FATF Priorities, Crypto Regulation Shifts, and Emerging Financial Crime Risks

In this week's episode of This Week in AML, John Byrne and Elliot Berman examine major developments shaping the financial crime compliance landscape. They discuss newly released presidential financial disclosures, FATF's priorities under new President Giles Thomson, and a new FATF report on terrorist financing risks tied to social media, messaging apps, and streaming platforms.

The conversation also covers the Rome Statement on Art Market Integrity, Binance's licensing challenges under the EU's MiCA framework, FinCEN and FBI actions targeting cartel-linked fuel theft and human smuggling networks, and the UK's evolving crypto asset regulatory regime.

Additional topics include Europol's latest assessment of organized crime networks, the SEC's enforcement action against Merrill Lynch for SAR reporting failures, and the potential business and regulatory implications of a recent U.S. Supreme Court decision affecting independent federal agencies. The episode concludes with a preview of upcoming AML RightSource content, including a discussion on AI and financial compliance.

FATF Priorities, Crypto Regulation Shifts, and Emerging Financial Crime Risks  - Transcript

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

John Byrne: I'm good, Elliot. Like Milwaukee, it's getting super warm here in Northern Virginia and Washington. Supposed to be 100 degrees next couple days, but I know you guys are dealing with similar weather.

Elliot Berman: Yeah, 95 here. And I live near one of the largest ice cubes in North America.

John Byrne: You got a lake, so that's always good.

Elliot Berman: Exactly. So that's helpful. What would you like to talk about today?

John Byrne: First thing, since we do try to cover corruption whenever it occurs or it's implied. The New York Times and various other outlets are reporting on the president's financial disclosures. Reading here from the New York Times, this is the day we're recording, says Trump pulled in at least $2 billion after returning to the White House. The release of a mandatory financial disclosure for 2025 shows that the Trump family's holdings, particularly the president's crypto business, were stunningly lucrative. So four reporters were on this piece, and again, it was reported in other places.

Looking at the financial disclosures, in 2024, the total revenue reported was $622 million. This year, $2.2 billion. And one of the biggest in 2025 came when an investment firm tied to the UAE bought nearly half of the family's main crypto company, World Liberty Financial. And other items are in there as well.

I will say it's not a media outlet that I pay attention to, except for sports, but the New York Post editorial page took the Trump family to task today, so I just tell folks to take a look at that.

Elliot Berman: That's the US Office of Government Ethics annual financial disclosure for certain governmental officials. The disclosure, which I'm sure they're all lengthy, this one was north of 900 pages. So lots of information.

John Byrne: We did mention last week the previous week's plenary outcomes from FATF. Just wanna highlight that FATF posted this week in more detail the objectives of the new president, this president's from the UK, for the 2026 to 2028 term.

Take a look at that. There's a pretty easy to read chart. As we mentioned, they're talking about fraud and information sharing and, of course the FATF plenary always considers the need for the risk-based approach to be actually active in different jurisdictions. So anyways, some good information there.

I know we mentioned it last week, but there's a quick chart there that you could send around as a good training tool when you're trying to have your staff pay attention to what FATF plenary outcomes are.

Elliot Berman: And then as FATF regularly does following a plenary, they've started releasing reports. They released one which highlights the latest risks of terrorist financing through social media, instant messaging applications, and streaming platforms. They identify some of these risks, and then they also talk about key measures that organizations and countries for that matter can take to address the misuse of these platforms. Including, this is not the complete list, strengthening structured dialogue between public authorities and the private sector, something you and I talk about all the time. Enabling effective information sharing and deepening public-private partnerships, another thing that we talk about very regularly.

We're getting smarter, as we get older. Clarifying regulatory scope, strengthening risk understanding, and a bunch of other things. So again a good report to take a look at. And a topic area that is important to all of us but a particular focus on these various communication platforms.

