The Week Of: November 2, 2020

This week’s news and stories of interest to the AML community. 

OFAC warns art businesses to keep track of buyers’ identities

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued an advisory note to museums, galleries, private collectors and auction houses warning of the risks involved with high-value artwork associated with sanctioned individuals.

High-value artwork transactions can provide access to the US market and financial system, and as such are an attractive money laundering vehicle and a way to evade sanctions, according to OFAC. A Congressional report released in July details how sanctioned individuals circumvented restrictions by moving millions of dollars through anonymous shell companies and investing the money in high-value artwork.

The OFAC guidance also describes how galleries in China host exhibitions and works of art by a Pyongyang-based art studio. North Korea is believed to have earned “tens of millions of dollars” creating and exporting artwork abroad.

OFAC is encouraging art businesses to implement risk-based compliance programs to mitigate potential exposure to sanctions violations.

FinCEN wants to clamp down on small payments fueling crime

The US Financial Crimes Enforcement Network (FinCEN) has proposed a new rule that would lower the dollar threshold of payments sent overseas that would trigger a suspicious activity report.

Currently, the US Bank Secrecy Act requires information on any payment over $3,000 sent to a foreign country to be collected and retained, triggering a report; FinCEN proposes to lower that threshold to $250 to avoid further evasion of the rules.

“Malign actors are using smaller-value cross-border wire transfers to facilitate or commit terrorist financing, narcotics trafficking, and other illicit activity,” FinCEN says in its proposed rule. “Increased record keeping and reporting concerning these transactions would be valuable to law enforcement and national security authorities.”

Crime fighting experts and law enforcement agencies say the current threshold, established in 1995, is outdated, according to ICIJ. An examination by FinCEN found that more than one million transactions in thousands of SARs were lower than $500.

Personal record hack numbers double in 2020

The number of personal records exposed in data breaches surged to 36 billion in 2020, which is double the number in 2019, according to ITPro. Two incidents alone exposed more than one billion records each.

Yet the number of publicly disclosed breaches declined. In Q3 2019, over 6,000 breaches were reported; so far this year that number is under 3,000.

The lower number could be explained by a lack of media coverage, reports ITPro, as well as a pivot towards ransomware attacks, which companies are not always obliged to report. American companies are not subject to the same strict reporting demands as are those in the EU under GDPR rules.

More than 75% of incidents were attributed to cyber criminals, while 17% originated from within an organization.