By Ashleigh Subramanian-Montgomery
On May 13, 2022, the Treasury Department published their 2022 National Strategy for Combatting Terrorist and Other Illicit Financing (2022 Strategy) and accompanying Press Release. The 2022 Strategy aims to enhance the United States (U.S.) framework on anti-money laundering/countering the financing of terrorism (AML/CFT) and provides a roadmap for enhancing transparency within the U.S. financial system. The 2022 Strategy’s overarching aim “is to encourage continued efforts to modernize the U.S. AML/CFT regime so that the public and private sectors can effectively focus resources against the most significant illicit finance risks.”
The 2022 Strategy provides recommendations to address the key risks and challenges raised in Treasury’s 2022 National Proliferation Financing, National Money Laundering, and National Terrorist Financing Risk Assessment (NTFRA), known together as the National Risk Assessments (NRAs). The Press Release announcing the Treasury’s publication of the NTFRA stated that the 2022 Strategy would be “a plan directly informed by the analysis contained in the risks assessments.”
The Charity & Security (C&SN) facilitated stakeholder input for the 2022 Strategy by submitting comments and suggestions to Treasury on March 3, 2022. This included three measures that could serve to enhance the proportionality of CFT measures and avoid the kind of operational disruptions that result from the current framework. C&SN also developed five recommendations ahead of the release of the 2022 Strategy.
The 2022 Strategy identifies the role of the U.S. AML/CFT regime, including its operational and legal framework, in combating illicit finance vulnerabilities and risks. To achieve the overarching aim of equipping the private and public sectors to utilize resources to combat the most pressing illicit finance vulnerabilities and risks through modernization of the U.S. AML/CFT regime, the 2022 Strategy lays out the following four priorities:
- “I. Increase transparency and close legal and regulatory gaps in the U.S. AML/CFT framework.
- II. Continue to make the U.S. AML/CFT regulatory framework for financial institutions more efficient and effective.
- III. Enhance the operational effectiveness of law enforcement and other U.S. government agencies in combating illicit finance.
- IV. Enable the benefits of technological innovation while mitigating risks.”
The 2022 Strategy promotes non-governmental organizations’ (NGOs) modus operandi on financial inclusion: “A more transparent and efficient international financial system and AML/CFT framework should not be a barrier to increased financial access for legitimate uses.” It discusses how “’de-risking’, is not only economically inefficient, but also has negative implications for AML/CFT”, such as how “the lack of financial access for charities providing humanitarian assistance to conflict zones can make their critical work even more challenging.” This is a welcome addition to the 2022 Strategy, as nonprofits (NPOs) have been expressing these sustained and enhanced financial access issues with Treasury for some time, and their recognition and inclusion is appreciated.
C&SN applauds the risk-focused progress and the steps Treasury is taking to address the key risks and challenges identified in the NTFRA. Likewise, Treasury is encouraged to include NPOs in all stages of the forthcoming updates to AML program rules and to AML/CFT guidance, including the Federal Financial Institutions Examination Council (FFIEC) [Bank Secrecy Act] BSA/AML examination manual; to enhance the proportionality of CFT measures and avoid the kind of operational disruptions that result from the current framework; to support NPOs in the development of a Global General License; and to provide NPOs the opportunity to comment on a draft of the upcoming ‘Derisking Strategy’.
C&SN appreciates Treasury’s ongoing commitments to engaging NPOs; to continued application of a risk-based approach (RBA) to AML/CFT compliance; to modernizing the policy approach and operational architecture for sanctions use; and to addressing de-risking.