Geopolitics, Crypto Risks, and AML Shake‑Ups: What’s Driving Compliance This Week

This week, Elliot and John unpack a whirlwind of global developments impacting financial crime compliance. They break down a major OCCRP report on how Russia, North Korea, and Iran are exploiting cryptocurrency for sanctions evasion and illicit finance—alongside new Chainalysis insights on post-strike crypto movements in Iran. The conversation explores FATF’s latest reports on stablecoins, cyber-enabled fraud, and the evolving risk-based approach.

On the U.S. regulatory front, they cover the effective date of FinCEN’s residential real estate reporting rule, the OCC’s proposed stablecoin framework under the GENIUS Act, and the ongoing debate over rollbacks to the Corporate Transparency Act. Across the Atlantic, they examine the FCA’s push to strengthen AML supervision for professional bodies.

The episode also examines the liquidation of Swiss bank MBaer under U.S. enforcement pressure and amid concerns about recent counterintelligence cuts.

Geopolitics, Crypto Risks, and AML Shake‑Ups: What’s Driving Compliance This Week - Transcript

Elliot Berman: Hi John. How are you today?

John Byrne: Hi Elliot. It wouldn't have had on my bingo card last week that when we were recording today, we'd be at war. But that's where we are. So I think I will just start off with a couple things that are relevant to the region. One is a report that was just posted by the Organized Crime and Corruption Reporting Project, who we've talked about many times. The report describes crypto's, what they call $350 billion Shadow War.

It says that Russia, North Korea and Iran have turned digital currencies into powerful tools for sanction evasion, hacking, and global money laundering. So the actual title of the report is the study is Confronting the Illicit Finance Hydra and Crypto Markets - Protecting Retail Investors and Disrupting Hostile Government Exploitation.

They looked at 164 documented money laundering cases over the past two decades, and according to the report, it found that cryptocurrency has enabled designated individuals, terrorist groups, and entire countries to sidestep sanctions and quote, process billions of dollars, either voluntarily or involuntarily. Close quotes.

The OCCRP mentions that the major researcher behind the report in an interview with the organization actually feels that the $350 billion likely understates the true scale of the problem. They got this from open source data, so that's why they think that perhaps there's much more, because obviously they don't have access to everything. Just in terms of the breakdown. They said the US accounted for 39 of the 164 cases. Russia was second with 19 cases representing 11.5% of the total laundered volume. So interesting report on their website. When you get an opportunity folks, take a look at that.

And then related, because it is related to, the attacks that we're in, Chainalysis that does a lot of excellent reporting, our good friend Jim Lee has posted that on chain data shows a sharp increase in activity from major Iranian exchanges in the hours following the US Israeli airstrikes.

So roughly $10.3 million in crypto assets came between February 28th and March 2nd. They have a blog that describes it and I'm sure there'll be much more information as we go forward. But those are two related crypto items that I thought we'd mention.

And I guess one more is a report FATF, as we said a couple weeks ago, when FATF does their plenaries, a lot of reports follow after that and there's another one we'll talk about in a bit, but they just issued a report examining the illicit finance risk linked to criminals use of stable coins. Especially through peer-to-peer transactions. Take a look at that report. It's on their website. They looked at 50 submissions from across the FATF network and looked at case studies and how new technologies and blockchain tools, along with other risk mitigation factors have been used to attempt to detect and disrupt that activity. The full report is available on the FATF website.

Elliot Berman: And staying with stable coins for a second. The OCC issued a notice of proposed rulemaking under the GENIUS Act. The ACT includes a number of required areas of regulation and directs that responsibility to OCC. So that is out there.

Just a reminder, the GENIUS Act itself becomes effective the earlier of 18 months after its enactment date, which was July 18th, 2025. So basically in January of 2027 or 120 days after the primary federal payment, stable coin regulators issued final regulations implementing the Act. So I think the goal here is to try to get the act effective sooner by having the regulations finalized.

I won't go into detail. People should take a look at it. It's a full throated regime to support, on an operational basis, the stablecoin activities that are authorized by the GENIUS Act.

John Byrne: I want to mention doing a interview this week with our colleagues from the Charity and Security Network and some other organizations, again, regarding the issue that we've continued to cover and that's financial access and impacts on humanitarian groups. As they are working diligently with a coalition that we're part of, to make the case to the evaluators of the US the FATF evaluation about some of the unintended impacts of Recommendation Eight and some other things.

