Dirty Money Comes Clean: U.S. aims to tighten regulations to prevent money laundering, due diligence remains the anecdote

The U.S. Department of Treasury is making moves to step up its vetting requirements in a recent push to prevent money laundering amongst American financial institutions. These new regulations, if passed, would require certain investment advisors to verify their customers’ identities and maintain records associated with their process. This seems like a no brainer, begging the question, how is this not already happening? If the Department of Treasury isn’t vetting and verifying these transactions, who is? In short, you. When it comes to moving money and transferring funds, taking matters into your own hands is the best way to keep them clean. By performing background checks you can ensure dirty money doesn’t wind up soiling your business and reputation. To date, enhanced due diligence is the anecdote to unreliable and wavering regulations.  

This concept isn’t new and it’s not the first time the U.S. has attempted to tighten regulations. It's been bubbling up for some time and has already been twice proposed but later abandoned due to industry pushback, according to the Wall Street Journal. The new vetting regulations would further bolster the U.S. Treasury Department’s new rule requiring investment advisors and financial institutions to identify and report any transactions that seem suspicious. Both rules would apply on the federal level to advisers registered with the SEC, while advisers registered on the state level would remain unaffected. Another reason performing your own due diligence is essential at any level. 

Both the U.S Securities and Exchange Commission and FinCEN have teamed up in this latest effort, with their recent proposal designed to broaden existing identification and vetting requirements for broker-dealers and mutual funds. If passed, it supports a larger mission by the U.S. to prohibit and prevent money laundering schemes from using investment advisory firms, corporate entities, and the real-estate transactions to obfuscate dirty money. 

Motivated by a new Congressional legislation passed in 2021, which mandates FinCEN maintains a corporate ownership registry and follows anti-laundering practices, the U.S. is adamantly putting guard rails into place to prevent foreign entities based in adversarial countries such as Russia and China from passing money through U.S. venture-capital and other investment firms, keeping national security the north star as new technologies continue to threaten it. 

Laundered money is often connected to corruption, fraud, and tax evasion and with these new regulations in place the U.S. hopes to safeguard itself against financial crime and the passage of dirty money through our national financial systems. Unfortunately hope is not the guarantee your business needs. 

When in doubt, vet it out. Proper vetting and due diligence is the best way to detect and prevent money laundering on any scale. Take a page from the SEC and FinCEN and ensure your money and investments are clean and cleared for trade. From traditional AML checks to a full suite of due diligence solutions, Intelligo has you covered. Schedule a demo today. The future of your business depends on it.