More on Corruption, Staffing Challenges, and Operation Shamrock

This week, John and Elliot discuss more about corruption, including the fallout from the effort to drop the charges against New York Mayor Eric Adams, another publication from the Basel Institute on Governance on the UK’s process for compensating victims of foreign bribery, and a statement from the UK Anti-Corruption Coalition. They also discuss the recent staffing changes at the IRS and other federal agencies, Operation Shamrock, a group dedicated to raising awareness of pig butchering and disrupting networks of transnational organized criminals, and other items impacting the financial crime prevention community.

More on Corruption, Staffing Challenges, and Operation Shamrock - Transcript

Elliot Berman: Hi, John, how are you today?

John Byrne: Good, Elliot. Like Milwaukee, it's pretty cold here in Northern Virginia. And I know some folks are getting whacked with snow storms, but it is February. And as we move toward March it's good to know that spring training already started. I think games are exhibition games going to start soon. So whenever the baseball season, if you're not a fan. Or you are a fan. It's always, warmer weather's coming. So we'll look forward to that. It helps keep us from focusing on things that challenge us put it that way.

Elliot Berman: That's true.

John Byrne: A couple of things. We try to stay as current as possible, but I think the audience knows that we record this earlier in the week, and they're listening to this on Friday. Early this week, the district court in the Smith versus Treasury case did just grant the Department of Justice motion to stay the nationwide injunction of the Corporate Transparency Act and the Beneficial Ownership Reporting Rule.

FinCEN had announced back on February 5th that it intends to extend the reporting deadline to 30 days from the date in which the stay is granted. So I'm sure there'll be some updates from FinCEN. So this was a one page order staying injunction. This is in the infamous U. S. District Court in the Eastern District of Texas. A place where a lot of folks on certain sides of the aisle like to go to get their cases heard. So I thought I would mention that.

And since we're sticking with things related to the U. S. Next week our webinar is on corruption. Obviously the corruption environment is vastly changed in the past couple of weeks, but we did want to update folks with the case of the New York City Mayor Eric Adams, we mentioned last week that the charges against him we're being dropped. As we go to record, the governor of New York, Kathy Hochul is meeting with various leaders to decide whether or not she should exercise her authority to remove the mayor from office, which is interesting.

This follows a wave of resignations earlier this week. Deputy mayors of New York, at least four have offered their resignations to Adams based on all the things that are going on. But the key here is he was indicted on a series of bribery and corruption charges and that's a space that we pay a lot of attention to. So by the time you hear this on Friday we may or may not hear what the governor is planning to do.

My take on this is she probably doesn't pull the trigger because it's not only rare, it's there's a process. There's also a primary for the mayor's race this year, that's in June, so there's not that far from now so we'll see what happens. But the bottom line is, in addition to the DOJ lawyers that refused to sign the removal of the indictment, virtually the whole public integrity section of the Justice Department in Washington is resigned over the weekend.

I think there was a couple that stayed mainly because they were planning to retire. But there's been a lot going on in this space and it's all related to corruption. One of the key eight priorities that we in the AML community pay close attention to.

Elliot Berman: John, I think you pointed me in the direction of something in the UK about corruption. Tie that in here.

John Byrne: Yes. So based on some of the both executive orders and some of the others that we just highlighted an organization called the UK Anti-Corruption Coalition. They have their own website that you could follow up here. But they sent a message to the UK government for a number of things.

They said, build the coalition of partners in the EU, the Commonwealth countries and those in the Global South to defend international anti corruption instruments, significantly bolster support for the OECD Working Group on Bribery and maintain momentum for progress at the UN Convention Against Corruption, build capacity at the Serious Fraud Office and NCA to ensure that they can work with partners globally.

The co chair of this organization when those executive orders were signed last month said the following, this is Gavin Heyman, " this is a huge mistake that will make U. S. and global businesses more vulnerable to extortion from tyrants, kleptocrats and thieves around the world. With the FCPA and then with the OECD anti bribery convention, the US was enforcing a level playing field for fair business practices for all global businesses. Now, American companies will be at the mercy of a race to the bottom."

As I mentioned, we're going to be doing a webinar next week on corruption, both domestic and global. And one of our panelists is Gary Kalman from the Transparency International, and they definitely have their ear to the ground on various corruption type issues. And so very interested to hear what Gary has to say both about this, but also in general, and hopefully between him and our other panelist, Jonathan Lopez will give you some practical advice on how to handle this.

One thing I'll mention is that the Foreign Credit Practices Act has a five year statute of limitations. I think I mentioned this last week as well. So law firms have said, be careful about how you handle these issues because In four years, they could return and be an enforceable statute.

Elliot Berman: Yes. And you've plugged the webinar twice, which is a good thing.

John Byrne: That's right.

Elliot Berman: Excellent job. People can still register at our website. So please do that. As you've mentioned, we have two great panelists, and is about as timely a webinar as we could have figured out how to do.

Next I'm going to give you, a preview of next week. The FATF plenary will go on between the time we record this and the time our audience hears it. So we will talk about the outcome of the FATF plenary in our episode next week.

John Byrne: Yeah. A lot going on there. And it'd be very interesting because what's going on again this week as we record, the U. S. And Russia are meeting in I believe they're meeting in Saudi Arabia to discuss Ukraine, A, without Ukraine at the table, and B, without the Europeans there as well. But the key for our world, besides the obvious, and many of us strongly support the independence of Ukraine and the horrific things that occurred in the unjustifiable attacks by Russia against Ukraine is the issue of sanctions.

