Financial Regulatory Forum

US Treasury seeks new members for Bank secrecy group; lobbyists need not apply — Complinet

By Guest Contributor
December 23, 2010

By Brett Wolf, Complinet

The US Treasury Department has announced that it is seeking financial industry representatives to join its 50-member Bank Secrecy Act Advisory Group. For the first time, this year’s application process has barred registered lobbyists from the group, whose duties include evaluating potential anti-money laundering and counter-terrorist financing regulations. Citing an Obama Administration Executive Order and Presidential Memorandum, the Federal Register notice submitted by Treasury’s Financial Crimes Enforcement Network stated that “member organizations may not designate a representative to participate in BSAAG plenary or subcommittee meetings who is registered as a lobbyist pursuant to 2 U.S.C. 1603(a)”.

The Executive Order 13490, filed the day after Obama’s inauguration, has imposed strict new rules that limit lobbyists access to his administration. It was followed by a series of White House memoranda and guidelines addressing the relationship between lobbyists and the executive branch. In one such document issued in September of last year, President Obama requested, but did not mandate, that federal agencies should not appoint or reappoint registered lobbyists to serve on the more than 900 federal advisory boards and commissions. That appeal drew “strong criticism” from some in the Washington lobbying community, according to a January report proffered by Democracy 21, a nonprofit government watchdog group.

Nonetheless, in June, President Obama upped the ante, announcing that the lobbyist prohibition was no longer a request, but “the official policy of my Administration”. The presidential memorandum stated: “I hereby direct the heads of executive departments and agencies not to make any new appointments or reappointments of federally registered lobbyissts to advisory committees and other boards and commissions.”

The BSAAG was established in 1992 by the Annunzio-Wylie Anti-Money Laundering Act of 1992 and consists of representatives from federal regulatory and law enforcement agencies, financial institutions, and trade associations whose members fall under the BSA umbrella. Members are selected to serve three-year terms and FinCEN makes all membership decisions. According to FinCEN, the BSAAG makes policy recommendations to the Treasury Secretary, which oversees FinCEN, on issues related to the country’s AML and CTF regimes. FinCEN is not obliged to adhere to BSAAG’s recommendations, however, when drafting or amending regulations. This suggests that in the BSAAG environment, even an adroit lobbyist would have limited influence; however, lobbyists working in concert could conceivably sway policy.

Asked whether President Obama’s prohibition on lobbyists had had a significant impact on the composition of the BSAAG, a FinCEN spokesman told Complinet that the Treasury bureau complied with the president’s initial request rather than waiting for the June mandate. As a result, the prohibition came into effect “almost exactly a year ago”, he said. Treasury’s decision to disqualify registered lobbyists from the BSAAG was not publicly disclosed.

“The prohibition has had very little impact. At most, a couple associations had to deregister their representative to BSAAG, or send a substitute,” said the spokesman, who cited FinCEN policy when declining to name the BSAAG representatives who were shown the exit.

The Federal Register notice posted Monday marks FinCEN’s first BSAAG recruitment drive since the lobbyist prohibition was enacted; new members were last solicited in December 2008 and January 2009. The fact that the Treasury Department is excluding lobbyists from the BSAAG is noteworthy, especially at a time when efforts are underway to draft financial services regulations as a result of the mammoth Dodd-Frank Act. Dodd-Frank’s implementing regulations could indirectly have an impact on the work of the BSAAG. According to one industry expert with close ties to the BSAAG, FinCEN is waiting to see how Dodd-Frank registration rules are written before deciding whether to restart AML program rules for hedge funds. At a time when such high-profile issues are liable to come before the BSAAG for debate, the question remains as to how the absence of registered lobbyists will affect the policy recommendations issued by BSAAG.

Brett Wolf  (Brett.Wolf@thomsonreuters.com) is a correspondent for Complinet.Complinet, part of ThomsonReuters, is a leading provider of connected risk and compliance information and on-line solutions to the global financial services community. Established in 1997, Complinet serves over 100,000 industry professionals in 80+ countries. Its connected approach provides one single place to get all the relevant regulatory news, analysis, rules and developments from the region to support firms in highly regulated industries.

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