Wolfsberg Group, G7, Peruvian Antiquities, and a Senate Russia Sanction Bill

This week, John and Elliot discuss the recent Wolfsberg 25th Anniversary Forum, the outcomes of the G7 meeting of Finance Ministers and central bank governors, the Manhattan D.A.’s office return of looted antiquities to Peru, a proposed bill in the US Senate concerning Russia sanctions, and other items impacting the financial crime prevention community.

Wolfsberg Group, G7, Peruvian Antiquities, and a Senate Russia Sanction Bill - Transcript

Elliot Berman: Hi John. How are you today?

John Byrne: Okay, Elliot. Not real happy about my Knicks. They're down three to one against the Pacers, first time in 25 years they made the conference finals. That's something to be happy about. And then of course we're in baseball season and we move on from season to season depending on how our teams go. So I'm doing good.

Lot going on internationally as well as domestically. I thought since we mentioned the EU sanctions package last week, we'd stay on that topic at the beginning to talk about sanctions. So a couple things. Earlier this week apparently President Trump is now upset with Vladimir Putin and he's talked about potentially issuing more sanctions.

Now, interestingly enough there's a piece in various newspapers that, Russia of course, has faced years of US sanctions. I taught my class last night. We talked about how FATF suspended the Russian Federation from FATF. So there's been a lot of response to what they've done in Ukraine. But there is some thought that sanctions could be tightened against the energy and banking sectors. In addition to other areas.

And according to the story, one of the stories the State and Treasury Departments have been drafting potential sanctions packages that would focus on those sectors. So we'll see. But you don't know from day to day whether Trump is gonna change his mind, but we'll see.

Having said that. The Senate in rare bipartisan effort has introduced a bill with 81 co-sponsors called the Sanctioning Russia Act of 2025, which is created to impose both primary and secondary sanctions against Russia, parts of its leadership, and third party countries that are aiding in its war in Ukraine. So the bill is designed according to the description from the Senate to pressure Moscow into negotiating a genuine peace agreement.

Key provisions include mandatory blocking of property and assets held by sanctions, individuals or entities in the US or certainly under us. Control denying visas for sanctions persons. Sanctioned major Russian financial institutions like the Central Bank of Russia Sberbank, VTB Bank, and Gazprombank, along with their subsidiaries and a whole series of others. At least as of our recording it has not been scheduled for committee consideration yet, but with 81 co-sponsors, my educated guess is that's probably right around the corner.

Elliot Berman: Yes. And the two additional interesting things. So the principal sponsors are Blumenthal and Graham which indicates, given where they stand on the spectrum how bipartisan this is. And secondly, the sanctions would be triggered if Russia refuses to engage in good faith negotiations for lasting peace with Ukraine, or initiates another effort including military invasion that undermines the sovereignty of Ukraine after peace is negotiated. It could have a significant impact on Russia reasonably quickly if it's passed and put into play.

John Byrne: Yeah. That makes a ton of sense. Staying internationally, late last week, the G7 finance ministers and central bank governors met in Alberta, Canada. That's part of the Canada's G7 presidency and talked extensively about financial crime prevention, so the ministers and the governors and this is on the canada.ca website so you can get it there. They agreed that a financial crime call to action to further spur concrete progress in tackling financial crime, money laundering, terrorist financing that can contribute money for technical assistance to support the expansion of the World Bank led resilient and inclusive supply chain enhancement partnership to deal with supply chain issues. Address risks stemming from large increase in low value shipments imported to G7, and of course relevant to what we just talked about, continuing their unwavering support to Ukraine.

And continuing to explore all possible options to hold Russia to account, including further ramping up sanctions. So another reference to sanctions. And again, this is the G7 finance ministers and central bank governors can communicate, which can be found on that canada.ca website.

Elliot Berman: They also specifically mentioned, continuing support to spur further progress and collective efforts by FATF to make the, all the efforts global.

John Byrne: Right. And I think we mentioned last week that FATF has been vocal about those issues as well. The other part of this that is relevant is the Wolfsberg Group had their 25th Anniversary Forum, late last week. And there the president of FATF was there. She was part of a number of people there. Violaine Clerc, the executive secretary was there as well.

And they talked about issues regarding the risk-based approach, changes to Recommendation 1, which deals with when you do the risk-based approach, where risks are lower to have simpler methods and when they're higher. Those types of things we've talked about before. Another area of financial inclusion. They talked about guidance there to give out what they're calling practical advice and support, again, with the risk-based approach, but also to, with a view toward making it more clear on how people can get access and use of financial services. And private public partnership, something that we talk about constantly.

