Leaders of FinCEN, CFTC and SEC Attempt an Intricate Dance of Competing Oversight of Virtual Currency

On October 11, the leaders of the Financial Crimes Enforcement Network (“FinCEN”), the Commodity Futures Trading Commission (“CFTC”), and the Securities and Exchange Commission (“SEC”) issued a “Joint Statement on Acitivites Involving Digital Assets” in order to “remind persons engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the Bank Secrecy Act (BSA).”  The regulation of cryptocurrency has been a constant topic of this blog.

The Joint Statement begins by making general observations about the AML obligations of cryptocurrency businesses regulated under the BSA, and the potential patchwork quilt of regulatory oversight:

AML/CFT obligations apply to entities that the BSA defines as “financial institutions,” such as futures commission merchants and introducing brokers obligated to register with the CFTC, money services businesses (MSBs) as defined by FinCEN, and broker-dealers and mutual funds obligated to register with the SEC. Among those AML/CFT obligations are the requirement to establish and implement an effective anti-money laundering program (AML Program) and recordkeeping and reporting requirements, including suspicious activity reporting (SAR) requirements.

. . . .

If a person falls under the definition of a “financial institution,” its AML/CFT activities will be overseen for BSA purposes by one or more of the Agencies (and potentially others). For example, the AML/CFT activities of a futures commission merchant will be overseen by the CFTC, FinCEN, and the National Futures Association (NFA); those of an MSB will be overseen by FinCEN; and those of a broker-dealer in securities will be overseen by the SEC, FinCEN and a self-regulatory organization, primarily the Financial Industry Regulatory Authority (FINRA).

This post will focus on the section of the Joint Statement which addresses a potential problem (as we have blogged) with all of these different regulators simultaneously asserting their respective power over cryptocurrency businesses.  Specifically, BSA regulations pertaining to the definition of a MSB, at 31 C.F.R. § 1010.100(ff)(8)(ii), flatly state that a MSB does not include the following:

A person registered with, and functionally regulated or examined by, the SEC or the CFTC, or a foreign financial agency that engages in financial activities that, if conducted in the United States, would require the foreign financial agency to be registered with the SEC or CFTC[.]

Given this regulation, how can certain cryptocurrency businesses be subject to the claimed jurisdictions of FinCEN, the SEC and the CFTC?  The October 11 Joint Statement addresses this issue as follows:

As set forth in the 2019 CVC Guidance, a number of digital asset-related activities qualify a person as an MSB that would be regulated by FinCEN. FinCEN’s BSA regulations also provide that any person “registered with, and functionally regulated or examined by, the SEC or the CFTC,” would not be subject to the BSA obligations applicable to MSBs, but instead would be subject to the BSA obligations of such a type of regulated entity. Accordingly, even if an introducing broker, futures commission merchant, broker-dealer or mutual fund acts as an exchanger of digital assets and provides money transmission services for the purposes of the BSA, it would not qualify as a money transmitter or any other category of MSB and would not be subject to BSA requirements that are applicable only to MSBs. Instead, these persons would be subject to FinCEN’s regulations applicable to introducing brokers, futures commission merchants, broker-dealers and mutual funds, respectively. These obligations include the development of an AML program and suspicious activity reporting requirements, as well as requirements under applicable CFTC or SEC rules. Furthermore, regardless of federal functional regulator, all financial institutions dealing in digital assets meeting the definition of “securities” under federal law must comply with federal securities law.

Although the above language stresses the potential application of multiple regulatory regimes to a single business, it does not even acknowledge the issue of potential money transmitter licensing requirements for cryptocurrency exchanges under state laws, which all vary and exist independent of federal law.

Finally, and not surprisingly, the Joint Statement declares that regulators will not feel constrained by the labels ascribed to the activity at issue by the virtual currency business itself:

We are aware that market participants refer to digital assets using many different labels. The label or terminology used to describe a digital asset or a person engaging in or providing financial activities or services involving a digital asset, however, may not necessarily align with how that asset, activity or service is defined under the BSA, or under the laws and rules administered by the CFTC and the SEC. For example, something referred to as an “exchange” in a market for digital assets may or may not also qualify as an “exchange” as that term is used under the federal securities laws. As such, regardless of the label or terminology that market participants may use, or the level or type of technology employed, it is the facts and circumstances underlying an asset, activity or service, including its economic reality and use (whether intended or organically developed or repurposed), that determines the general categorization of an asset, the specific regulatory treatment of the activity involving the asset, and whether the persons involved are “financial institutions” for purposes of the BSA.

