In Anti-Money Laundering

The Power of Blockchain Technology

In a meeting of many of the top banking executives from over sixty countries around the world, the Federal Reserve Bank of New York held its annual central banking seminar on October 5th, with the topic of the “policy implications of persistent low-inflation” found at the forefront of the discussion. Amid the mundane proceedings, one man managed to steal the show with an ingenious presentation on “The Digital Asset Economy.” That man was Adam Ludwin, COO of the startup company “Chain”, which helps “enterprise clients such as Visa, Citi, Nasdaq and other giants of finance capitalize on blockchains, the technology behind Bitcoin” (Shin, 2016). During his presentation, Ludwin, focused on ways in which the financial system could become more stable, offered a divergent thought process that he believed could help to prevent another financial crisis from occurring. Concentrating on blockchain technology, Ludwin asserted that blockchain networks could increase the “real-time” visibility that policy-makers have into several transaction forms, such as capital markets and payments, at an unprecedented level. This increase in visibility would then correlate into many added benefits, including an increase in the stability of the financial system as a whole immensely.

Blockchains are beginning to become notably coveted within the financial services industry due to their ability to increase security while also increasing transparency at a much faster and more cost-effective rate than previous, lesser-developed methods, which include the use of multiple ledgers and intermediaries. An example used by distinguished Forbes writer Laura Shin in her article “Central Banks Explore Blockchains”, cited in BSA News Now on October 14th, 2016, sums up the efficiency that blockchain technology offers perfectly. Shin proclaims that “a traditional bank transfer can take three days domestically or a week or more internationally, whereas sending a Bitcoin to the other end of the earth can be done in 10 minutes” (Shin, 2016). The far-reach of blockchains has now seen it evolve into a tool that is being regarded as the most significant development in recent history within the financial spectrum. The central banks of England and China, among others, have “talked about issuing their currencies in this new medium”, and Canada has even begun experimenting with the testing of its own form of digital currency (Shin, 2016).

While Bitcoin was once seen as a hazard within the financial services industry due to its ties to criminal activity, the most recent trend within this industry is the adoption of blockchain technology due to its efficiency and ability to offer innovative ways to perform daily activities. For more information on blockchain technology and how it can effectively reshape the future of banking and the processing of payments, please visit the article “Blockchain”, written by Global RADAR CEO Dominic Suszek, by following the link below.

Suszek (August 16, 2016) –

Recent AML Developments

Additional developments have occurred over the course of the past week with regard to increased efforts to enforce proper security and compliance measures in financial institutions worldwide. According to the article “FCA fines Sonali Bank for Anti-Money Laundering Failings”, cited in BSA News Now on October 13th, 2016, Britain’s Financial Conduct Authority (FCA) “fined a bank owned by the Bangladesh government 3.25 million pounds for failures in anti-money laundering controls” that were further described as serious and systematic weaknesses at nearly every level of its AML control structure (Reuters, 2016).

In a separate, but follow-up measure to those which were seen in the Global RADAR trending article “FinCEN vs The Casinos and Brexit Fallout Continues” posted on October 11th, 2016, the Financial Crimes Enforcement Network (FinCEN) is continuing its trend of imposing severe penalties on non-compliant United States casinos. According to the article “What Lessons Can Be Learned from FinCENs Latest Enforcement Action in the Gaming Industry?” which was also cited in BSA News Now on October 13th, 2016, FinCEN issued a “civil monetary penalty of $12 million against Cantor Technology, L.P. earlier this week pursuant the Bank Secrecy Act and its regulations, with which casinos are required to comply” (Fikry, 2016). In addition to this fine, however, Cantor must now undertake remedial compliance measures as a repercussion, as well as pay a supplementary fee of $16.5 million to the U.S. Department of Justice to settle an analogous investigation. The charges FinCEN has brought against Cantor include failure to implement and maintain an effective AML program, failure to report certain suspicious activity and certain transactions greater than $10,000, as well as a failure to keep appropriate records that are required by the Bank Secrecy Act and its accompanying regulations.

In other AML news, four Pakistani men and their companies based in Pakistan and the United Arab Emirates were blacklisted on October 11th due to their ties to an organization that was accused of money laundering activities for drug trafficking and criminal groups. The article “U.S. Blacklists Pakistan Nationals on Suspicion of Money Laundering” states that among the men was Pakistani national Obaid Khanani, “whose father Altaf Khanani was arrested by U.S. authorities in September 2015 and accused by the U.S. Treasury Department of laundering billions of dollars for the Taliban and other groups” (DailyMail, 2016). The U.S. Treasury Department affirmed that Obaid Khanani attempted to continue leading his father’s money laundering group following his arrest. Khanani will be tried on money laundering charges later this month. It has been found that each of the men that were apprehended had extensive histories in criminal financial practices. The newly imposed sanctions against them will now prohibit Americans from dealing with these men or their businesses, and will block all of the assets the men or their companies may have had in the United States.

Mr. Christopher J. Pelaez is a Staff Writer and Operations Specialist for Global RADAR. His background consists of experience as both a BSA and marketing consultant, with an education based in law. Always on top of all the latest in the world of AML/BSA, Mr. Pelaez also curates the well-known Global RADAR news service, BSA News Now.
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