One of their, staffers and researchers Poorvika Mehra. She posted a different document, but relevant earlier this week. And that's the Secretary General's report for the 9th review of the UN's Global Counter-Terrorism Strategy. And Poorvika has five takeaways. Read the report, but her analysis is always spot on.

One is multilateralism is non-negotiable. The report's unequivocal about that, no state can prevent or counter terrorism alone. Human rights concerns are not peripheral. That's something that's something the Charity and Security Network believe very strongly and worked a lot there. And prevention must go beyond siloed or militarized responses.

They say the report calls for a whole of government and whole of society approaches. And then finally technology and financial systems, they say are the next frontier. I think they're probably the frontier. And they talk about AI and unmanned systems to different evolving terrorist financing methods.

In any event, this report is available on the UN website also, if you follow Poorvika on LinkedIn she has it in her comment notes. And I haven't checked, but I'm sure it's probably also on the Charity and Security Network website certainly will be mentioned in their their newsletter they sent out frequently.

So I just wanted to highlight that was there as well.

Elliot Berman: Couple more US regulations. First, just a reminder to everybody that the residential real estate reporting rule became effective on March 1st of this year. For those of you who are responsible under that rule for reporting it's now live.

Just a reminder to everybody, it's reporting transfers of residential real estate where it was a non financed transfer. Essentially attempting to get to the transfers that are funded by cash, although if you read the definitions carefully, there are situations where it could be financed by a private finance source and it's still reportable.

And again, for those of you who are responsible or if you're a financial services company and you're in the chain of these transactions, there's multiple tiers of who has to do the reporting. And it's possible in some limited cases, that say the mortgage lending subsidiary of a traditional bank would have that responsibility. So you should be sure to take a look at that.

And then the OCC issued their final rule on National Bank Chartering. The rule itself is pretty simple. It takes some existing regulations and replaces the term fiduciary activities with the words the operations of a trust company and activities related there to. That's to, according to the OCC, to sync up with actual current practice. I think it'll be interesting to see as they approve more applications from holders of limited purpose trust company charters, particularly the new ones for particular activities, what in the end, they define all these things to be. Because many of the recent charter applications have been from outside the traditional banking space.

Again, if you are if you're following that or need to follow it the final rule has been published.

John Byrne: I am going back to FATF in another report. This is a fairly short report. It's Cyber Enabled Fraud. The subtitle is Digitalization and Money Laundering, Terrorist Financing and Proliferation Financing Risks. This report is on their website. Just a couple of takeaways from the report. 90% of jurisdictions identified fraud as a major, what they call hashtag money laundering risk. In the UK hashtag fraud accounts for over 40% of all crimes. And in several countries, up to 15% of adults have been victims. And global losses amount to tens of billions of dollars.

And they talk about things to be concerned about, phishing, social engineering accounts. Misuse of messaging apps, that sort of thing. They also reference money mules. In any event, the report is available on their website, of course, and just confirmation what we all, I think know is that cyber enabled fraud is a global cross-border phenomenon.

Elliot Berman: FATF also recently held their Learning and Development Forum on the Risk-based Approach and Risk-based Supervision. And they came out with a few interesting ideas. One is that they want to ensure that FATF's evaluation of countries gives credit for innovation and forward leaning approaches to attain effectiveness. And a reminder to everybody that the newest version of the mutual evaluations, another factor that they evaluate is effectiveness.

Also encouraging and supporting the use of technology and information sharing mechanisms. Developing opportunities for regular exchanges of experience and practices among supervisors, FIUs and other stakeholders to refine the implementation of risk-based approach. And initiatives to develop greater alignment on what the risk-based approach means in practice, between key stakeholders. And that's, that one's been lurking around for a long time.

We've been talking John about risk-based approach, what, 15 years and never really been able to get everybody on the same page about what that really means. So good to see that FATF is looking at that because that will help get the global stakeholders talking about it.

John Byrne: I know the IRS has been very vocal about the value proposition of BSA data. So we've talked about that. Related, is a response by, Democratic Senators to the Treasury Department. And that's a response to an inquiry that they made to the Treasury, asking about why the changes to the Corporate Transparency Act that we have certainly talked about earlier in 2025.

