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Financial Services Law Insights and Observations

Treasury official says it’s time to reconsider “culture of compliance”

Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion Bank Secrecy Act Anti-Money Laundering Compliance

On March 21, the U.S. Treasury Department’s Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg delivered remarks before the Association of Certified Anti-Money Laundering Specialists (ACAMS) Hollywood Conference, asking attendees to consider “[w]hat must a culture of compliance look like in a world where autocracy is on the rise” and how financial institutions should adapt their Bank Secrecy Act/anti-money laundering (AML) obligations to ensure they are effective. Rosenberg praised the quick responses taken by financial institutions and financial service providers in implementing the growing list of sanctions against Russia and Russian President Vladimir Putin’s support structure in light of the recent invasion of Ukraine. “Russia’s war has meaningfully expanded AML and sanctions obligations,” Rosenberg cautioned, stressing it was time for an updated approach to considering and managing risk. “Geopolitical events are evolving fast, and we need financial institutions more than ever to act swiftly as we in the government are pushing out new designations and advisories almost daily.” She instructed attendees to “think about risk and enhanced due diligence when it comes to Russian oligarchs and kleptocrats who may not have been priorities for [entities’] compliance efforts in early February but are now crucial players, supporting Putin’s power structure.”

Rosenberg further noted that Treasury’s efforts would be aided if public and private sectors were faster about sharing information and if information sharing was improved “across borders, between financial institutions, and with the government.” Closing money laundering and global passport loopholes through which sanctioned actors can move funds and assets around the globe is also critical, Rosenberg stated. She also highlighted the U.S. government’s recent collaboration with foreign partners to help countries effectively take measures to “find, restrain, freeze, and where appropriate, to confiscate the assets of those who have been sanctioned in connection with Russia’s invasion of Ukraine.” These multilateral efforts include the recent launch of the Russian Elites, Proxies, and Oligarchs multilateral task force, and Treasury’s Kleptocracy Asset Recovery Rewards Program, as well as recently issued FinCEN advisories to help compliance officials better identify Russian sanctions evasion and suspicious financial activity including through real estate, luxury goods, and other high-value assets. (Covered by InfoBytes here.)

Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

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