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Last week, FinCEN “communicated,” so to speak, to private industry, law enforcement, regulators, and legislators in three very different ways:  through a FY 2022 Year In Review infographic; a first-of-its kind enforcement action against a trust company; and in statements before the U.S. House of Representatives.  This post summarizes each of these developments, which are unified by the motif of FinCEN asserting that it has an increasing role in protecting the U.S. financial system against money laundering, terrorist financing and other illicit activity; providing critical data and analytical support to law enforcement agencies pursuing these goals; and simultaneously policing and trying to collaborate with private industry regarding these goals.…

Continue Reading  FinCEN Round Up:  FY 2022 in Review; First AML Enforcement Against a Trust Company; and Comments to Congress

Factual Statement Is a Tale of Whistleblowing, High-Risk Customers, and Misleading U.S. Banks

Earlier this month, Danske Bank was sentenced in the Southern District of New York to three years of probation and forfeiture of $2.059 billion.  The sentencing capped a tumultuous and global scandal that became public several years ago, as the enormous scope of the bank’s anti-money laundering (“AML”) compliance problems emerge:  several hundred billion in suspicious transactions allegedly were processed over time at the bank’s former Estonian branch.  As a result of the sentencing, Danske Bank was ordered to make an actual payment of $1,209,062,646; the bank received credit for the rest of the forfeiture amount on the basis of a $178.6 million payment to the Securities and Exchange Commission and a $672.3 million payment to Denmark authorities.

Danske Bank was charged not with violating the Bank Secrecy Act (“BSA”), but rather with bank fraud.  According to the press release issued in December 2022  by the Department of Justice (“DOJ”) at the time of the bank’s plea, the bank had “defrauded U.S. banks regarding Danske Bank Estonia’s customers and [AML] controls to facilitate access to the U.S. financial system for Danske Bank Estonia’s high-risk customers, who resided outside of Estonia – including in Russia.”  The DOJ’s choice to charge bank fraud presumably was predicated upon issues relating to U.S. jurisdiction and the actual applicability of the BSA to Danske Bank and activities in Estonia – but the heart of the criminal case is that Danske Bank allegedly hid its own AML failures from three U.S. banks, thereby thwarting the U.S. banks’ own AML programs and compliance with the BSA.

The plea agreement contains a lengthy statement of facts full of eye-catching allegations.  As we describe, it sets forth a tale of intentional and sometimes brazen misconduct by Estonian branch employees, coupled with lax oversight and implicit approval, or at least tolerance, of such conduct by some people in upper management.  Further, it involves another example of a financial institution, in the eyes of law enforcement and regulators, over-valuing profit and under-valuing compliance systems.  The case also highlights, again, the potential risks associated with correspondent bank accounts held by non-U.S. banks, the importance of having fully integrated and coordinated monitoring systems, and the potential role of whistleblowers.

Finally, this saga is not necessarily over entirely.  Danske Bank is subject to three years of probation.  The plea agreement requires numerous compliance commitments by the bank, including signed certificates of compliance and self-reporting of potential AML failures.  Danske Bank’s troubles also have involved lawsuits brought by investors claiming to have been defrauded, although the bank has had success in fending off these actions (see here, here and here).…

Continue Reading  SDNY Sentences Danske Bank in Massive AML Scandal

As we have blogged (here, here, here, here and here), the Anti-Money Laundering Act of 2020 (“the AMLA”) amended the Bank Secrecy Act (“BSA”) to expand whistleblower incentives and strengthen whistleblower protections.  At a high level, the AMLA amended 31 U.S.C. § 5323 to provide that if the government recovers…

Enforcement Trends, Crypto, the AML Act — and More

We are very pleased to be moderating, once again, the Practising Law Institute’s 2022 Anti-Money Laundering Conference on May 17, 2022, starting at 9 a.m. This year’s conference will be both live and virtual — and it will be as informative, interesting and timely as always. …

Acting Director Suggests that Financial Institutions Should “Welcome” the Program

Himamauli Das, the Acting Director of the Financial Crimes Enforcement Network (“FinCEN”), spoke about the Anti-Money Laundering Act of 2020 (the “Act”)  and FinCEN’s role in its implementation at New York University Law School’s March 25, 2022 Program on Corporate Compliance and Enforcement.  After discussing the Act’s emphasis on modernizing and improving the effectiveness of the general U.S. anti-money laundering (“AML”) framework, Mr. Das devoted the final portion of his talk, denoted as “Compliance and Enforcement” in his prepared remarks, almost entirely to FinCEN’s whistleblower program.

As we have blogged (here, here and here), the Act’s amendment of the Bank Secrecy Act (“BSA”) greatly expands the options for whistleblowers alleging AML violations and should generate litigation and government actions, similar to what occurred over the past decade in the wake of the creation of the Dodd-Frank whistleblower program.  The remarks by Mr. Das highlighted that FinCEN is hiring personnel for its new “Office of the Whistleblower;” is already receiving whistleblower tips; and is actively drafting rules to implement the Act’s whistleblower provision.  However, FinCEN still faces a major hurdle – lack of Congressional funding for the program.
Continue Reading  New AML Whistleblower Program Highlighted by FinCEN Acting Director

Art & Antiquities; Beneficial Owners; Foreign Corruption — and More

We are really pleased to be moderating, once again, the Practising Law Institute’s 2021 Anti-Money Laundering Conference on May 11, 2021, starting at 9 a.m. This year’s conference again will be entirely virtual — but it will be as informative, interesting and timely as…

