United States: White Collar Crime

The following are some of the key financial crimes prosecuted at the U.S. federal level:

1. Crimes related to money laundering and terrorist financing activities, which include domestic money laundering 18 U.S.C. § 1956(a)(1), international money laundering 18 U.S.C. § 1956(a)(2), transacting in proceeds of specified unlawful activity 18 U.S.C. § 1957(a), wilful violations of the Bank Secrecy Act (“BSA”) 31 U.S.C. §§ 5321-5322, bulk cash smuggling 31 U.S.C. § 5332, providing material support to terrorists 18 U.S.C. § 2339A, and providing material support or resources to designated foreign terrorist organizations 18 U.S.C. § 2339B.
2. Corporate fraud, including violations of the mail and wire fraud statutes 18 U.S.C. §§ 1341, 1343, securities fraud 15 U.S.C. § 78ff(a) and 15 U.S.C. § 77(x), bank fraud 18 U.S.C. § 1344, tax fraud 26 U.S.C. §§ 7201, 7206, embezzlement 18 U.S.C. § 656, and false statements in matters within the jurisdiction of the executive, legislative, or judicial branch of the U.S. Government 18 U.S.C. § 1001.
3. Violations of U.S. Anti-corruption statutes, including the Foreign Corrupt Practices Act of 1977 (“FCPA”) 15 U.S.C. § 78dd-1, et seq., which punishes the bribery of foreign officials, and statutes prohibiting the bribery of U.S. officials, such as 18 U.S.C. § 201 (bribery of public officials and witnesses), and 18 U.S.C. § 666 (theft or bribery concerning programs receiving Federal funds).
4. Insider trading, which is typically prosecuted under Section 10(b) of the Exchange Act and Rule 10b-5, which broadly prohibit the use of a “deceptive device”, the making of a false statement, or engaging in an act that operates as a fraud or deceit in connection with the purchase or sale of a security.
5. Sanctions evasion under the laws pertaining the economic sanctions administered by the Office of Foreign Assets Control (“OFAC”), such as the International Emergency Economic Powers Act 50 U.S.C. §§ 1701–1707. Typically, the U.S. Government will criminally prosecute wilful violations of OFAC Sanctions, or violations of the reporting and record-keeping requirements for Sanctions 31 C.F.R. §§ 501.601–06.

Yes, corporations may be held criminally liable. A State or Federal statute will typically provide the legal basis for authorities to investigate and prosecute the corporation, as well as the way in which a corporation’s criminal liability should be determined. Additionally, under the common law doctrine of respondeat superior, a corporation may be held criminally liable based on the actions of its directors, officers, employees, or other agents if those actions were within the scope of the agent’s duties and benefited or sought to benefit the corporation. The corporation need not to profit from an agent’s criminal actions for it to be held liable.

According to DOJ’s Principles of Federal Prosecution of Business Organizations, there are ten factors that federal prosecutors should consider in deciding whether to criminally charge a corporation: (1) the nature an seriousness of the offense, including the risk of harm to the public; (2) the pervasiveness of wrongdoing within corporation, including the complicity in, or the condoning of, the wrongdoing by corporate management; (3) the corporation’s history of similar conduct, including prior criminal, civil, and regulatory enforcement actions against it; (4) the corporation’s willingness to cooperate with the government’s investigation, including as potential wrongdoing by the corporation’s agents; (5) the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging or resolution decision; (6) the corporation’s timely and voluntary disclosure of wrongdoing; (7) the corporation’s remedial actions, including any efforts to implement an adequate and effective corporate compliance program or to improve an existing one, to replace responsible management, to discipline or terminate wrongdoers, or to pay restitution; (8) collateral consequences, including whether there is disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable, as well as impact on the public arising from the prosecution; (9) the adequacy of remedies such as civil or regulatory enforcement actions, including remedies resulting from the corporation’s cooperation with relevant government agencies; and (10) the adequacy of the prosecution of individuals responsible for the corporation’s malfeasance.

Absent clear legislative intent to exclude corporate agents from personal responsibility for acts they commit, they cannot use the corporate entity as a shield against liability for their crimes. Accordingly, directors and officers may be held criminally liable under the offences listed in response to question number 1. Additionally, these individuals may be prosecuted for conspiring to commit, and/or aiding and abetting, these crimes.

