This week, John Byrne and Elliot Berman examine a wave of regulatory and enforcement developments shaping the AML landscape. Topics include new U.S. Treasury sanctions targeting Iran's aviation sector, FinCEN's renewal of Southwest Border Geographic Targeting Orders, guidance on SAR confidentiality, and growing concerns over digital asset scams and cryptocurrency regulation. They also discuss FATF's latest reports on underground banking networks, money-laundering risks in the gambling sector, and AUSTRAC's enforcement actions against remittance and crypto firms.
In recognition of the 25th anniversary of 9/11, the conversation turns to the lasting impact the attacks had on anti-money laundering, counter-terrorist financing, and public-private partnerships. John and Elliot reflect on how the Patriot Act transformed financial crime prevention, why collaboration between financial institutions and law enforcement remains essential, and the importance of ensuring future generations understand the role AML professionals play in protecting the financial system.
Treasury Actions, Digital Asset Risks, and 25 Years After 9/11 - Transcript
Elliot Berman: Hi, John. How are you today?
John Byrne: Good, Elliot. Seven months into this war that's been characterized as not a war, so we continue to deal with that, and it's relevant today because we are going to talk about some of the additional sanctions that the Treasury Department has issued in relationship to the war with Iran.
When you hear this, it will be September 11th, 2026, 25 years after 9/11. We had a program last week run by the DC chapter of ACAMS with all sorts of folks that were involved pre- and post-9/11. So I have just a few thoughts on that.
But starting off, since I mentioned it, why don't we talk a bit about some of the Treasury announcements during the week? Some were from OFAC, some were from FinCEN. A number of them were relevant to Iran. I'll start us off with the OFAC updated its SDN list updates to the Iran-related general licensing.
And so that was just simply a couple of days ago. And then there also was a announcement by Treasury. The headline is, "Treasury Grounds Iranian Airlines With Sweeping Sanction Actions." The press release says, "OFAC sanctioned 36 targets for supporting Iran's aviation sector, which the regime uses," I'm quoting, "to move weapons, personnel, and illicit cargo. Today's action also targeted covert front companies."
That's always interesting given the history in this country regarding shell company oversight. "Foreign intermediaries and deceptive transshipment routes that Iran relies on to obtain US-origin aircraft and sensitive technology." This is part of what they're calling Operation Economic Outcast.
I know there were some other things that Treasury has done last week and early this week. What else did you have?
Elliot Berman: FinCEN renewed the southwest border GTOs. That's not unusual. They run for 180 days, so it was time for an update. And they also issued updated FAQs to go with those with that renewal.
They also joined with the banking, regulators Agencies.
John Byrne: Yeah,
Elliot Berman: Thank you. Agencies it issued a joint statement regarding communicating with customers, but also maintaining the confidentiality of SARs. And I on the one hand, it s- seems like how do you do that? But when I read the joint statement, it's like that, there's nothing really new here.
Essentially what they said is, you can talk to a customer, for example, and ask them questions about their activity without ever disclosing that you're filing a SAR. You've got to be thoughtful about how you ask the questions and how you explain why you're inquiring. But it's not that you can't talk about anything related to what becomes a SAR, it's you can't talk about the fact that a SAR was filed and what was in the SAR.
And maybe that's a distinction that everybody understands, but the regulators for whatever reason, along with Treasury, decided it was important to put this out.
I would say people should take a look at it. Again, I didn't think of it as a stop-the-presses kind of thing, but it's out there, and you should always be aware of what they're talking about. Those were the two that I saw that were not sanctions related.
John Byrne: Yeah, related to the SAR one, after we recorded last week. FinCEN announced that they had identified nearly $13 billion linked to suspected digital asset scams operated by overseas scam centers, and they just simply said in that, to continue to urge institutions to report suspicious activity. So again- these digital asset scams, we've talked a lot about them because they come under the categories of pig butchering or romance baiting. They also, a phrase I had not heard before, cryptocurrency confidence schemes. It's a pretty basic phrase, but I hadn't seen it used that way.
