War, Sanctions, Fraud, and the State of Public‑Private Partnerships

In this milestone 300th episode of This Week in AML, Elliot Berman and John Byrne reflect briefly on the evolution of the podcast before diving into a wide‑ranging discussion of the most pressing developments in the AML, sanctions, and financial crime landscape.

The episode features key takeaways from the Fifth Annual AML Partnership Forum in Washington, DC, including insights on public‑private collaboration, cryptocurrency investigations, fraud trends, sextortion, and human trafficking. Elliot and John also unpack major global and domestic developments—from wartime corruption risks and sanctions involving Iran and Russia, to FATF’s new anti‑fraud toolkit and a federal court ruling striking down FinCEN’s residential real estate AML rule.

Additional topics include emerging concerns about insider trading and prediction markets, nonprofit investigations tied to domestic extremism, shifting counterterrorism resources, and new reporting on classified information and financial motives. The episode closes with reflections on public service and the legacy of former FBI Director Robert Mueller.

As always, listeners are encouraged to review the source material referenced and draw their own conclusions.

War, Sanctions, Fraud, and the State of Public‑Private Partnerships - Transcript

Elliot Berman: John, how are you today?

John Byrne: I'm good. Congratulations. This is our 300th episode and, I think what we've tried to do in these past several years is give people a snapshot of what's gone on the particular week we're recording, or the end of the week before. Obviously both of us have views, but at the end of the day, what we tell people is take a look at the source material that we're referencing.

And hopefully it improves your ability to understand the AML/CFT, sanctions space. So hopefully we've done that in the course of all of these episodes.

Elliot Berman: Agreed. That is why we do them. We never talked about how long do you think we'll do this, when you came up with the idea and we decided to launch it, but we've been at it for a while now.

John Byrne: That's for sure. And there's as much as people want to think that we are the two muppets in the balcony we try not to do that as much as possible. But and I always forget the names. You must remember Waldorf and

Elliot Berman: Stadler and Waldorf.

John Byrne: Stadler and Waldorf.

Elliot Berman: Yes.

John Byrne: There you go. And younger folks, which is almost everybody that listens to us can Google those names.

Elliot Berman: I'm sure you can find clips on YouTube, and on the Disney Channel, you might be able to find the whole Muppet show and you can see them there.

John Byrne: That's true.

Elliot Berman: So last week we had our fifth annual AML Partnership Forum in Washington, DC. It's a great group of volunteers both from the private sector and from federal law enforcement. We had a great turnout. And lots of really good information exchange and relationships created. As you and I have talked about repeatedly, it's a Chatham House rules type of thing, so there are no recordings, but there were some themes that came out of there.

John, what were the handful of top level takeaways that you got from the two days of conversation?

John Byrne: I think the key concept is partnership, right? And we recognize the career efforts of Guy Ficco, who is stepping down as the IRS - CI, chief and Guy gave us some of his views over time regarding the value proposition of BSA data, how it's utilized by IRS, but then more importantly ,the importance of connecting with the private sector. I thought that was valuable.

We got updates on the challenges with cryptocurrency. I was able to moderate a panel on human trafficking and smuggling, and sadly one of the themes there is the rise in sextortion, which I know that the various law enforcement agencies have highlighted as issues for the financial sector to look for in terms of reporting. And then in addition to that, updates on all the sorts of frauds that continue to challenge this community and some real good case studies of . And it's always amazing to me how these criminals think they're gonna get away with things and just how much goes into what they do to steal money, to commit fraud, to deal with phony documentation or all that.

So all that really useful for the audience who are experts in their own right. Whether they were on the panel or in the audience. I think that's important to note as well. What were some of your thoughts?

Elliot Berman: Well, in addition to hearing from Guy about his long and valuable career of public service, we also heard from Jared Koopman who will be his successor. And it was interesting to hear his perspective also on public private partnership, but on other things too, as he takes over as the chief at IRS-CI. And we actually had four either former, current or about to be, chiefs in the room, which was, really good too. We got a nice range of perspectives over a period of time.

John Byrne: So that was our fifth annual. The game plan is to have a sixth probably in the March 2027 timeframe. But as we've said all along, the key element of this is no press, no exhibit hall, and an opportunity to exchange important information. So we're gonna continue to do that. And, look for more information on next year is when we start to plan that, which will be later this year.

