Indictment Focuses on “High Risk” Transactions Involving Mexico, Bulk Cash, and Zero SAR Filings
On September 13, the United States Attorney’s Office for the Eastern District of New York announced that defendant Hanan Ofer pleaded guilty to “failing to maintain an effective anti-money laundering program.” Ofer and his co-defendant, Gyanendra Asre, were named in a March 2021 indictment (the “Indictment”) alleging they funneled “hundreds of millions of dollars from high-risk foreign jurisdictions” – primarily, Mexico – from 2014 to 2016, through “small, unsophisticated financial institutions” without implementing an anti-money laundering program as required by the Bank Secrecy Act (“BSA”). Ofer and Asre were charged with failure to maintain an effective anti-money laundering (“AML”) program, failure to file (any) Suspicious Activity Reports (“SARs”), and the operation of an unlicensed money transmitting business.
As we discuss, it is a little difficult to draw clear lessons from the Indictment. Although the DOJ press release emphasizes the eye-catching number of $1 billion, neither the press release nor the Indictment actually describe these transactions as “suspicious,” much less as involving specific illicit proceeds. Rather, and as we discuss, the transactions are described merely as “high risk.” Thus, and although it is entirely possible that the government has access to evidence which it did not reference in the charges, the Indictment appears to rely heavily on a very process-oriented theory of prosecution: the defendants failed to implement adequate processes to monitor and/or prevent transfers that were “high risk,” but not demonstrably related to illicit funds involving specific underlying criminality.
It is also important to acknowledge the Indictment’s allegations against both defendants for operating, apparently “on the side,” a separate unlicensed money transmitter business of their own. Here, the allegations are more concretely severe: the unlicensed money transmitter business “involved the transportation and transmission of funds that were known to the defendants to have been derived from a criminal offense or were intended to be used to promote and support unlawful activity.” Although it is impossible to know, this charge presumably pressured in part Mr. Ofer to plead guilty to more process-oriented BSA charges involving the $1 billion in “high risk” transfers at other financial institutions.
Questions of which, if any, regulatory regimes apply to the variety of participants in the cryptocurrency market continue to dog the industry. On February 28, 2022, whether a cryptocurrency futures trading platform constitutes a “futures commission merchant” (“FCM”) under the Commodity Exchange Act (“CEA”) subject to Bank Secrecy Act (“BSA”) regulations took center stage in a U.S. District Court decision denying a motion to dismiss an indictment alleging violations of the BSA against the founders and chief executives of BitMEX.
On February 8, 2022, the 
We are pleased to offer the latest episode in Ballard Spahr’s Business Better podcast series, 
Sentencing is a critical stage in the federal criminal process, particularly given the incredibly high rate of guilty pleas in federal court. There is a very strong argument that sentencing far eclipses the importance of the increasingly rare trial in the federal criminal system. If a federal criminal investigation cannot be “killed,” then in many cases – particularly in “white collar” cases – the focus early on for both the defense and the prosecution is the sentencing hearing, and how to maximize one’s position, because a federal charge often produces a conviction via plea, or less often, via trial. Stated otherwise, federal criminal defense is often all about sentencing.
Last week, the Southern District of California partially