So that was appropriately done at the Wolfsberg Group Forum meeting. We've talked about Wolfsberg extensively. I think I've mentioned before, I'm efforting a conversation with Alan Ketley, who just retired from Wolfsberg. So we're gonna try to do that sometime in June if we can.

But they had at this forum over a hundred leaders from around the world. And then they had a number of areas, what they call key areas of convergence over the three days. Cost benefit decisions should be made on monitoring suspicious activity, redirecting resources that you gain for private public partnership as we just talked about.

And then one thing I thought was an interesting comment they said, requires all of us, meaning all financial institutions and of course the public sector to pivot their collective culture based in quote, fear of failure, unquote into one of rapid learning and continuous improvement. Fear of failure was viewed by many as a key blocker to progress that promoted overreporting of SARs or STRs by the private sector.

So interesting comment there. Obviously we'd like to talk to some of the folks and get more detail on that. But a number of interesting things Wolfsberg Group has a very active website and reports and guidance documents. So they're always a good part of this AML community that we're all striving to do better.

Elliot Berman: That last point that you highlighted also caught my attention and it's been called many different things, overregulation, too much focusing on the rules as opposed to the outcome, all those different kinds of things. But I thought fear of failure was a good way to describe what people have talked about in different ways for quite a long time.

John Byrne: I have a couple more things, but go ahead. What else do you got?

Elliot Berman: As long as we're doing international stuff the private bank Edmond de Rothschild Europe, which is headquartered in Luxembourg, became the first banking institution ever to be convicted of money laundering in Luxembourg. And this relates all the way back to the 1MBD case, which goes back to 2009 to 2013, where there was estimated to be about 4.5 billion US dollars misappropriated from 1MBD, which was a Malaysian sovereign wealth fund.

And about a little less than $500 million of it ended up in in that bank. So they had already received an administrative penalty, but this is a criminal conviction and they're being penalized 25 million Euro. Luxembourg over the years has been, viewed as a place with a lot of bank privacy. But this is an interesting take and it's interesting how long this has continued to go on.

There are still cases pending against individuals who were involved in these activities. They were not named in the articles, but I assume some of them were likely to have been bank employees.

John Byrne: TRM labs, a company that we've talked to Ari Redbord and others there. They produce a lot of excellent reports. Just issued a report on Chinese Underground Banking, which is available on the TRM Labs website. Also if you follow Ari, you can get access to that on LinkedIn.

It's a, basically a 20 page report, just referencing the conclusion here with something you should go through the good, some good charts and stats in there. They conclude that Chinese underground banking networks and their crypto laundering schemes represent a complex global challenge to the nexus of cyber crime, drug trafficking and sanctions of Asian. Yet as they say in the report, they're not invisible. If you have diligent blockchain analysis, interagency collaboration in bold strategies, including going on the offensive in cyberspace authorities can put light on these shadowy networks.

And they conclude with this. Ultimately combating this threat will require agility and innovation to match the criminals' own, but it's a fight that's well underway, aiming to safeguard the integrity of the global financial system from underground banking. A lot of other good information in there. Again, it's All Roads Lead to China, the Role of Chinese Underground Banking, and again, is produced by TRM Labs.

Elliot Berman: And the Manhattan District Attorney's office, which has a Antiquities Trafficking Unit, which we've talked about in the past announced the return of eight antiquities to the people of Peru. These antiquities were seized during multiple ongoing investigations into looting and trafficking networks targeting South and Central American cultural heritage. This has been a very active unit for a long time and has facilitated recovery and return of, numerous artifacts around the world.

John Byrne: I wanna give credit to the Manhattan DA's office run by District Attorney Alvin Bragg. And Bragg is quoted in the press statement that many of the objects being repatriated today are from areas of Peru that have been repeatedly targeted by looters, but they're able to undo some of that. The other part of it that's really fascinating is they've recovered more than 2,350 antiquities from 42 countries. They give you all the stats there. And the the constant in this office has been the assistant District attorney, Matthew Bogdanos who's the chief of the Antiquity Trafficking Unit and Senior Trial counsel, who's been a supervisor and in those types of investigations for quite a long period of time.

