Hold on to Your Wallet: ABA Money Laundering and Asset Forfeiture Panel Warns of Ramped Up Enforcement
The Department of Justice (DOJ) in recent years has proudly and famously flexed its asset forfeiture muscles in a number of high-profile cases by seizing the assets of foreign nationals. The Department now aims to continue and broaden these efforts, using the powerful money laundering statutes to seize assets, including for crimes involving cryptocurrency. That was a major takeaway from this morning’s Money Laundering and Asset Forfeiture panel here in Miami—a panel consisting of former DOJ attorneys Evelyn Sheehan, M. Kendall Day, John Kucera, and Steve Welk, as well as Deborah Connor, the current Chief of DOJ’s Money Laundering and Asset Recovery Section (MLARS). MLARS Chief Connor made plain that the government views money laundering statutes and asset forfeiture as “powerful tools” in helping to fight corruption and told us that DOJ is busy “educating prosecutors” and “deploying them in large ways” to use these tools. Connor explained that the governing statutes allow the Department to reach foreign actors, and that DOJ increasingly will focus on applying these tools to crimes involving cryptocurrency, too.
18 USC § 982(a)(1) allows the government to seize any assets “involved in” a money laundering offense. DOJ has used this broad statutory authority to seize property and assets belonging to downstream entities such as property holders or banks that may have facilitated transactions meant to conceal the proceeds of criminal behavior by others. Increasingly, the government is using civil asset forfeiture to seize property and assets before criminal charges are even brought. The panel discussed how these seizures at some point may raise Eighth Amendment issues, but noted that the case law is unsettled so far.
MLARS Chief Connor also discussed how DOJ is investigating financial institutions for aiding and abetting foreign actors who use banks to launder money or to violate the Bank Secrecy Act. She noted that bribes between foreign actors and governments can involve hundreds of millions of dollars. Financial institutions would be wise to exercise due diligence over transactions, or else their conduct could aid overseas corruption.
With respect to other enforcement trends, Connor touted the new National Crypto Enforcement Team (NCET), which DOJ formed to combat criminal uses of cryptocurrency. The NCET is focused on the misuse of cryptocurrency in exchanges and mixers and on when crypto is involved in laundering, third-party laundering, and ransomware.
The panel reflected that DOJ will continue to wield asset forfeiture as an enforcement tool and that new whistleblower laws will likely increase the volume of investigations and prosecutions. We’ll follow those enforcement actions here.
If you have questions about asset forfeiture or anti-money laundering issues, please feel free to reach out to the author or any of your trusted advisors at Arnold & Porter.
© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.