Such as restrooms, changing rooms, and locker rooms are reserved for individuals of that biological sex.
He went on to say, It's important to note that each member office has its own private restroom, and unisex restrooms are available throughout the Capitol.
Women deserve women's-only spaces.
Representative Elect McBride posted a response writing: I'm not here to fight about bathrooms.
I'm here to fight for Delaware's and to bring down costs facing families.
Like all members, I will follow the rules as outlined by Speaker Johnson, even if I disagree with them.
C-SPAN's Washington Journal, our live forum involving you to discuss the latest issues in government, politics, and public policy from Washington and across the country.
Coming up Thursday morning, a discussion about the incoming Trump administration agenda and women's issues.
First, we talk with California Democratic Congresswoman Sidney Komlager Dove.
Then the discussion continues with Republican Congressman Mike Flood of Nebraska.
C-SPAN's Washington Journal.
Join in the conversation live at 7 Eastern Tuesday morning on C-SPAN.
C-SPAN now or online at c-span.org.
Next, a conversation on combating financial crimes and foreign influence on American banks with the Treasury Department's Acting Undersecretary for Terrorism and Financial Intelligence, Brad Smith.
He addresses how laws and policies impact investigations into financial crimes.
This event was hosted by the American Bankers Association.
Please join us in welcoming your conference emcee from the American Bankers Association, Ryan Rasky.
Good morning, everyone, and welcome to the 36th Annual ABA-ABA Financial Crimes Enforcement Conference.
I am Ryan Rasky, Senior Vice President and Market Manager for Risk and Customer Markets at the American Bankers Association.
Throughout this conference, I am going to serve as your MC and guide you throughout your conference journey.
We appreciate you taking the time to travel to this conference, and I promise you will not be disappointed.
We have a jam-packed program with late-breaking information that will be useful to you immediately as soon as you return back to your offices.
It's stunning to realize that we launched this conference 36 years ago in partnership with the American Bar Association.
Our joint mission is to bring you the latest information in financial crime trends and regulatory hot button issues.
Whether you're responsible for AML or fraud or both, we hope you'll use this conference to improve your efficiencies and effectiveness across AML and fraud.
This conference is designed to facilitate a high level of understanding and collaboration across what used to be two distinct areas within the bank so that you can better equip and shift focus as the criminals are shifting their focus.
The next few days, we're going to get into the heart of what really matters.
The session selection and development, done by the advisory board of your peers, was designed to hit all of the big challenges that we're facing.
We've assembled not just the top experts, but those who are on the front lines moving their banks forward.
Please join me in thanking this year's advisory board for the conference for all the work that they put into this.
This year we're hosting over 80 speakers, many of which have never spoken at this event before, and we are very honored by their presence.
Government officials readily agreed to speak at this year's conference because ABA continues to work with both BSA and fraud government officials.
We'd like to now take a moment and go through some housekeeping to make your journey a little more enjoyable.
First, I hope you take advantage of the mobile app.
Oh, I'm sorry, let me back up a second.
I'm getting ahead of myself.
I hope you took advantage of one of the two power breakfasts this morning.
We'd like to thank Davies and Unit 21 for sponsoring today's Power Breakfast.
I want to remind both our remote and in-person attendees that we are recording most of the sessions, but we're only live streaming the general sessions that happen in this room.
Remote attendees, you already have access to two pre-recorded sessions.
Recording from today's breakout sessions will be placed on the platform beginning tomorrow and then ongoing.
In-person attendees, to maximize your experience, we suggest that you attend the sessions that are most applicable to you in executing your current job responsibilities and then saving the other sessions for virtual viewing afterwards.
We have extended the access to the conference platform until February of 2025, so you have plenty of time to go back and review sessions that you were unable to attend.
In addition, we got a couple other ideas that will help you navigate the conference as well.
As I was about to mention, your primary conference aid is our mobile app.
You can do a lot of things in the app.
You can download PowerPoint presentations for each of the concurrent sessions if there is one available.
You can create a personal schedule so you know where you need to be and when.
And then of course you can communicate with fellow attendees as well.
The remote attendees also have access to the app and instructions on how to download that can be found in your attendee email that was sent a few days ago.
For those of you that are here at the Marriott, we have provided you with a paper schedule at a glance and a prize booklet which will supplement your mobile app and help you win some really impressive prizes.
We've added a few features to our conference app as well in addition to the platform.
You can now search sessions and ABA resources by using key industry terms such as AML, fraud, or fintech, and several others.
This will help you select sessions that will support you in your job.
You can view industry partners and what they have to offer and discover relevant ABA resources so you can continue your conference experience.
If you need help with the app at any time, visit the ABA staff in the hub or virtual attendees, you can send us an email at events at aba.com.
Also new this year is we are debuting a newly designed or redesigned hub which has been carefully curated to promote increased connections and conversations.
