In this episode of This Week in AML, John Byrne and Elliot Berman break down key developments shaping the financial crime and compliance landscape. The conversation opens with reflections on Federal Reserve independence following Chair Jerome Powell’s recent remarks, before turning to U.S. policy updates and bipartisan actions with implications for governance and oversight.
The discussion then shifts to practical compliance takeaways, including OFAC’s newly released sanctions overview and a $1 million settlement highlighting how sanctions risks can arise through indirect client relationships. Internationally, the hosts examine Finland’s national money‑laundering risk assessment, the evolving EU transparency rules on beneficial ownership, and growing concerns about human trafficking linked to major global sporting events.
The episode also explores ongoing investigations into fintech and payments firms, emerging risks in cross‑border money movement, and a new Basel working paper on stablecoin liquidity and regulation.
Fed Independence, Sanctions Lessons, and Global Financial Crime Risks - Transcript
Elliot Berman: Hi, John. How are you today?
John Byrne: Good, Elliot. Lot going on. Still at war, obviously. Despite many comments on being close to a deal we'll have to see what happens. But let's stay in the US upfront. On a positive note, Governor Powell, Jerome Powell received the John F. Kennedy Profile in Courage Award over the weekend, and his acceptance remarks are posted on the Federal Reserve's website.
And just briefly, just wanna call out a couple things he mentioned. He mentions the legal protections that support the non-political conduct of monetary policy are straightforward, and then he says this: "These protections have served the public well, and administrations from both parties have respected them. If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well. The public will lose faith that the central bank will make decisions based only on what's best for all Americans. The Fed's credibility would be lost, and that we, all of us, have a duty to safeguard that priceless asset for our fellow citizens and for generations to come."
Excellent response of Governor Powell to obviously what he's been subject to over the past many years.
Elliot Berman: For our audience members who are younger than us some of whom are quite a bit younger than us. Profiles in Courage is the name of a book that President Kennedy wrote back in the, '
John Byrne: 50s, I think
Elliot Berman: Yeah. I think it was published before he became president.
John Byrne: It was, yes.
Elliot Berman: . And it's worth a read. Obviously it's old, but I remember reading it, in grade school. And it's about people mostly in political life who follow their values rather than necessarily following the crowd. And I think it's pretty salient for the times we live in today.
John Byrne: I agree. We talked last week about what I will characterize as the outrageous $1.8 billion slush fund that was being proposed. That is now, for the time being, dead because in a bipartisan manner Congress rejected the possibility that there would be payouts to January 6 rioters and other criminals. So for now, it's not going forward.
The Justice Department has made that announcement. It's also clear that the Senate is planning to vote to make that permanent, so we will see. But the one item that remains from that series of announcements last week includes the order from the DOJ that would protect Trump and his family and his companies from audits of already filed returns on a permanent basis.
That, according to Blanche, the acting attorney general, stays. We're both lawyers. I'm not in that space. I find it very hard to believe that would survive legal challenge, so we will see. But I think it's important to mention that the slush fund is now, for the time being, dead. But the audit addition, which was never part of the case to begin with at least according to Blanche, remains. So I think that's important.
And then just to fill out what's going on politically, everybody is aware, I'm sure, that follows this that the DNI, Tulsi Gabbard, is leaving her post in a couple of weeks. Trump has named as acting DNI a gentleman by the name of Bill Pulte. We know the Pulte name in Virginia because that's developments of homes for many years, mainly his father, not him.
But Bill Pulte is head of the Federal Housing Finance Agency he's gonna serve as acting intelligence director. That's only in effect for, I believe, 210 days, and then you have to go to Senate for confirmation if that were to happen. There is a lot of concern from all parts of government and the private sector that Pulte has absolutely no experience to be in this job. Which is an important job, gathering intelligence and making national security decisions, but yet another decision by the administration that has gotten bipartisan concerns raised.
I thought we would mention that. You could take a look and Google Pulte, and you'll see some of the things that he's been responsible for in terms of creating mortgage fraud investigations and other things which was definitely not within the purview of the FHA. So anyway, those are a couple of political things.
I know not everybody that listens to us wants to hear political conversation, but this is more take a look at it yourself, make up your own minds. That's the way we get things done in this country is to look at things and make decisions, and some of these decisions are at minimum worthy of debate.
Elliot Berman: The statute that created the DNI position actually requires that the director have intelligence experience. That those aren't the words in the statute, but I suppose on a technicality since it's acting director it shouldn't make a difference. We'll see what happens in 210 days.
