In this week’s Financial Crime Wave, two U.S. regulators covering the banking and securities sectors penalize companies, and compliance officers, a new study puts global financial crime compliance effectiveness at near zero, Congress crafts bill to create stronger safeguards for banks keeping accounts open to help law enforcement, and more.

Individual liability

OCC levies rare $50,000 individual penalty against former Rabobank CCO for concealing AML weaknesses, tarrying on timetables

The U.S.  Treasury’s Office of the Comptroller of the Currency (OCC) levied a $50,000 penalty against former Rabobank Chief Compliance Officer Laura Akahoshi and prohibited her from working in financial institutions in a compliance capacity related to failures in reporting anti-money laundering (AML) failures and concealing program weaknesses from federal examiners. The OCC stated that Akahoshi, a former OCC examiner herself, made “false statements” and “concealed bank documents” from examiners who found issues with the California operations of the Dutch bank as far back as 2012.

The OCC action states one unnamed former CCO raised concerns, but was not believed and eventually overruled by bank management and eventually placed on “force leave” before becoming a whistleblower for the OCC. To read ACFCS coverage of the original action, click here. To read the DOJ action, click here and the OCC action here. In imposing the sentence, Judge Jeffrey Miller noted that Rabobank’s conduct essentially amounted to “stiff-arming the OCC, and completely failing in its responsibility to its customers and the nation,” (via the OCC).


U.S. judge sentences Netherlands bank to pay “statutory maximum” of $500,000, in addition to previously negotiated nearly $370 million forfeiture, on obstruction charges

A U.S. District Court Judge in California has sentence the California operations of one of Netherland’s largest banks to two years of probation, along with a half-million dollar fine as part of a previously-negotiated $368 million forfeiture related to obstruction charges for lying, tarrying and actively obfuscating a federal regulatory inquiry by the U.S. Treasury’s Office of the Comptroller of the Currency (OCC). The government announced the agreement in February. To read ACFCS coverage of the original action, click here.

To read the DOJ action, click here and the OCC action here. In imposing the sentence, Judge Jeffrey Miller noted that Rabobank’s conduct essentially amounted to “stiff-arming the OCC, and completely failing in its responsibility to its customers and the nation.” Acting Assistant Attorney General John P. Cronan stated that: “Instead of filing reports that would have alerted law enforcement to the suspicious activity, as required by law, the bank looked the other way and then compounded its misconduct by conspiring to cover-up its failures and deceiving its regulator,” (via DOJ).


Are AML rules completely ineffective? Do money launderers, especially big fish, ever get caught? Mostly no, according to two reports

A new study published in an international peer-reviewed journal extends the anti-money laundering industry’s open secret. Despite nearly three decades, and global ubiquity, money laundering controls (and associated supporting measures) scarcely have the impact of a rounding error on criminal accounts. The new study tests the resplendence of Emperor AML’s cloak. The anti-money laundering industry is based on a series of assumptions, seldom critiqued, let alone tested by practitioners and governments. For example, that money laundering threatens economies, that money laundering controls are effective, that extending anti-money laundering (AML) obligations to new industries will have a big effect, and that a new global ‘effectiveness’ methodology based on specified outcomes is an adequate measure of effectiveness. The latest study, just published, tests the second and third of those assumptions. A separate study tests the fourth. (Many elements of the first premise have been tested elsewhere in the academic literature).

Not yet in its thirties, the anti-money laundering industry is marked by global reach and prodigious endeavor. Millions of businesses spend billions of dollars each year on compliance staff, risk assessments, consultants, training and software. A core goal is to identify suspicious financial activities; to help detect and dismantle serious profit-motivated crime. The intent is laudable. But, is it working? The unfortunate truth is that most countries are less than a percent, fractions of a percent, from complete failure in terms of AML outcomes and countering large scale criminal groups and intercepting illicit assets, (via

Cross-border declarations

EU Commission lauds agreement between EU states, parliament to bolster AML rules, extend cross-border currency declaration rules to prepaid cards, precious commodities, like gold

The Commission has welcomed the agreement reached by EU Member States and the European Parliament today on key measures to control illicit cash flows in and out of the EU, following a final round of negotiations this evening in Brussels, including extending critical currency border controls to other mediums of value. The main elements of the new rules will:

  • Tighten cash controls on people entering or leaving the EU with €10,000 or more in cash;
  • Enable authorities to act on amounts lower than the declaration threshold of €10,000, where there are suspicions of criminal activity;
  • Improve the exchange of information between authorities (Customs and Financial Intelligence Units) and Member States;
  • Extend customs controls to cash sent in postal parcels or freight shipments, to prepaid cards and to precious commodities, such as gold, which are not currently subject to customs control, (via the EC).