Anyway, so that's out there as well, and that just got me to remembering regarding digital assets and what you just talked about as well that I saw a report in something called Punchbowl News, which is updates on legislation and activity there that the crypto industry is putting out a series of ads, pushing for the passage of the CLARITY Act, which is actually supposed to be, from what I can tell, supposed to be voted on next week.
And the the reason they reference this is they're gonna be having three separate ads, again, according to Punchbowl News. And this is a 501(c)(4) that's linked to a crypto super PAC network that's called Fairshake. And so there are three spots. Two of them are what they're calling positive spots about the importance of the CLARITY Act in terms of guardrails around cryptocurrency.
But the third one is a somewhat negative ad attacking America's traditional banks. And according to the report, the ad tells viewers that American banks are enjoying a feeding frenzy of profits, complete with several shots of domestic pigs eating, snorting, and squealing. And it says now they want even more. And this is all related to the bank's concern about stablecoin and what that could do to the deposit funding. So interesting. We're on the sidelines of this issue. It's not an AML issue. But it is fascinating to see crypto industry's got a ton of money. They're getting very involved in politics, and these ads are supposed to start running next week from this report.
Elliot Berman: The OCC issued a an FAQ. Must be FAQ week. And this relates to, I wanna say it was back in May, if I'm not mistaken. Excuse me. They issued a statement regarding how banks can use verifiable digital credentials under the CIP rule. So more and more states are issuing, for example, a digital version of a driver's license. Where you can have it on your smartphone. You don't carry a physical plastic card anymore.
And the question is, you go in to open a bank account and someone says, "I need your driver's license." And instead of giving them the physical card, you say I have it on my phone, you can access it." And the question is, how do you use those?
So they put out some FAQs, which I think are worth looking at. Again, as people have updated their program processes to deal with these verifiable digital credentials, and the driver's license is the best example, but there are others. They've now come out with some connective tissue, if you will, in the form of FAQs.
So I would recommend that people take a look at it. It helps with the definition of what is a VDC and those kinds of things. So take a look at that.
John Byrne: FATF has done a couple of things in the past week. I'll mention one a report issued that highlights the growing role of underground banking, hawala, and other similar service providers to facilitate illicit finance.
According to FATF their summary, the report finds that criminal misuse of underground banking is a widespread global phenomenon, with more than eighty percent of reporting jurisdictions identifying these systems among the principal professional money laundering channels or techniques. The report also highlights the emergence of what they're calling highly sophisticated, scalable, and commercially operated cross-border professional money laundering networks and the rise of digital hawala.
So they spoke to close to or reported from close to fifty jurisdictions across the FATF global network. And that report is available on the on the FATF website. But they did some other things last week as well, right?
Elliot Berman: Yes, they published a new list of AML risk indicators related to the gambling sector, flagging activities such as smurfing and suspicious betting.
The purpose, of course, is to help governments, regulators and businesses detect money laundering, terrorist financing, and proliferation financing risks that are happening in the gambling sector. They talked about several key abuses, criminals using gambling platforms to move money without actually gambling. Making multiple small transactions, smurfing to avoid detection. And unusual large or coordinated bets on events flagged for possible competition manipulation.
And then they talked about a number of risk indicators and they described the publication as, "The new indicators provide practical guidance to identify, assess, and respond to suspicious activity." They also said criminals can structure beneficial ownership and shareholdings to bypass regulatory thresholds, particularly where AML/CFT, and anti-corruption controls are weak.
And that goes back to your earlier comment about the fact that our infrastructure in the US related to domestic shell companies is nonexistent. We may be one of those places where those controls are considered weak.
John Byrne: You also mentioned before we recorded, some activity from AUSTRAC.
Elliot Berman: Yes. AUSTRAC removed forty-five remittance and crypto firms from being registered with them, and therefore allowed to do business because of their financial crime risks. In some cases, it was failure to have a program, failure to certify that they had a program, failure to file their suspicious activity reporting and those kinds of things.
