trust and company service providers (other than trust companies).”
2. There is also a significant supervisory gap due to the lack of comprehensive AML/CFT supervision for other designated non-financial businesses and professions.
3. It also noted “serious gaps” in the legal framework, which prevent access to accurate BO information in a timely manner. The report notes that: “Lack of timely access to adequate, accurate and current BO information remains one of the fundamental gaps in the U.S. context. The NMLRA identifies examples of legal persons being abused for ML, in particular, through the use of complex structures to hide ownership.”