On February 18, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) announced a $507,375 settlement with BitPay, Inc. (BitPay), a payment processor for merchants accepting digital currency as payment for goods and services, for 2,102 apparent violations of multiple sanctions programs between 2013 and 2018.[1] The settlement highlights that financial service providers facilitating digital currency transactions must not only establish sanctions compliance programs to screen their own customers but also must monitor third-party non-customer transaction information.
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Congress Overhauls AML Framework, Mandating Disclosure of Beneficial Ownership Information
As part of the National Defense Authorization Act for 2021 (the “NDAA”), Congress has passed the most significant U.S. anti-money laundering (“AML”) legislation since the USA PATRIOT Act of 2001, the “Anti-Money Laundering Act of 2020” (“AMLA 2020”).
Although President Trump has threatened to veto the NDAA, the majorities supporting the legislation would be sufficient
AML Regulators Clarify Diligence Requirements for Politically Exposed Persons
On August 21, the Financial Crimes Enforcement Network, together with the federal banking agencies, released a statement to clarify banks’ customer due diligence obligations for politically exposed persons. The Statement affirms that (i) there is no regulatory requirement, and no supervisory expectation, for banks’ Bank Secrecy Act / anti-money laundering programs to include “unique, additional
OFAC Issues Guidance on COVID’s Impact on Compliance and Enforcement
On April 20, OFAC issued COVID-related guidance indicating that it encourages those subject to its jurisdiction to contact the OFAC staff if they believe they will have difficulty meeting OFAC deadlines (whether reporting deadlines, responses to administrative subpoenas, or other matters). OFAC also encouraged electronic submission of any communications. In our experience, OFAC is still functioning at a relatively high level, remote operations notwithstanding, but the staff has also been flexible in responding to the challenges all institutions face. As OFAC’s guidance and our own experience underline, open communication with the staff is very important.
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New OFAC Guidance On Compliance Programs
On May 2, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control released “A Framework for OFAC Compliance Commitments”, providing general guidance on the elements OFAC considers to compose an effective sanctions compliance program.
Broadly, the framework endorses a risk-based approach to compliance (recognizing that no two compliance programs will
First Ever Criminal Bank Secrecy Act Charge Brought Against U.S. Broker-Dealer
On December 19, 2018, the United States Attorney’s Office for the Southern District of New York (the “USAO”) announced criminal charges against and entered into a deferred prosecution agreement (the “DPA”) with Central States Capital Markets, LLC (“CSCM”), a Kansas-based broker-dealer, under the Bank Secrecy Act (the “BSA”).[1] The charge was for a felony violation of the BSA, which consisted of CSCM’s willful failure to file a suspicious activity report (“SAR”) regarding the illegal activities of one of its customers. According to the USAO, this represents the first ever criminal BSA charge brought against a United States broker-dealer. This case is another milestone in the recent trend towards stricter enforcement of the anti-money laundering (“AML”) regulatory requirements applicable to broker-dealers.
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