This Week in AML
This week, Attorney General spoke to the American Bar Association, and OFAC issued guidance on providing humanitarian assistance to Syria. John and Elliot discuss the speech and guidance and look at the recent release of SAR filing data by FinCEN.
The Attorney General, OFAC Syria Guidance, and SAR Data - TRANSCRIPT
Elliot Berman: Hi, John. How are you today?
John Byrne: I'm good, Elliot. I hope everything's well with you. A lot going on, and we're only in the early part of this week. We had to record a little bit early because we have some conflicts coming up in terms of travel and things, but I thought that we at least have three items to reference, and I'm not even including the potential additional indictment we might see in the state of Georgia, which of course does deal with corruption, but we'll wait and see on that. Maybe by the time you listen to this, that information will be out there.
But the three are big picture items with some specificity. So big picture items is, we'll talk about Attorney General Garland, spoke to the American Bar Association's House of Delegates. FinCEN has published their 2022 SAR filing by state, by category, by institution, by product, so there's a lot of good data there. And then something we just saw right before we jumped on today, and that's OFAC has issued what they call a Compliance Communique, and this one is guidance for the provision of humanitarian assistance to Syria, a series of FAQs.
So there's a bunch of things there. So the Attorney General covered several topics before the House of Delegates. What were the key points from your perspective?
Elliot Berman: His main theme is talking about the efforts in Ukraine, by the Ukrainian government, its Department of Justice, to document in the middle of a war, war crimes. Actually out on the battlefield or, in places where there was conflict immediately prior. Exhuming bodies, cataloging evidence, all the things necessary to bring war crimes trials to bear against alleged war criminals. And that the US Justice Department is committed to providing assistance. He spoke briefly about his own recent trip to Ukraine to meet with his counterpart there and other things that are going on in terms of direct support.
What are some of those direct support items?
John Byrne: He does reference the Task Force KleptoCapture, which was launched after the Russian invasion, and that's to deal with sanctions and export restrictions. But the tools from that task force are freezing and seizing assets, arrests, prosecutions, and working closely with international partners.
So DOJ prosecutors work with others, and at least as of, when the Attorney General spoke, they've seized or restrained over $500 million in assets. including yachts of, Russian oligarchs, and the others that support the Russian regime and try to evade economic countermeasures, which includes, the money laundering, financial crime, export control violations, all sorts of things like that.
And also, he referenced something that I know we highlighted at some point, and that's there's new legislation that gives the Justice Department the authority to transfer forfeited assets to the State Department to support the rebuilding of Ukraine. So that was actually a fairly bipartisan effort earlier this year. And as he says, it's our first asset transfer has occurred. It will not be the last. So that's also in addition to what you referenced some of the other tools that he highlighted in his presentation.
Elliot Berman: He also mentioned that when he was in Ukraine, he announced the creation in the Justice Department of a War Crimes Accountability Team, and that team is working now side by side with members of the Justice Department in Ukraine to document on the battlefield, and collect evidence to support war crimes trials which is pretty harrowing stuff, but really important because of course in the process of serious conflict as they have in Ukraine the evidence of these kinds of crimes can disappear pretty quickly just with the movement of troops and the movement of civilian populations.
I think the his prepared remarks are worth taking a look at. It's a reminder of the true impact of war. And you can find his prepared remarks on the DOJ website.
John Byrne: In addition to that impact an issue that we've covered before, that's derisking of the challenges of providing humanitarian assistance. OFAC has created what they call their Compliance Communiqué, and they just posted this. It's the guidance for how to provide humanitarian assistance to Syria. And there's a series of FAQs based on actual questions sent to Treasury over time, and you should take a look at that when you get a chance.
I'll just highlight a couple of them. Some basic questions like, can I donate money to NGOs in support of humanitarian efforts in Syria? The answer is yes. And they tell you to look at the Syria NGO general license, how that would work. And then they say things like a little more challenging, are NGOs authorized to provide humanitarian assistance in areas that are controlled by the government of Syria? The answer there is yes, as well pointing out that, again, that same license. And it says the authorization to engage in additional transactions beyond humanitarian aid across a range of economic sectors and certain non-regime held areas are also listed there as well.
And then, for our community the private sector part of our community, can US financial institutions process transactions related to authorized humanitarian assistance by NGOs? The answer is yes, but it also says something that warrants review, and that is you can do this and may rely on the statements of their customers that the transactions are, in fact, authorized unless you know, or have reason to know that the transaction is not authorized. So that's the caveat there.
