December 15, 2020
What's In the 2021 NDAA?
Last week, both houses of Congress passed the bipartisan National Defense Authorization Act (NDAA) for Fiscal Year 2021 which includes sweeping changes to the nation's anti-money laundering (AML) and Countering the Financing of Terrorism (CFT) regime. Many of the over fifty provisions that strengthen AML-CFT requirements are relevant to cryptocurrency businesses and financial institutions. While we wait for the President to sign or veto, let's discuss what the NDAA means for cryptocurrency businesses.
Highlights of the 2021 NDAA AML provisions include:
Most importantly for crypto businesses, Section 308 has a "digital currency" inclusion titled "value that substitutes currency or funds." This provision expands the definition of “currency or funds denominated in the currency of any country” to “currency, funds or value that substitutes for currency or funds.” This change in definition places cryptocurrencies in the same category as fiat currencies for purposes of AML regulations including the requirement to register as a money service transmitter. This language and the implications are consistent with Treasury's Financial Crimes Enforcement Network's (FinCEN) prior regulations.
- The 2021 NDAA establishes federal disclosure requirements of beneficial ownership information (defined for purposes of the 2021 NDAA as any individual who, directly or indirectly, either “(i) exercises substantial control over the entity” or “(ii) owns or controls not less than 25 percent of the ownership interest of the entity.”), including a requirement that reporting companies submit their beneficial owner(s) to a “secure, nonpublic database at the Financial Crimes Enforcement Network (FinCEN)”;
- The 2021 NDAA permits FinCEN to disclose confidential beneficial ownership information to (i) U.S. federal law enforcement agencies, (ii) a U.S. federal agency requesting information on behalf of a non-U.S. law enforcement agency, or (iii) with the consent of the reporting company, a financial institution in order to meet customer due diligence requirements imposed by law;
- The 2021 NDAA requires streamlined, real-time reporting of Suspicious Activity Reports (SARS);
- The 2021 NDAA establishes a Subcommittee on Innovation and Technology within the Bank Secrecy Act Advisory Group to encourage and support technological innovation in the area of AML and countering the financing of terrorism and proliferation (CFT);
- The 2021 NDAA expands the definition of financial institution under the BSA to include dealers in antiquities; and;
- The 2021 NDAA requires federal agencies to study the facilitation of money laundering and the financing of terrorism through the trade of works of art.
Who is TRM Labs and How Can We Help?
Cryptocurrency businesses are constantly adjusting to an ever changing regulatory landscape. The 2021 NDAA is just the latest example. TRM Labs (TRM) provides the next generation blockchain analytics software to protect your business from malicious actors and meet regulatory obligations. Our mission is to prevent cryptocurrency fraud and build a safer financial system for billions of people.
We help government agencies, cryptocurrency businesses, and financial institutions trace the source and destination of funds in any digital asset, monitor transactions, and create cross-chain profiles for crypto-related entities like exchanges. Our team of world class data scientists, investigators and anti money-laundering experts have created the next generation tool for monitoring the blockchain to prevent malicious activity and keep the cryptocurrency ecosystem safe for the world.