PODCAST
This Week in AML
EU Crypto Supervision Battles, Underground Banking 2.0, and Swiss AML Reform Compromises
AML RightSource
:
Sep 19, 2025
In this episode of This Week in AML, Elliot Berman and Joe McNamara cover a wide range of global financial crime compliance updates. Topics include the U.S. Treasury’s initiative to simplify SAR filings, BIS entity list implications, FINTRAC’s new ID verification rules for Canadian real estate, and Russia’s barter-based sanctions evasion. The hosts also discuss crypto regulation developments in the UK and Malta, Swiss AML reforms, underground banking trends, and AUSTRAC’s efforts to combat child exploitation.
EU Crypto Supervision Battles, Underground Banking 2.0, and Swiss AML Reform Compromises - Transcript
Joe McNamara: Hey Elliot, how are you this week?
Elliot Berman: I'm good, Joe. Uh, our colleague John is in Missouri. He is leading the Missouri Bankers Financial Crime Compliance Conference. And how are you?
Joe McNamara: I'm doing well, man. Quite frankly, I'm kind of bouncing out of my seat, but that's per norm. Like I've, I've mentioned in episodes past. I'm, I'm always excited when I get a chance to come back on with you guys. And I agree. I think we're, uh, we're gonna bounce around a little bit today. So, where did you wanna start?
Elliot Berman: There's a couple things here in the US and they're both relatively short, so let me talk about those real quickly.
Uh, the first one is, John Hurley, who is the Undersecretary of Treasury for Terrorism and Financial Crime, I might have his title a little messed up, but that's pretty close. He gave a speech earlier this week about an initiative that Treasury is going to go through to simplify the SAR process, both presumably the form and uh, also the the requirements.
He mentioned that they wanna simplify red tape. He said everybody acknowledges there's useful SARs and not so useful SARs and we want to lean into the useful SARs. All of which I think is laudable. There's certainly been discussion about how to make SARs more effective, uh, for a long time.
I think the challenge, and I'm not saying they won't do this, but I think it'll be important. The SAR is a form that has a consumer and a producer. The producers are all the FIs who have an obligation to file them, and the consumers are law enforcement. And I think it'll be really important for Treasury to go through a comprehensive set of conversations with both of those groups probably together, so that whatever simplification or change process they go through doesn't I impact effectiveness just for the purpose of simplification. I'm hopeful that that's how that process will go. I'm sure there's a bunch of folks who will listen to this, who will nod their heads, whether they're in law enforcement or in FIs.
Joe McNamara: Yeah. And I, my, my mind goes, back to, uh, to a former colleague of ours that mentioned the, uh, the three point system for SARs. You know, either happy face, no face or sad face. So shout out to, uh, you know who you are. But maybe that'll finally make it into, uh, to the new SAR regime.
Elliot Berman: Yeah. I, I guess not, but one never knows. Uh, the other one that I just wanted to mention, um, the Department of Commerce has, uh, within it, the Bureau of Industry and Security. We've talked about them before.
They're known as BIS. They maintain an Entity List, on which they put the names of companies and or countries that have been determined to provide significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the US. What this list does is if you're on it, it imposes additional license requirements. Or can limit the availability of most licensed exceptions for exports, re-exports, and in-country transfers.
Why do I think it's worth talking about? Because this is a tool that sits in many organizations next to or adjacent to their sanctions compliance program. If you are now banking or providing services to trade-based companies, or you plan to start doing that, you need to be aware of the BIS requirements, uh, become familiar with them and be sure that your BIS compliance program is running appropriately.
So these changes come up periodically. Uh, they do have to be published in the Federal Register, so you can always track 'em that way by, uh, putting an alert out for BIS and Department of Commerce.
So that's the US stuff. Let's stay, in North America for just a moment. FINTRAC, the FIU in Canada put out a reminder that beginning the 1st of October, some new requirements that were adopted earlier this year and that John and I talked about back in the spring when they were adopted including a requirement that real estate agents and brokers starting October 1st will need to verify the ID of certain home buyers in residential real estate transactions.