The message:  a business may not self-describe itself beyond the reach of an undesired regulator.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.

On October 1st, the Office of the Comptroller of the Currency (OCC) published the Fiscal Year 2020 Bank Supervision Operating Plan (“FY 2020 Plan”).

The FY 2020 Plan sets forth the OCC’s supervision priorities and objectives for the fiscal year beginning October 1, 2019 and ending September 30, 2020. The supervision priorities set forth align with the the OCC’s Strategic Plan, Fiscal Years 2019-2023.

The FY 2020 Plan facilitates the development of supervisory strategies for individual national banks, federal savings associations, federal branches, federal agencies, and technology services providers. OCC staff members use the plan to guide their supervisory priorities, planning, and resource allocations.

The FY 2020 Plan calls for the development of supervisory strategies that focus on a number of key areas including:

Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Compliance

The FY 2020 Plan emphasizes the institution’s implementation of Customer Due Diligence requirements including beneficial ownership information. We have blogged repeatedly on the BSA regulations regarding beneficial ownership, effective on May 11, 2018 (including here, and more generally regarding the issue of beneficial ownership, including here). The FY 2020 Plan also emphasizes evaluating whether an institution’s BSA/AML risk management systems match the complexity of the business models and products offered, evaluation of technology solutions used to perform or enhance BSA/AML oversight functions, and assessment of the adequacy of suspicious activity monitoring and reporting systems and processes.

Cybersecurity Operational Resiliency

The FY 2020 Plan emphasizes evaluating the institution’s threat vulnerability and detection, assess controls and data management, and management of third-party connections. The FY 2020 Plan calls for examiners to focus on an institution’s information technology risk management evaluation and its information technology systems maintenance.

Commercial and Retail Credit Underwriting  

The FY 2020 Plan focuses on evaluating the institution’s credit risk appetites, risk layering, and portfolio risk exposure. Supervisors will also examine the institution’s commercial and retail credit oversight and control functions, including portfolio administration and risk management, independent loan review, concentration risk management, policy exception tracking, collateral valuation, stress testing, and collection management.

Impact of Changing Interest Rate Outlooks

The FY 2020 Plan also focuses on the impact of changing interest rate outlooks on the institution’s activities and risk exposure, including deposit costs, funding migration, asset valuations, borrower debt service capacity, and housing affordability.

Preparedness for the Current Expected Credit Losses (CECL) Standard

The FY 2020 Plan focuses on the institution’s preparedness for the Current Expected Credit Losses (CECL) standard including evaluating implementation plans and use of third-party vendors to assist in methodology, modeling, and management information systems developed.

Preparedness for the Potential Phase-out of the London Interbank Offering Rate (LIBOR)

The FY 2020 Plan also focuses on the institution’s preparedness for the potential phase-out of LIBOR as a reference rate after 2021, including impact assessments, correlated risk assessments, vendor management, and change management related to the implementation of an alternative index for pricing loans, deposits, other products and services, as well operations and compliance risks.

Technological Innovation and Implementation

Finally, the FY 2020 Plan focuses on the institution’s technological innovation and implementation, including the use of cloud computing, artificial intelligence, digitalization in risk management processes, new products and services, and strategic plans. Further, the FY 2020 Plan allocates resources and support for risk-focused examinations of technology and significant service providers that provide critical processing and services to institutions.

While these priorities will guide supervision of all institutions examined, the FY 2020 Plan recognizes that departments will take into account bank size, complexity, and risk profile when developing individual bank supervisory strategies.

The FY 2020 Plan also calls on supervisory units within the OCC to coordinate resources and conduct agency-wide horizontal risk assessments during the year.

The OCC will provide periodic updates regarding supervisory priorities, emerging risks, and risk assessments in its Semiannual Risk Perspective reports.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.

Town of Metula at the Israel-Lebanon border – the site of 2006 rocket attacks by Hizbollah

On September 25, 2019, the Southern District of New York dismissed a complaint brought by victims of rocket attacks in Israel perpetrated in 2006 by Hizbollah, operating in Lebanon. Kaplan v. Lebanese Canadian Bank, SAL, Civ. No. 08 Civ. 7253, 2019 U.S. Dist. LEXIS 162505 (S.D.N.Y. Sept. 20, 2019). The Complaint was brought under the Anti-Terrorism Act, 18 USC 2333 (“ATA”). In it, the Plaintiffs alleged that the Lebanese Canadian Bank, SAL (“LCB”) provided banking services to five members of Hizbollah (“Hizbollah affiliates”), and by doing so, they materially supported an act of international terrorism.

