SARs, Seizures, and Systemic Shifts: Global Financial Crime Updates

In this week’s episode of This Week in AML, Elliot Berman and John Byrne cover a wide range of breaking developments in the financial crime compliance space. From congressional scrutiny of Jeffrey Epstein’s financial records and FinCEN’s website overhaul to the DOJ’s seizure of fraudulent ID marketplaces, the conversation highlights the growing intersection of policy, enforcement, and technology.

They also explore FATF’s new National Risk Assessment Toolkit, the UK’s sharp rise in fraud prosecutions, and the landmark “Failure to Prevent Fraud” offense now in effect. Plus, updates on FINTRAC’s enforcement actions in Canada, and FinCEN’s advisory on Chinese money laundering networks.

SARs, Seizures, and Systemic Shifts: Global Financial Crime Updates - Transcript

Elliot Berman: Hi John. How are you today?

John Byrne: Hey, Elliot. Good. Um, as we are recording this in middle of the week, the Epstein victims are having a press conference on the Capitol steps, and why is that relevant to our world? Just a couple of items that are relevant. One is on the House side, there's an Oversight Committee that's looking at the issues related to this. And several days ago, the Oversight Chair Comer from Kentucky asked the Treasury Department to release financial files related to Epstein and, uh, Ghislaine Maxwell, the one who's serving 20 years in prison.

So basically talking about Suspicious Activity Reports and other information. So that was a couple days ago, but just today, the Washington Post is reporting that Senator Ron Wyden from Oregon is in a letter to Bessant, the Treasury secretary asking that key information is being, or suggesting that key information is being withheld, uh, about the finances of Epstein. According to the letter, Wyden says the following, this ill-advised decision is impeding my investigation into the financing of Epstein's sex trafficking and preventing transparency into one of the worst pedophile rings in US history.

So, uh, several of the issues related to Epstein, obviously touch on an area where we're very familiar with Suspicious Activity Reports. We obviously know very well releasing information on Suspicious Activity Reports, it's a felony to disclose those illegally. And when Congress asks for that information, there has to be guardrails around any of that information being released.

Going back to this article in the Post, it said that, the Biden administration had released some Suspicious Activity Reports to the Senate during their review of activities there. So there is some precedent for that. And I know in the past committees have gotten access to SARs.

Elliot Berman: The privacy provisions related to SARs does not create a prohibition from Congress getting them. Uh, although as you point out there are guardrails and it has to be for an appropriate purpose. But I think oversight, investigation, uh, certainly would be found to fit into that bucket. So yeah, more to come.

John Byrne: Since we're talking about SARs, FinCEN is announcing today that they have a new web or an update to their website, calling it a user-friendly change to fincen.gov. So information on that. And they of course, encourage people to subscribeto FinCEN updates, which is a free email subscription service which many of us do subscribe to. So, those of you that pay attention to this on a regular basis should obviously, uh, take time to go through the website and, uh, on all the information they provide.

What I've looked very quickly. There's sections on AMLA from a couple years ago. Obviously statistics are on there and other feedback mechanisms. Uh. Certainly guidance documents and enforcement actions, the typical things you would expect.

Elliot Berman: So staying with things related to the US government, this is more on the, uh, prosecutorial side. The US Attorney's Office for the District of New Mexico announced in the last few days the seizure of two marketplace domains and one blog that was used to sell fraudulent identity documents to cyber criminals worldwide. They, the operators had something called VerifTools.

And those produced and sold counterfeit driver's license, passports, and other identification documents that could be used to bypass identity verification systems and gain unauthorized access to online accounts. So the key will be to continue to be moving forward. But, uh, it reminded me of things we've talked about recently on our podcast and some things that have been talked about on other podcasts that we've produced about, uh, synthetic identification fraud and things like that, and these kinds of document production factories make online activity that much more fraught.

John Byrne: You know, it, it's interesting you, you mentioned that, um in terms of, um, the Justice Department, this just came across on LinkedIn today, which I thought was interesting. And I think maybe in a way it's sending a message. And we didn't talk about this before we started to record, but I saw that uh, IRS simply posted a notice about the value of, suspicious activity reports and CTRs with an example from a case back in June.

