AML

The future of FinCEN

By September 19, 2018 May 28th, 2019 No Comments

The future of FinCEN

The House of Representatives last week passed, with overwhelming bipartisan support, the “FinCEN Improvement Act of 2018”. If passed by the Senate, this four-page bill could bring in some important changes to the US AML/CFT regime. Most notably it would expand the remit of FinCEN to be the primary financial crime regulator for cryptocurrencies and emerging technologies. This would provide much-needed clarity to both crypto-practitioners and government agencies on who is responsible for supervising this sector. The bill will also clarify the view of the US government on virtual currencies as legal but vulnerable to exploitation by illicit actors, such as terrorists.

The bill could also bring changes to the scope of “terrorism” that FinCEN covers. It recognizes that although the threat from “al Qaeda and its affiliates is still present and active” the threat from domestic terrorism is also “persistent” and should now come under the FinCEN umbrella. The passing of the bill comes hot off the heels of a Financial Services Committee hearing entitled “a Survey of Terrorist Groups and their means of Financing”, which looked in detail at the terrorist financing threats and vulnerabilities facing the US. It will now be up to the Senate to decide the future of FinCEN.

Strong in theory, weak in practice – enforcement in Europe

It is a sign that the money laundering problem in Europe has gotten pretty dire when new efforts to tackle it form a key part of the State of the Union address, as it did last week. In response to the recent splurge of significant money laundering scandals, the European Commission announced that it will recalibrate the mandate of the European Banking Authority (EBA). It will aim to give the EBA the “tools and resources” it needs to properly supervise the 28 member states to ensure that they sufficiently implement and enforce the anti-money laundering rules of the Union.  

It has become apparent, that despite having some of the most innovative regulators and forward-looking directives, rules are only as strong as how well they are implemented. The proposal will clarify the EBA as the main AML/CFT supervisor in Europe, it will set up a committee to pass decisions on transgressions and most importantly it will gain the power to impose sanctions on non-compliant financial institutions. This announcement is certainly a positive step. EU lawmakers may however, wish that it had come sooner, to have helped in the prevention of financial crimes in recent cases at FBME Bank, Pilatus Bank, ABLV, Danske Bank, ING and Credit Suisse

Money launderers yet to be thrown out of the temple – AML at the Vatican

Pope Francis, last week launched an investigation into possible embezzlement, fraud and money laundering conducted by the choir of the Sistine Chapel. The investigation targets the choir’s manager and director and could be linked to the unexplained cancelling of the choir’s summer tour back in July. This story may sound ironic but it is, in fact, one of many accusations of financial crime made against the Vatican and the wider Catholic church. A recurrent theme in most of these cases is that the perpetrators are never held accountable for their actions.

The Vatican, which falls under the jurisdiction of MONEYVAL and has its own FIU, received a less than positive progress report back in December 2017. The report highlighted the level of immunity that guilty parties operate under. One case in particular tells the story of the Chairman of the Vatican’s Children Hospital, who used half a million euros of the hospital’s money to refurbish the penthouse of the Vatican’s Secretary of State. He only received a one year suspended sentence on a reduced charge. MONEYVAL has repeatedly told the Vatican that they need to go further with their prosecutions of such cases. The Holy See could take a page out of the EU Commission’s book and take a stronger view towards enforcement.

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