On September 13, 2022, Judge Abdul Rahman Murad Al-Blooshi, Director of the International Cooperation Department of the UAE Ministry of Justice, issued a communiqué to His Excellency Tarish Eid Al-Mansoori, Director General of the Dubai Courts, directing the Dubai Courts to enforce judgements issued by the English Courts (the “Directive”). This follows the English Courts’ decision in Lenkor Energy Trading DMCC v Puri [2021] EWCA Civ 770 to enforce a judgment of the Dubai Courts concerning dishonored cheques.
The pro-enforcement Directive might foreshadow an increasing number of enforcement actions by judgement creditors of the English Courts against assets domiciled in Dubai.
The United States may prosecute foreign fraudsters using U.S. wires when their entirely foreign-based schemes use U.S. wires to victimize persons in the United States. That is the conclusion we draw from the Fourth Circuit’s decision in United States v Elbaz. The Elbaz court joined the Ninth Circuit in holding that the wire-fraud statute’s focus on the misuse of U.S. wires meant that the prosecution of any foreign scheme is a permissible domestic application of the statute as long as there is a wire transmission in the United States. The decision probably represents the outer limits of the statute’s permissible domestic application, though it denies the government the unfettered extraterritorial reach – a power the government previously sought.
But striking is the court’s discussion of the permissible geographic reach of the wire-fraud conspiracy statute (which carries the same heavy penalties as the wire-fraud statute). The court concludes that the conspiracy statute can reach any foreign conspiracy to commit wire fraud, irrespective of the fraudsters’ or victims’ geographic locations. In other words, U.S. law enforcement may now be able to prosecute entirely foreign conduct harming foreign victims; all that is needed is the intended use of a U.S. wire to further the fraudulent scheme that is the object of the alleged conspiracy.
The Saudi Central Bank (previously known as the Saudi Monetary Authority, or SAMA) has published the third edition of the Key Principles for Governance in Financial Institutions (the “Guide”), which are intended to enhance management styles, set direct and indirect strategic objectives, maintain stability, and promote the rights of stakeholders.
We recently shared an alert covering The National Defense Authorization Act for Fiscal Year 2021 (NDAA), which became law on January 1, 2021. The NDAA included significant reforms to the U.S. anti-money laundering and countering the financing of terrorism regime. Division F of the NDAA consists of the Anti-Money Laundering Act of 2020, which includes the Corporate Transparency Act (CTA). Congress enacted the CTA to establish uniform beneficial ownership information reporting requirements to improve transparency for national security, intelligence, and law enforcement agencies in their efforts to detect and prevent money laundering and terrorist financing.
On September 29, 2022, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued regulations regarding the beneficial ownership reporting requirements. The final rulemaking is effective January 1, 2024. Reporting companies created or registered before January 1, 2024, will have one year (until January 1, 2025) to file their initial reports, while reporting companies created or registered after January 1, 2024, will have 30 days after creation or registration to file their initial reports.
On September 16, 2022, the U.S. Department of the Treasury (“Treasury”) published three reports in response to a March 2022 Executive Order concerning the development of digital assets. The reports address the future of money and payments; implications for consumers, investors, and businesses; and the illicit financing risks of digital assets. Secretary Yellen described the reports as identifying the challenges and risks of digital assets used for financial services, while providing recommendations for mitigating such risks. The reports responded to President Biden’s March 9, 2022 Executive Order (“EO 14067”) on Ensuring Responsible Development of Digital Assets, which called for a coordinated, inter-agency strategy to harness the potential benefits of digital assets while addressing their inherent risks. We have written previously on EO 14067, and on a report issued by the Department of Justice pursuant to EO 14067. We analyze below one of the three Treasury reports, specifically the Treasury’s Action Plan to Address Illicit Financing Risks of Digital Assets (“Action Plan”).
On August 8, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned virtual currency mixer Tornado Cash for having laundered more than USD 7 billion worth of virtual currency since its founding in 2019. This includes over USD 455 million worth of stolen virtual currency associated with the Lazarus Group, a “Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group” that is responsible for the largest known virtual currency heist to date.[1] Notably, Tornado Cash is only the second virtual currency mixer that OFAC has sanctioned, following its May 2022 sanctions on Blender.io. These sanctions against two virtual currency mixers within months of each other signal an escalation in OFAC’s focus toward cyber-criminal activity perpetrated through virtual currency related platforms. Some in the digital assets industry, however, feel that OFAC’s actions—sanctioning a piece of computer code rather than specific bad actors—is unconstitutional and subject to legal challenge.
Among the “biting” new sanctions will be a wider ban on the provision of European services to Russia. The list of banned services has not yet been announced, but there are multiple reports circulating that this may include legal services. Watch this space!
On September 16, 2022, the U.S. Department of Justice (“DoJ”) issued a report on The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets (the “Report”), which will have a significant and wide-ranging impact on the U.S. government’s ability to investigate, prosecute, and disrupt crimes involving digital assets. The Report announces an expansion of DoJ’s enforcement capabilities through the establishment of a national network of prosecutors dedicated to investigating and prosecuting criminal activity involving digital assets. The Report also provides recommended regulatory and legislative actions, in order of priority, which DoJ believes would help it enforce criminal violations involving digital assets.
On September 15, 2022, Deputy Attorney General Lisa Monaco announced updated guidelines for the U.S. Department of Justice’s (“DOJ”) corporate criminal enforcement in a speech at New York University Law School. Monaco previously announced in October 2021 that DOJ would take a tougher stance on white collar crime. Shortly thereafter, Monaco formed an advisory group to evaluate potential changes to existing DOJ policies to facilitate DOJ’s more aggressive approach. The advisory group solicited feedback from defense counsel, executives, compliance personnel, law professors, and others during its review. Last week’s announcement and a DOJ memo released the same day were the culmination of nearly a year’s work and included both incentives and warnings for businesses and individuals. The new guidance updates existing DOJ guidance in the following areas:
Individual Accountability
Expedited Investigations and Prosecutions
Prior Misconduct
Department-Wide Incentives for Voluntary Disclosure
New Guidelines for Compliance Monitors
New Guidance for Assessing Corporate Compliance Programs
The policy revisions apply across the DOJ, and while some of the announcements supplement or clarify existing guidance, others establish new policies, e.g., guidance on evaluating a corporation’s compensation plans. DOJ indicates that the new guidance will be incorporated into DOJ’s existing, publicly available policy manual, the “Justice Manual,” but that for now, prosecutors are instructed to employ the Justice Manual’s existing “Principles of Federal Prosecution of Business Organizations,” in conjunction with the October 2021 and these recently announced policy updates.
The author and editors would like to thank Eben Kurtz for his contributions to this post.
On 21 April 2022, the U.K.’s Financial Conduct Authority (“FCA”) secured its first Account Forfeiture Order (“AFO”), a tool used for asset recovery under Part 5 of Proceeds of Crime Act 2002 (”POCA”), for a sum of £2,000,000 against the company QPay Europe Limited. Please find the FCA’s press release on the case here.
Until now, these powers, granted by the Criminal Finances Act 2017, have mainly been used by the National Crime Agency, regional police forces, and His Majesty’s Revenue and Customs (“HMRC”). However, because the FCA stated in their recently published three year strategy that they plan to use their “enforcement and intervention powers more actively”, these measures should now be firmly on the radar of the compliance teams and MLRO’s of FCA regulated entities.
