Category: Anti-Money Laundering

Anti-Money Laundering Regulations are Coming for Private Funds

Investment advisers and private funds have largely not been under the strict regulatory requirements under Bank Secrecy Act. The rationale is that the custody requirements impose a custody account and the custodian is subject to those rules. It looks like things are going to change. U.S. Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen

Kleptocracy Asset Recovery Initiative

Last week, the son and heir-apparent to the president of Equatorial Guinea agreed to give up $34 million in assets as part of a settlement with the U.S. government over corruption claims. This was the latest attack by the Department of Justice’s Kleptocracy Asset Recovery Initiative. According to the Wall Street Journal, the Kleptocracy Asset

Proposed Regulations on Customer Due Diligence Requirements

The U.S. Treasury Department’s Financial Crimes Enforcement Network has proposed revisions to its customer due diligence rules. Of course, the proposed rule would affect financial institutions that are currently subject to FinCEN’s customer identification program requirement: banks, brokers-dealers, and mutual funds. However, FinCEN suggested that it may be considering expanding these customer due diligence requirements

FinCEN Emphasizes a Culture of Compliance

The US Financial Crimes Enforcement Network has finally come around to realizing that US financial institutions should promote a culture of compliance. FinCEN does not point to any specific problem, but mere notes that “Shortcomings identified in recent Anti-Money Laundering enforcement actions confirm that the culture of an organization is critical to its compliance.” FinCEN’s

Bank Fraud is Okay, But not Drugs or Terrorism

I would like to think that many of the bankers involved in illegal money laundering are not actually aware of the full extent of their malfeasance. Maybe they should have done a better job looking at a client when they noticed a red flag. But sometimes you run across a case where the bankers are

New Lists to Check for Bad Guys

If you conduct business overseas or have foreign investors in your funds, you are checking the various block persons lists to ensure you’re not working with bad guys. (You are checking, right.) The Office of Foreign Assets Control (“OFAC”), of the U.S. Department of the Treasury, has created two new lists: the Foreign Sanctions Evaders List and

J.P. Morgan’s Madoff Failure

Yesterday J.P. Morgan agreed to forfeit $1.7 billion for its failure related to the Bernie Madoff fraud, plus several hundred million in fines. As part its deferred prosecution agreement, the bank agreed that it did not have the proper systems in place to catch Madoff. It’s easy to target the bank for compliance failures but

A Look Inside a Money Laundering Investigation

In The Infiltrator, Robert Mazur provides an encyclopedic account of his undercover work. Mazur spent years undercover infiltrating the criminal hierarchy of Colombia’s drug cartel, and the dirty bankers and businessmen willing to launder drug cash. His work led to the arrest of dozens of drug traffickers and money launders. It also led to the

Cash Transactions, Money Laundering, and a CCO Going to Jail

When I see a story about a chief compliance officer going to jail it catches my attention. Judge John F. Walter in the Central District of California sentenced Humberto Sanchez, the compliance officer of G&A Check Cashing to 60 months in prison. Private fund managers rarely have to worry about check cashing and bags of

OFAC and Private Funds

An SEC-registered investment adviser entered into a settlement agreement with the U.S. Treasury Department’s Office of Foreign Assets Control for allegedly failing to maintain a compliance program. The problem was triggered when the adviser’s foreign affiliate caused one of its clients to invest in a Cayman Islands fund that appeared on OFAC’s list of Specially