Category Archives: Know Your Customer and Customer Due Diligence (KYC/CDD)

End of the Road: Fincen Adopts Interim Final Rule Virtually Eliminating CTA Filing Requirements

by Matthew Bisanz, Brad A. Resnikoff, Kristin E. Rice-Gonzalez, Marcella Barganz, Courtney C. Seitz, Lorenz A. Taets, and Kelly F. Truesdale

Top left to right: Matthew Bisanz, Brad A. Resnikoff, Kristin E. Rice-Gonzalez, Marcella Barganz, Bottom left to right: Courtney C. Seitz, Lorenz A. Taets and Kelly F. Truesdale (Photos courtesy of Mayer Brown)

March 21, 2025, the US Financial Crimes Enforcement Network (“FinCEN”) issued an interim final rule (the “IFR”) that exempts all domestic entities from beneficial ownership information reporting requirements under the Corporate Transparency Act (the “CTA”) and its implementing regulations (the “Reporting Rule”). These changes have the effect of eliminating any reporting requirement for more than 99.9% of the entities that were previously required to report[1] and, for domestic entities and US person beneficial owners, marking the end of the yearslong journey towards the CTAs reporting requirements, which were enacted into law in early 2021 and implemented by FinCEN’s original rulemaking in September 2022.

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Cryptocurrency Exchange KuCoin Pleads Guilty to Unlicensed Money Transmission, Agrees to Pay More Than $297.4 Million in Criminal Forfeiture, Fine

by Jonathan J. Rusch

Photo courtesy of the author

For more than a decade, as part of its oversight of financial institutions’ compliance with the Bank Secrecy Act (BSA) and regulations thereunder, the Financial Crimes Enforcement Network (FinCEN) has repeatedly stated that any person accepting and transmitting convertible virtual currencies (“cryptocurrencies”) must register with FinCEN as money transmitters and thereafter comply with the anti-money laundering/counter-terrorism financing program, recordkeeping, and reporting requirements.[1] Even so, a number of cryptocurrency or virtual currency businesses have ignored these longstanding requirements, sometimes resulting in massive criminal and civil penalties.[2]

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TD Bank Pleads Guilty to Bank Secrecy Act and Money Laundering Conspiracy Violations – Part II: The Regulatory Agency Resolutions

by Jonathan J. Rusch

Photo courtesy of the author

On October 10, the U.S. Department of Justice, the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board (FRB) announced an extraordinary set of coordinated criminal and civil resolutions involving TD Bank, N.A. and its parent company TD Bank US Holding Company (collectively TD Bank) for systematic and years-long violations of the Bank Secrecy Act (BSA) and money laundering. The first post on the TD Bank resolutions addressed only the Department of Justice’s criminal resolution with TD Bank.[1] This post will focus on the bank’s resolutions with the regulatory agencies, and identify certain lessons to be learned from this case.

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Federal Court Suspends Enforcement of Corporate Transparency Act Nationwide

by Matthew Bisanz, Brad A. Resnikoff, and Kelly F. Truesdale

Matthew Bisanz, Brad A. Resnikoff, and Kelly F. Truesdale (Photos courtesy of Mayer Brown)

On December 3, 2024, the US District Court for the Eastern District of Texas entered a preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) and its implementing regulations nationwide, concluding that the CTA is likely unconstitutional as it is outside Congress’s power.[1] Although not the first court to reach such a conclusion, the breadth of the relief provided by the court—applying nationwide, rather than to the specific plaintiffs—reflects a significant development, given the rapidly approaching compliance deadlines for many existing companies under the CTA.

The Texas court’s decision has immediate implications for the 32 million reporting companies facing a year-end deadline to report beneficial ownership information to the government, particularly as reporting in early December indicated that only about 30% of the estimated total filings had been received.[2] While the Texas court’s decision effectively suspends the compliance deadline—as the Financial Crimes Enforcement Network (FinCEN) has confirmed—during the pendency of the injunction, the Government has already appealed the decision to the Fifth Circuit and is currently seeking to stay the effect of the preliminary injunction.

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“Operation Chokepoint 2.0”: De-Banking Policies and the Adverse Use of Reputational Risk in Bank Supervision

by Stephen T. Gannon, Max Bonici, Elizabeth Lan Davis, and Kristal Rovira

Left to Right: Stephen T. Gannon, Max Bonici, Elizabeth Lan Davis, and Kristal Rovira (photos courtesy of Davis Wright Tremaine LLP)

How subjective supervisory standards suppressed innovation and damaged innovators.

“The power to regulate—in addition to the power to tax—is the power to destroy.”

Peter Wallison, Judicial Fortitude (2018)

As we have previously noted, we expect that the second Trump Administration will be significantly more favorable to crypto than the Biden Administration, especially with the recent appointment of David Sacks as the Administration’s “Crypto Czar.” We anticipate that in short order the new Administration will address “de-banking,” a regulatory practice that has vexed the digital asset industry—and banking in general—over the last several years. In this context, “de-banking” means canceling banking services to crypto entities and individuals associated with them or crypto activities. It is a practice that has been sharply criticized and has become even less comprehensible as the digital asset industry has matured and embraced (indeed, has sought) reasonable regulation. In the last several days the attention paid to this issue has increased sharply as a result of comments by Marc Andreessen on the Joe Rogan podcast.