And so, there's like every regulation and rule, there's definitions and all those things, but to the extent that you are covered by this and you're listening to our podcast or you provide services to people who are covered by this, not because you would be required to help them, but if you want to pass that reminder on to customers, just a reminder that that rule, uh, goes live in a couple of weeks.
Joe McNamara: That's right. Well, and, and the other thing that I think is just a healthy reminder even beyond our friends to the North is, you know, FINTRAC went on on record pretty much saying, you know, verifying the identity of a person or an entity removes the anonymity from financial transactions. So just more of a call to continued action. You know, Hey, KYC onboarding, things of that nature really do help in terms of just uncovering some of the non-transparent areas of a financial transaction.
Elliot Berman: So Joe, I know you saw an interesting item that related to a new approach to sanctions avoidance.
Joe McNamara: Yeah. This one is just quick shout out. So I did see an a recent article that was written I think I saw it on Reuters essentially has it's reporting on the exclusive wheat for Chinese cars and how Russia is turning, uh, to the barter system to, once again try and figure out ways to skirt the overall sanctions that have been you know, thrown their way.
It was just more of a, a revelation, quite frankly, Elliot, that, you know, in some ways congratulations and hats off to the folks that are actually looking at how to implement these sanctions and it's very clear that they're having in effect, and it was also just more of an eye-opener that, you know, hey, there are still some really old school ways, I can't remember the last time I heard the term barter come up in you know, a, a financial discussion around the exchange of, of quite frankly, value right. Goods and services.
But you know, just again, I thought it was just an interesting little tidbit in terms of, there's always a way. What I would imagine is quite a few bags of beans or wheat for, uh, a fully functional Chinese car.
Elliot Berman: Yeah. That's probably not happening at the retail level. Guessing. Yeah,
Joe McNamara: I don't think so.
Elliot Berman: Probably not.
Joe McNamara: I think you gotta bring out the giant scales too.
Elliot Berman: Exactly. So the the FCA in the UK is in the process of working on new rules for crypto firms. They're in what is effectively the comment period, and they've given an indication coming out of the comment period, that they're likely to give some crypto companies exemptions from some of the rules that apply to banks.
But they're also, uh, indicating that they're likely to tighten some of the measures in other areas, such as cyber attacks that it considers more relevant to crypto firms. I think this is an interesting point in the progression of crypto moving into the general economy, both, locally in various countries and then globally and regulators many of whom are at least guided by the recommendations from FATF in trying to bring their own updated regimes that will apply to crypto online.
But also size them in a way that does what they should do, which is, uh, uh, requires compliance with things that present the greatest risks and, um, and recognize that different organizations may operate quite differently and therefore the regulations have to fit. The final rules won't be published until 2026. It'll be interesting to see as those final rules come out exactly how the UK ends up fine tuning this, but it'll be an interesting indication as other jurisdictions around the world, uh, continue to figure out how to regulate the various players in the crypto space.
Joe McNamara: Yeah, no doubt. Right. And I think, um, in terms of, overall change that we're seeing around the world, I think in a different flavor. I saw something that came out of Swiss Parliament this week. Did you happen to see their, their approval of their newest AML reforms?
Elliot Berman: I did. And it was interesting because the original undertaking by the Parliament was to implement some of the FATF recommendations related to gatekeepers like lawyers and trustees and other advisors under their anti-money laundering rules. But, uh, in the end they, meaning the parliament decided that get getting all the way up to the level of the FATF recommendations was going to slow the country's drive to be competitive.
And so as a result they chose to, I guess I'd say dial back. They did that also in a recent adoption of a, uh, beneficial owner registry. Also not going as far as, um, the FATF recommendations. That balancing test between fighting financial crime and really trying to prevent financial crime and being competitive is interesting.
