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  • Historic Penalties For Cryptocurrency Exchange’s AML-Related Violations

    On November 21, 2023, the Cayman Islands registered cryptocurrency exchange, Binance Holdings Limited (the “Company”), pled guilty to criminal violations related to allegedly failing to register as a money transmitting business (“MTB”), failing to maintain an effective anti-money laundering program, and violations of the International Emergency Economic Powers Act (“IEEPA”).  In connection with its plea agreement with the Department of Justice, the Company agreed to pay $4.3 billion in penalty, including $1.8 billion as a criminal fine and $2.5 billion in disgorgement.  The Company’s founder also pled guilty to similar AML violations and agreed to resign as the Company’s Chief Executive Officer.
  • New York Fines Crypto Trading Platform $30M In First-Ever DFS Crypto Settlement

    On August 2, 2022, New York State’s Department of Financial Services (“DFS”) announced that Robinhood Crypto, LLC (“RHC”), a trading platform that allows customers to transact in cryptocurrencies, had agreed to pay a $30 million fine to resolve allegations of “significant” lapses in its compliance with New York State anti-money laundering and cybersecurity regulations.  In addition to the fine, the settlement will also require RHC to hire an independent consultant to evaluate the company’s remediation efforts and compliance with DFS regulations. RHC did not admit to the allegations contained in the Consent Order.
  • OCC Issues Consent Order Against A Digital Bank

    On April 21, 2022, the Office of the Comptroller of the Currency (OCC) issued a consent order against Anchorage Digital Bank, a digital asset bank based in South Dakota.  Notably, Anchorage had previously become the first digital asset bank to be regulated by the OCC in January 2021.  In its consent order, the OCC determined that Anchorage had failed to adopt an effective compliance system as required by the Bank Secrecy Act and anti-money-laundering (“AML”) laws, specifically highlighting failures related to “internal controls for customer due diligence and procedures for monitoring suspicious activity, BSA officer and staff, and training.”
  • Department Of Justice Announces Enhanced Efforts Towards White-Collar Crime Enforcement And Creation Of National Cryptocurrency Enforcement Team

    In back-to-back speeches last week, senior Department of Justice (“DOJ”) officials emphasized that the Department would devote additional resources and attention to white-collar enforcement actions, with a specific focus on enforcement in the cryptocurrency space.  These initiatives, which contemplate additional corporate enforcement actions, reflect a break from the prior administration’s criminal enforcement priorities, which tended to focus on immigration and violent crime offenses.
  • Cryptocurrency Derivatives Exchange Reaches $100 Million Settlement With CFTC, FinCEN

    On August 10, 2021, BitMEX, an offshore cryptocurrency derivatives exchange (the “Exchange”), agreed to a $100 million settlement with the U.S. Commodity Futures Trading Commission (the “CFTC”) and the Financial Crimes Enforcement Network (“FinCEN”), resolving claims that the Exchange operated illegally in the U.S. and failed to comply with anti-money laundering (“AML”) laws and regulations.
  • National Defense Authorization Act Passed Over President Trump’s Veto Expands SEC’s Disgorgement Authority And Reforms Anti-Money Laundering Laws

    On January 1, 2021, the National Defense Authorization Act for Fiscal Year 2021 (“NDAA”) was approved by Congress, over the objections of President Trump who vetoed the bill a week before.  In addition to authorizing appropriations for defense related activities, the NDAA brings two significant changes relevant to regulatory enforcement.  First, the NDAA amends the Securities Exchange Act of 1934 (the “Exchange Act”), providing the U.S. Securities and Exchange Commission (“SEC”) with explicit statutory authority to seek disgorgement for civil actions and expanding the statute of limitation for securing this relief.  Second, the NDAA includes the Corporate Transparency Act (“CTA”), which significantly expands the beneficial ownership disclosure requirements for U.S. entities.
  • Motion To Dismiss Filed In Eastern District Of New York Case Could Provide Opportunity For Clarity On Scope Of FCPA’s “Internal Accounting Controls” Provisions

    On November 20, 2020, lawyers for a former investment banker, indicted in the United States District Court for the Eastern District of New York for his alleged role in the 1MDB matter, filed a Motion to Dismiss (“MTD”) the indictment against him, which includes charges of conspiracy to launder money and conspiracy to violate the U.S. Foreign Corrupt Practices Act (“FCPA”).  Motion to Dismiss the Indictment and Other Relief, U.S. v. Ng Chong Hwa a.k.a. Roger Ng, 1:18-cr-00538-MKB (Nov. 20, 2020).  While the MTD raises a number of issues—including whether EDNY is a proper venue given that the only allegations relate to wires that were transmitted through the EDNY, and whether the banker was an “employee” or “agent” of an “issuer” for purposes of the FCPA—the most interesting argument may be one that squarely challenges the scope of the FCPA’s internal accounting controls provisions.  The question of whether the FCPA’s internal accounting controls provisions can be stretched to cover more traditional risk and compliance controls has long been debated, and even spurred a rare dissent from two SEC Commissioners last month, so a decision on the MTD could provide a much-needed opportunity for clarity.
  • Industrial Bank Settles AML Charges With U.S. And New York State Authorities

    On April 20, 2020, Industrial Bank of Korea (the “Bank”) and its New York branch (“NY Branch”) reached settlements with the U.S. Attorney’s Office for the Southern District of New York (“USAO”) and the New York State Department of Financial Services (“NYDFS”), agreeing to pay a combined $86 million to resolve investigations into its anti-money laundering compliance program, which the USAO and NYDFS claimed led to the bank processing over $1 billion worth of transactions in violation of U.S. sanctions against Iran.  Specifically, the Bank entered into a deferred prosecution agreement (“DPA”) with the USAO, agreeing to pay $51 million to settle charges that it willfully failed to maintain an adequate anti-money laundering program at its New York Branch in violation of the Bank Secrecy Act (“BSA”).  And both the Bank and the New York Branch entered into a consent order (“Consent Order” and, together with the DPA, the “settlement agreements”) with the NYDFS, agreeing to pay a $35 million fine for violating New York state law.