At the federal level, the following Government agencies often participate in the investigation and prosecution of financial crimes in the U.S.:

1. Department of Justice (“DOJ”), which includes the US Attorney’s Office (“USAO”) in each federal district and the Federal Bureau of Investigation (FBI), has the power to investigate and prosecutes federal crimes, or bring civil enforcement actions.
2. Department Homeland Security (“DHS”), through divisions such as Homeland Security Investigations (“HSI”), U.S. Immigration and Custom Enforcement (“ICE”), and U.S. Customs and Border Protection (“CBP”), investigates crimes related to cross-border criminal activities that threaten the U.S. security and economy, as well as criminal enterprises that engage in a broad range of illicit activity including narcotics smuggling, human trafficking, gang violence, trade-based money laundering and other financial crimes, intellectual property theft, and customs fraud.
3. Securities and Exchange Commission (“SEC”), through its Enforcement Division, investigates possible violations of federal securities laws and the regulations promulgated thereunder. The SEC prosecutes violations through civil enforcement actions and administrative proceedings, and makes referrals to the DOJ for criminal prosecution.
4. The U.S. Secret Service has the responsibility to investigate crimes against the U.S. financial system committed by international criminals and in the cyber space.
5. U.S. Drug Enforcement Administration (“DEA”) may also investigate financial crimes related to drug trafficking activities.
6. The Commodity Futures Trading Commission (“CFTC”) investigates possible violations of the Commodity Exchange Act and its regulations. It prosecutes violations through civil enforcement actions and administrative proceedings, and makes referrals to the DOJ for criminal prosecution.
7. The Internal Revenue Service (“IRS”) has broad powers to investigate potential violations of the federal tax laws, and may refer conduct to the DOJ’s Tax Division or to a USAO for criminal prosecution.
8. The Federal Trade Commission (“FTC”) conducts investigations of potential violations of the Federal Trade Commission Act. The FTC may bring civil actions in court to enforce its regulations, or make referrals to DOJ for criminal prosecution.
9. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), which receives, analyzes, and disseminates financial transactions data for law enforcement purposes in the U.S., especially in aid of criminal investigations and prosecutions to combat violations of the U.S. Bank Secrecy Act, money laundering, terrorism financing, fraud, tax evasion, and narcotics trafficking.

State or federal courts hear cases of financial crime that fall under the court’s jurisdiction, which is determined based on the statute that was allegedly violated by the criminal suspect, the specific circumstances of the crime, the place in which the crime took place, and on the involvement of a federal agency in the criminal investigation and/or prosecution. Typically, cases of financial crime are heard by a U.S district court as such crimes often involve violations of federal law, cross state lines, or involve the channels or instrumentalities of commerce, such as the U.S. financial system. The U.S. does not have courts specialized in hearing financial crime cases.

In cases of financial crime, defendants are generally entitled to trial by jury pursuant to Article III, Section 2 of the U.S. Constitution, and the Sixth Amendment. A criminal defendant may waive the right to a jury trial and seek a bench trial before a judge. Moreover, the U.S. Supreme Court has held that defendants have a constitutional right to a jury trial only in “serious” criminal cases. Petty offenses—those that carry the possibility of six months or less in jail—are not guaranteed a jury trial. The U.S. Supreme Court’s ruling, though, sets a minimum standard. States are free to provide greater jury-trial rights to criminal defendants, not less.

An investigation is usually initiated when a government agency receives credible information reporting an activity that violates federal or state laws or regulations, including criminal activity or regulatory infractions. Such information may come from a human source (like the victim, a witness, or an informant), a written report (like a suspicious activity report), a request made by a foreign Government, or even from publicly available sources.

The Government may compel the production of information, documents, and testimony relevant to the case through subpoenas, which in the context of criminal investigations are typically issued by grand juries. Federal grand juries are selected by the court in each federal judicial district and are organized under the supervision and direction of the chief judge of a federal district court. At the state level, the selection, organization, and supervision of a grand jury may vary. A search warrant authorizes a law enforcement agency to search designated premises and seize specific items or documents.

Government investigators may interview a person who is or may be in possession of information relevant to the matter under investigation. Generally, investigators will seek a person to voluntarily appear for interview at an agreed location or designated Government facility. U.S. agents typically may not stop or summon a person for interview unless they have a warrant or court order to do so, or have developed specific articulable facts that the person being questioned is, or is attempting to be, engaged in an offense against the U.S. However, such protections may not apply at the U.S. border or its functional equivalent, which is one of the reasons why investigation agencies may seek the assistance of U.S. Customs and Border Protection, a division of the U.S. Department of Homeland Security, to stop a person at a transportation hub for interview.

