Financial Regulatory Forum

U.S. Treasury cautions Bitcoin businesses on compliance duties, advocate cites ‘chilling effect’

By Brett Wolf, Compliance Complete

NEW YORK, Jan.6 (Thomson Reuters Accelus)  - The U.S. Treasury Department’s anti-money laundering unit has mailed roughly a dozen letters to businesses linked to the digital currency Bitcoin warning they may be money transmitters and be required to comply with federal law and regulation, a Treasury spokesman told Compliance Complete.

These letters, sent in recent weeks by Treasury’s Financial Crimes Enforcement Network (FinCEN), are a form of “industry outreach” aimed at making Bitcoin businesses aware of their potential anti-money laundering compliance obligations, FinCEN spokesman Steve Hudak said.  (more…)

U.S. Treasury’s know-your-customer proposal delayed by struggle for regulatory consensus

By Brett Wolf, Compliance Complete

NEW YORK, Sept. 30 (Thomson Reuters Accelus) – A months-long delay in the release of a know-your-customer rule proposal that would have an impact across the financial industry is the result of the U.S. Treasury Department’s inability to reach a consensus with regulators on key details of the measure, sources familiar with the matter say.
Rob Rowe, a lawyer with the American Bankers Association’s Center for Legal and Regulatory Compliance, said “a number of bankers have asked about the status of the proposal.” (more…)

U.S. using subpoenas under 1989 act as new tool to probe financial firms

By Andrew W. Schilling, Compliance Complete contributing author

The U.S. Department of Justice has increased its use of the Financial Institutions Reform, Recovery, and Enforcement Act(FIRREA) to prosecute wrong-doing by financial firms. Accordingly, more institutions may find themselves having to deal with a subpoena under the act, including those that are directly targeted under the act. In-house counsel would be well advised to familiarize themselves with the statute and to respond to such subpoenas cautiously.

Responding to subpoenas has become routine business for in-house counsel at financial institutions, whose records are often necessary to “follow the money” in fraud prosecutions and civil lawsuits. (more…)

New U.S. FinCEN director must bolster agency under pressure over Iran sanctions, money laundering

By Brett Wolf

NEW YORK, Sept. 21 (Thomson Reuters Accelus) - When former Justice Department official Jennifer Shasky Calvery takes the reins at the U.S. Treasury Department’s anti-money laundering bureau on Monday, her first job is to revive the beleaguered agency amid pressure over Iran sanctions and money-laundering enforcement, sources said.

Shasky Calvery is a former prosecutor who cut her teeth dismantling international organized crime groups and tracking down their money. She will need all her leadership and diplomacy skills to boost the bureau’s morale, which has plummeted with the loss of skilled leaders and withering criticism from many fronts, and outline the policies with which she will make her mark as the new head of the Financial Crimes Enforcement Network (FinCEN). (more…)

U.S. Justice Department eyes compliance lapses in next era of money-laundering cases

By Aruna Viswanatha and Brett Wolf

NEW YORK, Sept. 4 (Thomson Reuters Accelus) - The U.S. Department of Justice is shifting its sights to a new offensive in combating money laundering: bringing criminal charges against banks and other financial institutions for weak compliance systems that fail to catch illicit money flows.

Even while the department’s money-laundering unit is wrapping up a series of blockbuster cases involving sanctions-busting transactions routed through some of Europe’s biggest banks, it has set its sights on the next front. (more…)

U.S. Treasury wants financial institutions to help combat identity theft-related tax frauds

By Brett Wolf

NEW YORK (Thomson Reuters Accelus) - U.S. Treasury Department reminded financial institutions of their obligation to lend a hand as the Internal Revenue Service struggles to crack down on rampant schemes using identity theft to obtain fraudulent tax refunds via electronic filings.

“Financial institutions are critical in identifying tax refund fraud because the methods for tax-refund distribution – direct deposit into demand deposit accounts, issuance of paper checks, and direct deposit into prepaid access card accounts – are often negotiated and deposited at various financial services providers,” Treasury’s Financial Crimes Enforcement Network (FinCEN) stated in an advisory issued Friday. (more…)

Squeeze on money-transfers to Somalia requires new vigilance by U.S. banks

By Brett Wolf

ST. LOUIS/NEW YORK, Jan. 27 (Thomson Reuters Accelus) – Somalis and Somali-Americans in Minneapolis, Minnesota are struggling to send money to their families now that the small, ethnic-based, money-remittance firms they relied on are no longer operating. Banks are no longer willing to process their transactions;  they worry that such transactions involving “hawala” transfer agents, commonly known as “hawaladars,” will cause the banks to run afoul of U.S.  sanctions and laws against money laundering and terrorism financing.

The hawaladars in Minneapolis and other cities that have experienced similar problems accessing bank accounts continue to seek ways to wire money to counterparts — often in Dubai, United Arab Emirates — so it can be forwarded to recipients elsewhere in the Middle East, Africa and Asia though informal  networks, experts in anti-money laundering enforcement say.  As a result, U.S. banks must beware of customers who might be running clandestine hawala operations from personal or business accounts. (more…)

U.S. SEC warns brokers over market access, sub-accounts in debut “risk alert”


By Stuart Gittleman and Brett Wolf

NEW YORK, Sept. 30 (Thomson Reuters Accelus) – The U.S. Securities and Exchange Commission (SEC) issued an unexpected warning to broker-dealers to supervise trading by customers with direct market access, especially customers that trade using master- and sub-accounts.

The notice came in the first in a continuing series of risk alerts the Office of Compliance Inspections and Examinations (OCIE) staff expects to issue. The staff did not say whether OCIE found related deficiencies, or at what level, in recent exams, or in reviewing the findings of recent exams by the Financial Industry Regulatory Authority (FINRA).  (more…)

COLUMN – U.S. Libya sanctions: vendors beware — and beware of your vendors

By Richard J Cellini, Esq, CEO Briefcast analytics. The views expressed are his own.

NEW YORK, March 18 (Complinet) - New Libya sanction rules will have the biggest impact on suppliers and distributors of large U.S. companies. It’s official: the U.S. government has adopted unprecedented emergency regulations blocking property and prohibiting certain transactions connected with Libya and high-ranking Libyan officials. The new rules took effect on February 25, 2011.

These sanctions impose serious and far-reaching legal, financial and operational constraints on a broad range of US-based companies, business executives, investors and private individuals. And that’s the easy part. (more…)

U.S. budget cut seen threatening state, local financial crime-fighting

By Brett Wolf

ST. LOUIS, March 11 (Complinet) – A looming cut to the federal financial crime agency’s budget could cripple state and local investigations that depend on transactions monitored via the anti-money laundering Bank Secrecy Act, worried authorities said.

In a surprise move, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has decided to save nearly $1.4 million by doing away with positions that facilitate state and local law enforcers’ access to the coveted data, often used in fighting drug trafficking, fraud and terrorism finance. (more…)

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