ENABLERS Act - Solutions available and benefits of being an early adopter

Currently, financial institutions are required to run thorough due diligence on clients - and their sources of wealth - under US anti-money laundering law (AML), but other ‘financial gatekeepers’ are not.

This lack of regulation has created a loophole for money launderers, and the Establishing New Authorities for Business Laundering and Enabling Risks to Security (ENABLERS) Act – passed by the US House in October 2021 – looks to close it by redefining the term ‘financial institutions’. The proposal means that other ‘enablers’ including, but not limited to, trust companies, lawyers, accountants and art dealers, will be required to investigate their clients when they seek to move money and assets into the US financial system.

How can firms comply?

Firms that will become financial institutions under the ENABLERS Act will be subject to the same AML obligations as financial institutions, which means they will have to:

• Identify and verify all clients at the onboarding stage, including screening for sanctions and PEPs

• Keep records of every check, and monitor these daily against Global watchlists

• Put a written AML policy in place

• Report anything suspicious to the US Treasury department

Firms due to be redefined as financial institutions under the ENABLERS Act do not need to do anything yet – the new requirements have not yet come into effect. However, there are huge benefits of becoming an ‘early adopter’.

Benefits of being an early adopter of the ENABLERS ACT

While the ENABLERS Act may not have come into force yet, meaning those affected are not currently under any legal obligation to put an AML policy in place, there are a number of benefits of acting now.

• Competitive advantage - Given that the ENABLERS Act will come into force some time next year, there is no getting away from putting the appropriate procedures in place. Those that wait, will find that - due to increased demand - they are paying more for solutions later down the line, and are then rushing to get everything in place for the deadline. By starting now, your business has time to gradually introduce new procedures in a much less disruptive way and address any teething problems to ensure that all requirements are being met once the ENABLERS Act does come into force. If competitors are still at the stage of implementing the new requirements when the deadline comes, this could not only put them in breach of the new laws – and subject to fines and legal action - but also cause disruptions at onboarding, pushing customers away and towards businesses that already have a smooth, AML-compliant, onboarding process in place.

• Protect your business now - While the ENABLERS Act is not yet in force, the illegal activity it has been designed to prevent is very much alive and kicking, so the sooner businesses comply, the quicker they can stop these illegal activities. Plus, by putting these comprehensive checks in place, you will know exactly who your customers are and the source of their funds, enabling you to protect your business from both financial abuse and reputational risk.

• Solutions are already available - Normally, those businesses that stick their neck on the line as ‘early adopters’ face a number of potential disadvantages -  the main one being that they are using a product or technology that is not yet ‘finished’ or is often incompatible with the systems the business already has in place. But with AML technology this is not an issue. Due to the fact that financial institutions have been subject to BSA AML law for many years – and those firms affected by the ENABLERS Act are already subject to AML law in the UK and other countries - the ‘testing’ has already been done, and there are a huge number of fully functioning AML compliance solutions on the market.   

What is the easiest way for my business to comply with the ENABLERS Act?

As mentioned earlier, these requirements have been in place in the US for financial institutions for some time, and in other jurisdictions – like the UK – professions due to come under AML law as a result of the ENABLERS Act, including accountants and law firms – are already regulated, so there are already a number of reliable and affordable third-party AML platforms on the market.

SmartSearch has been a pioneer in AML solutions for more than 20 years and created the first electronic AML platform back in 2011. SmartSearch is already used by more than 5,500 firms globally, including accountants, property firms, investment firms, insurance companies, gaming businesses and lawyers – making it the ideal, tried and tested solution for those sectors coming under AML law as a result of the ENABLERS Act.

Martin Cheek, managing director at SmartSearch said: “Our platform identifies, verifies – using the latest biometric and facial recognition technology – and screens clients all from one place, hosts all check data securely on the cloud, and monitors every client on a daily basis for any changes to their status.

“It can be accessed via desktop, or via tablet or cell phone, making it easy for users to onboard new customers any time anywhere, check the status of existing clients and run full audit reports at the touch of a button. We can also fully integrate the SmartSearch platform with our clients’ existing systems, enabling clients to customise the technology to fit their own requirements, adapting it and changing it as they need to.”

“Furthermore, SmartSearch is continually updated - both to ensure it is using the very latest in verification technology, but also to reflect any changes in regulation - to ensure all users are always meeting their obligations in the most efficient way. Plus, it can be tailored to suit each user firms’ size, customer base and individual risk profile, making it affordable for all businesses.”

To find out how to get ahead of the ENABLERS Act and make AML compliance easy, secure and efficient, visit https://www.smartsearch.com/us or register for one of upcoming webinars – The ENABLERS Act – how will the most significant change to US compliance affect your firm?

Register now