We have 30 of the top tier innovative products and services which will be in that hub and they're here to help you with any of the challenges that you might be facing.
Be sure to visit our partners during the designated breaks that we have.
Many of the sessions do not provide PowerPoints, but if they do, again, you can download them.
You can download the PowerPoint from the app or the platform.
For the lawyers in the room, we are offering CLE, but only to the in-person attendees.
The American Bar Association representative will be at the registration booth to assist you.
And then, of course, American Banker Association staff will be available if you have any additional questions or concerns.
For those seeking CPE credits, you can find information about those, about securing your certificate on the app and also the conference platform as well.
Just like CLE, you have to be in person in order to get those credits.
Again, for those who are watching virtually, if you have any questions, if you have any problems, email us at events at aba.com.
We're going to have a great time together, and we're going to have a lot of learning and sharing of ideas.
Again, we really appreciate you being here, and we're also pleased to announce that C-SPAN is here recording this event as well.
Now it's time to hear from the Undersecretary for Terrorism and Financial Intelligence to get our conference underway.
For many years, we have invited the Undersecretary because the Undersecretary is responsible to lead and coordinate anti-money laundering policy, counterterrorism financing and proliferation financing efforts, and anti-corruption initiatives and the use of targeted financial measures to advance the U.S. national security.
Brad Smith is the Acting Undersecretary for the Office of Terrorism and Financial Intelligence at the U.S. Department of Treasury.
Now, he may sound familiar to many of you because prior to this appointment, he was the director of OFAC, and before that, he served as OFAC's Deputy Director and Chief Counsel.
Acting Undersecretary Smith has an extensive background in legal matters as it pertains to national security issues.
After graduating with a JD from University of Chicago Law School, he first clerked for a judge on the U.S. Court of Appeals, and then he worked for a private law firm.
From there, he joined the U.S. Department of Justice as the senior counsel to the Deputy Attorney General, focused on national security issues.
He followed that as a deputy director advisor to the White House National Security Council before serving at OFAC as a chief counsel deputy director and director.
First, we will hear from the Undersecretary Smith, who will deliver his prepared remarks.
Then he has graciously agreed to spend some time with us on stage here.
So ABA's Senior Vice President for Illicit Finance, Heather True, will be joining the Acting Undersecretary on stage for a fireside chat on several of the critical issues.
First, please join me in welcoming to the conference Acting Undersecretary Brad Smith.
Oh, I am so excited to be here this morning.
I will confess I have never actually come into an event with theme music, so my day has already started very strongly.
And I will also confess, and I feel a little bashful about this, but this is actually my first time attending the ABA.
I was supposed to be here last year, and then I had to get pulled away, and we did some swapping of seats, and someone else covered it for me.
But this event is so well known, and this group is so familiar to those of us in Treasury that I am just excited to be here today.
I'm also excited on a personal level because I'll be chatting, as Brian mentioned a little bit later, with Heather True.
And Heather and I go way back.
We actually served in the Justice Department together.
We found our way to Treasury through a different route and have taken over time a lot of lessons from you all from industry to try to understand a little bit better what exactly goes on in the banking sector.
Because truth be told, we are both really legal lawyers and not necessarily bankers that confront things on a day-to-day basis.
And so for me, these opportunities are so exceptional because we really get to interact with and hear from the experts, all of you.
Now, in truth, whenever I come to an event like this, I do so with a tremendous sense of gratitude and humility.
And let me start with by exercise, really expanding on what I mean by humility.
We in the U.S. government, we at Treasury and TFI, have a leading role in establishing some of the policies that private industry implements.
But we are acutely aware that we are the stewards in part of the U.S. economy.
But at the end of the day, the implementation of many of these policies depends on the private sector.
It depends on bankers and industry who each day review, supervise employees, and discuss with their clients and industry what we're trying to do.
It also depends heavily on the bar and the legal profession to try to explain and interpret and enunciate and elaborate and point out where we've been confusing our regulations and our policy guidance.
That's not always an easy task.
And we know that when we impose obligations, when we charge private industry with undertaking certain steps, that we are, in all practical purposes, imposing a cost on industry.
Now, from our perspective, that cost is coming from a good place.
Those costs are designed to protect and enhance the national security and law enforcement interests of the United States.
Those are big, important priorities.
But we know that the private sector has to carry that burden.
And we also know, notwithstanding what you may hear sometimes in the news or what loose rhetoric can deploy, that resources are not unlimited and that the banking sector, at whatever level, has to prioritize and shift resources to meet new demands that we put in place.
And so we come to you in a bit with hat in hand, knowing that you are our partners and knowing that some of the things we do can put costs on you.
But the other side of that humility is profound gratitude.
Because when we think fundamentally about what we do at Treasury and how we exercise these authorities, we really have two goals.
