The Ripple Effects of FinCEN’s AML Act Implementation

The Anti-Money Laundering Act of 2020 (AMLA) represents the most significant shake-up of US AML regulation since the Patriot Act nearly two decades earlier. Passed as part of the National Defense Authorization Act, it introduced sweeping reforms intended to modernise the US financial crime framework, close long-standing loopholes, and give regulators and compliance teams stronger tools to fight money laundering and terrorist financing.

While the Patriot Act was about speed — responding to an urgent geopolitical and security crisis — the AMLA is about depth and sustainability. It addresses systemic weaknesses that criminals have exploited for years, while recognising that compliance must evolve in line with technology, globalisation, and the growing complexity of financial crime.

Two reforms stand out for the cultural and operational shifts they are already driving across financial institutions: the Corporate Transparency Act’s beneficial ownership reporting requirements and expanded whistleblower protections. Together, these reforms are reshaping not only compliance processes, but also the very culture of transparency and accountability within firms.

Beneficial Ownership Transparency: Closing a Long-Standing Gap

Beneficial ownership has always been a problem area in AML. Anonymous shell companies and layered corporate structures have been exploited to conceal illicit activity, from kleptocracy and tax evasion to sanctions evasion and terrorist financing. For decades, investigators have struggled to peel back these structures, often relying on incomplete public records, self-declarations, or documents that were difficult to verify.

The Corporate Transparency Act (CTA) tackles this challenge head-on by requiring most companies formed or registered in the US to disclose their ultimate beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The threshold is set at individuals who own 25% or more, or who exercise “substantial control” even without direct shareholding.

This information feeds into the Beneficial Ownership Information (BOI) Registry — a centralised database accessible to law enforcement, regulators, and, with customer consent, financial institutions. For compliance teams, this represents a genuine leap forward. Instead of manually piecing together ownership from patchy filings, there is now an authoritative source to check against.

Practical Impact on Onboarding and Due Diligence

Consider the onboarding of a client with multiple shareholders spread across jurisdictions, one of which is in a high-risk region. Previously, this could mean weeks of back-and-forth with the client, external databases, and even overseas company registries. Verifying who truly controlled the entity would be time-consuming, expensive, and often inconclusive.

With the BOI Registry, firms can now confirm beneficial ownership within minutes, reducing onboarding friction while raising confidence in their assessments. This efficiency means investigators can devote more time to higher-risk cases instead of being bogged down by routine verification.

Risk models also stand to benefit. Data from the registry can be integrated into transaction monitoring and customer risk scoring, helping to flag opaque or offshore structures for enhanced due diligence. In practice, this should mean fewer blind spots and stronger early detection of suspicious activity.

Legal Challenges and Ongoing Uncertainty

The registry’s implementation, however, has not been without obstacles. In 2024, legal challenges questioned the constitutionality of the reporting requirements, resulting in injunctions and exemptions for certain businesses. Although the Fifth Circuit Court of Appeals lifted one of the most significant blocks, some uncertainty remains as lawsuits continue.

For financial institutions, the message is still clear: the registry is moving ahead, and firms must adapt their processes accordingly. Waiting for the legal dust to settle risks falling behind. Compliance leaders should treat BOI integration as inevitable and begin planning for system updates, staff training, and revised policies now.

Whistleblower Protections: Shifting the Culture from Within

The second major reform under the AMLA is the strengthening of whistleblower protections. For too long, individuals inside firms have faced barriers — fear of retaliation, lack of trust in reporting channels, and uncertainty about outcomes — that discouraged them from raising concerns.

The AMLA not only expands protection to current employees, contractors, and even former staff, but also introduces a powerful incentive: financial rewards of up to 30% of penalties exceeding $1m in enforcement actions. This makes the US framework one of the most generous globally, echoing the success of whistleblower incentives in securities regulation under the Dodd-Frank Act.

For compliance teams, the implications are significant. Internal reporting may increase, meaning firms must ensure their reporting channels are visible, trusted, and effective. Investigations must be conducted fairly, and whistleblowers should be kept informed where possible to close the loop. Importantly, firms need to create a culture where speaking up is encouraged and valued — not stigmatised.

The Cultural Ripple Effect

Encouraging whistleblowing is about more than just compliance. It creates a deterrent effect: employees considering misconduct are less likely to act if they believe their peers feel empowered to report them. It also supports early intervention. Problems identified through internal channels are far easier to resolve before they escalate into regulatory breaches or reputational crises.

Building this culture means training managers to handle reports responsibly, communicating clearly about protections, and ensuring whistleblowers are not marginalised. Done right, it not only strengthens compliance but enhances overall corporate culture by embedding integrity and accountability.

Combined Impact: A Tighter Net Around Illicit Activity

Together, beneficial ownership transparency and whistleblower empowerment close two critical gaps in the AML ecosystem. The first removes a key method criminals use to hide illicit funds. The second makes it safer and more rewarding for insiders to expose wrongdoing.

The result is a tighter net around financial crime. Firms and regulators now enjoy greater transparency into the ownership of legal entities, while also benefiting from a growing number of insiders willing to raise concerns. Together, these complementary forces significantly reinforce the integrity of the compliance framework.

Operational Implications for Firms

Operationally, these reforms demand changes in process, technology, and culture.

• Verification becomes faster and more reliable, as registry data integrates into onboarding platforms and due diligence workflows.

• Risk scoring improves, as opaque structures and offshore entities are flagged earlier and more consistently.

• Internal reporting is likely to rise, requiring careful case management, confidentiality, and communication.

• Training and awareness become essential, ensuring staff understand both the new tools at their disposal and the protections available to them.

Compliance leaders must therefore adopt a holistic approach: updating systems, revising policies, and, crucially, reinforcing culture.

Global Comparisons and Lessons Learned

The US approach to beneficial ownership is not unfolding in isolation. Other jurisdictions have pursued similar paths, with varying outcomes.

• The UK’s People with Significant Control (PSC) register is public and easily accessible, but its accuracy has been questioned, and privacy concerns remain.

• The EU’s 5th Anti-Money Laundering Directive (5AMLD) mandated public registers, but subsequent court rulings have restricted access on privacy grounds, leading to a patchwork of models across Europe.

• In Asia-Pacific, progress is uneven. Some jurisdictions have moved towards transparency, while others remain opaque.

The US model — a confidential, federal-level register with controlled access — strikes a middle ground between transparency and privacy. Its evolution will be closely watched by other regulators and may shape global norms.

Looking Ahead: Integration and Innovation

FinCEN has already signalled that the BOI Registry could be integrated with other datasets, including suspicious activity reports (SARs), sanctions lists, and transaction data. Such integration would create a richer intelligence picture, enabling both regulators and institutions to identify patterns of illicit activity more effectively.

There is also talk of revisiting exemptions to close loopholes that criminals may exploit. And on the global stage, the Financial Action Task Force (FATF) continues to push for greater alignment on ownership transparency, meaning the US model could influence future international standards.

Conclusion: The Direction of Travel is Clear

The AMLA’s implementation is still in progress, and legal challenges have introduced some uncertainty. But the direction of travel is unmistakable: greater transparency, stronger internal cultures, and smarter compliance operations.

For financial institutions, the message is simple: do not wait. Firms that act now — by integrating BOI data, strengthening whistleblower frameworks, and embedding these changes into culture — will be better prepared not just for compliance, but for the future of financial crime risk management.