This Week in AML

Stopping Terrorist Financing is Still Critical

It's clear that terrorist financing is still a global problem that demands consistent vigilance. John and Elliot discuss the importance of being vigilant and the challenges nations and organizations face worldwide.


Stopping Terrorist Financing is Still Critical - TRANSCRIPT

Elliot Berman: Hi, John. How are you today?

John Byrne: Hey, Elliot. Okay. Obviously, the horrific attacks in Israel by Hamas is on all throughout the media since Saturday. And as we were recording this death tolls continue to rise and it's just awful. I know it does have impact on national security, so we should talk a bit about that, but we certainly want everybody to know that we're thinking of everybody and obviously this is just horrific.

Elliot Berman: It is and unfortunately, I'm not sure I see, a straight path to any kind of resolution in the very near future. I think this is unfortunately going to be something that will drag out, which will only make it worse.

John Byrne: Yeah, so a couple things related to that. Janet Yellen, the Treasury Secretary today at a news conference with IMF said nothing's off the table in terms of new sanctions on Iran and Hamas. They is still speculation that Iran has been involved in some fashion.

I know that Anthony Blinken said they don't clear evidence yet, but others have said that there is, so that's going to continue to be something to watch. And so Yellen talked about the value of current sanctions, and she said they're going to look at the sanctions on Iran, Hamas, Hezbollah and see if additional sanctions need to be added, and that's one thing.

And then the other thing that she mentioned, because there's been a lot of misinformation by certain parts of the political spectrum that the the Iranian $6 billion was used to fund this attack. That money was never utilized because that money has not been touched at all.

But Yellen said it does not rule out the possibility of reversing the decision last month to unfreeze that fund which would only be used for humanitarian purposes, by the way, if they find out that Iran was involved in the attack by Hamas. So I think that's important. And by the time people listen to this on Friday, it could actually have already occurred. So all that to say that this continues to be a day-by-day focus. And as to, as your point, I don't see any fast resolution.

Elliot Berman: A couple other very specific things, and then I think it's worth it for you and I just spend a couple minutes just broadening the frame to terrorist financing more broadly, not just these events. A number of efforts are underway or have already occurred to freeze accounts that are linked to Hamas. One is a crypto account at Binance and another is a bank account that the Israelis in conjunction with the UK, froze account at Barclays, which was a fundraising account. So as we talk about this more broadly, there are active ongoing efforts to find funds and to make them unavailable.

The bigger picture, of course, is that detecting and interdicting terrorist financing is most effective when we can do it as a community ahead of its use for horrific events like the one that's unfolding now, or use in general.

John Byrne: The other thing I would mention, we were both at the ACAM's conference last week and there was some discussion, not broad based, but a few speakers talked about terrorist financing and suggested that this is obviously before the attacks, that it was going to be de-emphasized. And of us believe that to be the case for a couple of reasons.

One is that's certainly one of the priorities that the Treasury and the State Department and DOJ issued back in June of 2021, terrorist financing. So that's clear whether it be domestic or foreign. And I think, what's just happened, it makes that clear that there's going to be a continued focus by both the financial sector and regulators on what are we doing to detect and report and prevent terrorist financing.

So I think that's important. So I don't think the de-emphasis was relevant then, it's certainly not relevant now. And a quick aside, we've talked a bit about de-risking in terms of monies going to humanitarian groups and how that gets held up in some cases because some of these fundraising efforts are fronts for terrorist activity.

That's going to come back again, never left of course, but that's also going to challenge those that are trying to help people in need, because when you have all this in front of you, you're going to default to, let's not let these funds go without the due diligence that's necessary. I would just put back on the table that de-risking is also going to continue to be a challenge for humanitarian groups that have nothing to do with terrorism.

All of this put together is just going to put a lot more emphasis on our community being more vigilant than perhaps they've been in the past year or two.

Elliot Berman: Another indicator that there isn't going to be, or there wasn't going to be, any de-emphasis on terrorist financing in addition to the US, is the fact that combating terrorist financing is a major pillar of the FATF structure.

And something that they test for, and they, not just write about, but talk, actually interact about and emphasize, I would say, equally with regular money laundering, if that's the right phrase. And so I think that It's here to stay, which is good. In terms of your de-risking comment, you have been a big champion of getting financial sector people and the NGO folks together talking about, what activities are fronts for terrorist financing and what activities and what the topologies look like when it truly is humanitarian.

And I think those conversations need to continue and probably step up, a level after something like this, because as you point out, the easy way is to just default and say, nope, not going to take the risk. And I think taking that easy track is not the right answer because there is the need for humanitarian groups, not specifically related to these events, but just in general across the globe, has clearly gotten more important and more important.

John Byrne: I know we usually ask at the end of our conversation, if people have ideas for programming to let us know, but as we're, as you were talking about this, I'm thinking those out there that are listening to us, if you have ideas about how, once this war lessens, which we hope is sooner versus later, what are the next steps for the financial community, I think would be a very both relevant and compelling conversation to have with government folks as well as private sector.

