Tag Archives: Jonathan J. Rusch

Central Bank of Ireland Fines Coinbase More Than €21 Million for Breaching Anti-Money Laundering and Counter Terrorist Financing Transaction Monitoring Obligations

by Jonathan J. Rusch

Photo courtesy of the author

Photo courtesy of the author

At a time when the United States Government has been demonstrating its general commitment to decreasing oversight of and enforcement against cryptocurrency entities[1], crypto firms that operate transnationally need to remember that other countries are likely to remain more vigilant in ensuring that such firms remain compliant with national legal regimes.  Those legal regimes include laws requiring their compliance with anti-money laundering and counter terrorist financing (AML/CTF).

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The Federal Financial Institution Regulators’ New Guidance on Filing Suspicious Activity Reports

by Jonathan J. Rusch

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Photo courtesy of the author

Under the Bank Secrecy Act and regulations thereunder, financial institutions have long been required to file Suspicious Activity Reports (SARs) on a wide range of possible criminal activities with federal financial institution regulators.  Over the past two decades, criminal and civil enforcement authorities have imposed BSA-related financial penalties in numerous cases for failure to file or untimely filing SARs.[1]  At the same time, many in the financial sector have complained about the burdensomeness and questioned the value of SAR preparation.[2]

On October 9, the five federal financial institutions regulators (i.e., the Financial Crimes Enforcement Network, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency) jointly issued a document titled “Frequently Asked Questions Regarding Suspicious Activity Reporting Requirements” (SAR FAQs).[3]  The SAR FAQs stated that “[t]he answers to these FAQs clarify regulatory requirements related to SARs to assist financial institutions with their compliance obligations while enabling institutions to focus resources on activities that produce the greatest value to law enforcement agencies and other authorized government users of Bank Secrecy Act (BSA) reporting.”[4]

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Monetary Authority of Singapore Imposes Financial Penalties, Prohibition Orders, and Reprimands for Anti-Money Laundering Breaches

by Jonathan J. Rusch

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Jonathan J. Rusch (photo courtesy of the author)

Since 2023, when Singapore Police arrested 10 people connected with Singapore’s largest-ever case of money laundering (involving S$3 billion in cash and assets)[1], the Monetary Authority of Singapore (MAS) has been conducting supervisory examinations against pertinent financial institutions with a nexus to persons of interest in that case and certain employees of those financial institutions.

On July 4, the MAS announced regulatory actions against nine financial institutions and prohibition orders and reprimands against 18 executives and managers of those institutions for failure to comply with MAS’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements.[2]  This post will summarize those actions and identify certain lessons to be learned for AML/CFT compliance.

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European Union, United Kingdom Competition and Markets Authority Impose More Than €549 Million in Fines on Major Car Manufacturers for 15-Year Cartel Involving Vehicle Recycling

by Jonathan J. Rusch

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Photo courtesy of the author

On April 1, the European Commission (EC) and the United Kingdom Competition and Markets Authority (CMA) simultaneously announced that they had imposed fines collectively totaling more than €549 million against a total of 17 leading car manufacturers and two trade groups, the European Automobiles Manufacturers’ Association (ACEA) and the Society of Motor Manufacturers & Traders (SMMT), for conducting a more than 15-year cartel pertaining to “end-of-life” vehicle recycling.[1]

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Cryptocurrency Exchange KuCoin Pleads Guilty to Unlicensed Money Transmission, Agrees to Pay More Than $297.4 Million in Criminal Forfeiture, Fine

by Jonathan J. Rusch

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Photo courtesy of the author

For more than a decade, as part of its oversight of financial institutions’ compliance with the Bank Secrecy Act (BSA) and regulations thereunder, the Financial Crimes Enforcement Network (FinCEN) has repeatedly stated that any person accepting and transmitting convertible virtual currencies (“cryptocurrencies”) must register with FinCEN as money transmitters and thereafter comply with the anti-money laundering/counter-terrorism financing program, recordkeeping, and reporting requirements.[1]  Even so, a number of cryptocurrency or virtual currency businesses have ignored these longstanding requirements, sometimes resulting in massive criminal and civil penalties.[2]

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TD Bank Pleads Guilty to Bank Secrecy Act and Money Laundering Conspiracy Violations – Part II: The Regulatory Agency Resolutions

by Jonathan J. Rusch

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Photo courtesy of the author

On October 10, the U.S. Department of Justice, the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board (FRB) announced an extraordinary set of coordinated criminal and civil resolutions involving TD Bank, N.A. and its parent company TD Bank US Holding Company (collectively TD Bank) for systematic and years-long violations of the Bank Secrecy Act (BSA) and money laundering.  The first post on the TD Bank resolutions addressed only the Department of Justice’s criminal resolution with TD Bank.[1] This post will focus on the bank’s resolutions with the regulatory agencies, and identify certain lessons to be learned from this case.

