Brad Gershel

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gershelb@ballardspahr.com | 646.346.8034 | view full bio

Brad focuses his practice on representing individuals and companies in white-collar criminal and civil matters, including government inquiries and internal investigations. Brad has significant experience in a wide range of enforcement, criminal and regulatory matters, including those relating to fraud, foreign bribery, and public corruption. His experience spans multiple state and federal law enforcement agencies, including the DOJ, FINRA, SEC, and New York County District Attorney’s Office. Additionally, he has represented clients in criminal and regulatory investigations for alleged violations of the False Claims Act and the Foreign Corrupt Practices Act.

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The European Parliament Votes to Ban Such Programs, with Immediate Effect as to all Russian Applicants

On March 9, the European Parliament (“Parliament”) voted overwhelmingly to limit citizenship-by-investment (“CBI”) programs in the European Union.  The vote, formally adopting a report by Sophie Int’ Veld, a Dutch Member of Parliament (“MEP”), calls on the European Commission (“Commission”) to enact legislation to phase out CBI programs and establish strict regulations governing residence-by-investment (“RBI”) programs.

Consistent with sweeping sanctions levied against Russia and affiliated entities and individuals in the wake of that country’s invasion of Ukraine, the Parliament is additionally calling for an immediate end to the processing of all Russian applicants of CBI/RBI programs.  The Parliament is also calling for EU members to “reassess” all approved applications from Russian citizens from the past few years to ensure that “no Russian individual with financial, business or other links to the Putin regime retains his or her citizenship and residency rights.”

As we will discuss, the risks for countries implementing CBI/RBI programs are significant, not least of which is the potential facilitation of corruption and money laundering.  As the Parliament noted in its report, these risks often cannot be properly assessed due to a lack of transparency and are not sufficiently managed, resulting in weak vetting and a lack of due diligence.
Continue Reading  “Golden” Passports and Visas

Farewell to 2021, and welcome 2022 — which hopefully will be better year for all.  As we do every year, let’s look back — because 2021 was a very busy year in the world of money laundering and BSA/AML compliance, and 2022 is shaping up to be the same.

Indicative of the increased pace and…

On December 14, the Financial Crimes Enforcement Network (“FinCEN”) issued a request for information (“RFI”), seeking comment on ways to “streamline, modernize, and update” the anti-money laundering (“AML”) and counter-terrorism financing (“CTF”) regime of the United States.  As we will discuss, the RFI is the latest development in a protracted inquiry into how to try to leverage technology in order to maximize the usefulness to the government of Bank Secrecy Act (“BSA”) reporting and record-keeping, and minimize the compliance costs imposed on industry.  However, as we also discuss, the RFI may add fuel to ongoing efforts to expand the coverage and reporting requirements of BSA regulations.
Continue Reading  FinCEN Seeks Comments on Modernizing the AML/CFT Regime

Terracotta Army near the city of Xian, China.

On September 23, the Financial Crimes Enforcement Network (“FinCEN”) issued an advance notice of proposed rulemaking (“ANPRM”) to solicit comment on questions related to the implementation of anti-money laundering (“AML”) rules in the antiquities market.

As we have previously blogged, the Anti-Money…

Fourth and Final Post in a Series on the FATF Plenary Outcomes

As we have previously blogged (here, here and here), the Financial Action Task Force (“FATF”) held its fourth Plenary on June 21-25, inviting delegates from around the world to meet (virtually) and discuss a wide range of global financial crimes and ongoing risk areas. Following the Plenary, FATF issued reports to detail their findings on specific topics. This post highlights three takeaways from the report entitled Second 12-Month Review of the Revised FATF Standards on Virtual Assets (“Report”).

Background

In June 2019, the FATF issued guidance instructing its 180 international member governments to demand that virtual asset service providers (“VASPs), such as cryptocurrency exchanges and digital wallet providers, collect “accurate originator information and required beneficiary information” on transactions totaling $1,000 or more (see here for our detailed blog post on this subject).