John Byrne: Staying, in government, OFAC issued a document. It's a 12-page document, Introduction to OFAC. So it updates people that maybe aren't as clued into the sanctions process, how persons can be removed, who has to comply, what are licenses, what are the consequences of non-compliance, and those things. That's a quick read and something that you can share with many parts of your staffs, even if the sanctions is not their main responsibility.
Elliot Berman: John as you've said many times, government documents can be really valuable training tools, and I think this one is a valuable training tool. A lot of people in many organizations are not really familiar with sanctions. There are sanction teams who have these deep expertise, particularly in larger organizations. But this is laid out in a way that I think is a good overview. There was nothing in there that's struck you or I as unusual, but for someone who is unfamiliar, I think it's a good starting point.
John Byrne: Yeah, I agree. It's a pretty easy read and something that can be shared. OFAC also announced this week a settlement with FTI Consulting. This settlement is an agreement to send a little over a million dollars to settle its potential civil liability for what is called an apparent violation of OFAC sanctions that targeted Russia's financial sector.
So they go, the two-year period of time, FTI indirectly dealt in prohibitive debt of VTB Bank, it's a Russian state-owned bank, on OFAC's sectoral sanctions identification list six different times. OFAC makes it clear that the settlement reflects OFAC's determination that FTI's conduct was non-egregious and not voluntarily self-disclosed.
The point here is, for those of us out there in the consulting world, the sanctions rules apply to transactions and entities you work with directly. But clearly also, as this points out with maybe some of your clients that you're advising. So I think it's worth taking a look at this.
Pretty interesting obviously a settlement but that the specific information is available on OFAC's website.
Elliot Berman: Yeah, and I think the facts are a little complicated. But the thing to remember, as you just pointed out, is that you're not allowed to do indirectly what you're prohibited from doing directly. And that's essentially what happened here.
John Byrne: All right, let's go international. What are some of the things that you got?
Elliot Berman: Finland did a national money laundering risk assessment, and they rated themselves level three on a four-point scale which is in the high risk zone. Risk of terrorist financing is moderately significant at two. It was actually published, by the Ministry of Finance and the Ministry of the Interior. It singles out the use of nominees and abuse of legal persons by organized crime groups as the main threat to money laundering. So we're back to shell companies which is not a surprise.
They identified a number of key vulnerabilities. It supplements the first national strategy, which was published recently for the period of 2026-2029. And the strategy is a framework for risk assessments and other things. So interesting for a country to self-assess and say, "Hey, we potentially have we're at risk here and we need to be active in doing things to resolve that."
John Byrne: Just real quick, and we didn't talk about this pre-recording, late last week regarding beneficial ownership, Transparency International did a post on LinkedIn under the category of great news, and they said, "The Court of Justice of the European Union has ruled that public access to beneficial ownership data is compatible with the EU law where there is a legitimate interest."
So they go into detail on that. It's a confirmation that trust companies that manage this was Italian agreements that permit a trust company to manage but not own an asset on behalf of a beneficiary can be treated by the Italian legislature as, quote, "other types of legal arrangements," and therefore held to the same transparency obligations of EU's AML directive.
Don't go by what I've just told you. Just take a look at Transparency International's description of this. But I did wanna highlight that because I know that was a debate in the EU regarding access to data.
Elliot Berman: Last week we spoke about a FinCEN bulletin about the risks of human trafficking at large international sporting events and entertainment events, issuing it in part in advance of the FIFA World Cup coming to the US, Canada, and Mexico.
Late last week, FINTRAC issued its own special bulletin similar to FinCEN's. And the OCCRP had a piece on their website this week bringing together the FinCEN notification, the FINTRAC, and also one that was issued by the Mexican government and pointing out more broadly how major international events can be ripe for human trafficking.
Worth a look. Again, this is a reminder not just about what's happening in the next few weeks with the World Cup, but also another lens through which to look at your human trafficking detection processes.
You also wanted to talk about Wise and the investigation that's going on there.
John Byrne: Yes. So I wanna give credit to Steve Hancock, who I follow on LinkedIn, who posted this the other day. This is a situation in Belgium. The actual source is the Bureau of Investigative Journalism is the source material.