So I think what this shows is AUSTRAC and other regulators around the world too, are being active in looking at non-traditional groups as well as traditional financial service providers. So you can go on the AUSTRAC website if you're doing business in Australia and wanna see who those folks are. But again it's worthwhile being aware of these kinds of things.
John Byrne: I agree. In our weekly segment where we always cover some sort of fraud going on in the US or some acknowledgement that white collar crime in some cases seems to pay. The Trump administration has freed GPB Capital founder, David Gentile, who was federally convicted in a $1.6 billion fraud case just 12 days into his seven-year sentence leaving 10,000 victims with no recourse.
This is reported in a Substack, but you can find this information readily available. Again 12 days into the seven-year sentence this commutation has occurred. And again, this is another example of the pardoning power needing, in my humble opinion, some guardrails. So we'll see what happens going forward.
But since we're on this point, I also want to mention a Reuters story. This is from yesterday. We're recording this on Wednesday, but on September 8th, Reuters said IRS under the current administration unlawfully shared taxpayer information with immigration authorities according to the US Appeals Court in DC.
So they upheld an injunction blocking an IRS policy that allowed it to share thousands of taxpayer addresses with immigration authorities, saying that the administration violated federal law. This was after they disclosed last year and earlier this year, 47,000 taxpayer addresses to ICE under a procedure that they said was helping expand immigration enforcement.
So there was an agreement between the agencies in July of 2025 that began that process. So several groups filed suit, including the Center for Taxpayer Rights and the Main Street Alliance, alleging that the practice was unlawful. That one of the circuit judges Cornelia Pillard in responding to the administration's appeal that said this would harm federal law enforcement said, quote, "But that's a gripe with Congress, not the court."
Anyway, it's a Reuters story from September the 8th.
Elliot Berman: John, I know you also highlighted something related to the challenges that the that inspectors general across the federal government have been facing. You just wanna briefly talk about that for our listeners?
John Byrne: You mean losing their jobs? Yes, that's right. Last week, as I mentioned, we had a 9/11 retrospective, and one of the panelists was John Roth. John Roth was one of the authors of the 9/11 Commission report regarding terrorist financing, the monograph and the report itself. And actually, we're gonna interview John next week a bit about that, but also about his piece that he wrote for the Brennan Center for Justice.
John also was the former IG for the Department of Homeland Security, and he'd been a federal prosecutor for over 25 years. But in John's piece, he talks about cutting these offices that oversee cabinet departments how by doing that less audit reports are done, fewer investigative reports, all sorts of things throughout the government, by the way.
And so the way in which inspector generals are successful is if they determine that there's either fraud or incompetence or problems with agencies. And when you lose that office, obviously that goes away. So we're gonna talk a lot about that with John next week, so it'll run a week or two after that.
You can read this on the Brennan Center for Justice website, and John Roth is the author.
Elliot Berman: So let's talk about 9/11, John.
John Byrne: During last week, one of the things that was the common theme was something that the Tunnel to Towers Foundation constantly reminds us, that's to never forget.
And it has been 25 years. In fact Elliot and I were actually on the phone with one another getting ready to prepare for the October ABA Money Laundering Enforcement Seminar. So we were working sort of last-minute details when the planes hit and, we both scrambled back to see what we needed to do.
So the day itself obviously was horrific on so many levels, but the things after that, that are still resonate with me today is the partnership between the financial industry and law enforcement. I sat down earlier this week and hopefully what, by the time you hear this, the, that interview will also be available.
I sat down with Dennis Lormel, who's the former head of the first head of TFOS Terrorist Financing Operations Section that he was named to at 9/11. And Dennis goes into extreme detail regarding how we got there, the day itself, and what's happened since. Like any dramatic thing in history, the fear is always that you're going to forget the older all of us get.