Regrettably, the de-banking problem is not new. De-banking crypto is simply the latest variation of regulators using vague and amorphous standards to supervise bank conduct through the subjective lens of what the federal banking agencies call “reputational risk.”

Below we discuss how we got here and some ways forward.

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FINMA Sanctions Swiss Private Bank Mirabaud & Cie for Serious Violations of Swiss Financial Market Law

by Jonathan J. Rusch

Photo courtesy of the author

For generations, the Swiss financial sector has carefully burnished its reputation as the “perfect home for wealth” and a “financial safe haven.”[1] That reputation, not surprisingly, has led for some time not only to attraction of persons seeking legitimate investment and wealth management opportunities, but to a high degree of money laundering risk.[2]

In recent years, Swiss government authorities have responded to these money laundering risks with necessary changes in its anti-money laundering (AML) laws and general improvements in its legal and regulatory enforcement of those laws. The Swiss Attorney General’s Office, for example, has demonstrated an increasing commitment to holding the Swiss banking community accountable for criminal violations of Swiss anti-money laundering (AML) laws.[3] The Swiss Financial Market Supervisory Authority (FINMA), as the supervisor of the Swiss financial sector, has lately shown increased resolve in imposing significant sanctions on banks that fail to comply with AML laws.[4]

The most recent example of FINMA’s resolve took place on September 17, when FINMA disclosed that it had taken strong AML-related measures against a prominent Swiss private bank, Mirabaud & Cie SA.[5] It stated that in June 2023, it had concluded enforcement proceeding against Mirabaud, finding that Mirabaud breached its AML obligations under Swiss law and “seriously violated provisions of financial market law concerning adequate organisation (governance), risk management and money laundering prevention over a prolonged period.” It also took the highly unusual steps of confiscating CHF 12.7 million of unlawfully generated profits, opening three proceedings against individuals, and prohibiting Mirabaud from accepting any new clients with increased money-laundering risks until compliance with Swiss financial market law has been restored.

This post will explain the background and basis of FINMA’s actions and provide several observations on its significance.

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The Top 5 Mid-Year Developments in Anti-Money Laundering Enforcement in 2024

by Stephanie Brooker, M. Kendall Day, Ella Capone, Chris Jones, and Ben Schlichting

From left to right: Stephanie Brooker, M. Kendall Day, Ella Capone, Chris Jones, and Ben Schlichting. (Photos courtesy of Gibson Dunn & Crutcher LLP)

In this piece, we analyze some of the most important mid-year trends and developments in AML regulation and enforcement thus far in 2024. Overall, 2024 has been very active, including key proposed and finalized rules, DOJ policy initiatives, and a notable judicial opinion discussed below. For a longer version of this piece, please visit Gibson Dunn’s website.

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FinCEN Adopts Rule Extending AML/CFT Requirements to RIAs and ERAs, Further Increasing Regulatory Obligations on Investment Advisers

by David Sewell, Timothy Clark, Ivet Bell, David Nicolardi, and Nathaniel Balk

Left to Right: David Sewell, Timothy Clark, Ivet Bell, David Nicolardi, and Nathaniel Balk (photos courtesy of authors)

On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) adopted a final rule that extends anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance obligations to certain types of investment advisers (the Final Rule), and delegates to the U.S. Securities and Exchange Commission (SEC) the authority to examine investment advisers’ compliance with these obligations.[1] The Final Rule ends a long-running debate over whether to subject investment advisers to AML/CFT obligations after multiple prior proposals to do so had stalled.

The Final Rule imports standards and requirements that will be familiar to investment advisers affiliated with financial institutions already subject to AML/CFT obligations, but may be new to smaller and independent investment advisers. For these entities, the compliance uplift required could be substantial.

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FinCEN and SEC Move Closer to New AML Requirements for Investment Advisers & ERAs

by Joel M. Cohen, Claudette Druehl, Marietou Diouf, Tami Stark, Prat Vallabhaneni, and Robert DeNault

Top: Joel M. Cohen, Claudette Druehl, and Marietou Diouf
Bottom: Tami Stark, Prat Vallabhaneni, and Robert DeNault
(Photos courtesy of White & Case LLP)

On May 13, 2024, FinCEN and the SEC jointly proposed a new rule that would require SEC-registered investment advisers and exempt reporting advisers to maintain written customer identification programs (CIPs). The new rule supplements a proposal in February to impose requirements on investment advisers similar to those that have existed for broker-dealers since 2001, as a means to address illicit finance and national security threats in the asset management industry.

For investment advisers who do not currently have an AML/CFT program, this compliance obligation will create a large shift in the way they operate. This will require significant legal time and attention, but it will be time well spent considering potential regulatory exposure and likely indemnification obligations which flow through commercial agreements in favor of counterparties.

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Crypto Experts React to Recent SDNY Ethereum Fraud Indictment

The NYU Law Program on Corporate Compliance and Enforcement (PCCE) is following the U.S. Attorney’s Office for the Southern District of New York’s recent indictment of two individuals for allegedly attacking and stealing $25 million from the Ethereum blockchain. The indictment in the case, United States v. Peraire-Bueno, 24 Cr. 293 (SDNY), is available here. Below, several crypto experts and former prosecutors provide their reactions to the case.

Left to right: Maria Vullo, Daniel Payne, Elizabeth Roper, Usman Sheikh, Justin Herring, and Robertson Park (photos courtesy of the authors)

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