Treasury’s Financial Crimes Unit Ramps Up Foreign Targeting, Investigations

Treasury’s Financial Crimes Unit Ramps Up Foreign Targeting, Investigations


Banks may see more information requests from the Financial Crimes Enforcement Network on potential money-laundering threats in the year ahead

U.S. financial institutions may be required to provide more customer information to the Treasury Department’s financial crimes office as it ramps up its focus on foreign money-laundering threats.

The Treasury’s Financial Crimes Enforcement Network this year established a new division to oversee foreign and domestic investigations. The Global Investigations Division, created in August, was previously part of FinCEN’s enforcement office.

That FinCEN carved out the investigations unit as a stand-alone office highlights one of the agency’s key priorities in the year ahead, former officials said.

FinCEN is expected to use its targeted investigative powers more frequently, including its authority under the Patriot Act to prohibit foreign banks from opening correspondent accounts with U.S. financial institutions, lawyers say. Other powers include the ability to request information from banks on customer transactions, and to require additional disclosures on transactions made in certain U.S. cities that FinCEN deems as risky.

“It signals that FinCEN will want to use the tools under the global investigations division with more frequency,” said Stephanie Brooker, a former director of enforcement at the agency who is now co-chair of the financial institutions practice at law firm Gibson Dunn & Crutcher LLP.

One power that FinCEN may rely on more in the year ahead is what’s known as Section 311 authority, which allows the agency to impose special measures on banks, such as record-keeping or due diligence requirements. FinCEN most recently used the authority to name Iran as a primary money-laundering concern, prohibiting the nation’s financial institutions from opening U.S. correspondent accounts.

The authority is part of the range of economic policy options the Treasury Department has at its disposal to pursue national security goals, said Steven Beattie, global financial crimes and operations leader at Ernst & Young.

“It’s another tool in the arsenal,” Mr. Beattie said. He added that financial regulators and enforcement agencies have relied more heavily in recent years on banks to spot financial criminals.

FinCEN officials have said in speeches in recent months that they plan to put a bigger focus on using their investigative powers to spot and prevent criminal activity such as terrorist financing, human trafficking and fraud, among other areas.

The agency may use its Section 311 authority to target types of transactions and accounts that pose a money-laundering threat, Jamal El-Hindi, deputy director at FinCEN, said during a speech in October. That is a change from its historic use of its 311 authority to target foreign banks and jurisdictions, he said.

“When we were making the case for creating a new division, we focused not just on increasing our capacity to do more of what we have already been doing, but also to be able to do things that have not been done before,” Mr. El-Hindi said during the speech. He didn’t say what types of transactions or accounts the agency may target.

The creation of the new global investigations division will allow FinCEN to use its information-gathering authority more frequently, Kenneth Blanco, the director of FinCEN, said in a speech this month.

By Kristin Broughton, 29 DEC 2019