Global Anti-Corruption Efforts, the Basel AML Index, and U.S. Policy Shifts

In this episode of This Week in AML, Elliot Berman and John Byrne dive into International Anti-Corruption Day and explore contrasting approaches to corruption and financial crime across the globe. From the UK’s ambitious anti-corruption strategy and new FCA tools to the Basel AML Index findings, AUSTRAC’s compliance updates, and EU fraud crackdowns, the discussion highlights global trends and challenges. The hosts also examine recent U.S. developments, including OCC guidance on crypto transactions and the newly released National Security Strategy, offering a perspective on what these changes mean for compliance professionals.

Global Anti-Corruption Efforts, the Basel AML Index, and U.S. Policy Shifts - Transcript

Elliot Berman: Hey John, how are you today?

John Byrne: Good, Elliot. It's, uh, cold here, which I'm sure it's also cold in Milwaukee 'cause it is December. But we were in the twenties today, which for you guys is probably shirt sleeve weather, but uh, for us that's pretty cold.

Elliot Berman: Yeah, it's in the upper twenties here. It's supposed to be in the low thirties tomorrow, so the precipitation we're gonna get is maybe rain, maybe snow, who knows?

Karen and I are heading to Arizona tomorrow for a family wedding. So we're gonna get a few days of seventies. We're recording today on Tuesday and today is International Anti-Corruption Day. Something proclaimed by the UN. Just a reminder to all of our listeners that the UN still thinks corruption's important.

John Byrne: And some of us in the US do as well. On that note, a couple things I wanna mention. We did talk about the pardoning of the former president of Honduras. There's apparently equal opportunity pardoning. The Trump administration pardoned, and I think we did reference this, Henry Cuellar, the Democrat from Texas, and Cuellar and his wife have been charged with collecting at least $600,000 in bribes from foreign entities.

Trump has pardoned Cuellar and reported by Punchbowl News the, House Democrats are set to restore Cuellar's post as the party's top lawmaker on the Appropriation Subcommittee. Which, uh, is telling all of us that the anti-corruption day that we are in doesn't seem to apply to either political party. This is obviously not acceptable on any level. So I did wanna mention that that was being announced, uh, this week as we record this.

Also separately the Washington Post in a cover piece yesterday, did some investigation that the Trump administration has pardoned major drug traffickers, over a hundred people accused of drug related crimes, despite the various anti-drug rhetoric that we've talked about throughout this year. That article appears in the Washington Post. You can read that at your leisure.

Elliot Berman: Staying in the corruption space, the UK has announced that it is going to create what are effectively blacklists of people who will be banned from holding key anti-financial crime roles under its new anti-corruption strategy. The initiative outlines over a hundred measures to combat corruption and illicit finance across state bodies and law enforcement. A key aim is to ensure the integrity of new hires. The UK said its new advisory list will play a key role and this is a quote, insiders working in the police, prison service, and at the border will be exposed through more robust vetting. It said this will ensure that those with a history of corruption or serious misconduct cannot move undetected between organizations.

John Byrne: There's some other UK things too that you've identified. Do you wanna mention those as well?

Elliot Berman: Sure. FCA has launched something called Firm Checker. And it's a tool to help consumers vet scam messages. The service checks if FCA authorizes a company to operate in the UK. It also shows which services a business is licensed to provide. The FCA said that by using the tool people can significantly reduce their chance of falling victim to fraud. And they suggested that whether you're considering an investment, a pension opportunity, a loan, or other financial service, that people in the UK should use Firm Checker to confirm that the firm is authorized.

They also noted a study. Done in the UK that says that 72% of the respondents said that they just flat out don't answer, unsolicited calls or don't respond to them. Which is, a good technique all by itself.

The other thing that I saw, and we mentioned this a few weeks ago, the beginning of it, but this is another step. FCA is getting responsibility for oversight of AML activity related to lawyers and accountants. And as part of that, there's a new corruption crackdown related to lawyers and accountants focused principally on lawyers and accountants activities in assisting criminals or kleptocrats to hide their funds.

Government's gonna invest about $20 million in a specialized police task force a domestic corruption unit. It'll be based in the City of London Police and it plans to expand sanctions and test some AI tools also to support corrupt corruption investigations. The Foreign Minister, David Lammy said that they'll lead internationally, bringing partners together to close gaps exploited by kleptocrats and organized criminals.

