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Key financial regulators in the US are set to receive a budget boost in 2025, as the lawmakers look to strengthen the nation’s financial crime-fighting capacity.
Earlier this month, the Senate Appropriations Committee unanimously approved a spending bill that earmarks $2bn to the Department of the Treasury for FY2025.
Once signed into law by President Joe Biden, the bill will secure a $160m funding increase for agencies within the Treasury.
Among those that will benefit are the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).
FinCEN’s budget will be increased by more than $25m, bringing it to a total of $215m — a 12 percent increase over FY2024.
Meanwhile, OFAC’s budget will be increased by almost $10m to $235m — a 4 percent increase over the same period.
Patty Murray (D-WA), chair of the Senate Appropriations Committee, said the increased funding is necessary for Treasury agencies to combat money laundering and safeguard the US financial system from abuse by illicit actors.
Murray added that the investments will maintain the Treasury's ability to craft, implement and enforce sanctions, including the “historic” sanctions programme against Russia’s war in Ukraine.
One exception to the funding boost is the Internal Revenue Service (IRS), which is a Treasury agency but whose funding is allocated separately.
The bill earmarks an annual budget of $12.3bn to the IRS — the same amount that was allocated in the previous year.
Within the Department of Justice (DOJ), the Federal Trade Commission (FTC) is also set to receive a budget boost of $24m, bringing its total budget to $450m in FY2025.
Erica Hanchiak, government affairs director at the Financial Accountability and Corporate Transparency (FACT) Coalition, welcomed the committee’s approval of the bill.
“When dirty money is allowed to flow through the US financial system with impunity, it is American communities and legitimate businesses that pay the price,” she said.
“This bill shows that Senate appropriators understand this unfortunate reality, and the vital role that Treasury plays in cracking down on transnational money laundering, sanctions evasion and other illicit activities.”
New responsibilities for FinCEN
Hanchiak added that the additional funding will help to support FinCEN as it begins enforcing new regulations, such as those introduced by the Corporate Transparency Act.
On January 1, 2024, FinCEN began accepting beneficial ownership reports for the first time under the Corporate Transparency Act, which was passed by lawmakers in 2021.
Aiming to identify and disrupt illicit finance schemes, the act requires most companies that do business in the US to report information about the individuals who ultimately own or control them.
Reporting companies created or registered to do business in the US before January 1, 2024 must file by January 1, 2025.
Reporting companies created or registered to do business in the US in 2024 have 90 days to file after receiving actual or public notice that their company’s creation or registration is effective.
Hanciak said that FinCEN’s new beneficial ownership information registry will help to combat the use of anonymous US shell companies for money laundering purposes.
“This is an important step toward protecting the US financial system, but we need a multiyear investment to make sure we’re able to counter twenty-first century threats with twenty-first century tools,” she said.
Earlier in the year, a group of 30 lawmakers echoed Hanciak’s concerns in a letter to Senators Chris Van Hollen (D-) and Bill Hagerty (R-), chair and ranking member of the Subcommittee on Financial Services and General Government.
“We respectfully request as much funding as possible in our current budgetary situation for FinCEN in FY2025,” they said.
“Money laundering tactics range from the simplicity of smuggling bundles of cash across the border to more complex methods involving shell companies, international trade, digital assets and high-end real estate.
“FinCEN should have the tools it needs to combat more sophisticated methods of money laundering.”
In the second half of 2024, the Treasury is also set to finalise new additions to US anti-money laundering (AML) rules that would bring real-estate businesses and investment advisors in scope for the first time.
In February 2024, FinCEN issued new proposed rulemakings that would require these entities to establish an AML and counter-terrorism financing (CTF) programme and file suspicious activity reports (SARs).
Once finalised, the rules will bring the US more closely into line with the recommendations of the Financial Action Task Force (FATF), the global AML watchdog.
FATF recommends that all jurisdictions regulate so-called tranche-two entities, such as lawyers, accountants, realtors and precious metals dealers, for AML purposes.
Currently, only five jurisdictions worldwide do not regulate these entities, namely China, Haiti, Australia, Madagascar and the US.
Like the US, and as covered by Vixio, Australia is also moving toward regulating tranche-two entities in its latest proposed reforms to its AML legislation.