Specifically, the Complaint alleged, among other things, that LCB failed to take certain due diligence measures, including reviewing public sources, and as a result continued to bank with members of Hizbollah. According to the Complaint, the bank’s customers’ afficilation with Hizbollah was “notorious public knowledge” due to news articles, reports, and Hizbollah’s own media sources. The Plaintiffs alleged that, even if the bank did not have actual knowledge, the bank at least should have known because it had a duty to perform due diligence on its customers, monitor and report suspicious or illegal banking activities, and not provide banking services to terrorist organizations.

Although the Kaplan case arises in the context of international terrorism and potential liability under the ATA, its analysis and conclusions can apply to more mundane state law tort claims against financial institutions by investors or consumers defrauded by the institution’s (former) customers. These claims often attempt to bootstrap allegations that a bank knew should have known about the customer’s fraud scheme due to the bank’s anti-money laundering (AML) monitoring and reporting obligations under the Bank Secrecy Act (“BSA”). As we have blogged, courts hold that evidence of an imperfect AML program and potential red flags about a customer fall short of the high bar required to sustain a claim for aiding and abetting a fraud or other tort against third party non-customers.

Continue Reading Anti-Terrorism Act Liability Requires More than Mere Failures of Customer Due Diligence

Remarks Focus on Account Takeovers, BEC Schemes, Beneficial Ownership, Technological Innovation and SARs

FinCEN Director Kenneth A. Blanco delivered prepared remarks on September 24 at the 2019 Federal Identity (FedID) Forum and Exposition in Tampa, Florida.

Director Blanco summarized the topics of his remarks by stating the following:

  1. First, I would like to tell you a little about FinCEN. Who we are, what we do, and why I am here to speak with you today.
  2. Second, I will speak to how illicit actors are leveraging identity. Specifically, I will highlight some of the trends FinCEN is seeing in how criminals exploit and compromise identities.
  3. Third, I will discuss how we use identity to protect our national security and keep our communities and families safe from harm.

As to the “who” and “what” of FinCEN, Director Blanco emphasized the agency’s role as “Administrator of the Bank Secrecy Act” and “THE Financial Intelligence Unit” of the U.S. Director Blanco went on to describe current developments in how “identity” – described by Director Blanco as “who we are legally” – is employed in the financial sector and government. Such developments are “critically important,” in part because “the features that make identity information valuable to companies also make these data stores high value targets for criminals and other bad actors, including terrorists and rogue states.”

Director Blanco next addressed the abuse of personally identifiable information by means of “account takeover,” which involves the targeting of customer accounts to gain unauthorized access to funds. He noted that FinCEN receives approximately 5,000 account takeover reports each month (totaling about $350 million), but that this figure amount merely reflects “attempts” and not actual losses. Director Blanco further noted that, “Criminals often acquire these leaked credentials through hacks, social engineering, or by purchasing them on darknet fora to facilitate the account takeover. Depository institutions, such as banks, are the most common targets given their high numbers of customer accounts, but institutions like insurance companies, money services businesses, and casinos, and of course their customers, are also affected.” Director Blanco then called for improving “cyber hygiene” by, among other things, implementing strong authentication solutions (such as multi-factor authorization and authentication procedures for processing payments or allowing access to sensitive information).  He reminded the audience that FinCEN held in July 2019 a FinCEN Exchange on business email compromise (BEC) fraud schemes targeting U.S. financial institutions and their customers, and that FinCEN had issued a July 16, 2019 Advisory on BEC fraud.

Separately, Director Blanco warned of bad actors who exploit weaknesses posed by the ubiquity of Social Security numbers (“SSN”). A FinCEN analysis of Suspicious Activity Reports (“SARs”) filed since January 2003 found more than 600,000 SSNs affiliated with identity theft reported from financial institutions, many of which were associated with more than one name. “That is mind-boggling, and it points to something wrong with how identity is being verified and authenticated across much of the financial system.”

