January 9, 2018 / 6:11 PM / 2 months ago

Senator Warren says U.S. needs to 'rethink' money laundering laws

WASHINGTON, Jan 9 (Reuters) - Democratic Senator Elizabeth Warren said on Tuesday the United States needed to review outdated laws for combating money laundering which are creating an undue compliance burden for small and community banks.

During a Congressional hearing on Tuesday, Warren said she supported more stringent company ownership disclosure requirements and changing the threshold for reporting suspicious transactions in order to make life easier for small lenders and law enforcement.

“Money laundering is a massive problem ... so everything we can do to crack down on that is good and that’s what we should be doing,” the Massachusetts lawmaker told the Senate Banking Committee. “But it seems to me we need to rethink a lot of our money laundering laws some of which ... were written back in the 1970s and are badly out of date.”

The Committee hearing was the first of two to be held on U.S. anti money-laundering laws (AML), most of which were written in the 1970s and are out of step with the current financial landscape.

Much of the burden for identifying the proceeds of crimes such as tax evasion and human trafficking falls on the banking industry, which is required to monitor financial flows and produce millions of reports flagging suspicious transactions to the authorities.

U.S. watchdogs have dished out more than $16 billion in fines for AML compliance failings since the end of 2009, while banks globally spent an estimated $12 billion on AML compliance programs in 2016, according to data compiled by consultancy Quinlan & Associates.

Warren and others on the Committee agreed that updating broader money laundering laws, that would apply to bank clients and other intermediaries, could help make AML laws more effective while reducing the burden on banks.

Democratic Senator Mark Warner also called on the Committee to take a closer look at the implications of the rise of anonymous digital currencies such as bitcoin for combating money laundering, noting lawmakers needed to “get ahead” of the issue. (Reporting by Michelle Price; Editing by Susan Thomas)

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