First of all, we are attempting to protect and preserve the integrity of the U.S. financial system.
And second, we're also attempting to leverage the power of the U.S. financial system to achieve, particularly in an international scale, certain broader foreign policy objectives.
And we're doing that because, for better or worse, at least for the last 75 years or so, the U.S. financial system has been at the center of the global economy.
We know that the dollar is the, or at least one of, the reserve currencies around the world.
And we know, based on our experience and observations, that many transactions, even when initiated in a foreign currency, ultimately will transfer through the U.S. financial system.
And when those dollars or transactions transit through our system, they become a problem that our industry has to confront, and they become a point at which we have an opportunity to deploy our authorities to advance and achieve our broader objectives.
That is an awesome responsibility.
And the power of our financial system, the strength of the dollar, is something that we have to protect.
And all of you in the frontline of industry, in advising clients on a day-to-day basis, help advance that goal.
You serve in a really sincere and profound sense as the frontline soldiers in our financial actions around the world.
And so, both with humility and deep, deep gratitude, we want to thank you for that service.
Our goal in coming to conferences like this is to really not only express those sentiments, but also to understand what you're seeing, to understand how you're interpreting or feeling the impact of regulatory changes that we may be trying to undertake.
And I thought I would highlight today a couple of regulatory changes that we at Treasury have made in the last year, again, in a spirit of humility.
Sometimes our global critics will suggest that the United States and the U.S. Treasury Department likes to lecture or talk to the broader world without necessarily looking in-house and assessing how we are doing things.
Sometimes people will question whether or not we in the United States are applying the same scrutiny to our own operations and to our own conduct that we would suggest others should do abroad.
Now, the candid answer, as you all know from a day-to-day basis, is that we do.
There's a tremendous industry devoted to these efforts.
But we're aware of that criticism.
And over the last year, we undertook several regulatory changes that I think reflect both an effort to improve and protect our financial system, but also a little bit of that humility that I was talking about, in which we are trying to address issues from a pragmatic perspective.
Now, the first change announced just in the last month or so by FinCEN will require that certain investment advisors now comply with Bank Secrecy Act obligations.
Now, truth be told, in a lot of ways, this strikes me as a common sense regulatory change.
If you turn on the news, if you look around the world, if you think about our global economy, it is no surprise that foreigners, sometimes foreign adversaries, are attempting to move in to U.S. industries, often at the initial stage, to try to gain access to U.S. information and U.S. technology, that they may then turn around and deploy against us.
And so, from a common sense perspective, if you know an adversary is sometimes attempting to invest in the United States or U.S. industries to take information and technology and then turn it around and use it against us or use it against our own industries that have made those deep investments, we should have a little bit of screening in place to try to understand precisely who is making these investments.
And so what FinSEN did is essentially announce a new regulation that will, in about a year and a few months' time, require that certain investment advisors comply with the BSA and help us identify who actually are their clients and what activity they're undertaking.
In that same spirit, we also announced a new rule aimed at residential real estate transactions, but a really specific subset of transactions.
The rule is focused on real estate professionals, and it involves and really focuses on things that, again, I think from a common sense perspective, we all would say this is something we should be scrutinizing.
It's essentially involving what we call non-financed residential real estate transactions that involve transfers to legal entities or trusts.
Again, I think common sense tells us that's a reasonable rule and something we should be doing.
Look at the newspaper.
Think about what we've talked about over the last couple years in the national security space with Russian oligarchs, let's say, who have purchased vast swaths of real estate around the world.
Not surprisingly, sometimes those transactions are not structured in a way in which you can immediately identify who's behind it.
I think a lot of us know from common experience dealing with carnon narcotics and narco-traffickers in the United States that they often use shell companies and front companies to make purchases and to hide their assets.
And so, again, it's not surprising that we perhaps need to look at those transactions a little bit more closely and scrutinize some of the activity that's in play.
But as we announce some of those regulatory changes aimed at trying to protect the U.S. financial system and quite candidly help to bring us into compliance with what some of our partners around the world are doing, we've also tried to be nuanced in our approach to ensure that we have reasonable exemptions in place so that we don't unduly burden industry, so that we aren't impractical for people who are on the front lines.
At the same time we're doing this, we're also, as I think a lot of you are aware, working to implement the Corporate Transparency Act.
And one of the key parts of that effort is what we call the beneficial ownership obligation.
That too was announced earlier this year by FinCEN.
And that, again, I think in the same spirit of the issues we've been discussing and really reflecting something that had bipartisan support from Congress, reflects an effort to try to understand who's behind certain shell companies that might be engaged in transactions.
Well, again, that's not surprisingly because unfortunately we know throughout human history, as old as our republic is, that bad actors will sometimes try to structure transactions and hide behind legal entities that they've put in place to carry on their nefarious activity.
And sometimes that can have huge consequences.
