A Guide to US Anti Money Laundering Act AMLA

In the face of evolving financial crimes, the Anti-Money Laundering Act of 2020 (AMLA) offers a critical update on how the U.S. approaches anti-money laundering and financial crime prevention.

It’s not just about adding more rules; it’s about fixing weak spots criminals exploited, forcing transparency, and holding institutions accountable.

But what’s really in this law? How does it affect your business, regulators’ priorities, or even your average person trying to stay on the right side of the law?

Here, we’ll cut through the noise to explain AMLA’s goals, how it works, and what it means for compliance—no legalese required.

What is the Anti-Money Laundering Act of 2020?

Let’s get straight to the point: the Anti-Money Laundering Act of 2020 (AMLA) isn’t just another update to the rulebook—it’s a massive overhaul of how the U.S. fights financial crimes.

Signed into law on January 1, 2021, as part of the National Defense Authorization Act (NDAA) of FY2021, AML Act AMLA 2020 is all about upgrading the country’s strategy to spot, stop, and prosecute money laundering in a world where criminals keep getting craftier.

At its core, filling in the gaps in outdated laws and giving banks, businesses, and regulators the enhanced capabilities they need to detect and report suspicious transactions is central to AMLA definition. Think of it like this:

• No more shadowy shell companies —businesses now have to reveal their real owners.
• Enhanced collaboration between agencies (FBI, Treasury, etc.) to connect the dots on financial crimes.
• Tech upgrades to help compliance teams work smarter, not harder.

Whether you’re a small business or a Fortune 500 company, understanding the impact of the anti-money laundering Act of 2020 is critical for staying compliant and avoiding fines, legal complications, or worse.

So, let’s dive into what AMLA means for you —no filler, no fluff, just the facts you need to stay on the right side of compliance.

Key Provisions of the AML Act AMLA 2020

To fully grasp the significance of the AMLA law, let’s delve into some of its key features:

Expanding the Scope of the Bank Secrecy Act (BSA)

The definition of financial institution now includes an electronic fund transfer network and a clearing and settlement system. Dealers in antiquities are now subject to BSA requirements with the issuance of the final rule, whereas Dealers in art are also expected to be included under new regulations, with rule-making currently in progress.

Establishing National AML/CFT Priorities

Anti Money Laundering Act 2020 requires setting national priorities for anti-money laundering and countering the financing of terrorism policy (AML/CFT priorities). Entities must take a risk-based approach and update their compliance programs and risk assessments according to AML/CFT priorities. Now regulators will assess and examine AML compliance according to these set national priorities.

Adjusting Reporting Thresholds

AMLA mandates a review of existing suspicious activity and cash transaction reporting thresholds to reduce the unnecessary regulatory burden on financial institutions and avoid de-risking (the practice of denying financial services to an entire risk category without performing individual risk assessment).

Emphasizing on Compliance-Related Technologies

One of the AMLA’s purposes is to encourage innovation and adoption of new technologies for AML/CFT Compliance. Standards will be set to test compliance-related technologies, with emphasis on machine learning or enhanced data analytics and how these technologies offer customization to support a risk-based approach.

Pilot Program for Sharing SARs

Now financial institutions will be able to share information with their foreign branches, subsidiaries, or affiliates about the filing of a Suspicious Activity Report (SAR) to meet  AML/CFT obligations.

Allowing Compliance Resource Sharing

With the implementation of the new Anti Money Laundering laws, two or more financial institutions will be permitted to share their compliance resources in order to effectively and efficiently ensure compliance with BSA obligations.

Discouraging the De-Risking

The AMLA mandates conducting an assessment of ways to improve financial inclusion and the development of a strategy at the government level to reduce de-risking and its adverse effects. The U.S. Treasury Department published its de-risking strategy in 2023, and FinCEN has proposed a rule to implement it.