Are industry-friendly AML regulations, revisions on the horizon from the OCC?

In appearances at recent community bank forums, Comptroller of the Currency Joseph Otting outlined a strategy focused on better tailoring and easing regulatory requirements for community banks. Four areas in which Otting plans to focus as leader of the Office of the Comptroller of the Currency are enforcement of the Bank Secrecy Act and anti-money laundering laws, evaluations under the Community Reinvestment Act, regulation of small-dollar lending (commonly referred to as payday loans), and simplification of the Volcker Rule. Otting, a former banker, has assured the industry that the Trump administration “is very banker-supportive.” He recently stated his view of banks as friends, not foes, of the agency, indicating that he would like the OCC to improve its “responsiveness to [its] customers, which are the bankers.”

Accordingly, institutions subject to OCC’s oversight have reason to be optimistic that regulatory relief and more industry-favorable regulation and supervision may be on the horizon. In a recent Q&A with the Independent Banker, Otting indicated that the current regulatory approach to BSA/AML compliance is ineffective in accomplishing the intended goal of protecting the U.S. financial system from being misused for illegal purposes. Instead, Otting expressed the view that the framework consists of a series of “gotchas,” and he stressed the need for a “collective effort that involves lawmakers, the Treasury Department, the Financial Crimes Enforcement Network and other regulators,” (via Arnold Porter).

Congress introduces bill to provide safe harbor to prevent regulators from dinging banks for keeping suspicious accounts open for law enforcement

Rep. French Hill, R-Ark., a member of the House Financial Services Committee and a former banker, introduced legislation last week to provide a “safe harbor” for financial firms that keep open a suspicious account at the request of law enforcement so that they don’t get penalized for doing so under anti-money laundering rules. His bill “enables partnerships without repercussions between law enforcement agencies and our local financial institutions by allowing law enforcement to monitor cash flows associated with criminal investigations,” he said. The legislation, the Cooperate with Law Enforcement Agencies and Watch Act, is not part of a bank regulatory relief package that faces a final vote in the House this week and appears to be headed to President Trump’s desk.

At issue is that sometimes banks receive notices from law enforcement agencies, known as “keep open” letters, requesting them to keep an account open so that they can track payments and better monitor criminals. If banks help out law enforcement and comply, though, they face the risk of being penalized by regulators for allowing an account to be used for criminal purposes. Law enforcement agencies are supposed to provide a written notice that they requested that they account be kept open, but bankers say there are no guarantees, (via the Washington Examiner).

Futures sector

NFA issues AML warning to FCMs, IBs, highlighting regulatory expectations related to independent reviews being done annually

The National Futures Association (NFA), a self-‎regulatory organization for ‎the US derivatives industry, ‎has warned anew that registered futures commission merchants (FCMs) and introducing brokers (IBs) not in ‎compliance with AML requirements could face disciplinary actions and, in some cases, hefty fines.‎ The Chicago-based regulator requires all FCMs and IB members to maintain an ‎AML program that includes an annual review to ‎be conducted by its personnel or by an independent third party, one of the four key programs of the AML program, but one that some firms can lag due to resources or simply shirking duties.

Stricter regulations were introduced recently which now require each futures ‎commission merchant (FCM) and introducing broker (IB) to develop ‎and implement a written anti-money laundering (AML) program. ‎Additionally, reporting entities have been forced to ramp up compliance measures ‎after being subject to the Bank Secrecy Act, which ‎introduced new criminal offenses of failing to prevent suspected money ‎laundering. They ‎also must tailor their AML programs to fit their business models and allocate adequate resources to their ‎compliance efforts, (via Finance Magnates).


DOJ cyber jousts with global botnet, decimating group operating for more than a decade

The Justice Department today announced an effort to disrupt a global botnet of hundreds of thousands of infected home and office (SOHO) routers and other networked devices under the control of a group of actors known as the “Sofacy Group” (also known as “apt28,” “sandworm,” “x-agent,” “pawn storm,” “fancy bear” and “sednit”).  The group, which has been operating since at least in or about 2007, targets government, military, security organizations, and other targets of perceived intelligence value, (via DOJ).