We have examples of billions of dollars, for instance, being laundered through shell companies by actors operating abroad.
But we also know at a very human level that even small, lower-level criminals will sometimes create these shell companies and implement them in a way to try to take funds from unsuspecting customers.
I saw looking at your pamphlet that elder fraud is a theme that's going to be touched upon, I think, in the conference over the next few days.
And that's something that is often effectuated through shell companies at a small level.
And so again, requiring and demanding a little bit of information about who these entities are reflects, I think, common sense and common objectives.
At the same time, we also understand that although the goals may be important and they may be things that we in concept can all agree with, there are, as I mentioned, real costs.
And one of the things that we're undertaking as part of our implementation of the Corporate Transparency Act is an effort to ensure that the obligations we impose on all of you are actually a little bit more tailored and effective.
One of the obligations of the CTA is for us to ensure that what we call the program rule, the regulatory obligations that essentially mandate how you implement compliance and screen for many of these illicit activities, applies a common sense approach.
Now, common sense from our perspective means risk-based.
We have put out through draft proposed regulations alterations to the program rule, and we've gotten some wonderful feedback, including from the ABA just within the last four weeks or so,
offering suggestions and ideas in which we can perhaps continue to refine our objectives and really achieve the broader goal of ensuring we're achieving these important AML and national security priorities while also reducing and hopefully managing some of the burden that you and industry feel.
This is a work in progress.
We're digesting some of the feedback that we've received from the ABA and from all of you.
And we believe it's always going to be, in a sense, an iterative process.
It should be.
Our adversaries are going to evolve.
Technology, as we all know, is going to change.
You are going to see things on the ground that will inform us about how things should be done better, but also about new risks.
It's therefore only appropriate that as we engage in this process, we continue to try to evolve and take on board some of your suggestions.
We're never going to be perfect.
We're never going to be able to strike the balance that we all want 100% of the time.
But we certainly can commit ourselves and are committed to trying to find that balance and to continue to work with you all as we begin to evolve and address these programs and our obligations to reflect the evolving era of the 21st century.
Now, I would be remiss, particularly given that my background is really economic sanctions, if I didn't also highlight not only the AML aspect of our work, but of course what we're also doing to use our authorities to try to change the behavior of foreign actors.
Economic sanctions, as so many of you know, have really been around since the country was founded, and they certainly have been in the news over the last two years or so.
All told, we have about 30 to 40, depending on how you count, sanctions programs in place right now.
Over the last year, and really over the last two and a half to three years, two have jumped to mind and continue to be a huge focus for us.
Because whether we like it or not, and certainly it is not from our perspective, we have two wars ongoing right now.
One in Ukraine with Russia's second invasion of that country in the last 10 years.
And the other sad unfolding conflict in the Middle East that, as we all know, continues to change on a day-to-day basis.
In that space, we have continued to deploy our sanctions authorities to try to change that behavior of the adversaries, but also to disrupt and stop the flow of funds coming through the United States, which they do to try to arm those who would kill U.S. personnel or our allies abroad.
Now, again, historically, some have suggested the United States, with the power of the U.S. dollar, attempts to act too much unilaterally in this space.
I would candidly fight that premise almost across administrations.
But I would just suggest if you were to look at the activities over the last two years, you will see there has been incredible collaboration.
Just in the last month, when we think about the Middle East, we actually took a number of actions with the UK, the EU, and of course the United States to try to disrupt the flow of ballistic missiles through Iran to Russia to support the conflict in Ukraine.
And just as the conflict has unfolded more in the Middle East, with Hamas taking any number of horrible actions, we have worked again with the Brits, with the EU, with Canada, with countries around the world to try to target and disrupt those activities.
Those very public actions and that high-level coordination reflects what we can discuss in the outside world on a public basis.
But I want to assure you that on a day-to-day basis, we are constantly engaged in conversations with our allies around the world.
But it's not just in the effort to try to take action together to sort of be disruptive, to put on a new burden that we're coordinating.
One thing that we have also undertaken over the last few years, largely in response to industry feedback, is trying to coordinate better the implementation side of our sanctions efforts with our international partners.
We have broken unprecedented ground with the Brits by exchanging personnel in our respective offices, by trying to develop and then issue collectively guidance.
But we've also come to understand, just as importantly, that those of you on the ground are often having to confront a number of different pieces of guidance from a variety of different actors.
And sometimes, as much as we may try to coordinate up front, there can be differences.
And that can drive people in the compliance and legal space baddie.
And so we have undertaken efforts with our allies around the world to try to understand a little bit better the guidance that we've put out, ways in which we can refine the advice we're giving, and perhaps ways in which we can come in and be a central depository for coordinating responses across governments.
Now, where those efforts go are hard to tell, but they're occurring, and that itself is important.