Director Blanco then discussed the use of identity as a means to counter illicit activity. In doing so, he emphasized that beneficial ownership information is a critical issue whose “importance to our national security cannot be understated.” Notably, Director Blanco criticized the lack of an ability to collect identity information as a “dangerous and widening gap in our national security apparatus.” Although he praised the agency’s promulgation of the customer due diligence rule (a topic on which we have written extensively, see, e.g., here, here and here), he called for a separate rule to collect beneficial ownership information at the corporate formation stage. “To be sure, it is not that shell companies should not exist—it is just that the authorities should be able to know who owns and controls them when there is a legitimate law enforcement need, subject to appropriate information access safeguards. But currently, there is no federal standard requiring those who establish shell companies in the [U.S.] to provide basic, but critical information at company formation.”

Finally, Direct Blanco stated that FinCEN has strongly supported “responsible innovation” in the financial sector in regards to using technological advances to comply with BSA regulations. “Innovative indicators that reveal customers’ digital footprints and activities are extremely helpful to financial institutions in the conduct of their day-to-day business, including helping them understand customer activity and monitoring for suspicious activity.” He observed that FinCEN changed the SAR form in 2018 in order to allow for the reporting of up to 99 technical indicators, such as IP addresses, MD5 hashes, PGP keys, and device identifiers.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.  If you would like to remain updated on cybersecurity issues, please check out Ballard Spahr’s CyberAdviser blog.

Last Wednesday, FinCEN Deputy Director Jamal El-Hindi appeared at the annual conference of the Money Transmitter Regulators Association and delivered prepared remarks. The topics of his address covered three issues of continuing interest: (i) innovation and reform with respect to implementation of the Bank Secrecy Act (BSA); (ii) FinCEN supervision of non-banking financial institutions; and (iii) maintaining a strong culture of compliance. Continue Reading FinCEN Deputy Director Stresses Technological Innovation, Virtual Currency Enforcement and the U.S. Culture of Compliance

A Modest Proposal

The European Union (“EU”) recently has grappled with a series of massive money laundering scandals and strategized about how to more effectively combat international money laundering and corruption. Generally, the EU has continued to issue a series of reports identifying systemic vulnerabilities to money laundering and suggest process-based recommendations for how to address future threats. These recommendations typically mirror the same range of process-based improvements set forth in earlier reports: from enhancing cross-border information sharing to increasing resources for adequate implementation and enforcement of anti-money laundering (“AML”) and counter financing of terrorism (“CFT”) policies implemented by EU member states and financial institutions. Noticeably absent from these recommendations is one of the most powerful deterrents available – and a distinctly American approach – prosecuting the bad actors.

Although many of the recent EU money laundering scandals rest on conduct occurring years ago, the recurring waves of scandals strongly suggest that the EU – like the U.S. – has a serious problem with money laundering that is not going away any time soon. They likewise indicate that the EU’s financial system will continue to be abused by bad actors who appear to be unfazed by any potential consequences. The EU therefore should consider emulating – at least in part – the American approach of more aggressively investigating and prosecuting individuals, including the corrupt politicians, kleptocrats, drug dealers, fraudsters, and other criminals from around the globe who are laundering sometimes massive amounts of funds through European financial institutions.

Very recently, in a different but related context, the Chairman of the U.S. Securities and Exchange Commission (“SEC”), Jay Clayton, delivered a speech during which he bemoaned his perception that his foreign counterparts failed to rigorously enforce their own anti-corruption laws. Specifically, Chairman Clayton asserted the following:

Corruption is corrosive. We see examples where corruption leads to poverty, exploitation and conflict. Yet, we must face the fact that, in many areas of the world, our work may not be having the desired effect. Why? In significant part, because many other countries, including those that have long had similar offshore anti-corruption laws on their books, do not enforce those laws.

Granted, the above comments pertained specifically to enforcement of the Foreign Corrupt Practices Act (“FCPA”), and arguably the comments were in furtherance of a pro-American message regarding international competition between countries. The comments nonetheless exemplifies a certain American perception: the U.S. aggressively prosecutes individuals, whereas Europe does not. Obviously, this issue entails a lot of cultural baggage on both sides.

Although there are viable criticisms of the U.S. approach (both in theory and in practice), and although the EU’s strong focus on process and institutions’ AML and CFT systems is critical, any government’s enforcement “tool bag” must include targeted prosecutions of the people responsible for the laundering violations. Otherwise, few bad actors around the world will think twice about continuing to turn to EU institutions for their laundering needs. This blog post explores this idea. Continue Reading The EU’s Efforts to Combat Money Laundering, the Financing of Terrorism and Corruption Seem to Overlook a Very American Approach: Prosecute People

The United States continues to be plagued by mass shootings, which appear to be increasing in both frequency and lethality.  Certain businesses have reacted by adjusting their business models, such as the recent decision by mega-retailer WalMart to stop selling some — but not all — types of ammunition.  Likewise, some financial institutions have imposed restrictions on retail business clients which sell firearms or have stopped lending to certain gun manufacturers.

