Timeline 2001

The year 2001 is a key year in global financial regulation. It brought several epochal events that lastingly shaped international tax enforcement and anti-money laundering efforts:

• QI Program (January 2001): The IRS introduced the Qualified Intermediary program, enabling for the first time a systematic US withholding tax collection on foreign accounts
• 9/11 and USA PATRIOT Act (October 2001): The terrorist attacks triggered a global wave of strengthened AML/CFT laws; the US PATRIOT Act revolutionized international cooperation in anti-money laundering
• FATF Special Recommendations: The FATF expanded its 40 Recommendations with 8 Special Recommendations on terrorist financing
• EU 2nd Anti-Money Laundering Directive (December 2001): Directive 2001/97/EC expanded the scope of AML regulation to notaries, lawyers, auditors, and other professions

The IRS QI Program came into force on January 1, 2001. It required foreign financial institutions trading in US securities to identify their clients and remit correct US withholding taxes. This was an important precursor of systematic cooperation with foreign financial institutions, whose infrastructure FATCA (2010) later built upon.

On September 11, 2001, the terrorist attacks on New York and Washington shook the world. On September 28, 2001, the UN Security Council adopted Resolution 1373, obligating all UN member states to criminalize terrorist financing, freeze terrorist assets, and strengthen information sharing. This resolution formed the international law foundation for many subsequent national AML/CFT laws.

On October 26, 2001, the US Congress enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act). This act dramatically expanded authorities to monitor financial transactions and required foreign banks with US accounts to cooperate.

At an extraordinary plenary meeting on October 29–30, 2001, the FATF adopted its 8 Special Recommendations on combating terrorist financing (later expanded to 9), substantially raising the global AML standard. Special Recommendation I directly referenced UN Resolution 1373.

Also in October 2001, the Basel Committee on Banking Supervision published its guidance paper Customer Due Diligence for Banks, establishing for the first time comprehensive international standards for customer identification (KYC/CDD) in the banking sector, which was used as a reference by many national supervisory authorities.

On December 4, 2001, the European Parliament and Council adopted the Second EU Anti-Money Laundering Directive (Directive 2001/97/EC). It significantly expanded the scope of the First AML Directive (91/308/EEC) to include notaries, lawyers, auditors, real estate agents, and dealers in high-value goods.

The regulatory innovations of 2001 affected:

• Foreign financial institutions with US securities business (QI Program)
• US and international banks (PATRIOT Act, Sections 311/312/313/319)
• All FATF member states (Special Recommendations)
• Hawala networks and alternative remittance systems (regulated for the first time)
• Non-profit organizations (as potential channels for terrorist financing)
• EU member states: notaries, lawyers, auditors, real estate agents, and dealers in high-value goods (2nd Anti-Money Laundering Directive)

• QI Agreement: Foreign banks with US securities business must conclude a QI agreement with the IRS
• PATRIOT Act Section 312: Enhanced Due Diligence for correspondent accounts and private banking accounts of foreign institutions
• FATF SR I–VIII: Criminalization of terrorist financing, asset freezing, reporting requirements for wire transfers
• Suspicious Activity Reports (SARs): Extension of SAR obligations to new financial intermediaries

1 correction:
- FATF Special Recommendations: Date Oct 31 incorrect, correct is Oct 29-30, 2001
2 updates:
- Missing: EU 2nd Anti-Money Laundering Directive (2001/97/EC) from December 2001
- Missing: UN Security Council Resolution 1373 of September 28, 2001
3 clarifications.
2 notes.