But the fact that they just posted that today, as we've talked about, there may be some attempts in the Congress in the next week to look at thresholds for CTRs and SARs. And I'm, this is a total educated guess on my part, but perhaps, someone at IRS said, well, you know, this is another opportunity to explain the value proposition of BSA data. But it, uh, was just a simple posting reflecting a case that happened a couple of months ago, but talked about the value of BSA data in that particular case. Uh, so I thought that was, uh, an interesting add on, let's put it that way.

Elliot Berman: Uh, indeed. So where would you like to go?

John Byrne: The FATF has launched what they're calling their National Risk Assessment Toolkit. And as there's been some reporting, the publication AML Intelligence does a really good job of finding these items and talking about it, they focused on the, on the crypto space, but looking at the, uh, the announcement, this is designed to help countries strengthen their risk-based approach.

So probably more directed to FIUs than financial institutions, but certainly FIs can get value out of this. But the, uh, the toolkit, and obviously you should look through everything in there, they're calling it the tailored, a tailored guidance. But, um, the key areas of risk that they identify in the toolkit include a whole host of things that we're pretty familiar with.

But the four priorities are corruption, virtual assets and virtual asset service providers, legal persons and legal arrangements, and of course the informal economy. Uh, they mentioned in the, in the statement that these areas are often linked. And used in combination to launder funds and specifically calling out corrupt officials who exploit their positions to siphon government funds and use shell companies.

I think that's pretty important, FATF if it is sending a message to all of its members. And that's a message that we can clearly hear here in the US because corruption continues to be a major challenge, let's put it that way.

Elliot Berman: Agreed. So a couple things out of the uk. Uh, one is that the government issued a progress report on its Economic Crime Plan, which it put into place in 2023. And it indicated that in 2024, prosecutions for, uh, money laundering cases in England and Wales increased 36% compared to 2023. And so, uh, that was, uh, interesting. It also revealed a sharp increase in fraud cases. And this is aligned with many of the conversations you and I have been having over the last year, and that is that in the 12 months ending March, 2025, there were 4.616 million fraud offenses in England and Wales. A 31% increase on the previous year.

So, interesting statistics. Certainly an indication that the various mechanisms to identify and bring, uh, bad actors to justice are continuing on in the UK. And then I know we both saw one that I'll flip to you and that is a new UK offense, which is called failure to prevent fraud, just went into effect this week. You wanna talk a little bit about that?

John Byrne: This is fascinating. These, um, measures are gonna hold companies to account if, if they profit from fraud. And examples would include dishonest sales practices. Hmm. Where have we seen that before? Hiding important information from consumers or investors. Dishonest practices in financial markets. And then if there's a prosecution, the organization will now have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time the fraud was committed. And that's obviously a major shift into how the UK oversees corporate fraud.

A fascinating area, Elliot. I did an interview yesterday, uh, with someone that talked about, fraud and AML being shouldn't be disparate, it should be connected. Which I don't disagree with. We did a webinar on this last week, but this more and more just shows that financial crime is, while it's so broad there needs to be a connectivity, I guess is the best way to call it in an institution, so that you have a way to respond to these things. So it's gonna be fascinating to see how the prosecutions occur in the UK 'cause this could be, this could be a model for other jurisdictions.

Elliot Berman: Yeah, some of the changes that this is putting in place, first, it removes the previous need, speaking of prosecutions to prove that senior management was complicit. If you think about burdens of proof, that's a tougher one. It's, you're back to the who, who knew what when problem. And then the other thing is just at a policy level, it's intended to encourage organizations to build an anti-fraud culture.

It doesn't apply to everybody, so it applies to organizations that meet any two of the following three criteria, they have more than 250 employees. They have, uh, uh, annual revenue of, uh, exceeding 36 million pounds. Or they have more than 18 million pounds in total assets. But it does on its face cover fraud committed anywhere in the world if it's connected to the UK. And that's very broad, given it's possible that money moved through the UK or the goods touched the UK in some way.