Also many institutions have asked, can money transmitters and US banks process remittances to Syria? Similarly to issues with other war torn countries like Somalia, we know that the greater Minneapolis area, a heavy Somalian population has complained to the state and the federal government about some institutions that feel that they are not able to process transactions to places like Somalia.
The question on Syria here, they say, again, institutions. can do this, but with the same caveat. You can rely on the statement of your customer that it's authorized unless you have reason to know or suspect that it's not. There's also some other things on import export and questions on foreign governments or commercial entities investing and engaging in commercial activities.
Bottom line is there's a lot of clear direction here. There's certainly some areas where you'll still have to take a pause and get, certainly, legal advice. But this is also something that our sanctions community, I'm sure, has been working on. And so anytime there's clarity, there's value. So I think that's something to highlight, and we wanted to make sure we mentioned that this week.
Elliot Berman: Agreed, John. The other thing that this reminded me is that OFAC does have a comprehensive list of FAQs on their website, and when you look at this particular communique you'll see that they often reference existing FAQs to give further information beyond what's in this highlights piece.
And so for those of you who aren't necessarily working in the sanctioned space day in and day out, remember that OFAC's website is a rich source of information in various forms to help you with your sanctions needs.
John Byrne: Okay, then you go to the FinCEN filings updated now to 2022. Obviously, extensive amount of information to process, we'll just highlight a few things, but it's broken down by year, 2014 to 2022, and a whole series of exhibits. It's an Excel spreadsheet. But I just wanted to reference a couple of ones that I thought were interesting.
There's an exhibit that looks at SARS based on the instrument type or the payment mechanism from depository institutions for the time period from January 2014 to December 31st, 2022. And as you look through it, a couple of things jumped out at me. US currency, still the most frequently used in terms of volume.
And then you have business checks, very few traveller’s checks. I don't think people use those as much anymore, obviously. And then funds transfers. So there's other in there too, foreign currency and things, but that gives you a sense that Law enforcement's continued focus on cash is not misplaced.
Elliot Berman: Agreed. The nice part about this is because it's all in Excel spreadsheet format, it's all downloadable. You can look at each of these. Each of them has a number of tabs that gives you more drill down on the data. And so to the extent that you want to look at geographies or product types, or other things like that to see what the volumes are compared to others.
John Byrne: Real quick one of the other exhibits talks about the number of filings by type. from depository institutions, and number one 9% of overall filings, suspicion concerning the source of funds. The second is transactions below the threshold, and we've known that for quite a while. And the third is transactions with no apparent economic business or lawful purpose. So those are the top three, and obviously there's other categories there to take a look at.
Elliot Berman: And those three and those three represent, I'm sorry, John, for interrupting, those three represent 25% of the filings.
John Byrne: Exactly. I think there's some good training opportunities here based on this data.
Elliot Berman: The other thing that's interesting is to see how the number of SARS has ballooned. There was a time when we talked in the industry about the fact that the government liked SARs because it was a lot easier to wade through the SARs looking for, potential investigative opportunities or to support existing investigations versus the huge volume of CTRs. CTRs still far outweigh the number of SARs, but the number of SARs keeps growing every year and it's getting to be a bigger and bigger pile.
Hopefully better analytical and investigative tools to dig through it, but we're still trying to figure out, all of us, I think, what is suspicious and how do we report the stuff that's really usable to law enforcement.
John Byrne: So yeah, 97 categories and number 97, chipwalking, and we'll explain what that is on the next This Week in AML.
Elliot Berman: John, what do you have in the pipeline?
John Byrne: We have posted an interview I did with Saskia Rietbroek, who runs the Association of Certified Sanctions Specialists. Saskia and I worked together at ACAMS years ago. I think you'll find that valuable. Also did an interview that we talked about last week with an expert on antiquities, smuggling, and theft from Thomson Reuters Special Services.
So that's coming up. And then we have just concluded an interview with Rebecca Gonzalez Ramos, who is the special agent in charge. for HSI in Puerto Rico. We both had a Spanish version that Marilu Jimenez from our advisory board hosted and one that I did myself. And so those two interviews will be up in the next couple of days and next week.
Elliot Berman: Yes. And lastly, just a reminder, you can still register for this month's AML Voices webinar and that's on AML best practices how to keep your program in tip top shape. And that's going to be Thursday, August 24th, starting at 1 p.m. Eastern time for the live stream. John you have safe travels, and I will talk to you next week.
John Byrne: Take care, Elliot. Talk to you soon.
Elliot Berman: You too. Bye bye.