FinCEN Alerts, Crypto Clarity Act Showdown, and Global AML Crackdowns

This week, Elliot Berman and John Byrne break down a packed slate of AML and financial crime developments shaping the global landscape.

They start in the U.S. with two new FinCEN alerts—one highlighting Iran’s use of front companies, digital assets, and complex corporate structures to evade sanctions, and another warning of heightened human trafficking risks tied to the 2026 FIFA World Cup. The conversation expands into broader trafficking concerns

From there, they unpack the OCC’s latest risk perspective, emphasizing persistent cyber threats, rising fraud sophistication, and mounting pressure on compliance systems amid geopolitical tensions. On Capitol Hill, attention turns to the Clarity Act and its push to build a regulatory framework for cryptocurrencies—alongside mounting concerns from banks and law enforcement about stablecoins, AML enforcement, and investigative visibility.

Internationally, they discuss Canada’s dramatic increase in AML penalties, AUSTRAC’s updated risk outlook and virtual asset focus, Switzerland’s proposed AML rule changes, and The EU’s push toward a unified anti-corruption strategy.

FinCEN Alerts, Crypto Clarity Act Showdown, and Global AML Crackdowns - Transcript

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

John Byrne: I'm good, Elliot. We are still at war, no matter how people try to characterize the activity as differently than war, 'cause you and I have been through Vietnam and some of the other ones that we recognize as combat. So hopefully things will come to an end.

The administration officials are in China, so we're also hoping that Taiwan stays safe, so we'll see what happens. As we are recording this, the meetings are just beginning, so by Friday we'll obviously know a lot more.

Elliot Berman: That's true. So where would you like to start?

John Byrne: Yeah, good question. Why don't we start stateside. FinCEN has issued two alerts as of this recording. One is on interestingly enough, on the use of front companies financial facilitators, and digital asset infrastructure by Iran's Islamic Revolutionary Guard to evade sanctions and launder proceeds. So that came out earlier this week.

The document it's a lengthy 11-page document with some red flags and some particular examples, like for example, commodity sales and misrepresentation of commercial activity, use of front companies and layered corporate structures. Which of course all of us seem to care about. So that is in the alert as well.

So that's one. Just very quickly, just reference one quick oil smuggling-related red flag. And again, this is pretty well-known in our world, irregularities in shipping documentation that may be intended to hide activities involving Iran. And obviously that's happened for a long period of time, so that's something that experts constantly talk about.

And they recommend that financial institutions may consider requiring a review of shipping documentation to identify falsified or missing information when that's practical. So that was there. So I don't know if you had anything to add about that one.

Elliot Berman: No. You mentioned there were two, the other one is a notice on the threat of human trafficking during the 2026 FIFA World Cup. And I know you have a couple things to say about that, but m- my big-picture take is either FinCEN or somebody else in the government, when there's a major- event like this, often in the sporting world the Super Bowl comes to mind, will put out something that reminds people that these kind of events can be triggers for human trafficking, either people who live in the host cities or not.

And it generally falls into sex trafficking and labor trafficking. But is there something else about that one you wanted to talk about?

John Byrne: No not really. They just continued to advise institutions to file SARs if it's associated with the 2026 World Cup. And the key term, because they wanna be able to search these, would be FIN-2026-HT World Cup. So it just makes it easier for law enforcement.

The red flags are pretty well known in our world. A customer's account has few or no transactions indicating or maintaining essential needs and may only receive credits from multiple third parties. Funds into an account in a location other than where the customer resides and are quickly withdrawn. It's always good to review those items, so I think that makes sense.

I would simply add in terms of human trafficking I did see a report yesterday House Democrats on the Oversight and Government Reform Subcommittee had a field hearing in Florida about the Epstein issues, and they issued a report. They heard testimony from a number of victims survivors, but they also issued this report, which you can find on their website.

It's a short fifteen-page report, it's entitled The Price of Non-Prosecution, and basically they say that Epstein's trafficking network was able to expand beyond Palm Beach to Paris and beyond because of what they consider to be the relatively easy non-prosecution agreement done by then US Attorney for the Southern District Alexander Acosta.

He negotiated that with Epstein and the committee staff, again, and the committee members, and this is the Democratic side, this is only one side, so you need to factor that in. Believe that enabled Epstein, with the relatively light agreement he had-- he served only 13 months in jail on state charges, and I think some of that he was able to do at home, at least during the day, something like that.

But that was in 2007. It enabled him to expand his network as I said, overseas, and there's a lot of information behind that based on the committee's review of the Epstein files. So again, this is obviously human sex trafficking issues. And they also mentioned that they believe that Epstein exploited the immigration system to traffic and control women, arranging fraudulent marriages and visas, and things like that.

Again, a 15-page document, it's available there but as we continue to try to be as up to speed on human trafficking issues, I think this is a relevant addition.

Elliot Berman: John, I noticed that the OCC published its semiannual risk perspective. Did you get a chance to take a look at that?

John Byrne: Yes, I did. This is something that they do, as we both know, on a regular basis. They give the institution sort of a heads-up on some things to continue to be aware of. They talk about credit issues and balance sheets, that issue.

