In this episode of This Week in AML, Elliot and John unpack a busy week in global financial crime and enforcement. They start with Italy’s latest FATF mutual evaluation, exploring what regulators praised, where weaknesses remain, and what it might signal for other jurisdictions.
The conversation then shifts to the EU’s newly adopted Russia sanctions package, including expanded financial and crypto restrictions and fresh anti-circumvention tools. They also highlight key investigations and enforcement actions from France, Moldova, Switzerland, and the OCCRP’s latest reporting.
In the U.S., the discussion turns to prediction markets, as the CFTC sues New York over regulatory authority, and a controversial DOJ case involving alleged insider betting raises thorny questions about national security, ethics, and enforcement priorities.
The episode closes with updates on DOJ staffing cuts, recent indictments, and transparency litigation tied to the Epstein files.
Italy’s FATF Review, New Russia Sanctions, and the Growing Risk of Prediction Markets - Transcript
Elliot Berman: Hi John, how are you today?
John Byrne: Elliot welcome back. Hope you had a great family event. I know you were gone for a bit. Joe filled in admirably as he always does. He makes both of us look better because he's so good. So we're happy to have him, but I'm glad you're back.
Elliot Berman: Thank you. Yes, it was quite an interesting trip. I'm glad to be back. We were gone about a week. And I listened to last week's episode - he does make both of us sound better, whoever he's working with. So yeah, bunch of stuff.
John Byrne: Absolutely. All right, there's a bunch of stuff. It's all over the lot. And I might add a thing or two that's come up since this morning. I thought, because we spent so much time talking about FATF mutual evaluation - the US in-person meetings have ended, so we're obviously waiting on the report - the Italian evaluation was posted. Do you want to talk about that?
Elliot Berman: Yes, so there was an indication in the report that there's always a concern - a little bit of warning, maybe, in the wording - about the high risk of organized crime. I know that historically we've thought of Italy as the home of organized crime, but it's so global now that I think it's more than just Italy. They talked about the risk from both domestic mafia-type organizations and other criminal groups that operate internationally. But generally speaking, the report was very positive, talking about a strong understanding of money laundering risks as well as strong cooperation to address them. They again - coming back to the criminal organizations - talked about the fact that they continue to use complex and opaque ownership structures to conceal the proceeds of crime, and noted that Italy has put in place measures to mitigate these risks. It did note that sanctions for breaches of beneficial owner obligations are not being effective in terms of dissuading people from using them. The United States figured that out and just decided not to worry about them at all. And like everybody else, they have a roadmap of key recommended actions that have to be taken care of over the next three years before their next mutual evaluation. So all in all, I would say positive report. If the United States gets that report, I'd be quite surprised, but somebody would be happy in Washington.
John Byrne: The European Union adopted the 20th Russian sanctions package. If you remember, there's been a long internal debate and deadlock because of vetoes by Hungary and Slovakia. Obviously, the change in government in Hungary is very positive on a number of levels. The package reflects the EU's continuing efforts to tackle sanctions circumvention, with additional measures targeting third-country parties, the activation of anti-circumvention tools against Kyrgyzstan, and an extension of the list of goods and technologies subject to the prohibition on transit via the territory of Russia. Several other takeaways: financial and crypto asset restrictions have been expanded, including a transaction ban on an additional 20 Russian banks effective in early May, and a new prohibition targeting specific crypto assets. So that was a major move by the EU just late last week.
Elliot Berman: Yes, and there were also some additional things related to restricting Russian access to energy resources coming out of the EU, which have been included in most of the packages. But I think each time they come up with another one, they fine-tune it based on where they see the leakage.
John Byrne: The Organized Crime and Corruption Reporting Project - which we talk about frequently, and if you're not already subscribing to their free newsletter, you should - made a number of announcements last week. I just want to quickly highlight a few, but you can get the detail from their weekly. One is a Moldavian oligarch who has been sentenced to 19 years for crimes including a billion-dollar bank fraud. A panel of judges in the Moldavian capital said that that individual "created and managed a criminal organization" that oversaw fraud, money laundering, and financial theft from the banking system, according to the Anti-Corruption Prosecutor's Office there. In addition, France has opened a criminal inquiry into Lebanese banks over capital flight. A criminal investigation into the illegal transfer of funds out of Lebanon has been launched by the French authorities, targeting the European subsidiaries of major Lebanese banks including Bank Audi and Banque Richelieu France. There's also a story in the OCCRP weekly about what Joe and I talked about last week - the House Financial Services vote to basically dismantle the Corporate Transparency Act. As we said last week, it still has to go to the floor and obviously the Senate, so a lot more activity has to occur before any potential changes happen. And the last one related to the OCCRP: they highlighted that a resolution passed by the Council of Europe's parliamentary arm accused Swiss authorities of allowing millions linked to a Russian embezzlement scheme. It was a human rights body that criticized Swiss authorities in a 43-to-7 vote. That's the latest chapter in the decades-long fallout from the Magnitsky case. You can read that in detail on the OCCRP website.
Elliot Berman: And you mentioned France opening an investigation. France has also issued a fine against MoneyGram, the funds transfer firm, of 1.3 million euros for AML failings. The Financial Supervisory Authority in France, which is embedded in the Bank of France, imposed a penalty following an investigation into the company's compliance systems. In its ruling, the regulator identified weaknesses across several core controls, including ineffective transaction monitoring, gaps in customer due diligence obligations, misclassifying customer risk, problems with internal control systems, and weak enhanced due diligence - which in the US we'd say was a general program failure. And MoneyGram, for those of you in the US, you'll recall there have been previous issues with MoneyGram going back a number of years. It's a big, sprawling international organization and they do seem to struggle a bit with keeping everything on the up and up.
