Executive Orders, Crypto Access, & Global Crackdowns

This week, Elliot Berman and John Byrne unpack a wave of fast-moving developments impacting the financial crime and banking landscape. They begin by reflecting on Barney Frank's legacy and his lasting influence on U.S. financial regulation.

The conversation then turns to a newly issued executive order, Restoring Integrity to America’s Financial System, and what it could mean for financial institutions—from heightened scrutiny around immigration-related risks to potential shifts in crypto access to the Federal Reserve system.

They also examine the latest developments in the Clarity Act, a controversial DOJ “anti-weaponization” fund, new OFAC sanctions targeting global networks, allegations of cartel-linked gold entering the U.S. Mint supply chain, and Interpol’s major cybercrime crackdown across the Middle East and Africa.

Executive Orders, Crypto Access, & Global Crackdowns - Transcript

Elliot Berman: Hi, John. How are you today?

John Byrne: Good, Elliot. We are still at war as we continue to do this. Lot going on. I do wanna mention something we just both chatted about before we started to record, that former Congressman Barney Frank has passed away. Barney Frank was a major leader in the '80s and '90s on the House Financial Services committee on a whole host of issues.

The Dodd-Frank legislation obviously bears his name, but also a fairly bipartisan member of Congress who worked closely with the banking industry, with consumer groups, that sort of thing. Just wanted to mention that because those listening that have been involved in the banking industry for years certainly are aware of the value proposition of Barney Frank to the nation's financial infrastructure.

Elliot Berman: I know you met him a number of times during your days with the Bankers Association. I had the opportunity to meet him once. He was here in Milwaukee, and a very personable fellow. He served in Congress for 32 years, starting in 1981 at a time where there was significant banking legislation, and he was a player in much of it, including Dodd-Frank.

I think for me, it's a reminder of what a functional Congress can look like, the years that he was there.

John Byrne: That's true. All right, couple things. Yet another executive order. This one is very relevant to our world. The title of it is Restoring Integrity to America's Financial System.

This is from May 19th, the executive order. You should read it carefully. There's a whole series of things in it. Some direct Treasury to issue advisories. Some make other recommendations. But some of the highlights that are in here are within 60 days of the date of the order, Treasury is directed to issue an advisory to all financial institutions regarding the risks that are associated with what they call exploitation of the US financial system by non-work authorized populations and their employers.

Goes on to say that the advisory shall describe specific red flags and typologies associated with a number of categories of suspicious activities. This is in direct response to earlier reporting that there was going to be requirements that financial institutions had to check and document immigration status of current and potential new account holders.

This doesn't seem to be that, but it certainly would require institutions to do a number of due diligence activities, including looking for payroll tax evasion by employers or labor brokers. They believe that the utilization of certain foreign identity documents are potentially problematic.

Interestingly enough, they also say shell companies or complex funnel structures that obfuscate the identity of the ultimate beneficial owners. Interesting given what's happened with the Corporate Transparency Act. In any event, there's some of that. I also know there's something in the order, Elliot, related to digital assets, right?

Elliot Berman: Yes. One of them is a directive to the Fed to determine, make a determination whether it has the legal authority to give crypto platforms and other crypto providers access to Fed accounts which has been a big debate. Historically Fed accounts were available to insured depository institutions and not to anybody else, even if you were providing financial services. I believe I saw an announcement from the Fed, that they did grant Fed account access to a non-insured depository institution. But it was not a crypto platform. So yeah, that's an interesting question.

John Byrne: Yeah, let me just add one thing. I'm sorry to interrupt. Real quick, the when this w- order was issued I saw a story in, I think, Yahoo News, but I also saw a press release from America's Credit Unions. And in the press release, they said they appreciated the fact that the executive order does not require universal citizenship collection on existing or new accounts.

I think that's only part of what's happened here. A couple bankers that I've spoken to this morning, one said the following: "Forcing us to consider immigration status as part of cr- credit decisions is pretty dark stuff." Another bank lawyer said to me after first reading this, again, just seeing it and putting and taking a quick look, say, "This is making banks immigration police and opening up crypto to the financial system."

Just some initial reactions from some daily AML practitioners that I thought I would highlight.

