President-Elect Donald J. Trump has said little about his plans for money laundering and terrorist financing enforcement, or his plans for the agency responsible for many of the Federal government’s anti-money laundering (“AML”) initiatives, the Financial Crimes Enforcement Network (“FinCEN”).

FinCEN is a bureau within the Treasury Department and not a fully independent agency.  Its leadership and policy agenda will be shaped by three yet-to-be-announced Presidential appointments, each of them subject to Senate confirmation:

  • the Treasury Secretary, who selects FinCEN’s Director;
  • the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, who must approve all regulations issued by FinCEN; and
  • the General Counsel of the Treasury Department, who oversees FinCEN’s Chief Counsel.

[Note: FinCEN’s leadership structure and authorities are summarized here.]

The current Under Secretary, Adam J. Szubin, and the current Director of FinCEN, Jamal El-Hindi, are both career civil servants who hold acting rather than permanent appointments.  The current General Counsel of the Treasury Department, Priya Aiyar, is also an acting appointee.

While Mr. Szubin, Mr. El-Hindi and Ms. Aiyar have no fixed terms, replacing Mr. Szubin and Mr. El-Hindi, in particular, may not be a priority for the President-Elect’s transition team.  Mr. Szubin rose through the ranks in the Justice Department’s terrorist litigation task force before running the Office of Foreign Assets Control (“OFAC”).  And, like Mr. El-Hindi – a longtime FinCEN staffer with prior experience at both OFAC and the Treasury Department’s Office of General Counsel – he is well respected and without partisan baggage.

At the same time, however, both FinCEN and the Treasury Department’s Office of Terrorism and Financial Intelligence as a whole are responsible for areas of policy at the core of the President-Elect’s platform: terrorism and border security.  FinCEN was first created as a financial intelligence agency and, under the USA PATRIOT Act, it is a clearinghouse for law enforcement information requests related to the financing of terrorism, among other things.

In addition, FinCEN:

  • maintains extensive databases that track every large currency transaction in the United States, as well as the hundreds of thousands of transactions that are flagged by banks as suspicious every year;
  • issues periodic advisories that set the tone for the clients and markets that U.S. banks will approach with heightened caution; and
  • plays an increasing role in enforcement, and was involved in the Federal government’s probe into Banamex USA’s AML controls for transfers between the United States and Mexico.

It is entirely possible, therefore, that as some have suggested the President-Elect will want the agency to step up its enforcement efforts.  His transition team may thus make it a priority to appoint a permanent Director to lead the charge.  Adding potential uncertainty is the fact that FinCEN has recently targeted two industries commonly associated with President-Elect Trump.  In 2015, FinCEN issued record fines against two casinos – one of which was the Trump Taj Mahal.  And, this year, FinCEN issued Geographic Targeting Orders (“GTOs”) subjecting certain all-cash luxury real estate transactions in six major metropolitan areas, including New York, to specialized reporting requirements.

In short:  at least until the President-Elect names a Treasury Secretary, FinCEN’s post-election agenda will remain unclear.

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works…

Michael Nonaka is a partner in the firm’s Financial Institutions practice group. He represents banks and other financial institutions on a wide variety of bank regulatory, enforcement, legislative and policy issues.  Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as big data, blockchain and related technologies, bitcoin and other virtual currencies, same day payments, and online lending.

Photo of Nikhil Gore Nikhil Gore

A member of the international arbitration and financial institutions practices, Nikhil V. Gore represents sovereign states and U.S. and global firms in international treaty-based and commercial disputes. He also regularly represents U.S. financial institutions, and the U.S. branches and affiliates of foreign financial…

A member of the international arbitration and financial institutions practices, Nikhil V. Gore represents sovereign states and U.S. and global firms in international treaty-based and commercial disputes. He also regularly represents U.S. financial institutions, and the U.S. branches and affiliates of foreign financial institutions, in investigations and inquiries involving the Federal Reserve, OCC, FDIC, CFPB, and state banking regulators.

Mr. Gore has served as counsel in investment and commercial arbitrations spanning several industries and a variety of regions, including Asia, Eastern Europe, North America, and Southern Africa. Additionally, he has expertise in the law of the sea, and was part of the Covington team that secured an order from the International Tribunal for the Law of the Sea, which required Russia to release three Ukrainian naval vessels and twenty-four servicemen detained in the Black Sea in 2018.

In his financial institutions practice, Mr. Gore has experience with enforcement actions and investigations relating to the Bank Secrecy Act, the federal criminal money laundering statutes, the full range of safety and soundness issues (including, in particular, supervisory reviews of bank control functions), and fair lending and consumer compliance. Mr. Gore is a regular contributor to the firm’s financial services blog.