John Byrne: Do you want to talk about prediction markets, something that's in the news quite a bit?
Elliot Berman: Yes, the CFTC has sued the state of New York. They filed suit last week. The CFTC - the Commodity Futures Trading Commission - is accusing the state of invading the CFTC's authority to regulate prediction markets, alleging that New York's actions intrude on the exclusive federal scheme Congress designed to oversee commodities derivatives markets, including prediction markets. The CFTC has determined - and has been treating - prediction markets as what they call event contracts, and not gambling. This is all tied up in the fact that many states have started to regulate these prediction markets as gambling. Arizona and Illinois were sued by the CFTC earlier this year for the same issue. I don't think we've had any court rulings yet to clarify, but I think in the end the question of definition - and whether the CFTC has exceeded its authority in creating that exclusive definition - will be how it's decided. I don't know whether all the CFTC cases will get combined or not. But it's interesting. The first time I saw a Kalshi ad on TV, I was watching a basketball game and thought, how is that not gambling? That was my immediate reaction. Then I went online and did a little looking. I haven't done it for a long time, but I used to do a little derivatives work on swaps and I was trying to figure out if it really works as advertised.
John Byrne: It's amazing. And since we're talking about prediction markets, I'll say my view is that some of the things you can actually bet on are very disturbing - when it relates to war, to whether or not regimes are going to change, that sort of thing. Given that, it was interesting to see - while you were away - that a US soldier was accused by the DOJ of using inside information about the capture of Maduro to win $400,000 on a prediction market. The defendant, who pled not guilty, is named Gannon Ken Van Dyke. He's an active-duty soldier who was actually involved in the planning and execution of the US operation, and used his access to classified information - at least, that's the charge - to place a series of Polymarket bets on Nicolas Maduro's future. He went so far as to change his listed location to appear as an overseas location, even though he is a US-based citizen, disguising the fact that he was placing bets domestically under another name. It's going to be interesting. They certainly asked the president about this, and he equated it to Pete Rose betting on baseball - which I can't begin to understand as an analogy. But I will say that I think this person will clearly get pardoned. So let's see what happens.
Elliot Berman: Okay, well, I don't know what it would cost to make that bet, but it doesn't cost anything to place that bet with me.
John Byrne: I wonder if it's already on Polymarket. That would be interesting to see.
Elliot Berman: It could be. As I indicated, I've done a little sleuthing, but I have not gone on to Polymarket or Kalshi just to see how they work from a platform perspective.
John Byrne: Since we're mentioning the Department of Justice, let me also mention that Reuters came out with a story about a week ago that DOJ leadership cut more than 4,000 employees from its law enforcement agencies. Notably, in the most recent congressional budget request for the National Security Division, that division alone has lost 38% of its employees. DOJ pointed to "unprecedented personnel constraints." That becomes interesting when DOJ is the entity behind eliminating these jobs. I also read today that there's been a substantial reduction - if not elimination - in DOJ lawyers in the tax enforcement division. So quite a bit of activity going on there. The Reuters story claims it's an exclusive, so they have some quotes on the record. But the bottom line is those are facts - 4,000 employees have been eliminated. It becomes interesting to follow going forward. And I will just say: right before we recorded, the Justice Department obtained an indictment against James Comey after failing on their first attempt. This indictment, from what I've read, is based on some Instagram post he put up - I'll let you read about it. The fact that they got this indictment is remarkable to me. I know they say you can indict a ham sandwich, but this seems really, really notable. And that, along with criminal investigations of John Brennan, means a lot of what's going on is troubling, to say the least.
Elliot Berman: Agreed. Anything else?
John Byrne: Good question. I did see one other item, still sticking with the US: a lawyer who is also a commentator, Katie Fang, has filed a 15-page lawsuit in DC district court against acting Attorney General Todd Blanch for failure to release the remaining 2 million-plus documents of the Epstein files, and alleging what she calls illegal redactions. So this is a journalist suing the Department of Justice for breaking the law. I think she filed it a few days ago, but I just caught wind of it in a report today.
Elliot Berman: Yeah, I do think it was filed either yesterday or maybe last Friday, so very recent. John, I know you're working on our May webinar. Do you want to talk about that?
John Byrne: Right now we're working on securing panelists for a webinar that's going to cover financial access challenges globally. We've talked about that issue - I've certainly interviewed people for AML conversations, and Elliot and I have discussed it in This Week in AML. But this will be a global look at access issues for a variety of organizations, through either traditional financial institutions or other types, and: what are the strategies? What are some of the legal restrictions? What needs to be done to improve access so that, regardless of risk, if an institution believes it can mitigate or manage that risk, they should be able to pursue those activities and accounts. That webinar is on the last Thursday in May, and I should be able to firm up the panelists in the next couple of days. I should also say we've posted an interview I did with Paul Camacho - he's a former IRS Criminal Investigation SAC who has been in the gambling and gaming industry for almost 10 to 12 years, and a very passionate believer in training. He is also one of the founding board members of the Mob Museum in Las Vegas. I think you'll find that interview very interesting. And then we're also going to have another conversation with Sarah Beth Felix to revisit April and look at some of the high points and issues she saw, and we'll post that next week sometime.
Elliot Berman: Yes, and just for clarity: the May webinar is May 28th. It'll live stream starting at 1 p.m. Eastern time. By the time you hear this, you should be able to register for the session at our website, and last month's session that live streamed last week should be up on the website as a recording by the time you hear this as well. So John, have a really good rest of the week, and I will talk to you next week.
John Byrne: Stay safe, take care.
Elliot Berman: Bye bye.