Elliot Berman: Yeah. This is another one that we'll have to see how it unwinds. It'll also be interesting to see how, once some kind of rules or guidance is in place who's going to enforce it? Is it gonna be the bank regulators, or will, to the extent that it has an immigration or border control kind of flavor to it, will it be DHS? Which we've never seen? That's down the road. You and I will be talking about that in some future time, but not today.

John Byrne: So again, just issued yesterday, so we'll see. And I think there's certainly gonna be challenges to the legal impact of executive orders in general. That certainly has been a debate since last year with the unbelievable amount of executive orders issued by this administration. And also speaking of this administration, we'd be very remiss if we didn't mention something that everybody is focused on this week as well, and that is Trump decided to forego the case against IRS, a ten billion dollar case that he sued the IRS for the disclosure of his tax returns.

But in addition to Trump eliminating that case there has been a creation by the Department of Justice, a one point, I'm not making this up, seven hundred and seventy-six, yes, that's the number they used, billion dollar anti-weaponization fund.

And this is a fund set up, as it's been reported, so individuals that feel that they've been the victims of weaponization from prosecutors can claim that and a group of five people appointed by the attorney general, which the president can fire, by the way, but appointed by the attorney general, all five, and can be fired by the president, can decide how these monies get distributed.

There's been a lot of talk in the past couple of days that this would include January 6th rioters, and because that's a possibility given the way this is structured, there's just a court filing this morning as we record this where the members of the Capitol Police and other police that were harmed during January 6th have issued a challenge to that fund.

We'll see where that goes. But I do wanna say even The Wall Street Journal in their editorial this morning said that this is n- not something that should be supported and I think that's that's interesting given The Wall Street Journal's editorial bent from time to time.

Reading from part of this, they said, the Trump settlement fund is an astounding precedent and if it proceeds, it is sure to become a highlight reel of Trump administration payments to Mr. Trump's friends and allies. That's from The Wall Street Journal this morning.

Anything you want to add to any of this, Elliot?

Elliot Berman: No. I think I'm okay. Last week we talked about the CLARITY Act being in front of the Senate Banking Committee for a markup after we recorded. Just let's update on that. So the markup did happen. There was some kerfuffle about what amendments were allowed to be brought to a vote and what weren't. The committee did in the end vote in favor of moving the piece of legislation to the floor. There has been no floor action. It seems as though there's ongoing backroom negotiations about what ultimately will happen.

We'll have to see what happens in the Senate. They have the 60-vote issue to deal with. And I'm not going to predict how the midterms are going to come out, but as we mentioned last week, the House passed a version of this last fall. If the Senate doesn't pass something this year and even if they do, if they can't get reconciliation with the House before the end of the year and one or both houses change majorities with the midterms, you could see this whole thing die. But that's a lot of ifs, I recognize that.

John Byrne: In the past couple of days, OFAC has issued a number of announcements related to sanctions issues. They include networks that are generating billions for Iran's terrorist regime, that's in the headline. Disruption of the Sinaloa Cartel, cartel narcoterrorist fentanyl trafficking operations. There's also something that deals with the targeting of flotilla organizers and Muslim Brotherhood networks supporting Hamas. So there's a whole series, as there always is every time that we have these conversations OFAC announcements. So just wanted to highlight that was there.

And then one other thing staying in the US, just this was reported by Dow Jones a couple of days ago. Two senior Senate Democrats have, Issued a demand to Secretary Bessent to immediately halt what are called indirect purchases of cartel-linked gold by the US Mint. So a recent report found that the US government had spent hundreds of millions of dollars on gold that were tied to criminal organizations operating under US sanctions in Colombia, Nicaragua, and Venezuela. So that story a ppears in in Dow Jones Risk Journal, and the letter and more information is there.

Their demand is in response to something called the Gold Bullion Coin Act of 1985, because that requires the Mint to use only domestically sourced gold for its investment coins.

Elliot Berman: Yes. That is an interesting one. I'll be very curious to see where that goes. But we have a lot of laws in the United States that most of us don't know about until something happens and it shows up in, it shows up in Dow Jones or the New York Times or something like that.

John Byrne: That's true.

Elliot Berman: Where would you like to go next?