At the federal level, when the Government requires the testimony of a person in connection with an ongoing criminal investigation, it may seek a Grand Jury subpoena compelling that person’s declaration. This subpoena may also be used to order the person to produce records material to the criminal investigation. States provide for similar legal avenues for law enforcement to compel the appearance of a person for interview. The difference between the two sovereigns is that, with a state subpoena compelling a person’s appearance for interview, statutory use immunity may attach automatically. In the federal system, use immunity is not automatic and must be always negotiated with the Government before someone appears for interview.

Interviewees do not generally have a right to be represented by a lawyer at an interview. The Sixth Amendment right to right to assistance of counsel applies to the custodial interrogation of a criminal suspect, or during the critical stages of a criminal proceeding after the suspect has been charged by the authorities. In practice, however, law enforcement agencies may allow an interviewee to attend an interview accompanied by counsel, even if the interviewee has no criminal exposure.

If the interview is conducted in circumstances such that a reasonable person might conclude that the person is not free to leave (i.e., the interview is “custodial”), Miranda rights will attach, and the Government will be required to advise that person about (1) the right to remain silent, (2) that anything the person says may be used in court, (3) the right to an attorney resent during questioning, and that, if the person is indigent, an attorney will be provided at no cost to represent him/her. Upon receiving the Miranda warnings, subsequent voluntary statements made by the criminal suspect to a Government agent will be admissible in court.

There is no right to pre-interview disclosure of evidence and the interviews may not be recorded or transcribed (although, in practice, they are). Further, interviewees have no right to receive a copy of such recording/transcript.

Federal legislation is presumed not to apply extra-territorially, and due process requires U.S. authorities to only prosecute crimes that have a U.S. nexus. However, federal statutes grant jurisdiction for U.S. law enforcement to investigate and prosecute international crime based on the text of the statute and legislative intent. For example, the Money Laundering Control Act of 1986 may be used to target foreign individuals and financial institutions involved in money laundering activities if the financial transaction takes place in whole or in part in the U.S. or, if the foreign financial institutional maintains a bank account at a U.S. financial institution. Foreign persons that conspire to violate, or cause a violation of, U.S. criminal laws, may also face criminal prosecution in the U.S. This is currently a much debated issue in corruption cases prosecuted under the U.S. FCPA statute.

U.S. authorities and foreign authorities commonly cooperate for the investigation and prosecution of financial crime. For instance, U.S. authorities regularly obtain information overseas through the more than 40 mutual legal assistance treaties (“MLAT”) that have been ratified by the U.S. The MLATs also provide means for seizing assets located in other jurisdictions. Additionally, the U.S. is a party to the Inter-American Convention Against Corruption, which provides for evidence sharing between 34 American countries.

Further, FinCEN works closely with the Financial Intelligence Units (FIU’s) of other countries to share, analyze, and disseminate with U.S. law enforcement information coming from suspicious activity reports prepared by financial institutions around the world.

Attorney client-privilege and the work-product doctrine limit the U.S. Government’s ability to obtain information and documents from attorneys during a criminal investigation. The evidentiary attorney-client privilege precludes the discovery of a client’s communication to a lawyer whom the client reasonably believes represents the client, when the circumstances indicate a desire by the client for confidentiality.

The attorney-client does not attach to statements made to an attorney not regarding legal advice or services sought by the client, to discovery of the facts underlying the communication, or to communications made to an attorney who is acting in a capacity other than as a lawyer. Moreover, under the crime/fraud exception to the attorney-client privilege, clients may not prevent discovery of communications made to enable or aid the commission of what the client knew or should have known was a crime or fraud.

The attorney-client privilege is treated slightly differently when the defendant is a corporation. Some states limit the privilege to communications received by an attorney from a member of the “control group” of the corporation. However, in federal cases where federal law controls, the privilege extends to communications by non-control group employees about matters within the employee’s corporate duties made for the purpose of obtaining legal advice for the corporation.

Under the work-product doctrine, documents prepared by or for a party or by or for a party’s attorney in anticipation of litigation, are also protected. However, these documents are subject to discovery if the party seeking disclosure (i) demonstrates a substantial need for the information, and (ii) cannot obtain the information by any other means without undue hardship. The mental impressions, conclusions, and trial tactics of a lawyer are protected from discovery, regardless of another party’s need for the information or inability to otherwise obtain it.

