#2021-1, January 8, 2021

Happy New Year!

It was an eventful week in Washington, DC, with the 117^th Congress convened its first session on Monday. Democrats maintained their majority in the House (222-212) and gained the majority in the Senate following the two runoff elections in Georgia, where both Republican incumbents lost their re-election bids.  While the chamber will be split 50-50 between Democrats and Republicans, Vice President-elect Kamala Harris will have the tie-breaking vote once she takes office on January 20.

On Wednesday, Congress certified the Electoral College votes confirming the election of Joe Biden as the 46^th President and Kamala Harris as the Vice President following disturbing violence by protestors in the US Capitol.  We are grateful that all those we work with in the Massachusetts Congressional Delegation were unharmed.

Rep. Auchincloss Joins House Financial Services Committee

Massachusetts will now have three members of the delegation on the House Financial Services Committee. Freshman Rep. Jake Auchincloss will join Reps. Stephen Lynch and Ayanna Pressley, who currently serve on the Committee.

We look forward to welcoming Rep. Auchincloss during a virtual freshman fly-in and working with him on our priorities.

Long-Awaited AML/BSA Reform Enacted

Last week, the House and Senate voted to overturn President Trump’s veto of the National Defense Authorization Act (NDAA) for the fiscal year 2021. The NDAA, which passed in December, includes several improvements to anti-money laundering rules.  The law directs the Financial Crimes Enforcement Network to establish and maintain a national registry of beneficial ownership information that banks may rely on when complying with customer due diligence requirements.

Among other measures, the provisions:

• Require the Justice Department to report on how law enforcement uses Bank Secrecy Act data;
• Call for the Treasury Department to review BSA reporting requirements and current thresholds and;
• Provides for financial institutions to share BSA compliance resources. 

We will share more information as the rules are promulgated, which is expected to be a lengthy process. In the meantime, banks should continue their current procedures.

IRS Changes Course on EIP Processing Error Resolution

After acknowledging a processing error that resulted in millions of economic impact payments (EIPs) being sent to accounts that were closed or inactive, the Internal Revenue Service (IRS) issued updated instructions after initially stating that these individuals would not receive their payment via ACH or check and must instead claim the Recovery Rebate Credit when filing their 2020 tax return electronically.

The updated communication notes that “if a company is able to identify the final [ultimate bank account], they can move the money to that account and not return it” to the IRS. “Therefore, organizations planning to redirect the payment to a known UBA should stop rejecting these payments to the [Bureau of the Fiscal Service]/IRS.”  For payments that have already been returned, the IRS said that “it is not viable for a rejected payment to be returned to the organization referring it. As of this point in time, the IRS has no plans to reissue any EIP2 payments.” Taxpayers who do not receive the EIPs for which they are eligible should request the rebate credit on their 2020 tax return.

FinCEN Issues COVID-19 Vaccine Scam Notice

The Financial Crimes Enforcement Network recently issued a notice detailing information on COVID-19 vaccine and distribution scams that include offers to provide potential victims with the vaccine sooner than permitted.  These schemes may also include the sale of unapproved and illegally marketed vaccines, sale of counterfeit versions of approved vaccines and illegal diversion of legitimate vaccines.

The notice provided information about what banks should include in suspicious activity reports about suspected COVID-19 related scams and requested filers include detailed information. 

To read the notice, click here.