kearneyb@ballardspahr.com | 215.864.8275 | view full bio

Brian assists corporate clients in white collar criminal and civil matters. His white collar practice includes providing advice on AML and BSA litigation and compliance, including matters involving suspicious activity reports. Prior to law school, Brian spent a decade as an educator at Saint Joseph’s Preparatory School in Philadelphia.

We blogged previously on the significant steps the European Union (“EU”) recently has taken toward implementing a rigorous new transnational anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) enforcement framework. This included, inter aliaEU-wide guidelines proposed by the European Banking Authority (“EBA”) for AML/CFT compliance officers. The need for competent, experienced, and sufficiently empowered AML/CFT compliance teams was further underlined by an Opinion and Report (“Opinion”) issued by the EBA last week on the potentially problematic trend of widespread “de-risking” across the EU.

“De-risking” is the term for a financial institution’s decision to terminate a business relationship, or refuse to do business, with an individual or category of individuals associated with a heightened risk of involvement in money laundering or terrorist financing. The EBA was impelled to address this institutional behavior, which, even if consistent with existing Authority guidance, “can be unwarranted and a sign of ineffective ML/TF risk management,” if done “without due consideration of individual customers’ risk profiles.”

The Opinion points out that indiscriminate de-risking can have the unintended effect of excluding certain (non-criminal) categories of individuals and entities from the financial system. This is framed, if not explicitly labeled, as a civil rights issue: the Opinion states that “access to at least basic financial products and services is a prerequisite for participation in modern economic and social life.” In some cases, the Opinion notes, financial institutions themselves have found themselves the targets of de-risking because of their regions’ reputations for ML/TF problems. De-risking these institutions essentially disqualifies them from participation in the EU transnational financial system, potentially affecting the socioeconomic stability of their home EU member state.

Such de-risking also, paradoxically, has the potential to exacerbate risk for the EU as a whole. The Report notes that “customers affected by de-risking may resort to alternative payment channels in the EU and elsewhere to meet their financial needs. As a result, transactions may no longer be monitored, making the detection and reporting of suspicious transactions and, ultimately, the prevention of ML/TF more difficult.” Because, as noted previously, entities need to access “at least basic financial products and services” to participate in modern society, restricting their access to such services may push them to seek alternatives in the so-called “shadow banking system,” an unregulated web of lenders which the EBA has attempted to weaken.
Continue Reading A Paradox: “De-Risking” Can Increase AML/CFT Risks By Driving People into the “Shadow Banking System”

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

We previously blogged about the Financial Crimes Enforcement Network’s (“FinCEN’s”) issuance on June 30 of the first government-wide list of priorities for anti-money laundering and countering the financing of terrorism (“AML/CFT”) (the “Priorities”), as required by the Anti-Money Laundering Act of 2020 (“AML Act”). The eight-item list was a “greatest hits” rundown of

European Commission Proposes EU-Level Supervisory Authority and Cryptocurrency Travel Rule

European Banking Authority Offers New Guidelines on AML Compliance Officers

Just as the United States has expanded significantly its anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) regulatory and enforcement regime through recent passage of the AML Act of 2020, the European Union (“EU”) has taken significant steps this summer towards implementing a rigorous new transnational AML enforcement framework.  Recent legislative proposals by the European Commission (the EU’s executive branch) aim to combat cross-border crime by ensuring uniform implementation and enforcement of AML/CFT principles, rules, and regulations, and by creating new recordkeeping requirement for certain cryptocurrency transactions.  Following the announcement of these legislative proposals, the European Banking Authority proposed in late July new EU-wide guidelines for AML/CFT compliance officers.  We examine each of these in turn.
Continue Reading European Union Round-Up:  A Summer of AML Enforcement and Compliance Proposals

Indictment Alleges International Scheme Involving Bribes Touching NY Correspondent Bank Accounts

The U.S. Department of Justice announced last week that U.K. law enforcement officials arrested, at its request, an Austrian national, Peter Weinzierl, for his alleged participation in a wide-ranging money laundering scheme involving Brazilian construction conglomerate Odebrecht S.A. Odebrecht previously pleaded guilty in December