The FATF also agreed to undertake a yearlong review documenting the progress that its member countries have made towards implementing its guidance on regulation of VASPs. It released the findings of that review in July 2020 and committed to a second 12-month review by June 2021. The Report, based on the findings of a self-assessment questionnaire provided to 128 jurisdictions, sets out the findings of the second 12-month review.
Continue Reading  FATF Continues to Stress AML Risks From Virtual Asset Service Providers

In Related Case, Federal Court Holds that Bitcoin-to-Bitcoin “Tumbler” Can Represent “Money Transmission”

On April 27, IRS CI and FBI Special Agents arrested Roman Sterlingov, a dual citizen of Russia and Sweden, for his alleged role as the founder and operator of Bitcoin Fog, a cryptocurrency “tumbler” or “mixer” aimed at concealing the source of funds. The criminal complaint and accompanying Statement of Facts, filed in the District of Columbia, alleges that over the course of 10 years, Bitcoin Fog moved more than 1.2 million bitcoin, valued (at the time of the transactions) at about $335 million. According to the government’s press release, “[t]he bulk of this cryptocurrency came from darknet marketplaces and was tied to illegal narcotics, computer fraud and abuse activities, and identity theft.”

Sterlingov allegedly founded the site while promoting it under the pseudonym Akemashite Omedetou, a Japanese phrase that means “Happy New Year.” In a post on an online Bitcoin forum, Omedetou advertised that Bitcoin Fog “[mixes] up your bitcoins in our own pool with other users,” and “can eliminate any chance of finding your payments and making it impossible to prove any connection between a deposit and a withdraw inside our service.”

Ironically, Sterlingov was identified by investigators using the very same sort of tracing that Bitcoin Fog was meant to forestall. The Statement of Facts outlines in extensive detail how Sterlingov allegedly paid for Bitcoin Fog’s domain using a now-defunct digital currency; it goes on to show a series of transactions recorded to the blockchain that identifies Sterlingov’s purchase of that currency with bitcoin. Based on tracing those financial transactions, investigators were able to identify Sterlingov’s home address and phone number, together with a Google account that hosts a document that describes how to obscure bitcoin payments – that document mirrors closely the methods Sterlingov allegedly employed to purchase the Bitcoin Fog domain.

In addition to thanking various domestic law enforcement agencies, the government’s press release highlights the international nature of the investigation by also thanking Europol and Swedish and Romanian law enforcement agencies. The criminal complaint against Sterlingov is therefore another example of IRC-CI pursuing its simultaneous goals of fighting crypto-related crime and collaborating with foreign law enforcement officials in order to do so.

Notably, this is the second case brought by the Department of Justice, Criminal Division’s Computer Crime and Intellectual Property Section, targeting virtual currency mixer operations. In United States v. Harmon, a case also being prosecuted in the District of Columbia, the defendant has similarly been charged for his alleged role in operating Helix, a bitcoin mixer that sent more than $300 million in bitcoin to designated recipients.
Continue Reading  DOJ Again Charges Crypto “Mixer” Under the BSA and District of Columbia’s Money Transmitters Act

Reunification of Korean Peninsula Memorial at the Entrance to Pyongyang

Related Money Laundering Case Relying on ATM Cash-Outs and BEC Schemes Also Unsealed

On February 17, the Department of Justice unsealed a sprawling indictment against three members of North Korea’s military intelligence agency – known as the Reconnaissance General Bureau –…

Farewell to 2020.  Although it was an extremely difficult year, let’s still look back — because 2020 was yet another busy year in the world of money laundering and BSA/AML compliance.

We are highlighting 12 of our most-read blog posts from 2020, which address many of the key issues we’ve examined during the past year…

On December 18, the Financial Crimes Enforcement Network (“FinCEN”) issued a proposal to impose on banks and money service businesses (“affected institutions”) a new set of rules for digital currency transactions involving “unhosted” digital asset wallets (i.e., wallets that are not provided by a financial institution or other service and reside instead on a user’s personal device or offline).  The proposed rule states that, for the purposes of these new requirements only, the definition of “monetary instruments” at 31 U.S.C. § 5312(a)(3) would be expanded to include convertible virtual currency and digital assets with legal tender status.  If adopted, the rule will create significant obligations for recordkeeping, reporting, and identity verification requirements.
Continue Reading  FinCEN Proposes New Rule for “Unhosted” Virtual Currency Wallets

Regulators’ Joint Statement Attempts to Clarify AML Expectations Regarding Potential Corrupt Actors

On August 21, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and other banking regulators – specifically the Federal Reserve, the FDIC, the National Credit Union Administration, and the OCC – issued a joint statement that provides additional guidance in applying Bank Secrecy…