This Week in AML
This week, Executive Vice President John Byrne, and Creative Director Elliot Berman of the AML RightSource staff talk about the announcement by Department of Justice that it has completed the extradition of a national of the Democratic People’s Republic of Korea (DPRK). The indictment alleges that the individual and others conspired to covertly and fraudulently access the U.S. financial system and to have defrauded U.S. banks and violated both U.S. and U.N. sanctions as part of the money laundering activities in transactions valued at over $1.5M. John and Elliot discuss the importance of FIs remaining vigilant in their understanding with whom they are transacting business.
North Korean Businessperson Extradited for Money Laundering TRANSCRIPT
Elliot Berman: Hi, John, how are you this week?
John Byrne: Hi Elliot, doing fine - I hope you're okay.
Elliot Berman: I'm okay. Yep. This week I saw a press release from the US Attorney’s Office in the District of Columbia and it was about the extradition of some North Korean nationals to the United States to stand trial for money laundry.
Did you see that?
John Byrne: Yeah, I did see that. And among other things they [are] being charged with avoiding sanctions. So, it was it was a “twofer” - dealing with money laundering and sanctions evasion, which obviously is two key areas for our community.
Elliot Berman: Indeed. First, they indicate that it's the first ever extradition of any North Korean national to the United States. It's interesting in some ways what's not in the press release - it doesn't mention the country from which they were extradited. I would say [it’s] somewhat circumspect in how it (the Press Release) described the investigation, which I'm not sure what this means, but it was “..this investigation was led by the FBI's Minneapolis field office” - which you know presumably the first identification of something unusual going on somehow cross their desk. And usually that's how the FBI decides who gets to run with it.
John Byrne: Yeah. I think that's an important point because we know that the FBI rotates agents throughout various States and offices. So having an international impact doesn't necessarily have to be in New York, Miami, or DC, and that the agents are working throughout the country on cases. And this is a perfect example of that. The other thing, just really quick that I noticed going back to things that we care about in the AML Universe is the use of front companies and 40 bank accounts registered to the false names. That sort of thing, which none of that's new, but that was one of the tools used by the co-conspirators. And that obviously continues to be a challenge in the AML field - detecting the use of front companies.
Elliot Berman: Yes. So again, something that the community has been working on for years and years, and actually some changes coming out of the Anti-Money Laundering Act will assist us with still is front and center. The other thing that I'm sure many of our listeners know is that the FBI actually has international offices, and they talk about cooperation with foreign, international partners.
But I'm sure that there were agents who actually office internationally, who would have been involved in this kind of a thing. And in fact, their counterintelligence division was actively involved as well as the field office.
John Byrne: Right. And they point out in the press release that the FBI working with foreign authorities - which is again, has been going on for quite a while - but that it’s also a positive. And while the dollar amounts weren’t excessive at $1.5M they were attempts to violate not just US sanctions, but UN sanctions. And according to the indictment the key conspirator was affiliated with North Korea’s primary intelligence organization.
So that to me, is a clear indicator of the importance that this administration is placing on North Korea and their various illegal activities.
Elliot Berman: Yes. I agree with that. Obviously for a very long time, the relationship between the United States and North Korea has been rocky. And even when there's been some effort by one administration or another to see if there's a way to thaw it a little bit, it tends to end up remaining rocky and clearly this kind of activity isn't going to make anybody feel too excited about the idea of rushing, to thaw it out without some real concessions and that kind of thing.
John Byrne: Right. And I would just say the reference to US banks and correspondent banks was, they were fooled by this as well. And no amount of beautiful letters between the countries kind of change the fact that we need to stay on our toes on this. So, I think it's, again, an important announcement on a number of levels.
And as you point out we need to continually remind everybody that the FBI does not just work on domestic issues. It does a great job working with their foreign counterparts [too].
Elliot Berman: Yes. It'll be interesting to follow the case. This was only at the indictment stage, but I don't know this for a fact, but I would expect something like this could move reasonably quickly. I expect that the prosecutors had things pretty well lined up before they would issue an indictment where they were going to have an extradition - because extradition is, a complicated matter all by itself.
John Byrne: Right. So, if people want to read the press release its Wednesday, March 24th, DOJ’ US Attorney's Office in the District of Columbia.
So, with that Elliot have yourself a good safe weekend.
Elliot Berman: You too - talk next week. Bye bye.