Enablers Act Places Due Diligence at the Forefront

In late 2022, U.S. lawmakers made significant progress towards what has been deemed “the most significant reform to America’s anti-money laundering laws in 20 years.”

By Brandon Silver, Associate | Due Diligence Practice

The Enablers Act, a bill introduced in October 2021 in response to the Pandora Papers investigation by the International Consortium of Investigative Journalists (“ICIJ”), would, for the first time, require trust companies, lawyers, antiquities dealers, and other third parties to investigate clients looking to move money and/or assets through the American financial system. The bill amends the 1970 Bank Secrecy Act that currently requires banks to vet their clients and closes what has been described as a loophole by financial crime watchdogs. Individuals and entities covered under the law will also be required to report suspicious activity to the U.S. Treasury.

Rep. Joe Wilson (R – S.C.), a co-sponsor of the bill, said, “Middlemen in foreign transactions should be subject to the same anti-money laundering checks as banks, and this brings us one step closer.”

The House Armed Services Committee voted to include the Enablers Act in the National Defense Authorization Act for 2023 (“NDAA”), a broad policy bill passed annually that lays out the budget for the Department of Defense. The NDAA with the inclusion of the Enablers Act passed a House of Representatives vote on July 14, 2022. This move makes it more likely that the bill will become law.

The ICIJ states that the Enablers Act will help “reign in” the many unregulated service providers such as attorneys, corporate service companies, and registered agents that typically act as entry points of foreign wealth into the U.S. Real estate transactions, however, are not covered by the bill.

If the Enablers Acts becomes law, numerous businesses will be impacted and required to conduct additional Know-Your-Customer (KYC) Screening. Prescient has extensive experience in this area and stands ready to support companies in their vetting efforts for U.S. and international subjects.