The U.S. government has extensive investigatory powers to obtain private and financial information material to an ongoing criminal investigation.

The Fourth Amendment to the U.S Constitution confers privacy rights to U.S individuals and companies that may limit the Government’s ability, both at the state and federal level, to obtain private records in connection with a financial crime investigation. Specifically, the Fourth Amendment establishes the people’s right to be secure in their persons, houses, papers, and effects, as well as protection against unreasonable searches and seizures. In the context of bank records, however, the Supreme Court has held that individuals and companies do not have an expectation of privacy protected under the Fourth Amendment. See United States v. Miller, 425 U.S. 435 (1976).

In response to the Court’s decision in Miller, the Congress passed the Right to Financial Privacy Act of 1978 (“RFPA”), which confers some federal statutory protections for personal financial records. Notably, this Act generally requires banks to provide individuals with notice when bank records are being subpoenaed, and an opportunity to be heard with respect to that request. RFPA also establishes standing to seek judicial relief against violations of the appropriate procedures laid out in the RFPA.

However, the RFPA has been amended several times to permit greater access without customer notice to information requested for criminal law enforcement purposes and for certain intelligence activities. Additionally, the RFPA does not govern requests for financial records made by or state or local governments, and the RFPA only protects the records of individuals and partnerships with 5 or fewer partners. Moreover, the Federal Government may use investigatory tools different from a subpoena or a search warrant to obtain records material to a financial crime investigation, including interviews with human sources that might be in possession of the information sought by the Government, or mutual legal assistance requests with other countries. The Government may also be in possession of the relevant information in connection the filing of a Suspicious Activity Report (SAR) by a financial institution.

As a result, U.S. investigatory agencies will generally be able to access the documents, electronic information, and other data of companies and individuals in connection with a criminal investigation.

State and federal law generally enforce the doctrine of successor criminal liability in the context of financial crime. Accordingly, a successor corporation may be held derivatively liable for the criminal acts of the predecessor corporation. Whether the successor will be liable is often dependent on whether the transaction involved a merger, a consolidation, or an asset acquisition.

In both a merger and a consolidation, the predecessor corporation is dissolved and only one corporation survives. In this instance, the surviving corporation will generally be held liable for the predecessor’s criminal acts. For this reason, companies will often structure the transaction as an asset acquisition. However, even in this instance, U.S. law establishes exceptions that may result in the buyer assuming the seller’s criminal liability, such as when the buyer expressly or impliedly assumes the liability, buyer is an alter ego of the seller, the asset acquisition is deemed a de facto merger/consolidation, or when the transfer was fraudulent or intended to avoid liabilities.

U.S. Government agencies encourage companies to conduct due diligence prior to the transaction and improve compliance programs and internal controls after the transaction. These compliance efforts are a factor that authorities generally consider favorably when deciding whether to prosecute an apparent violation of U.S. laws and regulations, or for calculating the appropriate penalty.

DOJ’s Principles of Federal Prosecution advise federal prosecutors to weigh the following considerations in deciding whether to charge individuals: federal law enforcement priorities; the nature and seriousness of the offense; the deterrent effect of prosecution; the person’s culpability in connection with the offense; the person’s history of criminal activity; the person’s willingness to cooperate in the investigation or prosecution of others; and the probable sentence or other consequences if the person is convicted. State prosecutors consider similar factors when deciding whether to bring criminal charges against an individual.

The evidential standard required by U.S. law to obtain a criminal conviction is “beyond a reasonable doubt.” Accordingly, prosecutors are required to persuade the jury (or the judge in a bench trial) that there is no other reasonable explanation that can result from the evidence presented for the case at trial. The trier of facts must be fully satisfied and entirely convinced to a moral certainty that the evidence presented proves the guilt of the defendant. This standard of proof is much higher than the standard generally required in civil cases, which is named “preponderance of the evidence,” and requires a certainty greater than 50 percent.

The statute of limitations for most federal crimes is five years. See 18 U.S.C 3282. However, some crimes have longer statutes of limitations such as bank fraud (ten years), tax crimes (six-years), major fraud against the U.S. government (seven years), or crimes involving banks and other financial institutions (10 years). Also, the statute of limitations may be “tolled” (legally suspended) (i) during periods of fugitivity, (ii) on application of the United States, during the pendency of an official request to a foreign court or authority to obtain evidence located in a foreign country; or (iii) in the absence of a legal provision, if the Government and the defendant enter into a voluntary tolling agreement.

