Significant changes to U.S. anti-money laundering and tax evasion laws stem from the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2019,” passed as part of the 2021 National Defense Authorization Act.

USD Correspondent Accounts

The U.S. maintains a unique position requiring all dollar transactions to clear through correspondent accounts with American banks. Foreign financial institutions seeking to offer USD products must establish these relationships, though regulatory requirements have made U.S. banks increasingly reluctant to do so.

Expanded Subpoena Powers

Treasury and Justice Department officials gained broad authority to subpoena banking records from foreign institutions. The scope encompasses “any records relating to the correspondent account or any account at the foreign bank, including records maintained outside of the United States.”

Compliance Penalties

Foreign banks face civil penalties of $50,000 daily for non-compliance. U.S. correspondent banks must terminate relationships within 10 business days or face $25,000 daily penalties. Additionally, bank personnel are prohibited from notifying account holders about subpoenas.

Conclusion

Given the potential loss of USD system access, foreign banks face overwhelming incentive to comply with information requests.