So it'll be interesting, as you pointed out, to see how this goes and what the prosecutions look like and whether this does become a model for other countries to say we've gotta find a way to stem this significant continuing increase in fraud events. And we're going to put this squarely on the, on the plate of organizations that are arguably in some ways on the front lines, not just financial services.

John Byrne: You had identified something else again that AML Intelligence flagged, and that was a a story about a British Columbia Lottery Corporation that's fighting a fine.

Elliot Berman: Yes. So, British Columbia Lottery Corporation is a company that manages casinos. It also manages, I believe, the British Columbia lottery. It was fined a million Canadian dollars, uh, by FINTRAC uh, Canada's FIU. That's about $780,000 for three compliance violations.

Failure to submit suspicious transaction reports where there were reasonable grounds to identify illicit activity. Failure to develop a written compliance policies that are kept up to date and not taking prescribed special measures around high risk clients. And specifically the high risk clients related to one of the casinos that they manage.

British Columbia Lottery said that upon receipt of the notice, they completed a thorough review of FINTRAC's findings, which they disagreed with and provided FINRA with information to counter its conclusion. Uh, FINRA still issued the fines. There's a lot of, uh, they said going on here, but, BCLC has filed an appeal to the federal court and that's pending. So be interesting. We're seeing more of this. We talked last week about Bunq, uh, which was the, uh, online bank in in Europe that is, um, contesting a fine from the from the Dutch Central Bank.

You know, we'll have to see in the US, historically, organizations have pushed back in the conversation with regulators prior to receiving a fine when they knew something was coming. But there haven't been a lot of court cases where they say, no, we're going to court to get this overturned. We'll have to see, uh, how that goes. But post Chevron, we may see that too, because of the change in deference.

John Byrne: We, um, had something happen after we recorded last week that, um, I know we both talked about mentioning and I just again, came across it and that's another thing that FinCEN did besides updating their website. They did issue an advisory and a financial trend analysis on the Chinese money laundering networks, which obviously is a big priority now.

So there is a, an FTA, uh, trend analysis that highlights the scope of that. A lot of information in there. So take a look at that when you get a chance. The BSA reports, they say they analyzed 137,000 of them between January, 2020 and December, 2024. And the suspected activity totaled approximately $312 billion in suspicious transactions.

And they mentioned among other things, that private individuals carrying passports from China play a significant role in these networks and may wittingly or unwittingly assist in Chinese money laundering networks to launder money on a global scale. So a lot of information related to that.

Elliot Berman: So I know you've got some interviews that you're efforting. Anything you want to talk about there?

John Byrne: We were able to post the interview I did with Lisa Arquette this week. Lisa just retired after over 35 years at the, uh, FDIC. So I appreciated, uh, the opportunity to talk to Lisa about some of her career journey, but also some of the things she sees today regarding financial institutions and AML. And then we interviewed Debra Geister from a company called Section2 on Hybrid Threat Finance. That was an interesting conversation. We'll post that a couple weeks from now.

And then later in the month, we're gonna do something a little different for us. We're gonna talk to two experts , on physical security issues around financial institutions, given the fear of terrorist acts and criminal acts, and shootings and that sort of thing. So I thought it'd be interesting to hear from a couple of experts in that space. So we're gonna interview them toward the end of the month, and as always, if you have, uh, issues, topics, themes, or people you'd like us to talk to, please let us know.

Elliot Berman: The recording of our August webinar, which was on coping with, uh, the growing fraud threat, should be available on our website by the time you hear this podcast. And, uh, there's still time to register for our September webinar, which is September 25th. It'll live stream starting at 1:00 PM Eastern Time, and it's on enhancing your KYC program. I think, uh, something, uh, well worth, uh, tuning in for because, knowing who you have in the house is the start of managing risk.

So John, uh, I know you're traveling to Milwaukee. We may bump into each other this weekend. And, uh, you have a great week and I'll talk to you next week.

John Byrne: Sounds good, Elliot. Take care. See you.

Elliot Berman: You too. Bye-bye.