As we have blogged, the Anti-Money Laundering Act of 2020 (“AMLA”) amended the Bank Secrecy Act (“BSA”) to expand greatly the options for whistleblowers alleging anti-money laundering (“AML”) violations and potentially create a wave of litigation and government actions, similar to what has occurred in the wake of the creation of the Dodd-Frank whistleblower…

U.N. Report Focus on Improving Accountability, Transparency and Good Governance

On March 2, 2020 the United Nations released a Report on Financial Integrity For Sustainable Development (the “Report”). Although the Report is lengthy and wide-ranging, we will focus here on the portions of the Report which target the humanitarian toll of Illicit Financial Flows (IFFs) from money laundering, tax abuse, cross-border corruption, and transnational financial crime – all of which can drain resources from sustainable development, worsen inequality, fuel instability, undermine governance, and damage public trust.   We also will focus on the portions of the Report which make recommendations designed to expand anti-money laundering (“AML”) compliance.

First, the Report makes evidence-based recommendations focused on accountability, designed to close international enforcement and compliance gaps. Those recommendations include: (i) all countries enacting legislation providing for the widest range of legal tools to pursue cross-border financial crime; (ii) the international community developing an agreed-upon international standard for settlement of cross-border corruption cases, and (iii) businesses holding accountable all executives, staff, and board members who foster or tolerate IFFs in the name of the business.

Second, the Report makes other recommendations on several AML-related issues on which we have blogged: (i) each country creating a central registry of beneficial ownership information for legal entities; (ii) creating global standards for professionals, including lawyers, accountants, bankers and real estate agents; (iii) improving protections for human rights defenders, anti-corruption advocates, investigative journalists and whistleblowers; and (iv) promoting the exchange of information internationally among law enforcement officers and other authorities.

The Report clearly envisions that corporations can and should play a pivotal role in contributing resources in the fight against corruption, money laundering and cross-border financial crime. To start, Boards and management, particularly those of financial and professional service institutions, must engage in oversight to ensure that compensation, benefits, and employment itself are contingent upon financial integrity. Investors also should embrace financial integrity for sustainable development and be clear with the companies in which they invest that they expect effective anti-corruption policies and regulatory compliance. Integrity will be cultivated when organizational leadership hold board members, executives, and staff accountable if they foster or tolerate IFFs in the name of the business. Moreover, the Report observes that governments can foster financial integrity by imposing liability for failing to prevent bribery or corruption.
Continue Reading  United Nations Targets Corruption and Illicit Cross-Border Finance

As we have blogged, the Anti-Money Laundering Act of 2020 (“AMLA”) amended the Bank Secrecy Act (“BSA”) to expand greatly the options for whistleblowers alleging anti-money laundering (“AML”) violations and potentially create a wave of litigation and government actions, similar to what has occurred in the wake of the creation of the Dodd-Frank whistleblower program.

We thought it would be valuable to learn how counsel for potential whistleblowers regard the AMLA and its implications.  We therefore are very pleased to welcome to Money Laundering Watch guest bloggers Mary Inman and Carolina Gonzalez of the law firm Constantine Cannon.

Ms. Inman is a partner in the London and San Francisco offices of Constantine Cannon. After 20+ years representing whistleblowers in the U.S., she moved to London in July 2017 to launch the firm’s international whistleblower practice, and she now splits her time between the London and San Francisco offices. She specializes in representing whistleblowers from the U.S., U.K., Europe and worldwide under the American whistleblower programs, including the federal and various state False Claims Acts and the Securities and Exchange Commission (“SEC”), Commodity Futures Trading Commission (“CFTC”), Internal Revenue Service (“IRS”), Department of Transportation (“DOT”) and new Treasury Department BSA whistleblower programs. Ms. Inman’s efforts to export the American whistleblower programs to the U.K., including her efforts on behalf of a successful British whistleblower, were featured in a recent New York Times article “Law Firm Sees Britain as Hunting Ground for U.S. Whistleblower Cases.” Her successful representation of three whistleblowers exposing fraud in the Medicare Advantage program was featured in the February 4, 2019 issue of the New Yorker magazine in an article entitled “The Personal Toll of Whistle-Blowing.” Ms. Inman represents renowned whistleblower Tyler Shultz who exposed the now infamous Silicon Valley blood testing start-up Theranos, and regularly speaks on lessons to be learned from this scandal.

Ms. Gonzalez is a senior associate in Constantine Cannon’s London office and a member of the firm’s International Whistleblower practice.  She represents international whistleblowers under various U.S. and non-U.S. whistleblower reward programs.  Her practice focuses on financial services fraud, foreign corruption,  and money laundering. Carolina is heavily involved in developing various practice initiatives in emerging markets like Latin America, Africa, and the Middle East.

This blog post again takes the form of a Q & A session, in which Ms. Inman and Ms. Gonzalez respond to questions posed by Money Laundering Watch about the BSA’s new whistleblower provision. We hope you enjoy this discussion regarding this important new development, and how it is regarded by potential whistleblowers and their counsel. – Peter Hardy and Meredith Dante…
Continue Reading  The New BSA Whistleblower Provision – From the Whistleblowers’ Perspective.  A Guest Blog.

The Occupational Health and Safety Administration (“OSHA”) now will investigate workers’ complaints of retaliation for reporting alleged money laundering and antitrust-related violations under new whistleblower statutes.  On February 19, 2021, the Department of Labor announced that OSHA would oversee whistleblower claims alleging retaliation under two laws – the Anti-Money Laundering Act of 2020 (“AMLA”) and

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