Elliot Berman: So what would you like to talk about this week John?

John Byrne: Well, you know, corruption is still an issue we like to cover and talk about, so maybe we'll mention a couple things. You know, we are unfortunately in the fourth week of this war with Iran and obviously our thoughts and prayers and support go to the families of the soldiers that have lost their lives thus far. And we're hoping there'll be a culmination of this in some fashion. But the corruption that occurs in wartime has gone on for I'm sure centuries. But this particular thing just jumped out at me and I wanted to mention this reported by the BBC.

They report that oil traders bet millions of dollars minutes before the president talked about what was going on with Iran. And so in the BBC version and it's been reported in other media outlets, traders bet hundreds of millions of dollars on oil contracts just minutes before Trump announced on Monday that the US would postpone strikes against Iranian energy infrastructure.

Market data reviewed by the BBC shows that the volume of trades spiked around 15 minutes before the social media post by the president announcing the move. The price of oil fell sharply after the announcement, dropping 14% in a matter of minutes. Traders who bet on the unexpected move would have made money.

And some market analysts say that the unusual activity opens up the possibility that bets may have been placed with prior knowledge of the decision. So I would reference that and with the expansion of, what's it called, Polymarket, is that the the name of the, were you

Elliot Berman: And that one, that one in Kalshi.

John Byrne: So you can bet on anything which is not a great thing. What could possibly go wrong? These kind of things could go wrong. So I thought it was important to mention that. Related to the war the Treasury has issued an Iranian related general license. We talked about the the Russia one last week, but this license authorizes the delivery and sale of crude oil and petroleum products of Iranian origin loaded on vessels as of March 20th.

Now, we heard some explanation over the weekend on some of the, public policy shows, what have you, that this is actually gonna benefit the US and globally. But I've heard others say that this and what happened with Russia will enable Russia to continue its attacks on Ukraine. So again, I'm not bright enough to figure out all of this, but I think those two things seem to be confusing, to say the least.

Elliot Berman: I'm also not smart enough to figure out how all this stuff works at the global economy level. But I have to say that I think I'm smart enough to realize that it's reasonably ironic that this action will allow a country that we've attacked to fund its response to our attacks.

John Byrne: Yes.

Elliot Berman: I don't know what to do with that. Not something I recall in the other wars or conflicts that the US has been involved in during my lifetime, or the ones I've read about in looking at history. Maybe it was happening and just didn't make the front pages.

John Byrne: Yes, that's very possible. There was a report from the OCCRP, the Organized Crime and Corruption Reporting Project last week. They didn't just report it, but it was reported elsewhere. And it has to do with an investigation of Europe's largest refinery of alumina, which is the main raw material used to make aluminum. And has been sending majority of its exports to Russian smelters that feed into the supply chain of EU sanctioned arm manufacturers.

It's an Ireland based plant Aughinish Alumina. And it increased those things since the invasion of Ukraine in 2022. And so that, that's a report you can read more about that particular issue from the OCCRP posted a couple of days ago, the 23rd of March, I believe.

Elliot Berman: The thing that's interesting is even though there have been a lot of sanction rounds coming out of the EU and the UK related to Russia. This particular raw material itself is not subject to sanction. But by putting it in the supply chain, it is assisting Russia with being able to get the materials that it needs to make rockets, which are clearly being used in its assault on Ukraine.

John Byrne: Right. Anyway, OCCRP, they do great work. I know that I've talked to one of their journalists just the other day, and he's been working on a piece regarding the Epstein files that he said he is been working on for several months. And so it gets posted before we record next week. We'll update you with that information.

Sticking with international issues FATF was part of a global anti-crime summit in the past week, and as a result, they also issued . A two pager on what they call their anti-fraud toolkit. It's a quick little two pager similar to what IRS-CI does with their CI-FIRST. They give you a snapshot of how the FATF standards respond to the growing threat of fraud. They talk about the risk-based approach, international cooperation, some of the issues like virtual assets, the need for private public partnership.

