What Is the Anti-Money Laundering Act? Reporting, Penalties, and Reforms

The Anti-Money Laundering Act of 2020 is the most sweeping update to U.S. financial transparency law in two decades. Signed on January 1, 2021, as part of the National Defense Authorization Act for Fiscal Year 2021, it modernized the Bank Secrecy Act of 1970 by expanding which businesses fall under federal anti-money-laundering rules, creating a mandatory whistleblower reward program, giving prosecutors stronger tools against foreign banks, and establishing a beneficial ownership reporting system through the Corporate Transparency Act.¹ In a major development, the Treasury Department issued an interim final rule in March 2025 that exempts all U.S.-formed companies from that ownership reporting requirement, leaving only foreign entities registered to do business in the United States on the hook.²

What the Law Actually Changed

The AMLA is not a single rule. It is a bundle of reforms spread across dozens of sections of the National Defense Authorization Act. At its core, the law does four things.

It upgrades how the government collects and shares financial intelligence. It broadens the categories of businesses that must run anti-money-laundering programs. It gives federal prosecutors expanded subpoena power over foreign banks that keep correspondent accounts in the United States. And it creates financial incentives, backed by anti-retaliation protections, for whistleblowers who report violations.

On the foreign-bank subpoena piece, prior law limited the government’s reach to records of the U.S. correspondent account itself. The AMLA now allows prosecutors to demand records related to any account held at the foreign bank, including records stored overseas. A foreign bank that ignores a subpoena can face fines of up to $50,000 per day.

National AML/CFT Priorities

The AMLA directed FinCEN to publish government-wide priorities so that banks, credit unions, and other covered institutions would know which threats to focus their compliance resources on. Rather than treating every type of suspicious transaction equally, institutions can steer their monitoring toward the areas the government treats as the highest risk.³

The published list covers eight threat areas: corruption, cybercrime, domestic and international terrorist financing, fraud, transnational criminal organizations, drug trafficking organizations, human trafficking and smuggling, and proliferation financing.³ These categories are not ranked. A small community bank might spend most of its attention on fraud, while a large international institution with correspondent banking relationships might weight corruption and proliferation financing more heavily.

New Industries Brought Under the BSA

Before the AMLA, the Bank Secrecy Act already covered commercial banks, credit unions, money services businesses, broker-dealers, casinos, and mutual funds. The AMLA expanded that list in targeted ways.

The most notable addition is antiquities dealers. Section 6110 amended the BSA’s definition of “financial institution” to include anyone engaged in the trade of antiquities, including advisors and consultants involved in soliciting or selling them.⁴ Antiquities are attractive to money launderers because prices are subjective, items are small and easy to move across borders, and the industry has historically relied on client confidentiality with little regulatory oversight. FinCEN issued an advance notice of proposed rulemaking in 2021 to begin developing specific compliance rules for the sector.

The law also directed FinCEN to address virtual currency. A proposed rule would treat convertible virtual currency and digital assets with legal tender status as “monetary instruments” for reporting purposes, requiring banks and money services businesses to file reports on transactions exceeding $10,000.⁵ That rule has not been finalized, but it signals the direction of regulation for cryptocurrency.

The Corporate Transparency Act and the 2025 Domestic Exemption

Embedded inside the AMLA is the Corporate Transparency Act, which created a federal beneficial ownership reporting system aimed at stripping anonymity from shell companies. Under 31 U.S.C. 5336, covered companies must report to FinCEN the identities of the real people who own or control them.⁶ A beneficial owner is anyone who exercises substantial control over the entity or holds at least 25 percent of its ownership interests.

The reporting requirement faced immediate legal challenges. In late 2024, a federal district judge in Texas issued a nationwide injunction barring enforcement. The Supreme Court stayed that injunction in January 2025, allowing enforcement to resume temporarily, but the legal uncertainty prompted a policy reversal.

On March 21, 2025, FinCEN issued an interim final rule that fundamentally narrowed who must file. The rule exempts all entities formed in the United States from beneficial ownership reporting. It also exempts all U.S. persons from having to provide their personal information as beneficial owners of any reporting company. FinCEN stated it will not enforce any BOI penalties or fines against U.S. citizens, domestic reporting companies, or their beneficial owners.²

The mechanism was straightforward. The interim final rule revised the regulatory definition of “reporting company” to remove domestic entities entirely. The definition now covers only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction by filing a document with a secretary of state or similar office.⁷ If you formed an LLC, corporation, or similar entity under U.S. state law, you are no longer required to file a BOI report or update any previously submitted report. Businesses that filed before the rule change should keep their confirmation receipts on hand, since a future administration or Congress could reverse course.