The U.S. has mechanisms to resolve financial crime issues falling short of a prosecution. In fact, U.S. prosecutors often resolve financial crime cases through non-prosecution agreements (“NPAs”), and deferred prosecution agreements (“DPAs”). Under an NPA, the DOJ does not prosecute the target of the investigation if the target agrees to cooperate with the Government and to implement remedial and/or compliance measures. The NPA is not filed with the court, and instead is kept between the parties.

Under a DPA, the Government files a charging document with the Court, and it simultaneously requests that the prosecution be postponed for the purpose of allowing the target of the criminal investigation to demonstrate good conduct. DPAs generally require the defendant to pay a monetary penalty, waive the statute of limitations, cooperate with the Government, admit the facts underlying the criminal charges, and implement compliance and/or remediation commitments. If the defendant complies with the DPA, the Government moves to dismiss the criminal charges or civil enforcement action.

In deciding to enter into a DPA or a NPA with the target of the criminal investigation, federal prosecutors will take into consideration the factors set forth by the Principles of Federal Prosecution (see answer to question 14 above). The Government does not require the court’s approval for entering into a DPA or a NPA with the target.

Yes. Plea agreements require the defendant to accept all or some of the criminal charges, in exchange of one of the following actions of the Government: “(A) not bring, or will move to dismiss, other charges; (B) recommend, or agree not to oppose the defendant’s request, that a sentence or sentencing range is appropriate or that a provision of the Sentencing Guidelines, or policy statement, or sentencing factor does or does not apply (such a recommendation or request does not bind the court); or (C) agree that a specific sentence or sentencing range is the appropriate disposition of the case, or that a provision of the Sentencing Guidelines, or policy statement, or sentencing factor does or does not apply (such a recommendation or request binds the court once the court accepts the plea agreement).” Fed. R. Crim. Pro. 11(c).

The U.S. Bank Secrecy Act (“BSA”) requires U.S. financial institutions to assist U.S. government agencies to detect and prevent money laundering. Specifically, the BSA requires financial institutions to report FinCEN suspicious activity that might signify money laundering, tax evasion, Sanctions evasion, or other criminal activities. Additionally, U.S. Government agencies often reward voluntary self-disclosure with declinations to pursue enforcement actions, and/or reduction in the civil or criminal penalty that would otherwise be sought by the agency.

For example, the DOJ has implemented the Corporate Enforcement Policy “CEP” to provide incentives and benefits to companies that voluntarily self-disclose misconduct, fully cooperate, and undertake remedial actions, including a presumption of a declination to criminally prosecute the company, absent aggravating circumstances. Similarly, OFAC encourages anyone who may have potentially violated OFAC-administered regulations to disclose the apparent violation to OFAC, and voluntary self-disclosure to OFAC will result in a reduction in the base amount of any proposed civil penalty.

At the federal level, courts determine criminal sentences based on the Federal Sentencing Guidelines, which are non-binding rules established by the U.S. Sentencing Commission in an attempt to uniform sentencing policy and calibrate sentences depending upon factors related both to the subjective guilt of the defendant and to the actual harm caused by the crime. While the Guidelines are not mandatory, federal judges must consider them when deciding a criminal defendant’s sentence. Accordingly, when a judge determines within his or her discretion to depart from the Guidelines, the judge must explain what factors warranted the increased or decreased sentence.

Relevant to criminal white-collar cases, the Sentencing Guidelines take into consideration the defendant’s acceptance of responsibility, which may be shown by the fact that the defendant made a restitution before sentencing and/or assisted authorities in the investigation or prosecution of the crime by providing complete information about the defendant’s involvement in it or by giving timely notice of his or her intent to plead guilty. Additionally, a court may consider a downward departure from the minimum penalty set forth by the Sentencing Guidelines based on the defendant’s substantial assistance in the investigation or prosecution of another person who has committed an offense. For example, in U.S. v. Edoardo Orsoni, Case No. 19-CR-20725-MGC, Edoardo Orsoni, the former general counsel at U.S. based Citgo Petroleum and Venezuela’s state-owned oil company Petróleos de Venezuela SA (PDVSA) pleaded guilty to conspiracy to defraud the U.S., was sentenced by the U.S. District Court for the Southern District of Florida to only three years’ probation based on Orsoni’s substantial cooperation with DOJ’s expanding investigation into corruption connected to Citgo, PDVSA, and Venezuela.