They say here that Wise, which is a platform, a money transfer is being investigated for half a billion in suspicious transactions by prosecutors in Belgium. And their shareholder value went down at least 20% based on this announcement. The story goes into detail about it and they say that they're under investigation for concerns, like I said, that they helped criminals launder proceeds of fraud, corruption, drug trafficking. They said that these accounts at Wise had featured hundreds of requests for cross-border help in various criminal proceedings in more than 30 countries, and it amount to about a half billion euros.
This story has had a financial impact on Wise. We'll have to continue to watch it. It's an investigation, but I thought it was important to to reference that, and you can do your own research looking at that source material or anything else related to the investigation.
Elliot Berman: Particular investigation is focused on Wise European operations. They've had some issues in the past. In 2025, their US subsidiary was fined $4.2 million following an investigation by regulators in six states here in the US for violations of the Bank Secrecy Act and AML laws under their CFT program.
And they had a previous investigation in Europe as well. When you're moving money, you have to have a good program. How about that?
John Byrne: Do you want to mention the Basel working paper?
Elliot Berman: Sure. As we've said many times keeping track of what's going on at Basel is really worthwhile. They do a lot of interesting work. And one segment of their work is they have top folks in various areas do working papers.
And they put one out very recently entitled Making Stablecoins Stable(r): Can Regulation Help? It's a little complicated, but the issue that the authors looked at was that the assets that back stablecoins are often a bundle of bonds and cash. There seems to be a bias by the stablecoin creators to have their the backup funds more heavily weighted into bonds rather than cash. The challenge that the authors identify and then talk about how regulation could help, is this bias to bonds creates a new risk because with stablecoins being transactional, the demand on the stablecoin provider to convert the stablecoins to fiat can happen on an ongoing basis, and therefore liquidity is really important.
And bonds, which have maturity dates, generally have meaningful penalties if you need to cash the bonds in early. So a bias to bonds means you have less liquidity, potentially insufficient liquidity. This isn't a new problem. In fact, a number of bank failures in the US over the years have in part been the result of this kind of asset liability mismatch.
But it's interesting to see it being raised in the stablecoin space. And the authors talk about specific regulatory solutions to the mix of the backup assets.
John Byrne: Next week on the 9th, the House Financial Services, one of their sub-committees will have a hearing focusing on Chinese money laundering networks. So we will follow that of course and let you know what the witnesses discuss. And I also wanted to mention, 'cause we've talked about this before the administration has targeted the Southern Poverty Law Center. Just recently, this is reported by CBS News, that federal agents that had previously investigated the center determined that it failed to yield any charges after IRS lawyers determined it was legally structured, sources that told CBS News.
Again is another example of targeting that at least at this point has not borne fruit. But to take a look at that story, it's a CBS News story. You can go on their website and read more about it
Elliot Berman: John our next webinar is scheduled for June 25th at 1:00 PM. You can register on our website now, and it's focused on regulation in the fintech space. We've got some great speakers lined up, and I think people will be interested in that. I know you've got some other things working, so why don't you talk about those?
John Byrne: We're efforting some other conversations. One, to talk to someone who is well-versed in the anti-corruption space. I'm trying to pin down that conversation. We are looking for others. I also I teach a money laundering, terrorism, and corruption class, George Mason University, and last night our friend Dennis Lormel spoke to the class specifically about 9/11, since it's been 25 years since 9/11 this year.
And Dennis has agreed to sit down with me later in the summer for a conversation about his experiences prior and since and where we're left in terms of terrorist financing issues for the AML community. So we're just trying to figure out a time that we'd do that. Most likely whenever we do have that conversation, we won't post it till closer to 9/11, so we'll do it sometime later in the summer.
And then my monthly conversation with Sara Beth Felix will be out by the time you hear this conversation. Really appreciate those that send us comments about that and any, and anything else that you'd like us to cover.
Elliot Berman: And John, I know you're traveling to Milwaukee later this week, so hopefully you and I will get a chance to see each other in person.
John Byrne: Sounds good. I'll just mention very quickly, I do additional podcasts unrelated to AML RightSource for Marquette's Center for Peacemaking. And there's been about nine conversations that we've posted. And this week I'm going to Marquette to interview the president of the university, so I'm very excited about that. And the focus of those conversations is about peace studies and issues related to the Marquette Center.
Those of you that's interesting to can find that on Spotify and Apple Podcasts, and there's a YouTube channel as well.
Elliot Berman: Okay, John. You have a good rest of the week, and I will talk to you next week.
John Byrne: Take care.
Elliot Berman: Bye-bye.