On October 3, FinCEN Acting Director Jamal El-Hindi issued a statement regarding anti-money laundering and countering the financing of terrorism compliance. According to Acting Director El-Hindi, two recent actions against casinos represent failure to (i) adequately train staff at every level in the organization; and (ii) properly file – or file at all – Suspicious Activity Reports and Currency Transaction Reports. Still, Acting Director El-Hindi acknowledged that casinos in general have improved their AML compliance efforts. Acting Director El-Hindi stated that FinCEN will continue to work with casinos on their compliance efforts, and cautioned that “[a] good compliance culture is one where doing the right thing is rewarded, and where ‘looking the other way’ has consequences.”
On October 3, FinCEN assessed a $12 million civil money penalty against a Nevada-based casino for willfully violating the anti-money laundering (AML) provisions of the Bank Secrecy Act (BSA). Pursuant to the Statement of Facts, from March 2009 through September 28, 2015, the casino allegedly failed to (i) develop and implement an effective AML program reasonably designed to ensure compliance with the BSA; (ii) exercise due diligence in its monitoring of suspicious activity; and (iii) maintain sufficient AML compliance controls, procedures, training, and audits, which resulted in multiple filing and recordkeeping control violations. As part of the FinCEN’s Assessment and the Non-Prosecution Agreement filed by the U.S. Attorney’s Officers, the casino must (i) perform a series of required Remedial Measures to ensure compliance going forward; and (ii) conduct a look-back review to ensure that suspicious transactions and attempted transactions were appropriately reported for transactions that occurred between 2010 and 2013.
On September 26, the DOJ announced charges against a Chinese trading company and its executives for conspiracy to violate the International Emergency Economic Powers Act (IEEPA), and to defraud the United States; as well as for conspiracy to launder monetary instruments through U.S. financial institutions. The criminal complaint alleges that the company served as a third-party payer, using an illicit network of front companies, financial facilitators, and trade representatives to purchase sugar and fertilizer for a banking entity based in North Korea that OFAC had designated as a Specially Designated National (SDN) in 2009. The civil forfeiture complaint seeks forfeiture of funds spread out across 25 different bank accounts located in China and connected to the affairs of the company. In addition, OFAC imposed sanctions on the company, which is located near the North Korean border and openly worked with the SDN banking entity after 2009.
On September 21, the U.S. District Court for the District of Columbia stayed enforcement of FinCEN’s second attempt to cut off a Tanzania-based bank’s access to the U.S. banking system. The dispute originated from FinCEN’s attempt to prohibit domestic financial institutions from opening or maintaining correspondent accounts on behalf of the foreign bank under the authority of Section 311 of the USA PATRIOT ACT, which authorizes FinCEN take special measures against banks of primary money laundering concern. FinCEN first promulgated a final rule imposing the prohibition in July 2015, which was enjoined by the court in August, 2015. FinCEN agreed to a voluntary remand to correct deficiencies in its rulemaking process, such as providing the bank access to declassified information and considering the use of less drastic measures to address its concerns. In March 2016, FinCEN promulgated a revised final rule in which it indicated that the bank’s AML compliance remained inadequate and that the bank continued to engage in “illicit financial activity.” Upon a second review, the court again found that FinCEN had failed to adequately disclose declassified information to the bank prior to releasing the revised final rule, and did not properly respond to other of the bank’s concerns. In addition, the court was not satisfied that FinCEN had made the required consultations with other executive-branch agencies as required by statute.
On September 7, FinCEN issued advisory bulletin FIN-2016-A004 notifying financial institutions of updates to the Financial Action Task Force’s (FATF) list of jurisdictions containing anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies. The FATF updated two documents categorizing certain jurisdictions: (i) the FATF Public Statement, identifying jurisdictions that are subject to the FATF’s call for countermeasures or are subject to Enhanced Due Diligence (EDD) due to AML/CFT deficiencies; and (ii) the Improving Global AML/CFT Compliance: on-going process, identifying jurisdictions which have developed an action plan with the FATF to address strategic AML/CFT deficiencies. Revisions to the FATF Public Statement include the 12 months suspension of FATF’s call for countermeasures against Iran; in turn, Iran was added to the EDD category based on the continued risk posed by Iran to the international financial system. North Korea remains the sole country subject to countermeasures. Jurisdictions currently on the Improving Global AML/CFT Compliance: on-going process list include Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu, and Yemen. Myanmar (Burma) and Papua New Guinea were removed from the list. FinCEN reminded financial institutions that they are subject to a broad range of restrictions on dealing with North Korea and Iran, in spite of the 12-month suspension of its call for countermeasures against Iran.