But in our world, they said a couple of things including the following. Cyber threats and fraud remain a concern. Banks continue to face challenges from both the elevated levels and the rising sophistication of fraud and scams, and that's why we do the programming that we do, Elliot in webinars and podcasts.

Geopolitical tensions increase sanctions and money laundering risk straining bank compliance systems, and may raise the potential for sanctions and BSA or AML violations. I think that should tell people that think there's gonna be a lessening of oversight to think twice. Some of our client colleagues and others have said, "Don't look at what's going on in terms of oversight as a reason to reduce resources." And I think this paragraph makes that pretty clear.

Elliot Berman: Yes. Worth a read, From a financial risk perspective, they talk about credit and market risk and the compliance and op risks they do a little bit of a dive into cybersecurity, fraud and compliance. Those topics have been in prior reports. Always a good read, we're always saying, "So what are the regulators thinking?" They put out these types of reports, and you get an idea of what themes are on their mind, and it's worth it then to see whether your institution or your organization is paying attention to these themes, others as well, but these themes in particular.

Where do you wanna go? You wanna talk about the markup?

John Byrne: Yeah. Day after we record this, there'll be a markup on the, Is it the CLARITY Act or the GENIUS Act? You'll have to remind me.

Elliot Berman: It's the CLARITY Act.

John Byrne: CLARITY Act. What's interesting about it, besides the obvious, because it's been a while since they've got back to this issue, this is supposed to create a framework for cryptocurrencies, so there's a bunch of things in there.

But two things I wanna mention, then feel free to add. One, it's designed in part to create a anti-money laundering regime for these crypto firms, similar to how traditional banks and other financial institutions have requirements. And obviously, that's necessary on a number of levels. So we'll see how that works out.

But the other part of it is, I know that the banking industry is pushing back on a particular provision that the way it's couched is the SEC and CFTC Treasury would issue joint rules to implement a provision. And I'm reading from a description here, not from the actual language. It says the bill would ban rewards on, and this is from AML Intelligence, I wanna give them credit, rewards on the idle balances of stablecoins that closely resemble bank deposits. But would allow rewards on transaction-based activity, such as payment via stablecoin. And according to this, and I've seen this from letters submitted from my old organization and others banks are opposed to this, saying it would shift deposits away from the regulated banking system.

That and the money laundering issues are pretty interesting to watch. What else do you see here?

Elliot Berman: There's a lot of lobbying, as you mentioned. There's been lobbying by some organizations that run platforms and exchanges about trying to make sure the bill doesn't restrict listing of smaller riskier tokens. There's the issue you talked about that the banking industry is concerned about the passive holding yields on stablecoins.

The thing to remember is that the House passed a version of the CLARITY Act as H.R.3633 back last fall. And the Senate has been struggling to first to focus on it, but then to get to the point of doing a markup. It's unlikely that what comes out of the Senate will be what the House passed, so we'll have to have some kind of reconciliation. This is a hot item, and I don't think these are easy issues. So it'll be interesting to see where it goes.

John Byrne: Yeah, and the other part of this that you actually flagged for me is a letter sent to both Chairman Scott and Ranking Member Warren late April, and this is from the National Fraternal Order of Police. So they are concerned about this legislation because they think it's gonna limit the ability of prosecutors to pursue cases of financial crime in which cryptocurrency is used. So they are very concerned about that. And reading from a excerpt of the letter, they said, "Make no mistake, stripping law enforcement of its ability to track blockchain financial transactions would impede the work of our members in preventing criminals from profiting from their crimes.

We are urging the committee to reconsider," this is a particular amendment, "in order to en- ensure that our officers aren't working with their hands tied behind their backs."

Elliot Berman: That focuses on a provision that allows criminal prosecution of the actual payers who use crypto, but not the platforms who in some cases might be argued that they facilitated the payments. Okay, you wanna go international? Do you wanna talk about the national strategy for combating terrorism or not?

John Byrne: Yes. Yeah let me do that one first. So the White House issued their counterterrorism strategy. Sorry I'm not taking this as seriously as I should, because I don't think they did. As you read this document, we've been reading government documents for 40 years, I've never seen anything partisan. And don't take our word for it, read it. It's a 16-page document.

But what's interesting about it is what their focus is going to be on does not include domestic terrorism in terms of what I would consider and others would consider right-wing domestic terrorism. It's focused on Antifa and other anti-fascist groups, and plus other items. Human trafficking's there, so that's a positive. It is a very paper. I'm not sure how this helps people to understand what the focus is other than clearly what it's not going to be. So again, don't take our word for it, 16-page document, White House counterterrorism strategy. There's an introduction written in the name of the President that you should read as well.

Elliot Berman: For comparison I went back and read the 2020 version of this, issued in the first Trump administration. And not that the threats should be necessarily identical, but just the style and tone. I think if you read the 2020 version, it reads like many other government documents.

As you said, does not read like a government document, does not read like a strategy. And I guess my concern is these strategy papers are supposed to help the country and those of us in the various parts of the financial services industry to understand, what the government's focusing on and how we should be tuning our processes to be aligned with that. This doesn't give us a lot to do that with.