John Byrne: All right. Internationally the Organized Crime and Corruption Reporting Project is reporting that Interpol has coordinated the arrest of over 200 in a major Middle East and Africa cybercrime crackdown. They're calling it the first of its kind across the Middle East and North Africa.

The code name is Operation Ramz. Spanned 13 countries, and it was designed to neutralize phishing, malware, and cyber scam operations. So that report is available at OCCRP and certainly in Interpol's website as well.

Elliot Berman: It was a major cooperative effort with intelligence sharing across the various countries. A strong indication of the value of cross-border intelligence sharing and that kind of thing.

We also saw, and we were talking about this before we recorded a report that the UK government says that about £1 billion a year in criminal cash is laundered through regular retail businesses such as vape shops, barbers, mini marts and sweet shops, and it's announced a new national crackdown on these organized crime activities.

They created a new High Street Organized Crime Unit, and this group is going to lead the national response, to businesses linked to organized crime. And it'll work with police, trading standards which is a part of the government, and other agencies to target rogue retailers. The the NCA in the UK estimates that about  £12 billion of criminal cash is generated in the UK each year.

So they're now saying a billion of it is happening through these small retail operations. And this is part of an ongoing three-year program that the UK has embarked on to focus on money laundering, tax evasion and illegal working. I think you and I were both surprised that the volume or the portion of the total that this small retail activity represents.

John Byrne: That's crazy. That's such a large amount. That's very surprising. I wanna mention the Commodity Futures Trading Commission, two things that they are involved in recently. One is, as they've done with other states, they are suing the state of Minnesota. Minnesota just passed a law that is supposed to go into effect, I believe, in the next month or two on the ban on prediction markets, and some other states have done the same thing.

So CFTC, arguing this is a federal situation are suing. CFTC is also looking at a surge in oil future trading that occurred immediately before Trump postponed strikes on Tehran in March. According to the reporting, at least three companies, all non-US companies. The stories suggest there's an investigation. But the way the story is couched, it sounds like they're trying to get references from several other sources. But the bottom line is, we certainly have read that had happened. The dollar amounts were phenomenal. But the again, according to the reporting, CFTC is looking at these three companies. So we'll keep watching that and see what happens.

Elliot Berman: And just a reminder about the first one that you mentioned. The CFTC takes the position that predictive markets are not gambling. And the states that have been passing laws have been exercising what they say is their legal right to control gambling and, in many cases, specifically sports gambling. And the CFTC says that they have I guess I would call it plenary jurisdiction here, and they've defined these markets as not being gambling, as being something else. We'll see. There's other litigation going on.

John Byrne: Yeah, there's no chance it's gambling to bet on whether certain things will happen. But hey, we'll see what happens.

Elliot Berman: I'm reminded of my favorite line from my favorite movie, which is Casablanca. Where as they're closing up Rick's Cafe for a few days, the police prefect says he's shocked, very shocked that gambling's going on there, and the croupier comes running from the backroom casino and hands him his winnings.

So sometimes movies made in 1942 are predictive of what'll happen in 2026. So John, tell me I know you've got a webinar coming up. You wanna talk about that?

John Byrne: We have a webinar on the 28th. It'll be at 1:00 Eastern Time with several panelists that are gonna discuss the ongoing challenge of financial access on a global level.

So we'll have representatives from House Financial Services a council there the FATF Coalition, and we'll... another organization that's done a lot of work with Ukraine, and actually has unfortunately had their accounts either frozen and/or eliminated, and they're gonna talk about how that's occurred and the struggles that they have to try to continue to provide donations to help our colleagues in Ukraine.

So we will talk about all of that next week and give some recommendations regarding what the financial sector can do to better understand those current and potential clients. So again, that's next Thursday, the 28th, 1:00 Eastern. You can sign up for it on our website.

Elliot Berman: And we are also working on a number of other of our podcast series. There'll be something posting in the next couple of weeks I'm gonna have a conversation with our chief artificial intelligence officer here at AML RightSource about current trends in AI, and that'll post. And I know, John, you're working on a number of things. So as always, if you have program ideas or topics please reach out to John or to me, and we'll be happy to explore creating some content.

John Byrne: Hang in there, everybody. Stay safe and pay attention.

Elliot Berman: So John, you stay safe, and I'll see you next week.

John Byrne: Take care.

Elliot Berman: You too. Bye-bye.