It's an interesting piece. It's available on their website. And again, it's just, a quick snapshot. It tells you they want to empower consumers to avoid fraud, to create prevention methods, detection methods, and also the ability to give you information so you can act quickly. Whether you're part of the public or private sector. In any event, some good anti-fraud related information from FATF.

Elliot Berman: We also saw that late last week, a Texas based US district court judge sided with the Pacific Legal Foundation in a ruling striking down FinCEN's residential real estate AML rule. At the moment I haven't seen an indication of whether or not FinCEN or Treasury plan to appeal. And I haven't seen anything that indicated that there was a request for a stay. The quote that I picked out of the decision, the agency fails to explain or show how non-finance residential real estate transactions are categorically suspicious, the judge indicated.

I don't know that would've been the standard I would've thought it would've been judged by. And one of the articles I read quoted former Treasury Secretary Janet Yellen, indicating at the time when she was still at the Fed, $2.3 billion was laundered through US real estate between 2015 and 2020.

So whether it's suspicious or not, there's certainly laundering going on there. But we'll see. The FACT Coalition director said the district court in Texas has sided with cartels, money launderers, and US adversaries. The defendant in this case would've been the government so it'll be up to them to decide whether or not appeal.

John Byrne: Can you say forum shopping?

Elliot Berman: I can actually. One of the things I remember from, civil and criminal procedure when I took those courses in law school, which is a really long time ago, I remember spending a lot of time and examining the whole challenge of forum shopping.

But the challenge is you can sue the federal government anywhere. there's a handful of cases that have to be brought in certain places, but otherwise you can pick your forum.

John Byrne: Part of what we try to do is with the sources to let you know where the information that we're repeating comes from. And it sometimes matters, sometimes does not. This next story has only appeared in near as I can tell on the CBS news site. So I'll leave that out there. And the story came late last week after we recorded, and it is headlined to the FBI and IRS will investigate nonprofit groups for domestic terrorism links.

So an exclusive to CBS news. They briefed several individuals there and they say that this is based on a December memo by Attorney General Bondi that ordered law enforcement agencies and federal prosecutors to prioritize efforts to investigate and prosecute groups and individuals who belong to anti- fascist, Antifa movement or, a deemed extremist quoting here. These domestic terrorists use violence or the threat of violence to advance political social agendas. And you can read the rest of that, but that was from the December 4th memo. It asked law enforcement agents to consider potential tax crimes in which extremist groups are suspected of defrauding the IRS.

The FBI did not comment on this. As you know, we've been working closely with our colleagues in the humanitarian world, and obviously there's concern that certain groups, depending on their mission might be targeted. We'll see what happens? As I said, I have not seen this story reported elsewhere.

There is a former domestic terrorism counsel at DOJ quoted in the story, and he said that this memo is concerning and does raise questions about what predication the FBI has in order to legally justify creating a list of groups that should be targeted for criminal investigation. So we'll see how this turns out.

But I thought we'd mention it again, only appeared in CBS News online. So it's important that we identify where the information is, but it's relevant to our community, so we thought we'd mention it.

Elliot Berman: It's interesting. Even though domestic terrorism is defined in a few statutes there isn't actually a statute that specifically outlaws, if you will, or creates a penalty for domestic terrorism. And that's part of the reason I think that IRS is pulled in. So if you can find these groups are misusing their nonprofit status or tax exempt status or that they're doing other things like money laundering. Then, you have something to get them into court.

John Byrne: Staying with terrorism, the Economist in a column in the March 21st edition talked about whether or not the obsession with immigration by the administration, is it leaving America exposed. They mentioned a couple of the attacks since the war with Iran started and then mentioned the fact that the counter-terrorism staffing at the DHS and the FBI has been substantially reduced. And so the question is, and this comes from not left-leaning groups, but groups like the Cato Institute, that's a a right-leaning think tank, that they say that more than 12,000 of the department's investigative officers, this is DHS some of whom work in counter-terrorism were reassigned to immigration enforcement.

And then roughly 2000 border patrol agents that are normally tasked with guarding against threats were pulled off their duties again to arrest and detain migrants. And the same pattern seems to be evident at the FBI in terms of the reduction of staff that were previously dedicated to counter terrorism. So again, this is in the Economist of the March 21st issue and just asking the question of whether or not these are quote, distracted defenses unquote.