With the global compliance spotlight on Australia, the question on everyone’s minds: with Austrac step up or also have its effectiveness questioned?

A look at how well Austrac is monitoring for money laundering, in light of recent bank compliance failures, (via NGM).

Corporate Transparency

Will the U.K. overrule crown dependencies, territories on beneficial ownership imbroglio, citing national security fears?

Money laundering through offshore finance centers has become a “matter of national security” for the UK – giving it grounds to have legal authority over Jersey, and potentially other crowned regions, to end financial secrecy, due to both fostering corruption and propping up graft-gilt regimes, a Westminster report has said. In a report entitled Moscow’s Gold: Russian Corruption in the UK, the Foreign Affairs Select Committee urged the British government to continue pursuing its drive to increase transparency in the UK’s offshore finance centers, an initiative done as part of an update to U.K. and European anti-money laundering (AML) rules to crack open beneficial ownership information.

These include the Crown Dependencies – Jersey, Guernsey and the Isle of Man – and the British Overseas Territories, such as Cayman, Bermuda and the British Virgin Islands. The report argues that too much “dirty” Russian money is entering the UK, with the offshore jurisdictions acting as “laundromats,” due to the secrecy of their banking systems, before the money is funneled into the UK. Last month, the House of Commons passed an amendment to the Sanctions and Anti-Money Laundering bill calling for the British Overseas Territories, such as Cayman, Bermuda and the British Virgin Islands, to introduce a transparent register of beneficial ownership of companies by 2020. The UK intends to legislate for the Overseas Territories if they do not voluntarily introduce transparent registers by the deadline, (via the Jersey Evening Post).

Cyber-enabled fraud

Europol reverse engineers social engineering, takes down cyber fraud racket

Europol cracks fraud ring that garnered more than $8 million through tricking access to some 700 bank accounts, chiefly using little-known tricks related to social engineering (via Europol).

Supreme Court

A look at some of the aftershocks of the Supreme Court’s decision to allow states to decide on sports betting

The Supreme Court on Monday ruled in favor of New Jersey in the case that was formerly known as Chris Christie vs. NCAA (Christie’s name has been supplanted by Phil Murphy, the state’s new governor), striking down a 25-year old federal law known as the Professional and Amateur Sports Protection Act (PASPA) that largely outlawed sports betting outside Nevada. The court’s 6-3 decision overruled the Third Circuit Court of Appeals, saying PASPA violates the state’s 10th Amendment rights, thereby creating a path for New Jersey and other states to offer sports betting. “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own,” wrote Justice Samuel A. Alito Jr., for the majority. “Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.”

Casino operators in New Jersey have been anticipating Monday’s decision for months, and much of the infrastructure is already in place. Many other state legislatures will now race to add regulation that will provide the legal framework for sports gambling in each state. Nearly 20 states have introduced bills that could legalize sports betting, and a 2017 report from Eilers & Krejcik Gaming estimated that as many as 32 states could offer legal sports betting within the next five years, (via the Washington Post).


After visit by U.S. Treasury, should banks, gatekeepers in Cyprus take domestic AML rules, foreign sanctions obligations more seriously?

In the wake of a recent visit to Cyprus by a top Treasury counter-financial crime official, several top regulators are pressuring sectors anew to strengthen domestic anti-money laundering compliance as well as exhorting a broad array of sectors to better comply with U.S. sanctions lists. In recent weeks, the US Treasury Department’s Assistant Secretary for Terrorist Financing Marshall Billingslea, visited Cyprus, meeting with the country’s Finance Minister, Foreign Minister and Governor of the Central Bank. The visit did not receive much media coverage, but the US embassy’s website posted statement, which said Billingslea discussed “the positive improvements and reforms that Cyprus has made in its anti-money laundering regulations and regulatory oversights,” with the officials and “explored areas where the US and Cyprus can continue to partner to fight threats to the international financial sector.”

The statement also mentioned the need for a “strong and well-regulated banking sector,” but a clearer indication about the nature of the discussions was given by the following: “It is vital that illicit actors know that Cyprus is not open for business. The US was encouraged by the commitments made by Cypriot officials today and will continue to work together to combat and corruption, money laundering and other financial threats.” The meaning, according to analysts reading between the lines, is that U.S. officials expect Cyprus to be more aggressive in scouring for potentially illicit funds and designated entities, particularly from Russia, using the country to move and legitimize criminal and corrupt funds, (via the Cyprus Mail).


