On November 28, 2022, the Office of Foreign Assets Control (OFAC) announced a $362,158.70 settlement agreement with Payward, Inc. (Kraken), an online virtual currency exchange, in connection with 826 apparent violations of the Iranian Transactions and Sanctions Regulations. This enforcement action highlights the OFAC compliance risks for virtual currency platforms and comes on the heels of the Bittrex settlement which we discussed here. Again, it is critical to assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.
On June 29, 2020, the Financial Crimes Enforcement Network (FinCEN) published updated guidance intended to “enhance the availability of financial services” for the hemp industry (the Guidance). Even though the Agriculture Improvement Act of 2018 legalized hemp at the federal level, some banks have hesitated to provide financing to the hemp industry because they are uncertain of their obligations under the Bank Secrecy Act or Anti-Money Laundering regulations (BSA/AML). The Guidance was published to clarify those obligations, and follows closely on the new National Credit Union Administration guidance for federally-chartered credit unions issued on June 20, 2020. …
Continue Reading Clearing the Air: FinCEN Guidance May Help Banks Find Their Way in the Field of Hemp Financing
This article originally appeared on Law360 on June 9.
The novel coronavirus and resulting global health pandemic and economic crisis created a perfect storm for bad actors to engage in fraud and financial crimes. Law enforcement’s response to the criminal activity spurred by the pandemic and economic stimulus and relief efforts are still nascent and focusing on low hanging frauds by individuals and small groups.
Continue Reading Another COVID-19 Enforcement Tool: Money Laundering Law
Money laundering is no game. Yet, some games have been used for money laundering. That’s what prompted Valve to announce that it would end the…
Continue Reading Laundering the Loot: Videogame Developer Valve Ends In-game Key Sales Because of Financial Criminal Activity
Europe has come up with a nifty plan to help Iran buy and sell stuff outside the reach of U.S. sanctions. The problem is that the plan is a fraud magnet. How do we know? It’s been tried before, and the fraud was epic.
The plan is known as the “Instrument in Support of Trade Exchanges,” or “INSTEX.” Lots of smart people have been involved in creating the program. Let’s hope they’re not too young to remember 1995, when fraudsters first heard that the UN was setting up a program known as “Oil-for-Food.” Similar to INSTEX, Oil-for-Food was designed to allow a sanctioned country (in that case, Iraq) to sell oil on the world market in exchange for food, medicine, and other humanitarian goods. A 2005 independent audit of the program found a staggering variety of fraudulent schemes netting billions of dollars in income for illicit merchants, intermediaries, and the Saddam Hussein regime itself. If INSTEX is not careful, it could be the victim of similar scams. …
Continue Reading How to Steal $10 Billion from Europe
A lot of us in the sanctions compliance world were wondering whether and when OFAC would issue official guidance on its application of sanctions in the digital currency world. On March 18, OFAC issued five FAQs related to virtual currency. Those FAQs convey two important messages:
(1) OFAC sanctions regulations apply to virtual currency transactions just as they apply to “fiat” currency (here’s looking at you dark web crypto-user); and
(2) OFAC will use its existing authority to respond to the growing threat posed by the use of emerging payment systems by malicious actors, including adding digital currency addresses that are associated with blocked persons to the SDN List.
While the first point – that OFAC compliance obligations apply to virtual currency transactions – is not groundbreaking news, the second point is more interesting. Our key takeaway from the FAQs is: OFAC is clearly thinking about how it will enforce its regulations on virtual currency transactions and digital currency operators, so you should too.
Continue Reading Digital Cops and Cyber Robbers: OFAC Guidance on Crypto Currency
Russian President Vladmir Putin has directed his government to develop a state-backed cryptocurrency, according to a Financial Times report published on January 2nd. A Putin advisor says that the “Crypto-rouble” could be used to “settle accounts with our counterparties all over the world with no regard for sanctions.” He added that Russia’s cryptocurrency would be “the same rouble, but its circulation would be restricted in a certain way.”
There’s a lot to unpack there. Broadly, establishing a cryptocurrency that the Kremlin can track defeats two of the main purposes of cryptocurrency: to provide anonymity and to remove government central banks from transactions.
Continue Reading Could the Crypto-Rouble Spell Crypto-Trouble for Sanctions?
Late last week, Congressional intelligence committees reportedly received some information from the U.S. Financial Crimes Enforcement Network (FinCEN) related to investigations into Russia’s attack on the 2016 U.S. Presidential election and the allegation of collusion with members of the Trump campaign. This followed earlier reports of the Senate Intelligence Committee requesting data from FinCEN, including “information about shell companies, money laundering and the use of property transfers.” Also in the past week, Robert Mueller, Special Counsel, was appointed by the U.S. Department of Justice to conduct an independent investigation regarding Russia’s cyberattack. Taken together, that makes three sets of investigators who may be reviewing and analyzing documents from FinCEN in order to better understand financial connections among the President’s campaign, his business organizations, and Russia.
Continue Reading Still Following the Money: FinCEN, Money Laundering, and the Bank Secrecy Act