Elliot Berman: And if I recall correctly, about a year ago, there was as part of the broad effort to reduce the size of the federal workforce, that there were a number of anti terrorism and counter terrorism groups within the government in various departments that either saw people taking early exit packages or having their positions eliminated. So before we reassigned them to do things that may or may not fit squarely into the remit of counter-terrorism, first thing we did is we said, we don't need as many of these folks, which is kind of an interesting bad start, followed by bad follow up. But we'll see.

So John, I there were, I think there are a couple other things you wanted to touch on.

John Byrne: Well, I would just very quickly we know based on, the media reports. And this first appeared with what is now called MS Now but it was written by Carol Leonnig, who actually wrote an excellent book about the history of the Secret Service that I read a couple of years ago. But it's also been covered by now the Washington Post and the New York Times, and that is that the special counsel Jack Smith when he had gathered evidence regarding the Mar-a-Lago case in terms of information there. Now there's been some information that has, it's not been leaked. It was part of the of the filing. It said that the special counsel's office. Found that when Trump held onto documents these were being done, they believed for personal financial gain.

So again, read the story. It said they had evidence indicating that after leaving office Trump had also shown a classified map to passengers on a private plane that only six people had access to. This is based in part Congressman Jamie Raskin of Maryland has sent a letter this week, to Attorney General Bondi, in which he references this information from the progress memo in January of 2023 that was reviewed by the authors of the piece that said that Trump held onto many documents related to his businesses.

Since there's been a lot of media coverage of this whole thing this is pretty brand new information, so it'll be interesting to see how this plays out, if at all.

Elliot Berman: And Jack Smith because he was a former member of DOJ he's under a essentially a gag order from the Attorney General which prior government officials, that's not that unusual. But, he's refusing to make any comment, which I think given his circumstances makes sense.

John Byrne: Right. Yeah. That's about all we got now. A lot going on, unless you have something you wanna mention?

Elliot Berman: I wanna mention our our March webinar will have live stream by the time you hear this. By the end of next week it'll be available on our website, and that's on AMLA and the changes that are coming for the EU. I recommend you take a look at it, the recording, because even if you're in the US I think it's important to understand what's happening in other major parts of the world.

And then our April webinar is going to be on, scams related to elder abuse and sexploitation. That's gonna live stream on April 23rd at 1:00 PM Eastern Time. And we're lining up some great experts. And so you can register for that at our website. And John, I know before we signed off, you wanted to talk about the recent loss of a public servant.

John Byrne: I always think that it's very important to recognize that we still have those that dedicate their lives to true public service. And Robert Mueller was clearly one of them. Recipient of the Bronze Star and a Purple Heart. He was a US attorney in Massachusetts, the FBI director, and handled the Russia investigation. I got to meet him only once. It was after 9/11 with meetings we had up in New York with bankers and analysts from the FBI to share information. Just a very quiet person, but commanded the room sort of thing.

And our good friend Dennis Lamel, worked directly for Director Mueller when they set up TFOS. So just wanted to mention that it was sad to see, but a tremendous life that he led. I do wanna mention one other thing. We're not doing video, but if we did video, you would see on my bookshelf behind me the Mueller Report, a dog-eared copy.

Because I actually read it from cover to cover, unlike some that pretended that they've read it. And just a couple things I should mention based on that investigation. There were 37 indictments, including six former Trump advisors. Trump Associates repeatedly lied to investigators about their contact with Russia, and then a statement was signed by over a thousand former federal prosecutors concluded that anybody else that would've engaged in his obstruction conduct would've been indicted.

It's clear to me as a lawyer, not a criminal defense lawyer, that there was obstruction here. So, as we see history being revised I think it's important that we mention the facts and those are the facts. If you don't accept my thoughts on them read the report. It's still very much available, but it more importantly, Robert Mueller was such a dedicated public servant and I just wanna make sure that we in the AML community understand that and and as we move on, not forget that.

Elliot Berman: John, thanks for those words. I will talk to you next week. You have a good rest of the week, and we'll do episode 301.

John Byrne: Happy 300th. Take care.

Elliot Berman: You too. Bye-bye.