U.S. financial crime authorities generally evaluate if the organization has used a “risk-based approach” to design, implement, and periodically update compliance programs. Accordingly, the compliance program of each organization should be different and tailored to the company’s products, clients, and to the risks associated to the jurisdictions in which the company has operations. Nevertheless, U.S. authorities typically expect organization to develop the following essential components of compliance:

1. Management Commitment: ensuring senior management commitment to the company’s compliance with U.S law.
2. Risk Assessment: conducting frequent risk assessments to identify and mitigate specific risks.
3. Internal Controls: developing and deploying policies and procedures to identify, interdict, escalate, report, and maintain records pertaining to activity prohibited by U.S law.
4. Testing and Audit: identifying and correcting weaknesses and deficiencies.
5. Training: ensuring all relevant personnel are provided tailored training on the pertinent U.S law.

U.S. authorities generally have three inquiries: is the company’s compliance program well designed? is it being applied in good faith? and does it work in practice?

To protect themselves from financial crimes, aside from designing, implementing, and updating Sanctions/AML/FCPA compliance programs, a company should carefully review any transaction involving high-risk persons or jurisdictions to confirm whether the U.S. Government’s authorization is required. If necessary, companies should request the Government’s interpretative guidance when available before moving forward with the transaction.

Individuals that are convicted of these offenses without entering into a plea agreement with the Government, are typically sentenced to long terms of imprisonment, substantial fines, and/ or disgorgement of ill-gotten gains. A convicted corporation may be subject to stiff fines, and the Court may also appoint a monitor to oversee the corporation’s affairs through a term of probation.

The U.S. Constitution does not guarantee criminal defendants a right to appeal. See McKane v. Durston, 153 U.S. 684 (1894). Accordingly, the questions of who can file an appeal and which issues are appealable are determined by federal and state rules of appellate procedure. In the federal system, after a defendant is found guilty, the defendant may appeal to the Circuit Court based on specific errors that might have occurred at trial. The defendant may appeal a guilty verdict, but the Government cannot appeal if a defendant is found not guilty. Either side in the criminal case may appeal with respect to the sentence that is imposed after a guilty verdict. Once an appeal is decided by a circuit court judge, a defendant can try to appeal that decision to the United States Supreme Court, but the Court is not required to hear an appeal in every case and takes only a small number of cases each year.

The U.S. has long been a leader in the global effort to fight financial crime, as recognized in the periodic evaluations conducted by Financial Action Task Force (FATF), the most prestigious inter-governmental policymaking body in the area of anti-money laundering (AML). The U.S. has a robust AML, Anti-corruption, and Economic Sanctions regime that is enforced by a strong government architecture, and has received the highest possible ratings for investigating and prosecuting financial crime.

Each year, the U.S. Department of Justice criminally prosecutes over 1,200 money laundering cases, including various complex and often international prosecutions against persons and businesses—including major financial institutions—that enable money laundering related to serious offenses such as narcotics trafficking, fraud, and corruption. Further, the U.S. works with partner countries and international organizations to. The U.S. has also supported, through technical assistance and other means, the development and implementation of robust national-level AML and Anti-corruption regimes in multiple jurisdictions around the world.

Moreover, the current U.S. administration is taking steps towards an increase in the number of investigations and prosecutions of financial crime. Since 2021, leadership at DOJ, SEC, FTC, CFTC, and other regulatory and law enforcement agencies have issued statements and policy revisions signaling intentions to focus on increased prosecution of these crimes. Further, in his fiscal year 2023 budget proposal, President Biden requested the U.S. Congress to authorize an increase of $210 million for FinCEN, as well as $212 million for Treasury’s Office of Terrorism and Financial Intelligence, in an effort to increase oversight of the financial sector, strengthen corporate accountability, and provide adequate support to law enforcement in connection with financial crime investigations.