Equally important from our perspective is not just Treasury's activities with foreign partners or our Treasury's engagement with the banking and legal communities, but also our coordination across the government with fellow actors who operate in this space.
When we think about emerging threats around the world, increasingly we are coordinating and working very tightly with the Commerce Department and export to try to deal with export controls and the financing of goods that might be moving through the world.
We work hand in glove with the State Department, who also has certain sanctions authorities.
And we coordinate more directly and on a regular basis with the Department of Justice, including the FBI, DEA, as well as the Department of Homeland Security.
And increasingly, as we confront the emerging cyber threats and ransomware and other activities, we are working with even more partners, such as the Secret Service and in-house, the IRS.
All of these things are efforts that we're undertaking in part to be better, to ensure that the guidance that we're issuing, the actions that we're taking, the communications that we're putting out are more effective, but just as importantly, more useful for you.
Because at the end of the day, we know, as much as we may put in place regulatory requirements, as much as we may want to disrupt something, it's all of you on the front lines that bear an incredible responsibility for protecting the U.S. financial system.
You are wonderful participants.
Your companies and your clients profit from it, so we shouldn't be naive about that.
But at the end of the day, you're also, in a very real sense, financial patriots who are helping to protect the integrity of a system that ultimately, we hope, benefits all of us.
And more broadly, working with our Western allies and allies really around the world, advance the liberal democratic values that are so important to the United States and to so many countries that we identify as allies.
I can't stress enough how much that work matters.
Because if you think about human history, going back thousands of years, it's not just arms that topple regimes.
It's money in bankruptcy.
It's the inability to be able to pay for your obligations.
And it's the risk of corruption that skims money from the system and from the government and from the private sector that also undermines societies.
And so in the stress of your day-to-day work, please don't lose sight of that important effort and that incredible contribution.
And know, as stressful as all of our jobs can be, as demanding as it can be to have so many people asking things from you, with perhaps sometimes too limited resources, what you are doing matters.
And we are incredibly grateful.
So with that, I would really just like to end with where I began.
By thanking you for coming here, thanking you for taking the time to give a number of days to understand a little bit better the AML space as well as sanctions, export controls, and so many other emerging issues.
And thank you for what you do when you go back to your offices, to your clients, to educate and explain the prohibitions and the obligations.
And thank you for your part in protecting the U.S. financial system and we hope advancing the broader values that our country at its very best represents.
So thank you all, and I hope you have a great time at the conference, and look forward to chatting now with Heather and hopefully hearing some feedback from all of you as well.
Well, that was a tremendous speech.
I don't know how I'm going to follow up with that.
But first of all, I wanted to say thank you for reading our letter on the program.
Yeah, it was not a small one either, but I read every page.
So see, your feedback helps.
The more you tell me, the more I can convey to Treasury.
No, it actually does.
And I actually Want to protect sort of our internal discussions as Heather, our old lawyer, would advise me to do.
But your letter does resonate.
It's always taken seriously by the highest levels of Treasury.
And it's taken that way for a couple reasons.
We know the ABA represents a number of important financial actors around the country.
And we also know candidly that the people in the ABA understand both sides of the issue.
They've been in government, they've been in the private sector.
And so we may not obviously always agree, but it's taken seriously.
And we also think it's taken, and I know you would say this, it's offered in the spirit of collaboration and good faith.
100%.
And I think one of the things that feels very important is that we're able to sort of hear and see where you're going and then be able to sort of make suggestions about how to sort of tailor things so that it's possible for banks to do.
And again, we're not always going to agree.
Sometimes we're going to want things that maybe Treasury can't give us, but at least we really appreciate you listening.
Absolutely.
And in fact, I was going over some of the asks that we made on stage at the conference last year, and I realized like everything we asked, you did.
One of the things that was a huge topic last year, and you mentioned in your speech this year, beneficial ownership, you know, that's something where we had asked for guidance that would sort of help.
Like one question was, it's sort of confusing to have these two regulatory regimes, at least until the CDD rule exists.
And so you've got one rule that set, you know, the CDD rule that applies to banks, and then you've got this whole new regulatory regime that applies essentially to bank customers.
And in that world, you know, it's very confusing.
Bank customers may say, why do we have to report to FinCEN and why do we have to report to Treasury?
And we asked you for guidance and we're trying anyway, right?
Yeah.
No, I think we have pushed it out.
I think the thing, and I tried to allude to it a little bit at the podium, and it's something that is sincere, is like this is a work in progress.
It's not something where we can necessarily anticipate all the concerns industry may face.
We know and have heard pretty acutely the frustration that industry has sometimes with trying to identify, let's say, risky behavior, trying to really go after what they believe and we believe is ultimately the real objective here.
But they feel forced to devote resources to avoid a bad audit.
And now, like, everyone wants a good audit.
We don't want to discourage auditing.
But we also can recognize that there is sometimes space in which things can be taken so literally it defeats the broader objective.