But, um, it seems to me that over time countries that choose not to become, that top level, if you will, may find that they're not competitive because other countries don't wanna do business there. So we'll have to see whether that's the fallout and maybe then we'll be able to really analyze whether the competitiveness argument is a winner or a loser.
Joe McNamara: You know, I have to be honest, I think that's probably the way more objective way of saying that versus what I would've said. Um, so kudos to you, Elliot.
Elliot Berman: Yeah. Politics and, and compliance are an interesting mix. They just are, they always have been. They are everywhere. And so it's always interesting to see what, what gets people riled up and jumping up to say, no, we're not gonna do that. Or, yes, we have to do that.
Another place where that is interesting is, uh, Malta which has become something of a, uh, of a haven for companies licensing crypto operations has opposed a push by some other countries in the European Union to have the EU Securities regulator, which is, uh, European Securities and Markets Authority, ESMA to take over supervision of major crypto companies.
The government of Malta has indicated that they're comfortable with coming up with, um, common supervision guidelines, but they don't want to centralize uh, the actual supervision. It's interesting that recently ESMA criticized Malta's licensing process questioning whether its risk analysis of potential licensees was sufficient.
So, uh, it'll be interesting to see, uh, where that lands. The EU is a complex animal because it's has member states and then it has centralized activity with the passage of their most recent anti-money laundering regime and establishment of a EU wide FIU AMLA. And a unified set of rules that all of the member states then have to adopt.
It'll be interesting to see how this plays out. But, uh, uh, I think Malta is feeling, uh, squeezed because they've been probably happy to be a home for all these licensees, uh, at least from a, a fee perspective. And now, that's, uh there are others that are saying, Hmm, maybe we should all do it the same.
Joe McNamara: Well, and I, I do have to give them credit. The spokesperson for the MFSA kind of went on to say, quote, we believe that centralization at this stage would only introduce an additional layer of bureaucracy which could hinder efficiency during a period when the EU is actively striving to enhance its competitiveness. Elliot, you know, me personally, I've been a competitor all my life. I think the last thing that I look at in terms of a performance is you know, did we play by the same rules? Like, I think that's just kind of table stakes. But again, probably a little bit more of an opinionated take than, than the objective positioning that you laid out.
Elliot Berman: Another thing that we saw this week, which in some ways kind of connects up with the BIS stuff that I talked about a little earlier, is that the Basel Institute on Governance put out a, uh, a notification about one of their working papers, which is Working Paper 58, and it's entitled How Corruption Facilitates Drug Trafficking through the Port of Rotterdam.
And this is a case study of how stronger regulations and laws has forced the drug traffickers to rely on corruption strategies. Generally by trying to find ways to corrupt import officials. And that, uh, it, quoting here from the summary, the paper finds that paradoxically a main driver of rising border corruption is increased political attention on and resources dedicated to fighting, trafficking, drug trafficking in this case. So interesting to read. For me, it's always interesting when researchers who can come at something you follow a methodology and then publish their findings.
And they don't necessarily track with what you think is happening. I think that's very valuable, not because we want it to be that way, but so that we really understand how the causes and effects are laying out. And so, um, you can find that paper if you just, uh, go to the Basel website and, search for Working Paper 58.
Joe McNamara: Bingo. So I think to round off, I, I had one other on my list, Elliot, and it's really around the rise of underground banking, which I also found kind of interesting. It shares some underlying qualities with what you just mentioned around, you know, as, as investigation or kind of pressure is added to some regulatory areas.
I think there was some interesting stuff that came out of this rise of what folks , are coining a version 2.0 of underground banking. But in terms of what you saw in these reports, what really jumped out to you?
Elliot Berman: So this was put out by the Dutch Research and Documentation Center, which is a, uh, I believe it's a part of the Netherlands National FIU. And to try to distill something pretty complicated into something not so complicated, what they saw was that the underground banking universe has evolved partially driven by the general push by societies to be more cashless. Now because of the conspicuousness of cash transactions, because there are fewer of them criminals are trying to make underground banking more sophisticated using encrypted communication and other things like that to make their transactions less obvious or less detectable.