As shown by the “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities,” a policy statement issued by FinCEN on June 30, 2021 after consultation with Federal and State regulators, as well as investigate and national security agencies, in recent years the U.S. prioritizes law enforcement actions targeting the following criminal activity, in no particular order:

1. Corruption. Consistent with President Biden’s 2021 National Security Memorandum, the fight against corruption is a priority for the U.S. Government, and law enforcement agencies frequently investigate and prosecute instances in which corrupt actors and their financial facilitators have sought to exploit vulnerabilities in the U.S. financial system to launder and obscure bribes and/or the proceeds of corruption.
2. Cybercrime. The U.S. Government is particularly concerned about cyber-enabled financial crime, ransomware attacks, and the misuse of virtual assets for laundering of illicit proceeds. In fact, since 2021, the U.S. Government has increased its efforts to investigate and prosecute criminal activity in the virtual currency space. For example, in October of 2021, the DOJ created a National Cryptocurrency Enforcement Team (NCET) that coordinates enforcement efforts of various criminal violations involving digital assets including wire fraud, mail fraud, securities fraud, and money laundering.
3. Terrorist Financing. Since the terrorist attacks of September 11, 2001, the U.S. Government pursues efforts to combat foreign actors such as ISIS, Al Qaeda, Hezbollah and Iran’s Islamic Revolutionary Guard Corps, as well as domestic violent extremist threats. Further, because terrorist groups require financing to recruit and support their operations, to prevent such financing is a priority for U.S. law enforcement.
4. Fraud. Bank, consumer, healthcare, securities, investment, and tax fraud are believed by the Government to generate the largest share of illicit proceeds in the U.S. Critically, fraud related to the COVID-19 pandemic is of particular concern to the DOJ and other U.S. agencies.
5. Transnational Criminal Organization Activity (“TCOs”). U.S. law enforcement targets international organized crime networks, as well as their involvement in a wide array of illicit activities, including cybercrime, drug trafficking, human trafficking, weapons trafficking and intellectual property theft. While Mexican and Russian TCOs are deemed priority threats by U.S. agencies, Africa and Asia-based TCOs are becoming more significant each year.
6. Drug Trafficking Organization Activity. U.S. agencies are increasingly interested on professional money laundering networks in Asia that facilitate the exchange of Chinese and U.S. currency or serve as brokers in trade-based money laundering schemes. Notably, the U.S. seeks to fight schemes to launder drug money by facilitating the exchange of cash proceeds from Mexican DTOs to Chinese citizens residing in the United States, including the use of front companies or couriers to deposit cash derived from the sale of narcotics into the U.S. banking system.
7. Human Trafficking and Human Smuggling. The Government is reportedly interested in the variety of mechanisms used by human trafficking and human smuggling networks to move illicit proceeds, including cash smuggling and establishing shell or front companies to hide the true nature of their business.
8. Proliferation Financing. U.S. agencies are determined to investigate the proliferation and support networks that seek to exploit the U.S. financial system to move funds that will be used either to acquire weapons of mass destruction, or in furtherance of state-sponsored weapons programs, including the evasion of United Nations or U.S. sanctions.

On July 28, 2021 President Biden released his National Security Memorandum declaring a national priority to modernize intelligence collection, streamline enforcement methods, and build stronger international partnerships to fight global corruption. Although the DOJ and the SEC are the primary enforcers of U.S. anti-corruption statutes, the President’s memorandum called on 13 additional government agencies to aggressively investigate and prosecute international corruption and money laundering.

As a result, over the past year the U.S. Government implemented additional efforts to actively prosecute corruption through criminal and civil penalties. For instance, the U.S. developed new initiatives to investigate money laundering and other criminal activity in Central America, including (i) the United States-Northern Triangle Enhanced Engagement Act, (ii) the Section 353 List of Corrupt and Undemocratic Actors for Guatemala, Honduras, and El Salvador (also known as the “Engel List”); and (iii) the creation of special task forces to increase investigations, prosecutions, and asset recoveries relating to criminal activity in Mexico and the countries of the Northern Triangle.

In the past year, DOJ criminally charged individuals and corporations for FCPA violations in connection with the bribery of foreign officials in or from countries such as Brazil, Venezuela, and Colombia. OFAC sanctioned several individuals and entities under the Global Magnitsky Sanctions (“GLOMAG”), including nationals from Liberia, Sudan, Bangladesh, Angola, Guatemala, Ukraine, El Salvador, Kosovo, And Servia.

Pursuant to GLOMAG, OFAC may sanction foreign persons and entities believed to be involved in serious human rights abuses or corruption in any foreign country, as well as those who assist or provide material support, including goods and services, to the designated persons or the targeted activities. Sanctioned individuals and entities are added to OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”), and all of their property and interests in property, within or transiting U.S. jurisdiction or in the possession or control of U.S. persons, are categorically blocked.

