The landscape of financial crime and Anti-Money Laundering (AML) continues to evolve at a breakneck pace, driven by the proliferation of cryptocurrencies, decentralized finance (DeFi), and complex third-party relationships. ACAMS Vegas 2024 brought together leading industry professionals and regulators to address these challenges head-on. Below are key insights from some of the most impactful sessions. 

1. Opening Session – “Together Against Exploitation: Insights from a Survivor and the Federal Government” 

One of the most powerful sessions was led by Claudia Quiroz, Director of the National Cryptocurrency Enforcement Team (NCET) at the U.S. Department of Justice. Quiroz detailed how the DOJ’s mandate has expanded to tackle cryptocurrency crimes, starting with cases like Silk Road and dark web markets, which have now evolved into more sophisticated scams. 

Cryptocurrency crime has evolved, and the digital asset world requires a dedicated approach. Formed two years ago, NCET focuses on AML, prosecution, and asset forfeiture related to digital currencies. Quiroz revealed that while crypto crimes account for only 10% of fraud cases, they represent 50% of total losses, with nearly $75 billion lost over the last four years. Victims are often in the 30-49 age range and deeply involved in crypto investments. These scams, usually involving fake investment platforms, are increasingly sophisticated and international in scope, requiring global collaboration to stem the flow of illicit funds. 

2. Latest Trends in Cryptocurrency Fraud

Several trends were discussed regarding how criminals exploit cryptocurrency: 

  • Bitcoin & Mixers: Platforms like Tornado Cash are used to obscure the flow of stolen funds. 
  • Stablecoins: These are frequently involved in large-scale hacks due to their liquidity and ease of conversion to fiat currencies. 
  • DeFi (Decentralized Finance): Offering no KYC/AML processes, DeFi allows criminals to engage in peer-to-peer lending and trading without oversight. 
  • Blockchain Tracing: While tools are being developed to trace transactions, rapid token movement complicates enforcement. 

The key takeaway? Crypto is here to stay, and institutions must understand its basics, tools, and risks to stay ahead in the fight against financial crime.

3. Regulatory Roundtable: Straight from the Source

This panel featured major regulatory bodies like the FDIC, OCC, Federal Reserve, and FinCEN, discussing forthcoming regulations in the banking and financial services industries, particularly in AML. 

Lisa D. Arquette from the FDIC emphasized the regulatory theme of “shift”—the need for financial institutions to remain agile in the face of evolving financial crime. Third-party risk management was a major point, as banks increasingly rely on 3rd, 4th, or even 5th-party relationships. Continuous monitoring and due diligence are critical, as is clear accountability in contracts. 

Koko Ives from the Federal Reserve highlighted the importance of enterprise-wide risk assessments and the need to allocate resources to higher-risk areas. Institutions should expect more guidance on risk assessments, especially with the new beneficial ownership and SAR/CTR threshold changes FinCEN is currently developing. 

Key Regulatory Updates: 

  • Resource Allocation & Risk Focus: Banks must focus on high-risk clientele and products, considering geography and service profiles. 
  • AML Act & BSA Officer Responsibilities: BSA officers must be U.S.-based, fully qualified, and ensure simplified due diligence for low-risk customers. 
  • Third-Party Risk Management (TPR): Banks must ensure that AML compliance is either in-house or well-integrated with third-party systems. 

Ultimately, while third-party providers play important roles, the bank always remains responsible for ensuring AML compliance.

4. Enforcement Actions and Future Trends

As financial institutions navigate the complexities of new relationships formed during the pandemic, enforcement actions are expected to rise. Institutions that have not adapted to the pandemic’s surge in third- and fourth-party relationships face regulatory risk due to gaps in due diligence and monitoring. 

Key Issues Raised: 

  • Outsourcing Compliance: While some compliance functions can be outsourced, the responsibility still rests with the bank. 
  • Fraud Monitoring: Institutions that delay escalating SAR filings face increasing regulatory scrutiny.

5. Future of Beneficial Ownership & AI in AML

FinCEN reported that they have already received over 4 million beneficial ownership reports since January, claiming significant progress in closing AML/CFT gaps. Plans are also underway to expand beneficial ownership reporting to include investment advisors. 

Meanwhile, AI is seen as a game-changer for AML processes. Although it can enhance efficiency, institutions must ensure they fully understand how AI works, particularly regarding data security and processing.

6. Domestic Terrorism and Financial Crime

A significant session led by the U.S. Department of the Treasury addressed the growing threat of domestic terrorism. As domestic violent extremism becomes a larger threat, financial institutions must adjust their strategies. These actors often self-fund, making detection harder. The session emphasized the importance of using social media data in investigations, though First Amendment challenges remain a concern. Institutions were encouraged to build strong relationships with law enforcement to spot threats early.

7. Trends in Technology and AML

Emerging technologies like AI and blockchain were major topics of discussion. Regulators urged financial institutions to embrace “responsible innovation”, ensuring any new technology integrates seamlessly into BSA/AML compliance programs. As fintech partnerships grow, regulatory expectations for oversight and integration are becoming more stringent. 

Conclusion 

ACAMS Vegas 2024 provided critical insights into the evolving challenges of AML and financial crime. Cryptocurrency, DeFi, and complex third-party relationships pose significant risks, but regulators are actively responding with new rules and enforcement actions to bolster AML efforts. In this dynamic environment, financial institutions must stay proactive, remain compliant with current regulations, and prepare for what lies ahead. Embracing technology and innovative strategies will be essential in combatting financial crime in the years to come.