So again, uh, a very different tone on corruption in the UK than here in the US.

John Byrne: Also internationally, we've reported in this organization many times. The posting of the Basel AML Index for this year is out. It's a global snapshot of money laundering trends and a reminder that the risk scores are based on data from 17 publicly accessible sources, FATF, Transparency International and number of other organizations, and they look at 177 jurisdictions. I know you've seen that as well. What jumped out at you about the Index?

Elliot Berman: Well, the worst countries in the index are Myanmar, Haiti, Democratic Republic of Congo, Chad, and Venezuela. Pretty much the same list as last year. And the best countries on the list, Finland, Iceland, San Marino, Denmark and Estonia.

Again, a very similar to last year's list. The US is sort of in the middle. This year we were a 114th. Last year we were a 101st. But our score was only a couple hundreds of a point different. So not much going on there.

What I thought was really interesting is you mentioned the framework, looking at the data sources it's got five sections to it. Quality of the country's AML framework, that's half their score. Corruption and fraud risks, that's 17.5. Financial transparency and standards is 17.5. Public transparency and accountability is five, and political and legal risks is 10.

John Byrne: Sticking with overseas AUSTRAC, the FIU in Australia that we have covered for many years posted what they're calling their preview questions for the AUSTRAC 2025 Compliance Report. So this report is due from entities that provided designated services of some kind during 2025, and they have to file these between January 1st and March 31st of next year.

What's interesting is these, questions will take a bit to to respond to. So giving them these entities this time to put it together, it makes sense. That's why these were posted. I just wanna highlight a couple of them. And again, you could find this on the AUSTRAC website. So a couple of the questions.

Does your business provide digital currency exchange services? Yes or no. Does your business accept trade in cash? Yes or no. Does your business offer any of the following products? Stable coins, privacy coins, cryptocurrency ATMs, and or kiosks? Over the counter brokerage and defi lending. Gotta respond to that as well. Here's one that's all of this is, is relevant internationally, but something that we've talked about. Did your business experience de banking in 2025 and it says yes or no, and then it explains their definition.

They call it de banking, means a situation in which a financial institution withdraws banking services to a business. AUSTRAC understands there is industry-wide concern due to the risk of de banking. Information provided under this question will only be used to help AUSTRAC establish a picture of the extent of the concern, so that that's in there as well.

There are a number of other detailed questions about delivery methods. Did you conduct a money laundering or terrorist financing risk assessment of these new delivery methods in 2025? And my educated guess would be if you said no, uh, then they would wanna know why. And then right below what it does say. Why did your business not conduct? And you have 500 characters to explain that.

And then lastly, again, there's a lot in here, did your business outsource any of the following AML/CFT functions? And that includes customer ID, transaction monitoring, enhanced due diligence, training, or none. An extensive list of information that I'm sure will be designed to help AUSTRAC deal with guidance, deal with potential increase in regulations, it could run the gamut. But that's available on their website.

Elliot Berman: A couple of other things from the EU and the UK. The British government is expected to extend AML checks to charities, universities, and football agents. And so what does this mean? It means that universities and private schools and charities will need to do KYC checks on donors, amid concern that charities and higher education are being used to launder dirty money. Again, this is part of their anti-corruption strategy. And, uh, it's gonna encourage national institutions to strengthen their resilience to corruption from high value donations. I thought that was interesting, going in a direction that we're clearly not even talking about here in the US.

And then the EU police dismantled a major fraud network that was operating scam crypto sites that allegedly generated over 700 million Euro. Police arrested nine people. The investigation covered at at least eight countries and revealed a large fraud organization with multiple schemes and a financial and technical infrastructure that was spread across Europe. That's the tip of the iceberg as we know, but certainly active efforts in Europe to stop these, scams.

John Byrne: Elliot we're, we're nothing if not trying to be as current as possible. As you were discussing that, and you already mentioned Anti-Corruption Day, the FACT Coalition has just published the following statement, which I'll just reference very quickly. They are commending what they're calling the ambitious new UK anti-corruption strategy and saying that provides a sharp contrast to US backsliding in global dirty money fight. And just a quick quote from Ian Gary, their executive director. He says among other things, in that announcement the following, the UK government's renewed focus on the fight against corruption is a key component of the nation's economic and national security, stands in stark contrast to the current situation in the US where the Trump administration has systematically dismantled core pillars of US anti-money laundering and anti- bribery frameworks. So more about that is available on the FACT Coalition's website.