I would suggest taking a look at both the press release and the letter. The concern that the senators raise is without the CTA, they feel that it'll further enable drug cartels and fentanyl. They mentioned Iran sanctions evaision specifically, fraud, human trafficking and organizing transnational crime. What else is interesting is they say that there's surveys that show overwhelming support for the CTA.

What those surveys are, neither of us have seen. But the bottom line is there's still concern about the fact that the CTA created some exceptions last year when this had been fairly bipartisan bill that was signed into law a couple of years ago. In any event, that's gonna be an ongoing debate, ongoing conversation, and I'm sure there'll be more hearings in the Senate and House to talk about that issue and some of the other issues that are designed in part to quote, reduce burden unquote, but may affect reporting and detection.

And that's for law enforcement and others to make that case.

Elliot Berman: Late last week Treasury proposed a rule to sever Swiss Bank MBaers access to the US financial system. The day after that proposal was announced the bank went into liquidation. Why is that true? Because the Swiss regulator had already determined that they were in serious difficulty and serious non-compliance and had left it open as to when their order of liquidation might go into effect. But Treasury's announcement pushed the Swiss regulator to do it.

They concluded that the enforcement proceedings from the US would warrant activating their liquidation order. And the bank had been identified as unable to implement its own measures, but had been breaching sanctions against Iran, Russia, and Venezuela.

Then also FCA in the UK, we already spoke several times about the fact that they're going to be taking over as the principal AML supervisor across all domains in the UK, and they issued a report, one of their units, the Office of Professional Body anti-Money Laundering Supervision. So many groups like accountants, lawyers, and others, their trade associations have an obligation to be the supervisor of those groups, AML responsibility.

The report indicated that while there's been some improvement, the professional bodies lack teeth to enforce the AML rules. And the interesting thing is they observe that it's difficult for membership organizations necessarily to be effective regulators. In the meantime, the FCA transition is still in flight. There are several acts of parliament that need to happen. So there's no firm date, but at least in the UK they're working on those things, whereas in the US gatekeepers continue to be unsupervised.

John Byrne: To say the least.

Elliot Berman: What else you got, John? Anything?

John Byrne: No, I think that's it. Although there's been some reporting about the FBI preparation from an intelligence standpoint, and this is covered by a few media outlets, but it is, I don't say suggested. It is reporting that Kash Patel, who as we know, has been in the news a few for a few times lately.

According to a CNN report, they said he gutted the FBI's counterintelligence team that's tasked with tracking Iranian threats the days before the US strikes. And we've seen it in some other media accounts. It's gonna be interesting to see how that plays out. Meaning that there's been some concern about some of the reductions in counter terrorism.

The State Department closed its group in 2025. There's a refocus, the FBI to domestic terrorism as opposed to foreign from experts that I've talked to. So I think some of the changes that occurred in the past year year plus are going to be questioned, at least in terms of information gathering and response time. So we'll see. It's, as we know with everything else, things change on a day's notice, so we'll keep that keep watching that.

But as we close off here, I just want to mention to folks, because it's coming up. We're in March, the 19th and 20th at the Mayflower in DC is our fourth annual AML Partnership Forum. Registration's open. This is in a forum without the press. This is a sort of what I would call Chatham House rules. It gives private and public sector folks the opportunity to share information. There'll be panels, there'll be conversation. So go on the website and take a look at that and maybe you can join us for one or both days.

Elliot Berman: Our March webinar will be March 26th. It's going to live stream at 11:00 AM Eastern time, a little earlier than our regular time. And it's about AMLA, the future of compliance in the EU. Our colleague Vesna McCreery, who's the chair of our international advisory board, is going to be moderating.

So you can sign up for that at our website. And then if you're gonna be attending the IIB meetings in Washington, DC next week, AML RightSource will be there, so certainly flag us down and say hello. And we're also sponsoring the 1 LoD Financial Crime Summit in New York City on March 11th, so we'll be there as well. If you're a member of our loyal audience, please stop by and say hi. So John you have a good rest of the week and I will talk to you next week.

John Byrne: All right. Stay safe.

Elliot Berman: You too. Bye-bye.