So something we'll certainly be actively considering and in terms of trying to figure out next steps. So I think that's important. And we will continue to do that, but if you have ideas now, please send them to Elliot or myself.

Elliot Berman: Yes, that would be great. On a different topic, one that we've talked about regularly, I just want to mention that during this week, the Securities and Exchange Commission in the US has published an updated notice about some longstanding beneficial ownership filing requirements.

It's shortening existing timeframes for certain circumstances, tends to have to do with investors who have invested more than 5 percent in a given company. Just something going on there. It's an indication that FinCEN is by no means the only part of the US government that is paying attention to beneficial ownership.

John Byrne: And going back into the corruption category, which there's always quite a bit of grist for the mill, as they say. Yesterday, a new indictment was filed against Representative Santos of New York.

He's being accused in the indictment of stealing the identities of donors to his campaign, then using their credit card to ring up thousands of dollars in unauthorized charges. Also wire fraud. He wired some of the money to his own personal bank account. 23 count indictment; embezzlement, lying to Congress, among other offenses charging more than $44,000 to his campaign.

This'll be interesting to watch. Just another example, what are we doing, folks, when we are electing some of these folks? What are we doing? But anyway, it's an indictment, so it's not proof of guilt.

We'll watch that carefully, but there's a lot of corruption going on. Sadly, in both political parties we've talked about as well, but this one bears watching and for a number of reasons, but the fact that stealing identity is an additional aspect of this that we hadn't seen before.

Elliot Berman: Those are new charges layered on top of the original indictment. And not that the original stuff was all that fancy. But identity theft and stealing someone's credit card and making unauthorized charges, that's pretty garden variety scam.

It's interesting that now it's crept over to be part of the political corruption component as well.

John Byrne: One thing that makes me laugh because that's frankly how stupid it is. Santos allegedly took credit card information from one of his contributors who already gave the allowed $5,800 to the campaign to give himself an additional $15,000 .

And because that exceeds the contribution list, he listed the additional payments as coming from one of his relatives. So these are things that clearly were going to be discovered. So this will be an interesting case to see. Does he plead guilty? There's lengthy prison terms for all of this. As we said, it's definitely worth watching.

Elliot Berman: Yeah, to me the more emergent question is this enough for him to choose to resign himself, or will his caucus determine that, a resignation may be appropriate, but we'll see.

John Byrne: Yeah, so you think the Republican caucus who clearly didn't care about certain other indictments is going to say, okay, Santos, this is enough.

I guarantee you it'll be interesting to watch. Let's put it that way.

Elliot Berman: I agree with that. And no, I don't think they will. But it will be interesting to watch. I like to go to the theater. And see plays and things like that, but unfortunately some of the best theater is on our television screens and in our newspapers.

John Byrne: That is so true.

Elliot Berman: All right, John, so we have a webinar coming up later this month on the 26th.

John Byrne: Yes, we do on on obviously a very topical issue and that's sanctions. We are very pleased to have a couple of experts that are going to walk us through a whole series of things. We're calling it Sanctions Due Diligence Beyond Watchlist Screening.

The two individuals, Jordan Heisler and Beth Beam, have been working on sanctions for quite a bit of time. And so we're really excited about what they're going to cover. This is a topic that we continue to follow, obviously. And that's.. coming up. You and I are working on additional programming for the rest of the year.

This one is October 26th, 1 o'clock Eastern. Still time to register, of course. And again you're not going to want to miss this one. We're really appreciative of these two that want to share not just what's going on in certain spaces with due diligence, but recommendations and strategies, which are so important, given how essential sanctions compliance is in today's world.

Elliot Berman: Yes, and if you missed the September webinar on fraud the full recording of the live stream is now available on our website. So you can go to amlrightsource.com and go over to the Resource Center and go down to webinars there's a place where you'll be able to find prior month webinars.

And I strongly recommend that to folks. Interesting conversation, again, two great experts and an interesting element of that was, AML versus, or combined with fraud, just some of the commonalities and places you can bring your teams together. And some of the places where keeping them separate makes sense just because of kind of the main thrust of fraud versus AML detection.

John Byrne: Elliot, if I could mention one other thing real quick, because this will be people will be able to download this on Friday the 13th. But on the 14th, there'll be a virtual 5K race to raise money for the Foley Foundation. We posted a few weeks ago an interview that I did with Tom Durkin and Cindy Lauscher from the Foley Foundation about bringing hostages home.

Sadly, a very relevant topic today as well. The Foley Foundation was created when Jim Foley was assassinated by ISIS back in 2014 and his mother Diane created this foundation to help with protecting journalists worldwide. That conversation is available to download. I also interviewed a investigative journalist Kira Zalan, that's there as well.

A few additional conversations we've been able to post. Since our last conversation together in Las Vegas last week.

Elliot Berman: Sounds good, John. So you have a great weekend. I know you're you're in South Carolina, so enjoy the weather, and I will talk to you next week.

John Byrne: Take care, Elliot.

Elliot Berman: All right. Bye bye.