Another interesting, more, academic paper that tells us, uh, that for every push to make things harder for criminals that doesn't make them get out of the business. It makes them have to change their business model. And there is one more thing I think is worth mention, and that is AUSTRAC, uh, the Australian FIU, has, uh, put out a reminder to, uh, financial services companies to look out for transactions that are indicators of child exploitation. And they, uh, talk about red flags and, uh, number of other things. They also talk about the fact that they've been a very active, so. They had an ongoing operation that was joint between the Australian Center to counter child sexual exploitation and AUSTRAC since June of 2022, and it's led to the closure of more than 3000 Australian bank accounts linked to sextortion payments. John and I, talked about, John and I talked about sextortion last week because of an alert from FinCEN.
So this is a global thing. And, uh, child exploitation along with other types of human exploitation and human trafficking are something that we've talked about a lot over the years and continue to remind everyone that it's some of the best work that that our community can do to, uh, identify these activities and pass them along and support law enforcement in their efforts to shut them down.
Joe McNamara: Absolutely right. And I think, um, to borrow from the adage it takes a village, I think it's just a healthy reminder that all of us have a, have a role to play, especially in thwarting these kinds of crimes as well as any other that are directly or indirectly linked to, fi, financial non-compliance.
So, uh, just a couple housekeeping items here. I think the first is for those of you that are listening and have not yet signed up. Highly encourage, and I think this is actually a really timely topic, uh, but would highly encourage you guys to take a look at the AML RightSource website and go ahead and sign up for the, uh, the upcoming webinar this month.
Elliot, you're gonna be moderating a great panel on, uh, the topics surrounding enhancing your KYC program, and that happens September 25th at 1:00 PM Eastern. But looking forward to that. And, any insights in terms of, you know, what else we should tell these guys?
Elliot Berman: We're gonna have a great panel as you mentioned, and it would be, uh, wonderful to sign up and, uh, listen to us for an hour. We also have, uh, coming in October, uh, you can't sign up yet, but you will be able to, at the end of next week, uh, will be AML Compliance Best Practices will be our webinar and great panel lined up for that as well.
A lot of good things in the pipeline. Also, continue to watch the website and LinkedIn as we post additional content. Which is all in process. Joe, thanks for joining me today. Uh, had a great time chatting with you and look forward to the next time that the two of us are doing this.
Joe McNamara: Absolute pleasure, Elliot. Thanks again for having me and to everybody else, have a great week.
Elliot Berman: Bye bye.
Resources:-
US Treasury fincrime chief John Hurley pledges to simplify SARs; current reporting regime too complex
https://www.amlintelligence.com/2025/09/news-us-treasury-fincrime-chief-john-hurley-pledges-to-simpl...
A Rule by the Industry and Security Bureau on 09/16/2025
How corruption helps drug traffickers adapt to strengthened border enforcement
AUSTRAC urges financial services look out for child exploitation transactions
Swiss parliament approves watered-down AML reforms
https://www.amlintelligence.com/2025/09/latest-swiss-parliament-approves-watered-down-aml-reforms/
Malta opposes push to centralize EU crypto supervision
https://www.amlintelligence.com/2025/09/news-malta-opposes-push-to-centralize-eu-crypto-supervision/
UK’s FCA to exempt crypto firms from some banking rules
https://www.amlintelligence.com/2025/09/news-uks-fca-to-exempt-crypto-firms-from-some-banking-rules/
Rise of underground banking linked to falling use of cash – study
Underground banking is developing to version 2.0
https://www.wodc.nl/actueel/nieuws/2025/09/02/ondergronds-bankieren-ontwikkelt-zich-tot-versie-2.0
Exclusive-Wheat for Chinese cars? Russia turns to barter to skirt sanctions
Canada real estate agents must ID home buyers from October 1