I teach a class with students that are in their early, mid to late 20s, so they were either not born or children. So for them, it's an historical footnote. So it's really important that we continue to let people know so many things about 9/11 and the aftermath. Again, the partnership that still exists today, even during this chaotic administration, that the bankers still want to work closely with their law enforcement partners.
That has not changed. If anything, it's more important than ever. So that's a positive that came out of that. Also, our allies were with us from day one. And that includes our allies to the north, Canada, who didn't think twice, and the NATO alliance was with us. So all those things were very relevant and shouldn't be considered historical vestiges of a different time.
But the bottom line is almost 10,000 people have lost their lives, some that day, some because of the cancer that spread after the towers went down. People are still living with all of that. But again, not to look at that as an optimistic day, but since then, I wanna just continue to say the importance of what we do, meaning the AML community, and also that we gotta continue to urge the next several generations that what you do matters.
And I think a lot of people who said this to us, anecdotally, but they've said they became AML professionals in part because of 9/11, because they wanted to follow the money and deal with terrorist financing. So that's my long-winded response to your point, Elliot.
And I know obviously you were in the Midwest at the time, but it affected your industry, our industry together, and I know you have thoughts as well.
Elliot Berman: I do. One of the things that is now standard in the financial crime prevention industry is the linking of money laundering and terrorist financing.
That's a post 9/11 change. Coming into 9/11, it was about money laundering coming out of crime. I'm not saying there was no interaction or looking at things related to terrorist financing, but the Patriot Act, in addition to all the provisions and tools and things that it created it really changed the focal point of the work we do in financial crime prevention.
And for those folks who've entered the industry since 9/11, they came into it where terrorist financing was a major focus. When you and I were first working on this, the Bank Secrecy Act started out, it was all focused on tax evasion, and it, of course, has progressed. But it progressed and changed direction significantly with the Patriot Act, and we've all been doing that.
It's interesting, and it's not really a 9/11 thing, but now with fraud first being very closely linked to money laundering, but also just proliferating globally as we talked about earlier. It's interesting how much of the work, it's still about terrorist financing, but even the terrorist financing is in some ways related to fraud.
I guess I'd say, you and I were there before, and we're still here after, and I echo everything you said about partnership between the industry and law enforcement. Not that we didn't get along before, but everybody realized that learning to speak each other's languages and for us to understand what government investigations really looked like and for them to understand how the financial service industry really worked.
I can remember talking to FBI agents often throughout my career, and for a long time, they had no idea how a bank worked. When they were doing their investigations, they were imprecise in what they were asking for. And, I think the communication between those sectors over the last twenty-five years has enhanced that substantially.
John Byrne: And again, just a reminder, there are a number of foundations. Always be careful about where you contribute, but the Tunnel to Towers Foundation was born from the tragedy of 9/11, and it does a series of things for veterans, for fallen first responder families, Gold Star families and they cover things like veteran homelessness. But their key is to never forget.
So I would just urge people during this week and the following week or two, to read up on the activity. There were some offshoots and other issues going forward. We've talked about the Patriot Act. We've talked about some of the unintended impacts on charities.
But collaboration and partnership came out of that, and we have to continue to keep those themes and those actions going as long as we can.
Elliot Berman: Agreed. John, you've already mentioned a couple of things that you have in the pipeline. I just want to mention that the September AML Voices webinar, will be on AML Compliance Best Practices: Navigating the Evolving Global Compliance Landscape, and that will live stream on September 24th, 1:00 PM Eastern.
There's still plenty of time to register for a seat our website. And we have we've got some other webinars yet this year that we're we're working on that I think will be interesting to people. Please continue to sign up and listen to those. They're also available on our website as recordings.
Anything else, John?
John Byrne: Nope. That's, I think we'll end on that. As always, if you have ideas about people you'd like us to interview, themes content direction you'd like us to consider, please feel free to reach out.
Elliot Berman: All right, John. I will talk to you next week and between now and then you have good days.
John Byrne: Sounds good. Take care. Stay safe.
Elliot Berman: You too. Bye-bye