John Byrne: Go ahead. Let's go overseas.

Elliot Berman: Okay. Canada, they've been doing a lot of different things and what they've recently done is they've raised the anti-money laundering penalties up to 40x. For example, minor violations the fine was 1,000 Canadian dollars, the fine now is 40,000 Canadian dollars. So they're getting serious about the fines. And they do that all the way up through serious violations and very serious violations, where very serious violations used to be a half a million Canadian dollars, now the maximum is 20 million Canadian dollars.

These came into force as part of the new Strengthening Canada's Immigration System and Borders Act, and they will apply to violations that occur on or after March 26th of this year.

AUSTRAC in Australia has released an updated risk snapshot of Australia's financial crime landscape, and they've focused on money laundering, terrorism, and proliferation financing risks are becoming much more complex and interconnected because of technology, globalization and the growing overlap between legitimate and illicit activity. I think it's worth a read. They have detailed snapshots of their concerns in each of those three areas.

And I would strongly urge people to read that. Again, even if you're not doing business in Australia, I think seeing how other national regulators are coming at some of these - issues can certainly help us understand what's happening or how we should be planning in the future.

John, what else did you see?

John Byrne: AUSTRAC has also launched campaigns about the virtual asset sector, so that's also connected. I think it's interesting how some countries outside the US are focusing on this. According to the press release from the CEO of AUSTRAC, he said that these campaigns reflect our, the risk profile of the sector and the regulatory priorities of AUSTRAC.

They said they're gonna continue to provide advice and guidance to assist businesses on how to comply. There's two campaigns, are actively engaging in improving AML risk management within that sector, so I would add that to the mix.

Elliot Berman: And then Switzerland's FINMA has opened a consultation to change some of the AML rules there. This is focused on financial intermediaries, and they wanna make sure that financial intermediaries understand their customers' control structures and only execute payments on behalf of customers' clients, if they can assess the client information and conduct due diligence.

John Byrne: There's an article in Newsweek, an opinion piece written one of the co-authors will be on our webinar at the end of this month Julia Yansura. She's with the FACT Coalition. Julia and John Dodsworth, who's the head of deforestation strategy at the World Wildlife Fund in the UK wrote this opinion piece. It just appeared this week in Newsweek and the title of the piece is, "As Illegal Mining Booms, Government Guidance Fails, Fails to Keep Up."

And both of these experts have spent a lot of time in this space. Just reading an excerpt, "Illegal mining is increasing at a staggering pace with significant environmental consequences." And they talk about the level there and also that much less is known about what is occurring financially.

Not only does it generate billions of dollars a year in illicit proceeds, but they argue that it also represents an income source for terrorist organizations. And so an interesting piece by these experts. They add that while financial transactions at illegal mining sites are often conducted using cash or sometimes crypto, research by the FACT Coalition say that by the time the mineral is exported, transactions typically involve formal companies and the use of the financial sector, and they go into detail about how that occurs.

Elliot Berman: The EU executive has created a consultation. Comments are due by the 6th of July, and it's focused on getting feedback on the forthcoming EU anti-corruption strategy. The responses will be used to shape its approach to preventing and tackling corruption across the EU.

The EU directive, which was adopted earlier in 2026 focuses on the need to introduce stronger rules and harmonized penalties for corruption offenses alongside measures intended to improve prevention, investigation, and prosecution. It'll be interesting to see what the EU comes up with. They have a more aggressive approach than we're taking here in the United States currently.

John Byrne: That's for sure.

Elliot Berman: Anything else before we go to what's in the pipeline?

John Byrne: Just a couple of things. When you talk about corruption, we continue to talk about the response of this administration to the January 6th rioters and the pardons to every one of them. I just saw something today that at least 33 of those individuals that were pardoned have been re-arrested, charged, or sentenced for other crimes.

I just throw that out there. There's also an attempt to pay these rioters, compensate them in some fashion out of our tax dollars. So that's gonna be interesting to watch as we think about corruption and protection and domestic terrorism. It's all relevant. It's all interesting to watch. More and more is being reported on it, so I think that's something to pay attention to.

Elliot Berman: I'd leave it there.

So John, you mentioned our May webinar, which we'll live stream at 1:00 PM Eastern Time on the 28th of May. And you're going to be talking about financial, global financial access.

Anything else you want to say about that?

John Byrne: Yeah, I'm really excited about this because we're gonna have three folks give perspectives that we don't always hear in the AML community. It's important, and I know our community cares about this. We're gonna hear from Julia from The FACT Coalition. We're gonna hear from a counsel for a representative on the House side in the US, and the CEO of an organization called Renew Democracy Initiative.

And all three are gonna talk about where we are today in terms of access, what are some of the challenges, and what are some of the impacts when access is limited or totally e-eliminated. So we're gonna talk about financial inclusion, not just simply in the US, but more broadly.

Elliot Berman: We have some other things that are in the pipeline, and you'll see them posted to our website. Please pay attention to that. And John, I will talk to you next week.

John Byrne: All right. Stay safe. Take care.

Elliot Berman: You too. Bye-bye.