Update of Regulations and Guidance

AMLA mandates regulatory authorities to review and update outdated or redundant regulations and guidance materials that do not promote a risk-based approach to AML compliance. FinCEN has already completed the process of obtaining public opinions to review existing regulations and guidelines.

Greater Subpoena Powers

Authorities in the US now can request access to bank accounts of correspondent banks maintained in a foreign country. Failure to produce records can result in severe penalties, which can be recovered from funds in correspondent accounts in the USA.

Enhancing Penalties for Repeated Violators

Repeated violations of BSA and related AML Laws and regulations, now may result in harsher penalties as high as 3 times the profit gained, loss avoided, or twice the maximum penalty allowed for that violation, whichever is higher.

Criminalizing Concealing Sources of Funds

Under the AMLA law, concealing the source of funds in certain monetary transactions involving senior foreign political figures, or any immediate family member or close associate is a criminal offense. The penalty for this offense can result in up to 10 years in prison, fines of up to $1,000,000, or both, along with forfeitures of assets or properties involved.

Whistleblower Incentives and Protection

AMLA legislation requires that whistleblowers must be rewarded with 30% of the monetary penalty imposed, where the monetary penalty is not less than $1,000,000. AMLA also includes provisions to protect the confidentiality and rights of whistleblowers.

Beneficial Ownership Requirements

The Corporate Transparency Act (CTA) enacted alongside AMLA mandates corporations, companies, and other legal entities to report certain information about the beneficial owners including the person who acted/requested its creation to FinCEN. Although this database will not be available to the general public, authorities are allowed to share this information with relevant regulators, law enforcement, and intelligence agencies to fight financial crimes.

PEPs and SFPFs in AMLA Compliance

The AMLA prohibits PEPs from misrepresenting the source of funds, with violations subject to fines or imprisonment. PEPs are foreign individuals in prominent public functions, their families, and close associates, posing higher risks of corruption. Financial institutions must conduct enhanced due diligence on PEPs, with special obligations for senior foreign political leaders (SFPFs) and the accounts they manage.

Why was the AML Act 2020 needed?

Prior to the enactment of the AMLA 2020, money laundering laws and regulations were mostly outdated and there was no mechanism to ensure regulations and guidelines were up to date and relevant in the evolving landscape of financial crimes.

In addition, lack of encouragement to use advanced technologies for compliance and reliance on manual processes lead to inefficiencies and consuming compliance resources in redundant tasks.

On the other hand, limited oversight of beneficial ownership was facilitating criminals to conceal their assets behind complex structures, and the list goes on.

With the initiation of the AMLA 2020, lawmakers sought to address these shortcomings and establish a stronger foundation for fighting financial crimes, while aligning the US AML regulations more closely with international standards, enhancing cross-border cooperation.

Who will be affected by the AML Act 2020?

Compliance with the anti-money laundering Act 2020 isn’t limited to large financial institutions. Every business subject to BSA requirements must adhere to the updated rules and guidelines issued in response to new legislation.

Failure to comply with the anti-money laundering regulations can result in severe consequences, including large fines, reputational damage, and even criminal charges.

Regulatory Spotlight: Section 6101 of AMLA 2020

This section mandates financial institutions to implement reasonably designed, risk-based AML/CFT programs. These programs must be proportionate to the institution’s specific risk profile while aligning with national AML/CFT priorities.

Embracing the Future of AML Compliance

The Anti-Money Laundering Act of 2020 is a significant overhaul of the US strategy to fight financial crime. With its emphasis on transparency, collaboration, and innovation, the anti money laundering law lays the groundwork for a safer, more secure financial ecosystem.

Businesses, regardless of size or sector, must embrace these changes to flourish in an increasingly regulated environment.

At AML Watcher, we help businesses achieve AML compliance using context-driven databases and tailored solutions. Our innovative, technology-driven approach supports a risk-based compliance strategy that aligns with regulatory guidance to avoid a one-size-fits-all approach.