And trying to figure out how we do that, some of that, what we're talking about right now, is a little bit, well, where can we reduce the burden?
Where can we have just more of a single point or at least fewer points of compliance and obligations so that you at least free up some of the resources?
Because the last thing we want to do is keep piling on obligations without signaling some relief.
And it's a work in progress.
You guys are going to know it better, but it's something we know we have to do.
Well, we're really appreciative of that.
And I think if I heard anything from bankers this year when we were talking about the program rule, it's really important to reinforce the risk-based approach, which I know is FinCEN's sort of number one in terms of operating how to change this rule, how to make it work.
And I think we have some concrete suggestions there, including, for example, being able to include the language of the AMLA, which really allows the redirection of risk of resources from higher risk customers and activities to lower risk cust or sorry, to higher risk customers and activities and away from lower risk customers and activities.
And I think that's, if I had to sort of say one thing, I think that would be it.
So look, I've got cold bread.
Plugs made, we all heard that.
Oh my goodness.
So sometimes I think that just to sort of move on to another topic, that sometimes it can seem a little abstract, you know, what it is that the work TFI does and sort of the way that maybe sanctions that tend to have this foreign, you know, sort of they relate to things that are not necessarily within the continental United States or all of the United States.
And in addition, you know, sometimes it seems maybe a little abstract what's happening in terms of, you know, you do this work, you're working very hard, you are, you know, as you said, on the front lines of making things happen.
And so, like, it seems sometimes that it's not necessarily the things that, you know, you really want to focus on.
But I was noticing as I was sort of preparing for this that in the last month alone, there were five actions that Treasury took, the TFI took.
And they were on stuff like Hamas terror financing, the ransomware initiative of EvilCorps, Russian ransomware, FinCEN sort of taking action in addition against a Russian virtual currency exchange, fentanyl trafficking, the Colombian Clan DeGolfo and the Sinaloa Cartel, and a Cambodian businessman who is running a scam compound.
You're going to hear a lot, I know, about sort of scams and how they harm Americans.
And so just by sort of doing the work that you have to do to comply with sanctions and BSA, it seems like that's really affecting a lot of important priorities.
Can you talk a little about TFI's sort of thought here and how these priorities are selected?
Yeah, well, in some sense, and Heather, and you all may know this already, but Heather was basically the chief lawyer for TFI for years and so understands our stuff so well, both from a legal perspective but a practical perspective.
So at the end of the day, TFI, we actually, I always think about it as sort of fun.
Like our mission is to drive ourselves out of business, which is a weird way of thinking about it, but if we succeed, we have no job.
And so unfortunately, there's always going to be probably adversaries out there.
But in some sense, when I say that, it's because our priorities aren't necessarily set entirely by us.
They're going to be set by foreign actors abroad, whether it be Russia invading a country, Hamas trying to kill various folks, including U.S. citizens under some circumstances.
And so those are priorities that we have to go after.
You alluded to fentanyl and counter-narcotics trafficking.
That has been actually a priority for more than 30 years within the Treasury Department.
And we have two offices abroad in Mexico City and Bogota focus just on that issue.
But it gets very practical when you think about it because fentanyl deaths, particularly among the young in this country, are astronomically high.
If it were a disease, it would be a public health crisis and we would be mobilizing similar to how we acted in COVID and other things.
And whether we like it or not, for counter-narcotics, that is funded by and large through the U.S. dollar.
And narco-traffickers, given where those narcotics are coming from, and fentanyl itself is exclusively a Western hemisphere, although precursors come around the world, the demand for that drug is in the Western hemisphere in the United States.
And so what we do and what you do in disrupting those transactions, perhaps shutting down a business that might be tied to a narco-trafficker, quite literally can help save lives.
Because whether you like it or not, when we flip or seize dollars that are tied to a narco-trafficker, we have a number of examples over the years in which those traffickers come in and flip and become what you might call state's witness, or in this case witness for federal prosecutors.
Because we immobilize their assets, we make it very difficult for family members to pay for various things, and suddenly they're going to want to cooperate.
Similarly, like the Cambodia action, it's called, and I didn't know what this was until this action came out, was called pig butchering, which is apparently a common form of fraud, but essentially you're advertising to a lot of people, in this case in Cambodia, to come work and do one type of activity, and then effectively you become, and don't hold me to this phrase because it's not going to be precise, and it might be a little crude,
but you become basically enslaved labor who is held hostage at sort of these communities.
Well, that same type of activity happens in the Western Hemisphere.
And one of the things that we have tried to disrupt over the last couple years has also focused on elderly people in the United States.
Narco-traffickers are, for better or worse, in some ways sophisticated actors.
And so they don't just sell drugs, but they create fraudulent Airbnb setups.
They engage in the type of elder fraud that you see every day.
