EXCLUSIVE: Public face of controversial AML rule-making effort to leave U.S. Treasury Department

May 3, 2013

A top U.S. Treasury Department anti-laundering official who has played a key role in the development of a controversial proposal to require banks and broker-dealers to better know their customers is leaving the department. Friday will be his last day.

However, the departure of Chip Poncy, director of Treasury’s office of strategic policy for terrorist financing and financial crimes, is unlikely to have a significant impact on the development of the soon-to-be-released proposed rule, Treasury sources said.

“Chip has been instrumental in leading a sustained effort to enhance the integrity of the financial system, including through the development of a proposed rule to strengthen and clarify customer due diligence obligations for U.S. financial institutions,” David Cohen, Treasury’s undersecretary for terrorism and financial intelligence, told Compliance Complete.

“Though Chip will surely be missed, he leaves behind a strong team that has been working with him on the proposed rule and will continue the effort. Treasury’s policies and perspectives remain unchanged, and we will continue our efforts to strengthen transparency in the financial system, including those relating to customer due diligence.”

Sarah Runge, who has served as assistant director under Poncy, will take over as acting director of the Treasury office when he leaves. A Treasury official described her as “sharp and motivated.”

Poncy told Compliance Complete that the decision to leave Treasury was difficult, but it was “time to turn the page” and spend more time with family, including his four young children. He declined to comment on his professional plans.

The rule-making process will be losing its “best public spokesperson,” even if others will carry the effort forward, said the head of anti-money laundering compliance at a large U.S. bank who has followed the issue.

After soliciting input from industry professionals and law enforcement officials, Treasury began drafting the proposed rule early this year. A Treasury spokesman told Compliance Complete the proposal should be out “soon” and that officials are “currently consulting with the regulators.”

Once the proposal is published in the Federal Register, there will be another round of public comment to guide officials at Treasury, and its anti-money laundering unit the Financial Crimes Enforcement Network, as they decide whether to issue a final, binding rule, and if so, which requirements will be included.

The financial services industry is nervously awaiting the release of the proposal, mainly because it is expected to include a provision requiring they determine the true, or “beneficial,” owners of accounts opened in the names of corporations and other legal entities. Many consider this an onerous measure due to the costs associated with time-consuming investigations capable of verifying such information.

Poncy, who appeared at a series of public meetings Treasury held across the country last year to gather feedback on the issue and pitch its importance and viability to the financial services industry, is widely viewed as one of the government officials most responsible for the regulatory campaign.

As recently as February, Poncy was still pitching the urgency of the proposal to the banking industry while appearing at an anti-money laundering conference in Miami.

“He’s been a real dynamo on this issue,” said one Treasury official who asked not to be named, adding that Poncy is “a good guy who is great to work with.”

Still, Poncy, who arrived at Treasury in June 2002, is turning over the reins to a team that shares his passion for the issue and will move the rule-making process forward, the official added.

“I don’t think they’re going to ease off one bit,” he said.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter: @GRC_Accelus)

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