However, at least some commentators have made a much more far-reaching proposal.  They argue that banks and credit card companies should draw upon their experience monitoring transactions under their Bank Secrecy Act (“BSA”)/Anti-Money Laundering (“AML”) programs and attempt to review individual customers’ purchases of firearms, ammunition and related items such as body armor — in order to file Suspicious Activity Reports (“SARs”) and/or terminate their accounts.

But in order to monitor these types of transactions, financial institutions first would have to convince retailers to provide extra data on customers’ purchases, which otherwise would not typically inform the institution of the precise nature of any given purchase. Moreover, because this proposal focuses on individual customers, the financial institutions would have to draw conclusions based on imperfect information regarding the “true intentions” of the purchaser.  This task would be much more nuanced and difficult than a blanket decision to not do business with a particular industry.

We recognize the sensitive nature of this topic and seek merely to acknowledge this emerging national debate — one unlikely to fade from the national discourse in light of the continued mass shootings that will (unfortunately) keep happening – and to caution the possibility that future civil lawsuits against financial institutions, worthy or not, might incorporate allegations regarding BSA/AML programs and responsibilities.  Such lawsuits could rest on unrealistic assumptions regarding the actual capacity of financial institutions to detect and report the apparent planning activities of a future mass shooter.

This issue invokes echoes of Operation Choke Point, the very controversial and now-defunct program initiated by the Department of Justice and implemented in part by the Federal Deposit Insurance Corporation, in which financial institutions were subjected to higher regulatory scrutiny for providing services to certain allegedly “high risk” but legal businesses, such as gun and ammunition manufacturers.  Perhaps not surprisingly, certain groups have reacted with vehement opposition to the notion that financial institutions should apply higher scrutiny to transactions relating to firearms.  For example, Senator John Kennedy of Louisiana has introduced a bill, entitled the “No Red and Blue Banks Act,” to “prohibit the award of federal contracts to banks that discriminate against lawful businesses through social policy considerations.”  The stated purpose of the bill is to “ensure that [banks] will not be awarded lucrative federal government contracts after trampling on business owners’ Second Amendment rights.”  Although such a bill may simply be a vehicle for a press release, the sentiment is real.

Aside from Second Amendment issues, others have argued that imposing this moral and regulatory burden on banks and credit card companies inappropriately shifts the responsibility for addressing the scourge of mass shootings from where it belongs – with Congress, state legislatures and law enforcement.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.

Today we are very pleased to welcome guest bloggers Gretta Fenner and Dr. Kateryna Boguslavska of the Basel Institute on Governance (“Basel Institute”). The Basel Institute recently issued its Basel AML Index for 2019. As they explain below, this data-rich and fascinating Index, on which we blogged last year, is one of several online tools developed by the Basel Institute to help both public- and private-sector practitioners tackle financial crime.  The Index is a research-based ranking that assesses countries’ risk exposure to money laundering and terrorist financing.

Established in 2003, the Basel Institute is a not-for-profit Swiss foundation dedicated to working with public and private partners around the world to prevent and combat corruption, and is an Associated Institute of the University of Basel. The Basel Institute’s work involves action, advice and research on issues including anti-corruption collective action, asset recovery, corporate governance and compliance, and more.

Gretta Fenner is the Managing Director of the Basel Institute, where she also holds the position of Director of the Institute’s International Centre for Asset Recovery. She is a political scientist by training and holds bachelor’s and master’s degrees from the Otto-Suhr-Institute at the Free University Berlin, Germany, and the Paris Institute for Political Science (Sciences Po), France. She also holds an MBA from the Curtin University Graduate School of Business, Australia.

Dr. Kateryna Boguslavska is Project Manager for the Basel AML Index at the Basel Institute. A political scientist, she holds a PhD in Political Science from the National Academy of Science in Ukraine, a master’s degree in Comparative and International Studies from ETH Zurich as well as a master’s degree in Political Science from the National University of Kyiv-Mohyla Academy in Ukraine. Before joining the Basel Institute, Dr. Boguslavska worked at Chatham House in London as an Academy Fellow for the Russia and Eurasia program.