They have fraudulent businesses that people may be engaged with and not knowing.
And so all are those things that, like, it's not just pie in the sky, you know, throwing darts at Vladimir Putin's picture.
It's actually taking actions that impact people in the United States on a daily basis.
We have had instances, too, where people come in, we get upwards of about 50,000 calls a year to various hotlines, and they will reach out and indicate, you know, their Social Security number has been taken hostage by one of these type of illicit actors.
And so those are the things that when you submit your BSA report, when you report a block transaction, actually have a real impact in terms of what we do in being disruptive.
Not to go on, but to give you just a real stark example, today at Treasury, Fencin, Andrea is going to be hosting, Andrea Gacky, the director of Fencin's, hosting an award ceremony for law enforcement.
They do it on an annual basis.
And I think they're giving out, you know, let's say roughly a dozen or so awards.
They had 37 nominations.
And just from those nominations, you had people using, I think it was about 8,500 BSA reports that you all had helped submit.
And those BSA reports collectively helped seize $2.5 billion, result in the restitution of about another $2.5 billion, various arrests, whether at the local level with, let's say, New York state prosecutors, federal prosecutors, actions taken by DHS.
And all of that is a direct result of the information that's coming in from the banking sector.
You know, that is incredibly helpful to hear because I think if we had to ask for one thing, you know, in terms of, like, there's a lot that banks do, and obviously banks are happy to put the compliance resources where they need to go, and everyone here is really committed to doing that.
But sometimes it's important to have to be able to explain that to other people.
You know, your boards of directors, you have to explain sort of what the work you're doing and what the sort of tangible results of that is.
So the more that we can hear from government about what the benefits are of what it is that, you know, the banks are doing on the front lines of this, the easier it is to sort of make the case to do it more and better.
To make it to the board, to make it to industry, to justify your budget sort of on an annual basis.
You know, and that's actually something that, you know, again, like I think you guys probably have the same experience within your companies or your corporate culture or your business environment.
Often we are so focused on the immediate action right in front of us and just the pressure to get out, take, move, move, move, that our feedback loop isn't always great.
We've gotten a little bit better, I think, over the last couple years about trying to push out guidance, trying to push out typologies.
And one thing I've heard and learned a little bit just in the last couple months while sort of temporarily doing, fulfilling the undersecretary role is the engagement with like FinCEN exchanges and having that dialogue where we can sort of give back and forth about, hey, here's what we're seeing.
You're telling us what you're doing from a compliance perspective.
I was at an event focused on fentanyl in New York, oh, probably a month or so ago.
And won't, you know, obviously won't say who, but a money service provider basically was presenting.
And they were providing input on what they had done above and beyond, which is something I'm always impressed by is how much the financial sector is doing, going way beyond what we're saying explicitly to try to trace and unpack transactions.
And I was just blown away at the way in which they were using automation, risk, alerts.
And my question to the presenter as part of the exchange was, okay, what was the budget for this and how did you justify it to the board?
And he very helpfully responded by saying, well, this I was actually able to take out of Hyde because it was part of our pre-programmed budget for the coming year.
But the case study itself and this success will help us in trying to defend and justify additional funds going forward.
And that's what they're doing internally.
But to the extent we can highlight, and we've tried to in press releases, but more and more the value of information I think is really worthwhile.
Because the last point I'd say on that is, and Heather knows this so much better than anyone else, sometimes we can't, we aren't, we cannot always explain through a public action explicitly how we use this information.
But we may be able to find ways in which we can summarize or provide typologies that explain, even though you don't see this information necessarily being part of an indictment or a press release, it nonetheless was extraordinarily valuable in trying to track and trace certain activity.
And that's certainly something I think we can work on with you all to try to find ways forward.
Well, thank you.
So I think speaking of information, that's another big theme that we sort of talked about.
How can we make sure that information gets where it needs to go in ways that can be very productive?
And I think one of the things that Lawrence Scheinert actually talked about last year at the conference was how there's sort of this integration between what it is that FinCEN does and what the work that OFAC does.
And for example, how BSA reports that are obviously being submitted under FinCEN rules to Treasury, how that can sort of help facilitate some of the sanctions work that Treasury does.
Oh, absolutely.
And that's again something that I think over the years we've gotten better and better at.
But whenever, so Treasury will take, OFAC will take a sanctions action, we call those designations.
And one of the things that we do with a designation is we will roll out the identifiers for that person or that entity.
And that information can sometimes depend on, or at least we can be led to the proper source from it based on BSA data.
And it may seem very small to people, and probably sometimes when you're in a policy discussion, it can seem small.
But for us, and we think for industry, that's huge.
Because like, look, let's say 20 years ago, maybe we would roll out an action and there would just be a name with a geographic location.
Well, my name's Brad Smith, and I'm not the president of Microsoft, although I wish I had his money, right?
