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The U.S. financial intelligence unit has gone two years without a permanent director as of this month, a prolonged state of flux that some former officials believe has undermined the bureau’s mission and stature during a critical juncture for national anti-money laundering initiatives.

Federal job boards recently re-advertised the opening for the directorship of the Financial Crimes Enforcement Network, or FinCEN, to replace Himamauli Das, a University of California Berkeley-trained lawyer and long-time government official who has led the bureau on a temporary basis since August 2021.

Das replaced another acting director, Michael Mosier, who held the role for only four months, after Kenneth Blanco, FinCEN’s last permanent director, took a position with Citigroup in April 2021. Blanco led FinCEN for three years and four months, roughly the average span for directors since the bureau’s formation in 1990.

“Having permanent leadership gives a signal to people on the inside that this is the person who’s going to steer you through a crisis,” a former Treasury official said on condition of anonymity. “They also look at [Treasury] leadership and say, ‘What does it mean that you don’t give us a permanent director? It’s important to know that you take us seriously.’ ”

A second former official said the lack of permanent leadership has contributed to “dysfunction” at FinCEN, which has long contended with low staff morale, including as recently as 2021, when a survey by the Partnership for Public Service ranked the bureau 429—nearly dead last—of 432 federal sub-agencies or agency units in terms of employee satisfaction and engagement.

During its long, slow shuffle at the top, FinCEN has struggled to implement the Corporate Transparency Act and the Anti-Money Laundering Act of 2021, legislation that ushered in the largest, most rigorous update of the federal regulatory regime against illicit finance since the Patriot Act two decades prior.

Shortly after Congress overrode then-President Donald Trump’s veto to enact legislation that included AMLA and the CTA, FinCEN requested funding for 125 new full-time employees to help complete a host of rulemakings those two bills mandated. FinCEN’s last publicly disclosed headcount hovered around 300 full-time staff.

Among several other tasks, Congress directed the bureau to create a whistleblower program, develop a list of national financial-crime priorities, review policies for flagging large cash transactions, and identify and report on the U.S. financial system’s vulnerability to corrupt proceeds from overseas and potential exploitation by foreign adversaries.

But developing the regulatory framework necessary for administering an impending federal database of beneficial owners may represent the steepest hill for FinCEN to climb.

The bureau published the first of three beneficial ownership rules pursuant to the CTA in September 2022, nine months later than Congress specified.

An early draft of the second rule, which will govern who can access the new database, has drawn sharp criticism from Congress and bankers, some of whom have claimed that the limitations proposed by FinCEN would make the registry “practically useless” to them.

The bureau has also taken preliminary steps towards regulating investment advisors and the real-estate sector for AML purposes over the past two years.

A spokesperson for FinCEN did not respond to a request for comment by press time.

Dwindling enforcement

FinCEN has also taken flak for purportedly lagging in enforcement, specifically for having not used section 311 of the Patriot Act to blacklist a foreign bank or country as a “primary money laundering concern” since 2019 despite identifying several potential targets for the designation.

Das’ broad experience across government, which includes roles at the White House and State Department as well as Treasury, lacks one element shared by the two directors that preceded him: law enforcement experience.

That missing element may contribute to the bureau’s cautious use of the Patriot Act, the former Treasury official said.

“If you’re not used to enforcement, you may be a little wary of trying something new, something aggressive,” the former official said, adding that enforcement decisions require the approval of the bureau’s general counsel, an office that is conservative by design.

The combination of an intentionally conservative general counsel with a cautious acting director “is a recipe for paralysis,” the former official said.

Instead of blacklisting foreign banks and governments under the Patriot Act, FinCEN sometimes warns them in a private setting to resolve their issues and stop handling illicit funds.

“The goal is to change behavior, not just to hand out penalties,” a source told moneylaundering.com in March. “If the activity stops, it worked.”

Answering to Congress

FinCEN directors are appointed by the secretary of the Treasury and report to the head of the department’s Office of Terrorism and Financial Intelligence, currently Brian Nelson.

Das, a former colleague of Deputy Treasury Secretary Wally Adeyemo, received a Distinguished Service Award during a prior stint at the department and also previously supervised the National Security Council’s efforts to place financial restrictions on U.S. adversaries.

Although candidates for FinCEN’s directorship do not require confirmation by the Senate, the “acting” tag risks signaling to Congress that the administration lacks confidence that the leader in question is the right man or woman for the permanent role, said the former Treasury official who spoke to moneylaundering.com on condition of anonymity.

“They [lawmakers] don’t know if this is the person who’s going to be able to carry through on what they’re asking them to do.”

Das represented the bureau at a three-hour hearing before the House Financial Services Committee in April 2022 and may appear before the panel again in the coming weeks.

Jamal El-Hindi, who served as FinCEN’s acting director for 19 months in 2016 and 2017, rejected the notion that describing a director or other senior official’s status as “acting” automatically confers a negative impression, and instead attributed the bureau’s rulemaking delays to budgetary constraints and an unrealistic timetable set by Congress.

“In my experience, if you have the support of your superiors and staff, there is not a huge difference,” he said.

El-Hindi, currently counsel at the Clifford Chance law firm in Washington, D.C., had already served as FinCEN’s deputy director for a year when he was named acting director in May 2016 following the resignation of Jennifer Shasky Calvery.

During his tenure, the appointment of a new, permanent director—a role he did not want—always seemed imminent, El-Hindi said.

“It stretched on longer than I thought it would.”

Contact Fred Williams at fwilliams@acams.org