This blog post takes the form of a Q & A session, in which Ms. Fenner and Dr. Boguslavska respond to several questions posed by Money Laundering Watch about the Basel AML Index 2019. We hope you enjoy this discussion of global money laundering risks — which addresses AML compliance vs. actual effectiveness, kleptocracy, transparency, de-risking, and more. –Peter Hardy Continue Reading What the Basel AML Index Reveals About Global Money Laundering Risks

On August 21, 2019, FinCEN issued an advisory (the “Advisory”) alerting financial institutions to various financial schemes and mechanisms employed by fentanyl and synthetic opioid traffickers to facilitate the illegal fentanyl trade and launder its proceeds.

As defined by the Centers for Disease Control and Prevention (“CDC”), “fentanyl is a synthetic (man-made) opioid 50 times more potent than heroin and 100 times more potent that morphine.” In 2017, more than 28,000 deaths involving fentanyl and other synthetic opioid occurred in the United States. As noted in the Advisory, fentanyl traffics in the United States from two principal sources: from China by U.S. individuals for personal consumption or domestic distribution or from Mexico by transnational criminal organizations (“TCOs”) and other criminal networks. In turn, these trades are funded through a number of mechanisms, including: purchases from a foreign source made using money servICES businesses (“MSBs”), bank transfers or online payment processors; purchases from a foreign source made using convertible virtual currency (“CVC”); purchases from a domestic source made using MSBs, online payment processors, CVC or person-to-person cash sales.

Recognizing fentanyl traffickers’ modus operandi is critical to detecting and preventing these illicit transactions. Thus, the Advisory provides detailed illustrations of each of the above-identified forms of transaction in order to assist financial institutions to detect and prevent facilitating fentanyl trafficking. Continue Reading FinCEN Advisory Highlights Money Laundering Risks Related to Fentanyl Trafficking

The Financial Crimes Enforcement Network (FinCEN) issued a press release today, entitled “New FinCEN Division Focuses on Identifying Primary Foreign Money Laundering Threats.”

The announcement states that this new Division will focus on topics about which we have blogged repeatedly:  Section 311 of the USA Patriot Act and threats posed to the financial system by narcotics trafficking and the financing of terrorism.  Pursuant to Section 311, FinCEN is authorized to designate foreign financial institutions as being “of primary money laundering concern” and to take any of five “special measures” against institutions so designated. FinCEN can impose the most severe, fifth special measure—allowing it to prohibit or restrict domestic financial institutions from opening or maintaining correspondent accounts for designated foreign financial institutions—by issuing a regulation under the Administrative Procedures Act.

The announcement also stresses the goal of FinCEN to coordinate more with the financial regulation authorities of other countries, thereby underscoring the increasingly international aspects of anti-money laundering enforcement, as well as financial corruption and money laundering itself.

The press release is relatively short, and so it is set forth below in its entirety:

[FinCEN] has launched its Global Investigations Division (GID), which will be responsible for implementing targeted investigation strategies rooted in FinCEN’s unique authorities under the Bank Secrecy Act (BSA) to combat illicit finance threats and related crimes, both domestically and internationally.

FinCEN Director Kenneth A. Blanco announced that Matthew Stiglitz, a former Principal Deputy Chief in the Department of Justice’s Criminal Division, will lead GID. Mr. Stiglitz brings considerable experience to FinCEN in complex international investigations after spending more than 24 years as a state and Federal prosecutor.

“FinCEN will greatly benefit from Matthew’s experience, leadership, and management skills,” said Director Blanco. “We are excited to have him on our team as we stand up GID to further focus FinCEN’s investigative efforts to protect our nation and its people from harm.”

GID will leverage FinCEN’s BSA authorities, including Section 311 of the USA PATRIOT Act, to investigate and target terrorist finance and money laundering threats, and GID will work more closely with foreign counterparts to coordinate actions against such threats when appropriate.

The foundation of GID is FinCEN’s former Office of Special Measures (OSM), which was previously a part of FinCEN’s Enforcement Division. FinCEN’s strategic use of its Section 311 authority as well as its other information collection authorities, such as the geographic targeting order and foreign financial agency regulation authorities, have greatly expanded in recent years. FinCEN will now have one dedicated division focused on utilizing these authorities to maximum effect, building upon OSM’s prior work.

GID will employ FinCEN’s authorities to detect and deter a wide range of potential threats to our national security and financial system, including those that have a nexus to the proliferation of weapons of mass destruction, rogue state actors, transnational organized crime, international narcotics trafficking, and terrorism.

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.