Who Still Has to File

Foreign-formed entities registered to do business in the United States remain subject to BOI reporting unless they qualify for one of 23 statutory exemptions. These companies must report beneficial ownership information for their non-U.S.-person beneficial owners only. They do not need to report information about any beneficial owner who is a U.S. person.²

The filing deadlines under the interim final rule are:

Foreign entities registered before March 26, 2025: BOI report was due by April 25, 2025.
Foreign entities registered on or after March 26, 2025: 30 calendar days from the date the entity receives notice its registration is effective.⁷

For each non-U.S.-person beneficial owner, the report must include the individual’s full legal name, date of birth, current address, and an identifying number from a non-expired passport or other acceptable government-issued document, along with an image of that document.⁸ Individuals who own interests in multiple reporting companies can apply for a FinCEN identifier, a unique number that can be submitted in place of their personal details on each filing.⁹

Two exemption categories come up frequently for foreign entities evaluating whether they must file:

Large operating company. The entity employs more than 20 full-time employees in the United States, maintains a physical office here, and filed a federal tax return showing more than $5 million in gross receipts or sales for the prior year. All statutory criteria must be met.¹⁰
Inactive entity. Formed on or before January 1, 2020, not actively doing business, no foreign ownership, no ownership changes in the past 12 months, sent or received no more than $1,000 in that period, and holds no assets of any kind.¹¹

Other exempt categories include publicly traded companies, banks, credit unions, insurance companies, broker-dealers, registered investment companies, tax-exempt organizations described in Section 501(c) of the Internal Revenue Code, accounting firms, public utilities, and subsidiaries of certain exempt entities. S-corporations do not qualify as tax-exempt entities for this purpose despite their pass-through tax treatment.¹¹

Residential Real Estate Reporting Starting in 2026

A separate AMLA-related initiative takes effect on March 1, 2026. FinCEN will require reporting on certain non-financed transfers of residential real estate to legal entities and trusts.¹² Cash purchases of homes through LLCs and shell companies have long been a favored laundering method, and this rule targets that gap.

A transfer is reportable when four conditions are met: the property is residential, the transfer does not involve financing from a lender with its own anti-money-laundering and suspicious activity reporting obligations, the buyer is a legal entity or trust rather than an individual, and no exception applies.¹³ If a traditional bank finances the purchase, the bank’s own reporting duties already cover the transaction, so the new rule does not apply.

Responsibility for filing follows a cascading priority list. It starts with the closing or settlement agent named on the closing statement. If no such person is involved, responsibility moves to whoever prepared the closing statement, then to whoever filed the deed, and so on down the chain.¹² The filing deadline is the later of the last day of the month following closing or 30 calendar days after the closing date.¹³

Whistleblower Awards and Anti-Retaliation Protections

The AMLA replaced the old Bank Secrecy Act whistleblower program, which capped awards at $150,000 and left them entirely at the government’s discretion, with a mandatory award structure. Under 31 U.S.C. 5323, when a whistleblower’s original information leads to a successful enforcement action producing sanctions greater than $1 million, the Treasury Department must pay an award.¹⁴ The shift from “may” to “shall” was one of the most consequential changes in the law.

Awards follow a tiered structure rather than a flat percentage. A whistleblower can receive 20 to 30 percent of the first $1 million collected, 10 to 20 percent of the next $4 million, and 5 to 10 percent of the next $5 million. The overall ceiling is 30 percent of the government’s total collection.

The law also prohibits retaliation. Employers cannot fire, demote, threaten, or otherwise discriminate against employees who report potential violations to federal authorities. A whistleblower who experiences retaliation can pursue reinstatement, back pay, and compensatory damages.

Penalties for Violations

Penalties under the Corporate Transparency Act’s beneficial ownership provisions apply to whoever is still required to file, which currently means foreign reporting companies. Violations carry both civil and criminal consequences under 31 U.S.C. 5336(h).⁶

Civil penalties of up to $500 for each day a violation continues without correction. A company that ignores its filing obligation for a year could face more than $180,000 in accumulated fines.
Criminal penalties of up to $10,000 in fines and up to two years in federal prison for willfully providing false information or willfully failing to file.

Beyond the CTA-specific penalties, the broader AMLA carries its own enforcement consequences. Foreign banks that ignore subpoenas face fines of up to $50,000 per day, with additional penalties possible after 60 days of noncompliance. Financial institutions that fail to maintain adequate anti-money-laundering programs remain subject to the existing BSA penalty framework, which can include both civil money penalties and criminal prosecution depending on the severity and willfulness of the violations.

FinCEN has said it will not enforce BOI penalties against U.S. citizens or domestic companies under the current interim final rule.² That posture could change if a future administration reverses the rule or if Congress amends the statute.

1
FinCEN. AMLA FinCEN One Pager
2
Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting
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Financial Crimes Enforcement Network. FinCEN Issues First National AML/CFT Priorities and Accompanying Statements
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Federal Register. Anti-Money Laundering Regulations for Dealers in Antiquities
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Regulations.gov. Requirements for Certain Transactions Involving Convertible Virtual Currency
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Office of the Law Revision Counsel. 31 USC 5336 Beneficial Ownership Information Reporting Requirements
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Federal Register. Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension
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Financial Crimes Enforcement Network (FinCEN). Beneficial Ownership Information Reporting Filing Instructions
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Financial Crimes Enforcement Network (FinCEN). FinCEN ID Help
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Financial Crimes Enforcement Network. BOI Small Compliance Guide
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Financial Crimes Enforcement Network. Frequently Asked Questions
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Financial Crimes Enforcement Network. Residential Real Estate Frequently Asked Questions
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Financial Crimes Enforcement Network. Quick Reference Guide Residential Real Estate Reporting
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Office of the Law Revision Counsel. 31 USC 5323 Whistleblower Incentives and Protections