A Lot Happened This Week in AML

This week, Executive Vice President John Byrne, and Creative Director Elliot Berman of the AML RightSource staff talk about the introduction of the Domestic Terrorism Prevention Act, the comments by Janet Yellen about the risks of crypto or virtual currencies, and the issuance by FinCEN of frequently asked question about SAR filing. They discuss how the DTPA is a direct response to the incursion at the Capitol and how Yellen’s comments are aligned with those by financial regulators in other countries.

A Lot Happened This Week in AML Transcript

Elliot Berman: Hi, John, how are you this week?

John Byrne: Hey, Elliot. A lot better. We got a new administration. It's sunny here in Northern Virginia, and we've got a lot to do, but much better than we've been, so good.

Elliot Berman: Usually we try to focus on one thing each week, but this has been a busy week, so there's three different things I thought would be worth taking just a moment to talk about each. First is the federal banking regulators and FinCEN issued some joint FAQ's about SAR filings.

John Byrne: Yeah. There's only a handful of questions that I've been getting, and you've been getting since the late nineties. So, it's kind of interesting to see these things spelled out in FAQs. One of them, for example, is in an institution, keeping an account open if it gets a written, keep open requests from law enforcement, even though it's filed a SAR.

That was probably day one question we had - and the answer is yes, you can do that. It was always a struggle to get law enforcement to give us the keep open letter, but obviously there's more partnership than there was back then. And then another one I thought was interesting is "do you have to file a SAR if you see negative media, negative news?".

And of course, the answer is no, but obviously it gives you some insight that you need to do a little more checking. And then of course, there’s the option of filing after that, but it's always useful to give direction in this space.

Another thing that happened is there's a number of hearings on new cabinet members. And one is Janet Yellen to the treasury department, and she was asked a series of things, of course focused on the economy, but there was one set of questions on cryptocurrency. And it was interesting. It got played in a lot of press reports, what she said about that. And I thought it's a warn us at least mentioning a little bit.

So, what was Yellen's take on cryptocurrency?

Elliot Berman: Well, she suggested that lawmakers, because she was of course, speaking to members of Congress, to consider curtailing the use of cryptocurrencies because there is serious concern that they're mainly used for illegal activities. Now, again, it's important to distinguish between the actual crypto or virtual currencies.

And the technology that underlies them, is blockchain, which is being used now for many things, but she was specifically talking about that. It was interesting because a number of the virtual currencies like Bitcoin and Ethereum and others, have been on a tear in terms of value, and some of the primary ones took a little bit of a step back in the markets in reaction to that comment.

By the way, the other thing that's interesting is this comment actually puts the U.S. into alignment - it's just a comment - but puts us into alignment with the head of the European central bank and others who have identified the anonymous nature of these transactions as being very worrisome in terms of terrorist financing and other illegal activities.

Obviously, it's a long way from a comment in a confirmation hearing to a statute, but it was an indication that a person with central bank experience and now soon to be treasury secretary perspective on things.

John Byrne: No, that's right. And one of the things as we both know; we're going to be adding some experts in the crypto space to the company that we're going to be working with. And we're doing more programming in that area because that tends to be an area where, people express concern, but don't always have the expertise to, to explain it. So, people like us can understand how it works besides the obvious ways. So, we're looking forward to providing more content in in crypto as well.

Elliot Berman: Yeah. And then the last thing I think we need to talk about is just today, it was in the domestic terrorism prevention act of 2021 was introduced into the Senate. And it's clearly, if you read it, it's a direct response to the events of two weeks ago.

John Byrne: And again, the House and Senate have introduced the same bill. Dennis Lormel, and I did a lengthy interview on this that'll get posted next week. So, we go into some detail there, but the thing that I thought was interesting, besides creating offices within various law enforcement agencies to specifically deal with this, was the reference to training. Training becomes so important in this space. The one gap in all of this, and I think this legislation will move pretty quickly and something, Dennis and I spend some time talking about, is you need to bring the private sector into this, bring our peers and colleagues from the financial sector so that we can do what we've done with terrorism in general.

And with human trafficking, come up with case studies and topologies and be able to deal with preventing the movement of funds that enables this action. But this is clearly a really good first start.

Elliot Berman: Agreed on both parts. Good start. And this cries out for public private partnership.

John Byrne: Right. Stay safe more to come both on this and the other issues that we referenced. And we'll talk again next week.

Elliot Berman: Yep, you too. Stay safe. Bye bye.