John Byrne: Our friends at the Antiquities Coalition posted the outcome of a meeting in Rome. The output was what they're calling the Rome Statement on Art Market Integrity, and it's being described by the Antiquities Coalition as a new framework that recognizes that combating art crime requires partnership between cultural heritage experts and financial regulators.

The executive director, Tess Davis, who we've worked with and also have interviewed in the past, was quoted as saying, "As long as criminals exploit art and artifacts, we cannot protect our heritage without securing the modern markets that trade it." So the actual Rome Statement is available on their website.

They do talk a bit about the financial crime task task force that we were part of, myself and Dennis Armel and I think Rick Small. That back in 2020 put out a document that we think has been helpful in directing some of these strategies both domestically and internationally.

But wanted to mention that the antiquities folks posted both the document and their comments about it. This came from a meeting June 4th and 5th in Rome, but the the posting was earlier this week. You can go directly to the antiquitiescoalition.org for more information.

Elliot Berman: We're recording on the 1st of July, and today, earlier this week, there was an indication that Binance was preparing to suspend services across the EU starting today. The reason for that is they had applied for a license under MiCA, which is Markets in Crypto Assets regulation. And to this point, they have not been granted that license.

Starting today, you have to be licensed. So they were notifying customers in various countries in the EU that certain transactions would not be allowed going forward. They were also letting their clients know that their funds were safe, and that they could be accessed. But transactional things are suspended until they're able to secure the license under MiCA.

John Byrne: A couple of things in the States, and we will go back internationally in a bit. The FBI posted that a Mexican citizen was sentenced for role in prolific human so that information that Mexican national was extradited from Mexico, was sentenced to 87 months in prison for his particular role in the smuggling operation. So that's from the FBI.

The issued what they're calling a supplemental alert to advise FIs to be vigilant in detecting, identifying, and reporting suspicious activity connected to Mexican cartels that, that they list in the announcement. And the alert provides an overview of methodologies and typologies associated with what they're calling fiscal fuel theft schemes, and highlight red flag indicators and reminding obviously FIs about the suspicious activity reporting requirements.

And then the Treasury Department with A- OFAC and FinCEN announced multiple actions on fuel smuggling in a separate announcement earlier this week. So couple things from Treasury, FinCEN, and the FBI. As always, take a look at the websites for more information.

Elliot Berman: FCA in the UK issued several policy statements related to their new crypto assets regime, reminding people that it will actually go into full effect in October of 2027.

But that there's pre-work for companies to do including registrations and learning the regs and those kinds of things. If you do business, have offices, or are interested go to the UK FCA website and take a look. It's an extensive announcement. Brings together a lot of things.

And while FIs that are involved in crypto or are acting as VASPs are specifically covered by this, there are many other industry groups trade bodies, law firms, accounting firms, others who will need to be familiar with this either to advise clients or to work with others. Important to take a look at that.

John Byrne: In several media outlets, but also in the Organized Crime and Corruption Reporting Project, there's a story about a Europol report that said that law enforcement has pushed many of the EU's most threatening criminal networks off its current watch list.

But organized crime continues to regenerate with hundreds of new networks identified since 2024. So that report the subtitle is The Blueprint of Criminal Opportunism. And 76% of the networks that Europol has been investigating are no longer listed among the most threatening, but they caution that should not be read as proof that organized crime is shrinking.

So that report is available on the Europol website, or you can get the analysis on OCCRP's website as well.

Elliot Berman: And the US Securities and Exchange Commission, the SEC, has fined Bank of America's Merrill Lynch unit $7.5 million for failing to file numerous SAR reports meant to flag money laundering and other suspicious client activity.

They used an automated score-scoring model to determine which transactions should be looked at for SAR filing. And that ended up ignoring transactions that didn't hit the score but still were suspicious and were deemed worthy of a SAR. So I think the lesson coming out of this is it's fine to use automation and scoring models, but, you need to be sure that either the scoring models are really accurate or that you've got some kind of quality assurance process behind it so that you can be regularly testing to be sure that the scoring model's catching what you want it to catch.

