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 Union Round-Up: A Summer of AML Enforcement and Compliance Proposals
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.
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DOJ Again Uses Money Laundering Statutes to Charge Alleged Foreign Corruption Scheme — This Time in Brazil
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
Review, then Reform? AMLA Charts a Path for the Future of SARs and CTRs
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.
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DOJ Announces Historic Civil Forfeiture Settlement in 1MDB Case
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.
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FinCEN Deputy Director Stresses Technological Innovation, Virtual Currency Enforcement and the U.S. Culture of Compliance
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.
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Federal Reserve and FinCEN Raise Alarms Regarding Technology-Assisted Financial Fraud
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.
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Congressional Funding Bill Pursues Approval of Financial Services for Marijuana Industry Through the (Temporary) Backdoor
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
Standard Chartered Bank Enters Combined $1 Billion+ Settlement with U.S. and U.K. Authorities Over Iranian Financial Transactions
UK-based Standard Chartered Bank (“SCB”) announced the terms of significant settlements last week with various U.S. and U.K. governmental agencies, resolving a series of related investigations into the bank’s alleged violations of international sanctions and concomitant failures of anti-money laundering (“AML”) controls over a period stretching from 2007 to 2014. The bank will pay a total of $1.1 billion in combined forfeitures and fines to various national and state agencies in the two countries — and extend, once again, its deferred prosecution agreements (“DPAs”) with the U.S. Department of Justice (“DOJ”) and the New York County District Attorney’s Office (“NYDA”).
Specifically, the bank will pay: a $480 million fine and a $240 million forfeiture to the DOJ; approximately $639 million to the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”); over $292 million to the NYDA; almost $164 million to the Board of Governors of the Federal Reserve System; and $180 million to the New York Department of Financial Services. The bank also will pay over £102 million (an amount approximately equal to over $133 million) to the U.K.’s Financial Conduct Authority (“FCA”). After certain payments are credited against some of these penalties, the total will exceed $1 billion.
Financial Services and the Marijuana Industry: the U.S. House Mulls Regulatory Reform for Financial Institutions and Cannabis-Related Businesses
Federal legislators continue to struggle over the growing disconnect between increasing State legalization of the cannabis industry, and the continued illegality of cannabis under federal law. This struggle represents an increasingly pressing question for financial institutions, given the burgeoning market involving cannabis-related products – including third parties who provide services and equipment to growers and distributors – and its need for safe, traditional banking services. The latest chapter in this struggle was a hearing, entitled “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses,” held by the House Financial Services Committee’s Subcommittee on Consumer Protection and Financial Institutions on February 13. The recorded webcast is available here.
We previously have blogged about the unsteady regulatory ground on which financial institutions have been operating with regard to cannabis-related businesses, an industry legalized in many states but still in violation of federal drug laws and thus exposing its financial service providers to potential Bank Secrecy Act (“BSA”) violations and federal money laundering charges. The terrain grew only more perilous at the beginning of 2018 with then-Attorney General Sessions’ decision to rescind the Cole Memo, and with it the prior limited assurance that the DOJ would not make prosecution of persons working in or with state-licensed cananbis businesses a DOJ priority.
The 2018 midterm elections, however, changed the landscape yet again. This post will discuss last week’s hearing and the growing opportunities and stubborn obstacles which it highlighted.
Continue Reading Financial Services and the Marijuana Industry: the U.S. House Mulls Regulatory Reform for Financial Institutions and Cannabis-Related Businesses