But like, okay, like you can't do Brad Smith and just roll out an action.
You have to have identifiers to try to explain who this person is.
And so the info we can get is huge.
Similarly, sometimes we will get BSA data and there will be transaction specific, often transaction-specific information that might give you tips or leads about geography, might give you tips or leads about certain accounts.
It might help you in chain analysis as you try to link back and figure out where that money is flowing.
And that is huge because it creates opportunities for disruption.
But it also helps us, and this is something that I suspect you all can appreciate, but it helps us to be a little bit more targeted.
Because it may not be that we have to go out with necessarily a meat cleaver of a prohibition to achieve our result.
We might be able to be a little bit more focused, use the rifle as opposed to the shotgun to go after a transaction, and minimize some of the collateral consequences we can see.
And so I think those are things that are very helpful.
But I would say if you think about an OFAC sanctions action, you should assume, even though it may not necessarily be seen publicly, that as part of that process, there was inherent coordination with FinCEN.
There was a pulsing of the BSA database.
There was often conversations with the analysts who really understand that data, who work to push out products on that space.
And that's something that is growing and improving, and I think will continue to move forward, particularly in the ransomware and cyberspace, where we are just really trying to deal with a threat that we see in real time can have huge consequences for private parties, for industry, and for really the financial system writ large.
Right.
Ransomware and fraud, I'm assuming, scam compounds too.
Absolutely.
I just went to the ABA Foundation event yesterday to sort of talk about, you know, how to sort of protect all Americans, including older Americans.
And I think one of the things that came up is that there isn't necessarily terrific data about exactly the scope of the problem, but one estimate might be $137 billion in losses, which is, of course, horrible, which is why, for example, the focus on taking this action against a Cambodian scam compound is such a huge thing.
And I think that's reflected in the data that you guys are providing in the terms of the BSA reports.
No, and the scam thing, too, the thing that's so not impressive is the wrong term because it suggests, you know, it could be read as good.
The thing that is so startling, I guess, I would say, about that, is what you see is this fraud is, and fraud itself is bad for all the reasons, you know, we can think about in terms of integrity, in terms of the activity, but it's also fraud being used to advance some other horrible purpose.
And you can't separate the one from the other.
And it's bad in itself, but it's often a means to a much more horrible end.
Right.
Yeah, no, it's really terrible.
And, you know, I think that's all the more reason why it's really important for sort of the system to work together and to not look at things in isolation.
You know, another topic about coordination is sort of it's important because right now, for example, the CIP rule and the CDD rule and the program rule sort of work together.
And I think especially as FinCEN is working on a revision to the CDD rule, just waiting to see what that rolls out.
You know, when that happens, we want to make sure that that continues to work with CIP.
And Ideally, all of these pieces work together.
We've been focused on sort of the resources that banks have to spend on CTRs.
And, you know, is that really where banks should be putting the resources?
I would say no.
I think you would say no.
But, you know, we all want to focus on the stuff that really matters.
No, I agree.
And, you know, I can't guarantee where we're going to end up, right?
And you know that, and there's ongoing conversations, and it's something that we're very much focused on.
We have meetings weekly on various aspects of this stuff, if not daily, really, but certainly I have them weekly on these issues, if not more frequently.
And we are constantly trying to assess how we can harmonize things, how we can manage the burden.
Sometimes, and you appreciate this so well, the challenge we have was you will have statutes and you will have regulations, and the language isn't necessarily a perfect overlap.
And sometimes the objectives you think are the same, but one captures something a little bit more holistically.
And trying to harmonize that is an important task that we're trying to do.
And I think it requires us to be real candid with ourselves and with you about recognizing the trade-offs and understanding, hey, yes, we know this might not be 100% here, but it's going to allow us to focus on this bigger objective over here.
And that may be, then we're going to have to tolerate a little risk here.
Or vice versa, if you don't want to do that, we're going to impose additional costs on industry who we know are feeling it already, that are facing obligations to try to prove their budgets are right.
And those are things that we have to internalize and recognize the system can only bear so much.
And how we find the path forward is critical.
Well, your recognition of the sort of, you know, the private resources being used for the public good is really, we really, really, really appreciate that.
Can't say that too much.
Well, it's just the truth.
And again, I just, we appreciate the work you all do.
Appreciate, of course, the work you do, Heather, and just look forward to the continued collaboration and candid conversation, even if we don't always agree.
At least we can do it in good faith and with transparency and recognition that we're all trying to go in the same direction.
Well, I mean, there's nothing more I can say.
That is just so happy to have you here and to have this dialogue and this conversation.
And we really look forward to continuing working with you and all of TFI.
Absolutely.
Hopefully we'll see each other soon.
Yeah, absolutely.
Absolutely.
Great.
Well, thank you, guys.
Thanks, Brian.
Excellent.
Thank you.
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