What the Russians want, they want sanctions eliminated. They want sanctions lifted. And so it'll be interesting to see as they quote, negotiate unquote what happens with Ukraine. How much sanctions are a part of that? In terms of what Russia gives up.

I'm not optimistic. We will see what happens. By Friday things could change 180 degrees. But right now, Ukraine's not at the table. The Europeans are not at the table, and it's pretty relevant to have all the stakeholders together, but sanctions is being discussed. And so that's going to be something to watch carefully.

Elliot Berman: Yes. Last week, we talked about something coming out of the Basel Institute on Governance, and there is another Item related to some of the things you've already been talking about. They have come out with Working Paper 55 and it's entitled compensating the victims of foreign bribery, UK legislation, practice and recommended reforms.

Again, in this space this is not a U S only kind of issue. There are many nations have various anti bribery regimes. And I think it's worth taking a look at Working Paper 55 and you can get access to it on the Basel website, which is baselgovernance.org.

John Byrne: Yeah, just reading from it. They list the number of recommendations. It's such a great organization. I just mentioned to real quick, consider the factors like the value of the bribe and the profit of the bribe giver when you calculate compensation and then clarify the legal concepts that underlie compensation, like the victims, the remedies, the harm. So all of that, as Elliot just mentioned, is available on their website.

Elliot Berman: Two other things. One is we've talked both on this podcast as well as in some of our webinars about the whole issue of fraud and the danger about it. And a lot of it in the last couple of years has fallen under the rubric of pig butchering. There is a group called Operation Shamrock, and they are a large, diverse group of volunteers.

And I'm just going to read from their website. It's got in big letters, enough is enough. And it says "Operation Shamrock's mission is to raise awareness of pig butchering with everybody, everywhere, all the time. Our goal is to educate the public, mobilize collective action and disrupt the operations networks of transnational organized criminals to prevent further harm." so go take a look at their website I think there's some resources there and opportunities for more learning for those people who want to do that.

Then probably not a gigantic surprise, but unfortunately the Committee to Protect Journalists published a special report about the number of journalists killed in 2024. And it's the deadliest year for journalists in the history of the organization. Almost, 70% of the 124 journalists and media workers who were killed were Palestinians and they were killed in the conflict in Gaza. You and I have talked about the challenges of finding quality sources, but actually killing the journalists is just horrific.

John Byrne: Yeah, that's that's so true. Another thing that just popped up in terms of dealing with everything so quickly. Over the weekend, there was a reports that Musk is going after the IRS like he has done with every other agency that he's hit so far, USAID and Department of Education. And they went to Energy and they realized the people that got rid of the ones that protect us from a nuclear impact. And so they put them back into office.

Similarly, what happened with the IRS is that just today IRS workers were now being told that the exit deal that was directed toward them is going to be delayed. So IRS workers who are deemed critical to tax filing season are exempt from the administration's deferred resignation program until mid May, because they were going to terminate a whole host of staff on probation status. And as you remember, IRS tried for a long period of time to get staffing up to par and they finally did a couple of years ago.

So a good majority of these folks are new. So as you remember, workers across the government were offered these deferred resignations. But almost half the IRS workforce, which has about a hundred thousand people are in taxpayer services or information technology. And as we all know, tax day is April 15th. This update comes as the IRS actually looks at the other potential funding cuts from those that want to chip away of the funding from 2022, that was going to help the agency modernize, improve taxpayer services and actually go after tax cheats.

Again, we feel very strongly about the good work that the Internal Revenue Service does. We've worked quite a long period of time with IRS CI. But the day to day folks that do the tax filing and return related work are pretty essential and obviously bring funding to the government. So again, there's been a pause at the IRS. And so that exit deal has been delayed.

Elliot Berman: You mentioned the February webinar. I want to mention to people too, that we're also already hard at work on our March webinar which you can't register for quite yet. But it's on the risks related to virtual assets. And while there's obviously a lot of conversation going on in the U S about cryptocurrency and other things. The purpose of this webinar is from the financial institution perspective to have a full understanding of, what the risks are. Not saying that it's too risky to be involved in, but understanding what it is that you're looking at and what you may be able to do about it.

John, anything else that you have in the works?

John Byrne: I have a a podcast that I've tried to schedule for a bit and actually we have to push back a couple of weeks. I'll mention it as I firm that up. So just trying to get on people's calendars is always a challenge. We're working to effort that I'll say, as we always do, if you have issues, people, themes, you want us to cover for a more of an in depth conversation, let Elliot or I know we'd be happy to schedule an interview with those folks.

Elliot Berman: John, I know you're traveling. So do that safely. I also want to congratulate you and Sue on becoming grandparents again.

John Byrne: Thank you. Our second grandson, Callen, was born very early last week. He's now over a week old, doing very well. Got to get him up to appropriate weight so he can go home with his parents. But my son and my daughter in law are doing great. So thanks for mentioning that. And then we are very excited to add to the our first grandson, Owen now has a cousin he can play with at some point. So yeah, thanks a lot.

Elliot Berman: All right. You be well and travel safely. And I'll talk to you next week.

John Byrne: Sounds good. Take care.

Elliot Berman: You too. Bye bye.