War, Fraud, and Enforcement - What Compliance Teams Need to Watch

This week on This Week in AML, John Byrne and Elliot Berman unpack a rapidly evolving risk landscape—from the ongoing war with Iran and its implications for terrorism threats, to new DOJ enforcement policies and global fraud trends reshaping financial crime compliance.

They discuss OFAC’s latest Russia-related license, concerns about the lack of updated DHS threat advisories, and the implications of conflict-driven risks for financial institutions. The conversation also covers major developments in fraud and AML, including new SAR guidance, DOJ updates on voluntary disclosure, AI-enabled fraud, human trafficking trends, and critical reports from Interpol, Nasdaq, and MONEYVAL.

The episode closes with updates from Europe on fraud enforcement and AMLA’s supervision plans, as well as breaking news from the U.S. national security community—offering essential insights for compliance, risk, and financial crime professionals. A must‑listen for compliance professionals looking to stay current in a rapidly shifting environment.

War, Fraud, and Enforcement - What Compliance Teams Need to Watch - Transcript

Elliot Berman: Hi John. How are you today?

John Byrne: Good, Elliot. We're heading the third week of our war with Iran. Again, didn't have that on our bingo cards a month ago. But a couple things related to that I thought I'd just start with real quick. And then because we have both domestic and global topics to cover today as we always do.

OFAC issued Russia related general license number 1 34 last week. And this authorizes the delivery and sale of crude oil and petroleum products of Russian Federation. Done, I suppose in part because of the challenges of putting tankers through the Strait of Hormuz, but I think others have argued that allowing the purchase of Russian oil will give Russia more money to deal with the Ukrainian war, which they started.

We will see what occurs there. And just quickly related to that the Washington Post is reporting that the Department of Homeland Security has not issued an updated national terrorism advisory since the summer, which obviously we are in mid-winter time, and it's silent on the threat status of the war in Iran. And even though we have seen, sadly a couple of attacks in the past two weeks, one on March 12th, that was near Temple Israel in West Bloomfield, Michigan.

Elliot Berman: It was in Temple. It was in Temple Israel.

John Byrne: A Lebanese born US citizen loaded a truck with fireworks and gasoline and barreled into the synagogue. The DHS officials have not issued the update, as I mentioned. The recent one expired in September, and they've not also published a homeland threat assessment. That's the annual report, which highlights, quote, the most direct pressing threats to the nation.

I think both of us being around as long as we have, we know that one of the major fallouts from things like this, like war especially against Iran, is lone wolf attacks. Because it's pretty important, the New York Police Department has done a great job with their threat assessments. Not so much DHS. But it's something we have to continue to monitor.

Elliot Berman: So staying domestic for a moment, there have been a number of reports that Bank of America is settling a lawsuit with the Epstein victims. There have been a number of suits filed against major financial services companies that did business with Epstein. And there aren't any details yet in terms of the size. But there is a hearing on approving the settlement that's shown up on the court docket.

So we'll see. And there's several settlements with other major US banks have already happened.

John Byrne: CI FIRST is put out a new series of alerts. This one FinTax Knowledge Exchange Alert. This is on SARs. Just a quick two pager, but a really good.

I would argue at least a training tool or entry level training tool for analysts at at FIs or companies that work with FIs. They explain how SARSs are utilized, who looks at them, which. Is obviously a series of groups including SAR review team coordinators, and we know one very well. Steve Gurdak, who's head of the Northern Virginia SAR review team for many years.

They also talk about what to include in the SAR narratives. How to write effective SAR narratives and how to use supporting documentation. So again, in a quick two pager, they do remind everybody that SAR information is confidential. But you can find this on the IRS CI website.

Elliot Berman: And John, I know you pointed out that the DOJ has updated its corporate enforcement and voluntary disclosure policies. My recollection is they did that last year as well. But what did you see with that?

John Byrne: Yeah the DOJ does remind everybody that no matter what administration, they have promoted the benefits of voluntary disclosure and cooperation.

They went to formalize those incentives back in 2017. That's the first time when they adopted these corporate enforcement policies, and this grew out of the Fraud Section's. FCPA voluntary disclosure program. Basically it's gives you some my words not theirs, gives you some points for voluntary disclosure, cooperation. A theory that's been around for quite a while.

But this is now at least according to DOJ department-wide. It's a unified framework and they say this is how prosecutors will evaluate and reward voluntary disclosures and cooperation. I would add, a quick point here. I did also see in a separate story that DOJ is now changing their hiring policies to allow the Department of Justice to hire prosecutors right out of law school.

Because apparently before that they needed at least some experience. So it'd be interesting to see how that turns out. But from the same department that gives you voluntary disclosures, they're also trying to ramp up after they lost quite a bit of attorneys in the past year and a half.

Elliot Berman: I recall when I graduated law school. Six weeks after I graduated I, tried a small civil case on my own. And I can't say that it was a shining moment in jurisprudence. But I also am thinking, I don't know that I would've been wanting to be a prosecutor in the federal courts right out of school. Hopefully there'll be good training and this will not be a problem, but we'll see.

John Byrne: Hopefully the training is more robust than they give new ICE agents. So there's another case that I thought we'd mentioned and that is the DOJ going after Jerome Powell. They have at this point the court, in that case, and here is what judge Boasberg, his ruling was to quash the DOJ subpoenas against the Fed chair. Here's part of what he said in that opinion. I'm quoting, what the court must determine is whether the board is correct in its inference. In other words, what is these subpoenas dominant purpose? A mountain of evidence suggests that the dominant purpose is to harass Powell, to pressure him to lower rates.