This trend of anti-corruption enforcement is expected to continue. On December 6, 2021, President Biden released his “United States Strategy on Countering Corruption” further declaring that the Government is working “domestically and internationally, with governmental and non-governmental partners, to prevent, limit, and respond to corruption and related crimes.” This policy statement outlines 5 pillars of work for the U.S. Government, which include modernizing efforts to fight corruption, enacting gap-filling legislation to curb illicit finance, increasing federal and state enforcement actions, and leveraging foreign assistance to achieve anti-corruption policy goals. Further, on April 14, 2022 FinCEN published its “Advisory on Kleptocracy and Foreign Public Corruption,” whereby “FinCEN urges financial institutions to focus efforts on detecting the proceeds of foreign public corruption, a priority for the U.S. government.”

First, FinCEN is currently preparing its regulations to implement the following provisions of the Anti-Money Laundering Act of 2020:

1. The beneficial ownership reporting requirements of the Corporate Transparency Act (“CTA”), which will require a number of companies in the U.S. to report identifying information and its beneficial owners to FinCEN.
2. A no-action letter process at FinCEN, which would establish a form of enforcement discretion where FinCEN states by letter that it will not take an enforcement action against the submitting party for the specific conduct presented to that agency.
3. A limited-duration pilot program for sharing suspicious activity reports (SARs), which would permit a financial institution with a SAR reporting obligation to share SARs and information related to SARs with the institution’s foreign branches, subsidiaries, and affiliates for the purpose of combating illicit finance risks.

Second, as part of this year’s National Defense Authorization Act, the Congress is currently studying an amendment that would expand AML obligations to include attorneys, accountants, financial advisors, and other persons involved in the formation of corporations, trusts, partnerships, and similar entities. The amendment, known as the Establish New Authorities for Businesses Laundering and Enabling Risks to Security Act (the “ENABLERS Act”), would require the Department of the Treasury, within one year, to develop proposed regulations imposing AML obligations on “gatekeepers,” including the obligation to maintain written AML and know-your-customer policies and procedures, conduct ongoing training and independent audits, and report suspicious activity to Treasury. As well, the proposed Act would require Treasury to conduct random audits of gatekeepers to assess compliance with the new provisions

Third, the Congress is also studying a package of legislative initiatives proposed by President Biden and Attorney General Garland to enhance the U.S. Government’s authority to hold the Russian government and Russian oligarchs accountable for President Putin’s war against Ukraine, and that may have a broad impact on investigations and prosecutions of financial crimes. Notably, the package of legislative initiatives includes proposals for:

1. Expanding forfeiture authorities under the International Emergency Economic Powers Act (IEEPA) to reach property used to facilitate sanctions violations enabling the government to take away the violators’ “tools of the trade.” This proposal would amend IEEPA’s penalty provision to extend the existing
   forfeiture reach to facilitating property, not just to proceeds of the offenses.
2. Modernizing Racketeering to Include Sanctions Evasion. This proposal would add criminal violations of IEEPA and the Export Control Reform Act (ECRA) to the definition of racketeering activity in the Racketeer Influenced and Corrupt Organizations (RICO) Act.
3. Expanding the Time Limit to “Follow the Money.” This proposal would extend the statute of limitations from five years to 10 years for prosecutions and asset forfeitures pursued in connection with international money laundering activities.

With the enactment of the Anti-Money Laundering Act of 2020, including the provisions related to the Corporate Transparency Act, the U.S. took action to address the deficiencies that had been identified in the periodic evaluations conducted by Financial Action Task Force (FATF), including the lack of a requirement in the U.S. to disclose the identity of the person who owns or controls a company—also known as the beneficial owner—to the Government when the company is formed.

In addition to the initiatives discussed previously in response to question 27, the U.S. Congress has recently been called upon by the compliance community to establish an effective AML Whistleblower program. While the AML Act established an AML Whistleblower award program that is administered by FinCEN, major loopholes have undermined this initiative. Critically, there is no minimum award guarantee, meaning that all whistleblower awards through the program are discretionary. The U.S. Congress may take remedial action by establishing a mandatory minimum for AML whistleblower awards and a fund specifically designated for paying out these awards, which could be financed through assets obtained in connection with the whistleblower program.