Elliot Berman: Yeah, I can't say any more than that. What else you got, John?

John Byrne: Well, the other one that we were gonna mention, I'll defer to you on the recent announcement from the OCC, and then let's talk about the national security strategy that was just released as well.

Elliot Berman: Okay. The OCC issued an interpretive letter that said that national banks, so those banks chartered by the OCC and overseen by the OCC, may act as riskless principals in crypto asset transactions. Without spending 20 minutes going through what all that means riskless principal transactions are those where the riskless principal takes possession of an asset on behalf of a seller, where a buyer is identified, standing by, and prepared to immediately, make the purchase. The OCC has recognized the power of national banks to be a riskless principal in other circumstances. The one that jumps to mind is foreign exchange transactions. And the SEC has recognized that broker-dealers can be a riskless principal in a number of circumstances. Those all involving securities.

I don't think this is really that surprising and executed properly it doesn't involve crazy risk. But it is another step. We also saw this week that Comptroller Gould gave a speech and talked about the active nature of the OCC in receiving and reviewing limited purpose trust charter applications and new bank applications. And all of this will be dependent on who gets them and how they use them and whether they have the right people and the right processes and the right systems. And that's a we'll see. You and I'll be here to, uh, watch and see where this goes.

John Byrne: I referenced the White House released the National Security Strategy earlier this week. Many have called it a clear ideological and substantive shift in US foreign policy. A couple of the items in the strategy, it's 33 pages, so folks should read it and make up their own minds regarding the direction, but they talk about, quote, commercial diplomacy unquote.

That's not something that's appeared in any previous strategy. And there is some positives. They'll continue to support Taiwan and obviously the Taiwan China challenge continues. So that's certainly a positive for those of us who wanna see Taiwan protected.

Others have called some of what's in here are blatant calls for social engineering. So again, we'll leave that to you. The Center for Strategies and International Studies, a very well respected think tank has a piece out. And I'll just reference a couple of parts, but again, you should read the whole thing, not just the snippets that we give you.

The National Security Strategy is quote, a real, painful and shocking, wake up call for Europe. It's a moment of cavernous diversion. Divergence between Europe's view of itself and Trump's vision for Europe. If Europe had any doubt that the Trump administration is fully committed to a tough love strategy, it now knows for sure.

There talks about issues regarding culture that are in there. There's references to wokeness and that sort of thing. There's certainly a reference to China, but not really anything regarding Russia. The only thing it says, again, you should read it completely, quote, as a result of Russia's war in Ukraine, European relations with Russia are now deeply attenuated and many Europeans regard Russia as an existential threat, unquote. I think that's because it is an existential threat.

Elliot Berman: Yeah I don't know that that's a result of Russia's recent activities. I think that's been a concern since the end of World War II.

John Byrne: I think that's right. Anyway, so take a look at that strategy. Many have called it groundbreaking and groundbreaking doesn't always mean positive or negative. It's, you as a viewer or reader should come up with your own opinion regarding this, but definitely it's a change from previous strategies.

Elliot Berman: John, I know that we have one more webinar this year. It's on the 18th and it's a year in review. You've got a great panel and I'm looking forward to that. I wanna remind our listeners that they can still register at our website. So I'd urge them to do that. And John, I know you've got a couple of things you've been working on. You wanna talk about those before we sign off?

John Byrne: We've done a couple of podcasts that will be posted. I did one with a professor at Marquette about issues related to peace studies, which I think our audience will find interesting.

Also was able to interview our own Joe McNamara with Justin Cole. Justin Cole, former head of communications for IRS-CI. They talk about the use of AI in investigations. I think you'll find that interesting. And then our good friend Sarah Beth Felix, who has her own newsletter now on LinkedIn called Dirty Money. You should subscribe if you haven't already. We're gonna sit down and I'm gonna talk to her also about her views of the year in review of 2025. So that's coming up as well.

Elliot Berman: Well, John, I'm gonna see you next week, so until I see you, you have a good rest of this week and we'll talk to our audience next week.

John Byrne: Take care.

Elliot Berman: You too. Bye-bye.