Eighth Blog Post in an Extended Series on Legislative Changes to the BSA/AML Regulatory Regime

As we have blogged, the Anti-Money Laundering Act of 2020 (“AMLA”) contains major changes to the Bank Secrecy Act (“BSA”), coupled with other changes relating to money laundering, anti-money laundering (“AML”), counter-terrorism financing (“CTF”) and protecting the U.S. financial system against illicit foreign actors.   In this post, we review several provisions of the AMLA section entitled “Modernizing the Anti-Money Laundering and Countering the Financing of Terrorism System.” These provisions signal potentially significant changes in the BSA reporting regime for suspicious activity and currency transactions – albeit in the future, after the performance of studies and reports which Congress has required regarding the effectiveness of Suspicious Activity Report (“SAR”) and Currency Transaction Report (“CTR”) filings.

These provisions of the AMLA require the Treasury Secretary to acquire a fuller picture of the reporting regime as it currently functions in regards to SAR and CTR filings. We repeatedly have blogged about the ongoing debate regarding the utility of SARs and other BSA reports versus the onus the system places on financial institutions (see, for example, here, here, here and here). The AMLA now creates the opportunity for the government to respond to that debate with a data-driven approach. The theme of these AMLA provisions is feedback – both internal and external – regarding how (and whether) SARs work.  Notably, they also address the issue of whether the monetary filing thresholds for SARs (generally, $5,000) and CTRs ($10,000) should be increased.


Continue Reading Review, then Reform? AMLA Charts a Path for the Future of SARs and CTRs

Settlement Applies to $700 Million in Luxury Assets; Law Firms Obtain a Carve-Out

Last week, the Justice Department announced a massive settlement in the 1Malaysia Development Berhad (“1MDB”) case, a matter implicating numerous money laundering and FCPA concerns and one about which we previously blogged here.

The DOJ announced a blanket settlement of all pending civil forfeiture cases against assets acquired by fugitive Malaysian financier Low Taek Jho (“Jho Low”) and various members of his family. The assets, consisting of both cash and real property, are currently located in the United States, United Kingdom, and Switzerland, and exceed $700 million. When combined with prior dispositions, this means the United States government has now recovered over $1 billion associated with the 1MDB scheme. The current settlement constitutes not only the largest recovery by the Department’s recently formed “Kleptocracy Asset Recovery Initiative,” but the largest DOJ civil forfeiture on record.

The assets subject to the agreement represent an eye-catching list of high-end baubles, including a jet aircraft; luxurious properties in New York, Los Angeles, Beverly Hills, and London; stock; and rights to music royalties. The agreement further notes that, although not specifically part of the settlement because they already have been resolved, other related forfeiture cases – including the forfeiture of a gigantic yacht – have been “considered” as part of this global resolution.
Continue Reading DOJ Announces Historic Civil Forfeiture Settlement in 1MDB Case

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

The Federal Reserve and the Financial Crimes Enforcement Network, or FinCEN, both recently issued reports addressing worrisome trends in technology-assisted financial fraud.  The reports seek to engage the financial services industry in partnering more closely to reduce associated losses.

Specifically, the Federal Reserve issued a report entitled Synthetic Identity Fraud in the U.S. Payment System. FinCEN issued a report entitled Manufacturing and Construction Top Targets for Business Email Compromise. Collectively, the reports reflect how techonology-driven fraud and identity theft schemes can target financial institutions, businesses and consumers alike, thereby impacting the Anti-Money Laundering and related anti-fraud programs of the financial institutions implicated by such schemes.
Continue Reading Federal Reserve and FinCEN Raise Alarms Regarding Technology-Assisted Financial Fraud

As we have blogged, there is perplexing, significant and ongoing uncertainty regarding just how federal criminal and Bank Secrecy Act laws will be – or will not be – enforced against financial institutions providing banking services to marijuana-related businesses (“MRBs”). As our blog has discussed, recent bipartisan efforts in the 116th Congress to