In response to recent violent attacks in San Bernardino, CA and abroad, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, has re-introduced legislation to heighten accountability on financial institutions to improve anti-money laundering and counter-terrorism safeguards.
By holding bank executives personally liable and increasing penalties for willful and negligent violations of the Bank Secrecy Act, the measure would encourage banks to take appropriate steps to preserve the integrity of the U.S. financial system and to exercise good judgement and prudent behavior.
Specifically, H.R. 4242, entitled the “Holding Individuals Accountable and Deterring Money Laundering Act,” aims to strengthen the government’s ability to go after individuals for violations of the Bank Secrecy Act, which requires U.S. financial institutions to work with government agencies to detect and prevent money laundering and terrorism financing. Further, the measure makes bank executives personally liable for misconduct and explicitly gives regulators the tools to remove or permanently ban from the industry top bankers who violate the law.
"Given the recent horrific acts of violence carried out by the San Bernardino shooters, and with the Islamic State having demonstrated both the capacity and intention to export its brutality beyond the Middle East, the need to sharpen our anti-terrorism financing and anti-money laundering efforts has become increasingly urgent," said Ranking Member Waters. “While we do not have any evidence that financial institutions failed to do their due diligence regarding the San Bernardino shooters at this time, the track record of the largest financial institutions operating here in the United States makes clear that more must be done to cut off access to funds fueling terrorist attacks on innocent people here and abroad in these difficult, trying times. Enactment of this legislation would increase the deterrent value of our current anti-money laundering and counter terrorism financing framework, by increasing banks’ focus on these activities, strengthening the government’s ability to go after individuals when they violate the law, closing critical loopholes, encouraging and improving information sharing, while also empowering regulators with enhanced civil powers to hold banks accountable for misconduct.”
With the re-introduction of this bill, Waters continues her efforts to hold banks and individual executives accountable for allowing illicit funds to move through their institutions. As of its introduction last Congress, Waters’ legislation received support from a number of investor and civil society organizations, including the AFL-CIO, Citizens for Responsibility and Ethics in Washington (CREW), Global Financial Integrity, Global Witness, Government Accountability Project, Human Rights Watch, Jubilee USA Network, Oxfam America, U.S. Public Interest Research Group (U.S. PIRG).
Massive enforcement actions for sanctions violations and Bank Secrecy Act compliance failures against a number of banks has revealed that more must be done to ensure that financial institutions more effectively and proactively engage in behavior that promotes our national security. In recent years, the Department of Justice (DOJ) has executed numerous settlement agreements, levying billions of dollars in fines against the world’s largest financial institutions. The DOJ also found that some banks actively turned off anti-terrorism controls in order to accommodate financing to the worst actors, including terrorist groups, drug cartels, arms dealers, tax evaders and corrupt officials.