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TD Bank Pleads Guilty to Bank Secrecy Act and Money Laundering Conspiracy Violations and Agrees to Pay More Than $3.09 Billion in Criminal and Civil Penalties for “Systemic Breakdown” in Compliance Policies, Procedures, and Processes

by Jonathan J. Rusch

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Photo courtesy of the author

In any corporate compliance program, chief compliance officers must be mindful that their programs are not guaranteed to maintain consistent levels of funding from year to year.  Factors such as expanding or contracting business operations, declining business conditions, or external events such as recessions or COVID may require various year-to-year adjustments in a compliance program’s staffing levels and internal controls operations.[1]

Even so, it is essential that senior management in any company or financial institution recognize and accept the fact that at all times, the compliance programs in their enterprise must be adequately resourced and empowered to function effectively.[2] What a company’s senior leadership may not do, under any circumstances, is to make decisions that, over time, systematically starve critical compliance programs of resources essential to the effectiveness of those programs.

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FINMA Sanctions Swiss Private Bank Mirabaud & Cie for Serious Violations of Swiss Financial Market Law

by Jonathan J. Rusch

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Photo courtesy of the author

For generations, the Swiss financial sector has carefully burnished its reputation as the “perfect home for wealth” and a “financial safe haven.”[1]  That reputation, not surprisingly, has led for some time not only to attraction of persons seeking legitimate investment and wealth management opportunities, but to a high degree of money laundering risk.[2]

In recent years, Swiss government authorities have responded to these money laundering risks with necessary changes in its anti-money laundering (AML) laws and general improvements in its legal and regulatory enforcement of those laws.  The Swiss Attorney General’s Office, for example, has demonstrated an increasing commitment to holding the Swiss banking community accountable for criminal violations of Swiss anti-money laundering (AML) laws.[3]  The Swiss Financial Market Supervisory Authority (FINMA), as the supervisor of the Swiss financial sector, has lately shown increased resolve in imposing significant sanctions on banks that fail to comply with AML laws.[4]

The most recent example of FINMA’s resolve took place on September 17, when FINMA disclosed that it had taken strong AML-related measures against a prominent Swiss private bank, Mirabaud & Cie SA.[5]  It stated that in June 2023, it had concluded enforcement proceeding against Mirabaud, finding that Mirabaud breached its AML obligations under Swiss law and “seriously violated provisions of financial market law concerning adequate organisation (governance), risk management and money laundering prevention over a prolonged period.”  It also took the highly unusual steps of confiscating CHF 12.7 million of unlawfully generated profits, opening three proceedings against individuals, and prohibiting Mirabaud from accepting any new clients with increased money-laundering risks until compliance with Swiss financial market law has been restored.

This post will explain the background and basis of FINMA’s actions and provide several observations on its significance.

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The New Threat in Business Email Compromise Schemes: Video “Deepfakes” of Corporate Executives

by Jonathon J. Rusch

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Photo courtesy of the author

Cybercriminals around the world use a variety of exploits to conduct fraud schemes directed against individuals, companies, and government agencies. One of these schemes that has proved highly lucrative for cybercriminals over the past decade is the so-called “business email compromise” (BEC) scheme.[1]

BEC schemes typically involve cybercriminals’ infection of the email account of a corporate executive, then impersonating that company executive via email to direct a subordinate employee to wire-transfer a substantial amount of funds to one or more accounts that the cybercriminals control. The United States Secret Service has estimated current global daily losses to BEC schemes at approximately $8 million (an annualized $2.9 billion).[2]

Another online fraud technique that has been emerging more recently is the use of so-called “deepfakes.”  Deepfakes — a form of synthetic media that uses “deep learning” (artificial intelligence) technology to synthetically create or manipulate various media, including video, audio, and images[3] — are well-recognized in the U.S. and United Kingdom banking sectors as a significant threat to bank customers.[4] Voice deepfakes, for example, can be used to deceive customers as well as bankers into transferring funds out of customer accounts.[5]

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Creating A European Union-Wide Anti-Money Laundering/Counter Financing of Terrorism Regime (Part II): Changes in Anti-Money Laundering Rules

by Jonathan J. Rusch

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Photo courtesy of the author

As part of its continuing efforts to strengthen the capacity and capability of the European Union (EU) to combat money laundering and terrorism financing[1], on January 18, 2024 the Council of the European Union announced that it and the European Parliament had found a provisional agreement on parts of the anti-money laundering and countering the financing of terrorism (AML/CFT) package to protect EU citizens and the EU’s financial system.

This provisional agreement is intended to accomplish two fundamental objectives: (1) to transfer all AML/CFT rules applying to the private sector to a new regulation; and (2) in doing so, for the first time to make those rules more stringent and harmonize them “exhaustively”, in order to close possible loopholes that criminals use to launder illicit proceeds or finance terrorist activities through the financial system.[2]

The first post in this series covered the provisional agreement relating to the creation and operation of a new EU-wide anti-money laundering authority (AMLA).[3]  This post will summarize and comment on the extensive and detailed provisions of this provisional agreement with regard to two elements: (1) the new AML regulation[4]; and (2) a new AML/CFT directive (to be designated by the EU as the “Sixth Anti-Money Laundering Directive”) that would establish the mechanisms that EU Member States should put in place for AML/CFT purposes and repeal the EU’s 2015 Fourth AML Directive.[5]

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