I should add that we are efforting a follow up conversation with Tess Davis from the Antiquities Coalition sometime in June. She's been on extensive international travel. And Tess is intimately involved in a number of these sorts of actions and she's been kind enough to sit down with us before. So we'll talk to her about this and certainly other related activities because as we've said before, the antiquities dealers and sellers are included under the Bank Secrecy Act because of AMLA but there's been no final regulation.

Elliot Berman: John, you and I have talked a lot about corruption in the public space both domestic and internationally. And I noticed that this week, President Trump issued an interesting pardon. Do you wanna talk about that?

John Byrne: Yeah. This is an interesting, pardon. That's the understatement of 2025. I'll give you credit on that. So here's what happens, it's in my backyard here, outside of Northern Virginia, Culpeper County Virginia. Scott Jenkins, not the CNN guy, the former sheriff of Culpeper County was convicted in December by a jury on one count of conspiracy, four counts of what they call honest services fraud, seven counts of bribery. He accepted more than $75,000 in bribes in exchange for appointing what clearly were untrained and unvetted individuals as auxiliary deputy sheriffs.

The evidence in anybody's assessment was overwhelming. There was video of Jenkins accepting bags of cash testimony from some of those involved in the scheme who pled guilty and reports from two undercover FBI agents. In March of this year he was sentenced to 10 years in federal prison. And the US attorney at the time said he violated his oath of office and faith the citizens of Culpeper County placed in him when he engaged in a cash for badges scheme.

Why are we saying all this? Because on Monday the president announced he was pardoning, Scott Jenkins. So we have pardoned an individual who was convicted by a jury of his peers. Video evidence and testimony. I don't think we need to say more on that one, Elliot.

Elliot Berman: Probably not. Okay. So I know you wanted to talk about one of our colleagues in the , financial crime prevention community who's announced her retirement. So why don't you do that and then I'll talk about the June webinar.

John Byrne: Yep. Sounds good. After I think she indicated it was 35 years, Lisa Arquette is retiring from the FDIC. I think everybody in the AML space in the States knows Lisa. Lisa has been extremely active on the conference circuit and certainly in any of the meetings that we've had, stakeholder meetings that we had on de-risking with the World Bank, she's certainly was a member of the BSAG for many years. And always someone who, when she came to these conferences brought her A game. We didn't always agree, but she was always very, both candid about what banks could do better, where there were issues where her FDIC could improve.

And I always felt that when she was part of a panel you were always getting both current information and valuable and practical information. Lisa, a dedicated public servant, I can't stress that enough. And losing her expertise is a big loss to the FDIC, but certainly you get it after all those years it's time to figure something else out or retire, whatever she decides to do. But I just wanna say that having participated with her in so many conversations, really appreciated her work. And Lisa, the best to you.

Elliot Berman: I agree. You know Lisa much better than I do, but I've always enjoyed working with her and also listening to her speak. It's a great testament to the level of expertise and dedication that we have in the public sector. Our June webinar will be the 26th live streaming at 1:00 PM Eastern Time.

And it'll be on the topic, the latest on effective risk assessments. We've got an outstanding expert panel who I met with yesterday morning to talk about the details, and I think everyone who comes and listens to the livestream or taps into the posted recording later will get useful insights into what's going on in the risk assessment space. How it continues to evolve and things they should be thinking about to make sure that they're evolving their own risk assessment process regardless of whether they're a large institution or a small institution, or for those non-banks that have adopted the use of risk assessments even where they're not mandated.

Looking forward to that. And John, I know you've got a couple of you're working on one that you just mentioned, but others as well, right?

John Byrne: Yeah. So on Friday this week we're gonna sit down with Sarah Beth Felix. One of the key experts in the AML space. Really looking forward to that conversation. Next week I'll be talking to Adam Hirsch, who's with the Economic Policy Institute about trade related crimes. So we're gonna talk to him about that and, I don't think there's enough time, but I'd love to talk to some folks down under in Australia, 'cause they got that second consultation out on the AML infrastructure that's going on there.

But I think the comment period ends in a couple of weeks, so it's probably too quick. But we'd definitely like to get more information on that. We talked to Aub Chapman months ago about the first iteration, so we'd love to follow up. So anybody that's listening to this that is either an expert in Australian AML law or currently part of an advisory package down there reach out to us. We'd love to have a conversation.

Elliot Berman: That would be great. So John, it's been good to talk to you. You have a wonderful rest of the week and I will talk to you next week.

John Byrne: Take care, Elliot.

Elliot Berman: You too. Bye-bye.