A look at multinationals and U.S. sanctions: The very long arm of American reach and influence in the arenas of sanctions and corruption

The international reach of American law is an effective tool in persuading multinational corporations not to do business in countries targeted by US sanctions, as the case of Iran shows, with many large, global businesses noting that because so many of its customers and investors are U.S.-based, they realize they must follow American geo-political and national security whims. So-called secondary sanctions focus on non-US banks and individuals who do business with counterparts in countries subject to sanctions, and have enmeshed many dealing with Iran in recent years. The Iran sanctions, which were mostly lifted as part of the 2015 joint nuclear deal between Iran and the world’s major powers, will be progressively re-imposed in the coming months following US President Donald Trump’s decision to withdraw from the agreement.

The 1977 Foreign Corrupt Practices Act, which prohibits bribing foreign officials to win business, can and does also apply to foreign companies that are traded on Wall Street, and their employees, or to companies and individuals whose activities and financial transactions involve US banks or territory. Numerous European companies have learned this the hard way, including Total, which settled with US authorities in 2013 for $398 million over charges it bribed an Iranian official to win oil and gas concessions. The US also has punished foreign interests for sanctions violations, including French bank BNP Paribas, which paid $8.9 billion in 2014 for doing business with countries under US sanctions, Iran, Sudan and Cuba, while also operating in the United States, (via the


Bungling bureaucrat or savvy sanctions buster?

After the surprisingly light sentence a U.S. judge gave to a Turkish banker and “honest bureaucrat” following orders to evade Iran sanctions, the next major question is when and how severely the U.S. government will punish Halk Bank – and the second burning question is will that be seen as justice or the result of twisted, tangled global geopolitics, (via Hurriyet).


AML with no boundaries

There is momentum for Europe to have a pan-country AML authority, thought experts still say there are key hurdles to overcome, (via Payments Compliance).


Did the “holy of holies” when it comes to financial crime information, the FinCEN SAR database, spring a leak?

A blockbuster story about the whistleblower who revealed President Donald Trump’s personal lawyer received payments from various companies has placed attention on a fairly obscure unit with the Treasury Department that’s at the heart of regulating the financial system, the Financial Crimes Enforcement Network and its oversight of the veritable treasure trove of data in the form of suspicious activity and customer transaction reports filed by financial institutions.

The New Yorker’s Ronan Farrow interviewed someone he called a “law-enforcement official” who leaked, per the report, after not being able to find two suspicious-activity reports on Michael Cohen, who received big payments from AT&T, Novartis and Korea Aerospace Industries. have Both companies have called these payments mistakes, and senior officials at those companies have stepped down as a result, (via Marketwatch).

Money laundering

Is London a “laundromat” for dirty Russian money?

London is being used as a “base for the corrupt assets” of individuals linked to Russian President Vladimir Putin and the Kremlin, the U.K.’s foreign affairs committee said in a report published Monday. The committee said this was “clearly linked to a wider Russian strategy” to undermine national security.

Combating dirty money being laundered in the capital by Russians “should be a major U.K. foreign policy priority.” The assets “stored and laundered in London, both directly and indirectly, support President Putin’s campaign to subvert the international rules-based system, undermine our allies, and erode the mutually-reinforcing international networks that support U.K. foreign policy,” the committee said. However, it said that the U.K. was itself guilty of “turning a blind eye to London’s role in hiding the proceeds of Kremlin-connected corruption.” This risked “signaling that the U.K. is not serious about confronting the full spectrum of President Putin’s offensive measures,” (via CNBC).


London falling down on new AML rules

Tens of thousands of British companies are still not complying with new measures brought in to counter fraud and money laundering, Big Data and Anti-Money Laundering, with one firm stating more than 57,000 UK businesses are not yet compliant with new regulations requiring that they declare People with Significant Control (PSCs) over each business, in short, beneficial ownership, (via Amp).


Latvia makes global plea for help to bolster AML rules, enforcement, effectiveness

Latvia’s anti-money laundering chief wants more help from banks as country tries to retool image in wake of one of its largest banks being shut down for sanctions violations, (via Reuters).


U.S. talks tough on Iran, but will that lead to change?

New U.S. Secretary of State, Mike Pompeo, talks tough in addressing Iran, threatens “strongest sanctions in history” and vows to “crush” Iranian proxies, including pressing European countries to cut ties with the reclusive, recalcitrant Islamic theocracy, (via The Telegraph).