John Byrne: Earlier this week and through yesterday, the Supreme Court released a number of decisions. And one decision that's getting some focus, but I would argue probably not enough 'cause it needs more focus 'cause of the variety of things that this could impact. They ruled on Monday that the president could fire the heads of independent agencies without cause, and that gives Trump a major victory as he continues to exert control over the federal bureaucracy.

The justices struck down a nearly 100-year-old precedent that allowed Congress to insulate the leaders of almost two dozen agencies from political influence. And so there's a couple things I would mention. One is, in the dissent Justice Sotomayor said, "The Court discards that democratic regime in favor of one that distorts the structure of government to fit the majority's theory of unitary, total executive control."

That was an opinion held by some. The business expert, Andrew Ross Sorkin, who writes for The New York Times and actually just wrote a book which I haven't read yet, but I'm really interested in getting it, about 1929, the Depression issues back then, a lengthy historical look back.

But one of the things that he analyzed from this decision that I hadn't seen elsewhere, he said the the following. Many are framing this as a short-term political win, viewing this through what he's calling a narrow partisan lens. He said the real casualty here is economic growth. Without internal pushback or regulatory continuity between administrations, businesses face an era of unpredictable policy whiplash, making long-term strategic planning much more complicated." Elliot, I can recall way, way back when I actually attempted to run for office years ago in Virginia I looked at some of the regulations that allowed decisions to be made in Richmond versus locally.

And without going into too much detail, I remember thinking that seems unfair." You want the local policy makers to make decisions. But the business community was pretty clear to me, and they said, "Wait a second. We need consistency. Whether you agree or disagree, we need central oversight because that way we can plan."

So this seems to be a similar issue. That the strategies that businesses will have will undoubtedly be driven by what they perceive to be the next view of a different administration, same party, different party, what have you. So in addition to losing the independence of some of these agencies, the business community's gonna feel some impact here, at least in their planning.

And so I thought that was a interesting angle, which having seen it, I agree with. I think that is something else that this decision could impact

Elliot Berman: I agree with you. And you and I have already talked a couple of times about the fact that many of the things that we're seeing, particularly in the financial services regulatory area are they really gonna be permanent or will we see some kind of retrenchment down the road?.

Obviously, economic events can really change things. If you look at the major pieces of legislation in the banking space in the United States, almost every one of them is a reaction to a major financial crisis. Now, some of the new things like crypto and that kind of stuff, whether there will be crises in those areas, we don't... my crystal ball isn't that clear.

But we have seen other situations where changes in policy or changes in law have created crises. The S&L crisis was really created in part by a piece of legislation that encouraged S&Ls to get into businesses that they were not familiar with.

I agree with you. I think the lack of consistency and, a reliable sense of what's happening is in fact a a real risk to business planning. So John, I know you had a great conversation with Jonathan Rusch this week that you recorded. We're gonna publish that on our website on Tuesday the 7th.

So I would recommend people listen to the two of you. I found it really informative. As we mentioned last week our webinar this month will be on the 22nd. It's gonna be on AI and financial compliance, and our colleague Joe McNamara is gonna moderate that, and he's got a great panel lined up.

So we encourage people to sign up and attend that. Anything else, John?

John Byrne: I didn't mention by name, I apologize, but the new president of FATF is Giles Thomson from the UK, and his current role outside of FATF he is the director of the Office of Financial Sanctions Implementation and Economic Crime at the Treasury in the UK.

So I wanted to mention that he was the one who's taking over, and he'll be in that role. His term is a two-year term as we've talked about. So Giles Thomson is the name.

Elliot Berman: Okay. I hope you're gonna have a quiet but enjoyable Fourth of July weekend. I hope for your sake and mine that this heat wave starts to moderate along the way here somewhere.

And I will talk to you next week.

John Byrne: Let's remember, 250 years, think of it as a commemoration if there's challenges with celebration. All that the US and all of us have accomplished with all the challenges. So stay safe for this Fourth of July, and we will talk to you next week. Take care.

Elliot Berman: You too. Bye-bye