That case, seemingly won't push Fed chair Powell out for his end of his term, which is in May, just a month and a half from now.

Elliot Berman: Yeah. And that's his term as chair. His term as a governor continues until sometime in 2028.

John Byrne: Exactly.

Elliot Berman: And it would be unusual for him to continue, but, I did see some reports of speculation about whether he may continue. We'll see what happens.

So there have been a number of reports issued about crime and fraud. MONEYVAL issued a new report that outlines topologies of conflict related money laundering. And they note that the research examines how conflicts create conditions for generating illicit proceeds and how those proceeds are subsequently laundered or used to finance, terrorism, and the proliferation of weapons of mass destruction. An interesting report. I recommend you take a look at it. You can find it on the MONEYVAL website.

And then Interpol also issued an interesting fraud threat assessment. And they noted that AI-enhanced fraud is 4.5 times more profitable than traditional scams. I guess that answers the questions, why are the bad guys using AI? Because that's where the money is. And their key findings are that law enforcement authorities collaborating more effectively against financial fraud is effective. There's high, global and human costs due to financial fraud. That there's been a spread of global fraud centers, which you and I have talked about, many of which are in Southeast Asia. That fraud increasingly is enabled by AI tools. That criminal networks are cooperating and sharing expertise in technology.

So it makes it that much more important for the public and private sectors to share information if the enemies are sharing information. And there's an increasing nexus between financial fraud and terrorist financing across Africa. We've talked a lot about Southeast Asia over the years and other parts of the world, we haven't talked a lot about Africa. It doesn't mean it's not happening, but this report calls that out.

John Byrne: Nasdaq released their 2026 Global Financial Crimes Report and people should download it and read it. I'm commenting based on a posting from a friend of ours, Doug Gilmer. Doug Gilmer has done a couple of webinars for us on human trafficking, and he highlighted from the report that human trafficking is called out in the report to now be estimated to be unbelievable, a $528.5 billion a year industry globally. That's up according to Nasdaq from $347 billion just two years ago, a 23.5% annual growth rate.

Doug also comments, and again, he's a clear expert in the anti-trafficking space. But in his comments, he said, he believes we continue to fail to deal with this horrific problem. He said we have more anti-trafficking training, awareness, operations than ever before, and yet the criminals are winning. He thinks there needs to be systemic change. So again that report is available. You can download it on the NASDAQ website.

Elliot Berman: AMLA has launched some data collection exercises to test their risk assessment models. The point of this is really twofold. One, the test models are designed to inform the selection taking place in 2027 of up to 40 entities that AMLA will directly supervise.

And they're also being tested to ensure that money laundering risks of credit and financial institutions are assessed consistently by the supervisors across the EU. Remember we're going into a unified regime and therefore the national regulators in each of the member states need to adapt their processes to that uniform approach.

John Byrne: The only other thing I have, and it just came out a couple hours ago. The head of the National Counterterrorism Center, a guy by the name of Joe Kent, is resigning from his post because from his posting it says he cannot in good conscience support the ongoing war in Iran. Washington Post, reported it, and so did New York Times. But that just happened today. I haven't seen or read any responses from the administration, but that was just as they say breaking news a couple hours ago.

Elliot Berman: And two more from Europe. A new study from Cifas, which is a not-for-profit fraud prevention service, has concluded that 45% of crime in England is from fraud of various types. Many of us in the industry have been talking for the last number of years about the continued acceleration, almost explosion of the amount of fraud we see. And this is another indicator g geographically limited to England. If you go to the Cifas website you can find that report.

And then lastly, our friends of the OCCRP reported on a a case going on in Germany. German prosecutors are targeting the providers of software used to steal millions of dollars in online trading schemes. So they're going after the software company for creating this software. They, I'm quoting here from the report, knowingly and willingly provided the fake brokerage all in one solution software, central to the fraud that was being committed by the the criminal groups across multiple countries. We'll see, it's at the outset. But it's interesting that prosecutors, and these are local prosecutors in Germany, felt that they had enough to go with this.

John, what else you got?

John Byrne: That's really it at this point. By the time you hear this, we'll be on our second day of the AML Partnership Forum. Have some outputs from that we can talk about next week. So we're looking forward to that.

Mentioned that, the folks in the NPO community are working very diligently because the FATF mutual evaluation of the US is going on as we speak and they're making the case about human humanitarian and charity groups and the difficulty they have with financial access, based in part on the banker's response to Recommendation Eight and some other things. So that's an ongoing issue that we will continue to follow.

And then next week we'll do our monthly catch up with Sarah Beth Felix. And we're always looking for more people to chat with. Topics, issues, that sort of thing. So please, if you have somebody, let us know.

Elliot Berman: And our March webinar, which is on AMLA, will live stream on Thursday the 26th at 11:00 AM Eastern time to accommodate our west coast colleagues, but also our colleagues in the UK and the EU.

So John you have a great rest of the week. I'm gonna see you at the Forum. In fact, I'm gonna see you tomorrow. And I will talk to you then.

John Byrne: Safe travels. Talk soon.

Elliot Berman: You too. Bye-bye.