Executive Branch

The Lawfare Podcast: Discussing FinCEN with Director Andrea Gacki

Scott R. Anderson, Brandon L. Van Grack, Andrea Gacki, Jen Patja
Monday, January 29, 2024, 8:00 AM
What has been the evolution of FinCEN?

Published by The Lawfare Institute
in Cooperation With

Everyone recognizes sanctions as one of the United States’ most powerful tools of economic statecraft. But few realize that much of the information behind sanctions designations comes from another office within the Treasury Department: specifically, the Financial Crimes Enforcement Network (or FinCEN). And over the past few years, as sanctions and other economic tools have become more and more important, FinCEN has been evolving its operations and activities as well.

To discuss the current state of FinCEN and what its future holds, Lawfare Contributing Editor Brandon Van Grack and Lawfare Senior Editor Scott R. Anderson had a conversation with its current Director, Andrea Gacki, for the latest installment of their “The Regulators” series, focusing on the policymakers at the frontlines of national security and economic statecraft. They discussed FinCEN’s involvement in the historic Binance settlement, what new policies FinCEN is rolling out to tackle everything from beneficial ownership to residential real estate, and how it is working with similar organizations around the globe.

Click the button below to view a transcript of this podcast. Please note that the transcript was auto-generated and may contain errors.


[Audio Excerpt]

Andrea Gacki: we know that dirty money has a corrosive effect on the U. S. economy and corporate anonymity facilitates crime and disadvantages small businesses across America. So what we want through this change through, what the aim of this change is to make the United States less hospitable to dirty money and support law enforcement, intelligence, and national security professionals as they work to safeguard our nation.

The framework that we've instituted, as Brandon, we opened up the database for filings on January 1st of this year. Filing is simple, it's secure, it's free of charge, and the information is not an annual requirement. Unless a company needs to update or correct its information, it reports once and does not need to report again. So, we're trying to navigate the critical need for this information and balance it with the impact on small business.

[Main Podcast]

Scott R. Anderson: I'm Scott R. Anderson, and this is the Lawfare Podcast for January 29th, 2024. Everyone recognizes sanctions as one of the United States most powerful tools of economic statecraft. But, few realize that much of the information behind sanctions designations comes from another office within the Treasury Department. Specifically, the Financial Crimes Enforcement Network, or FinCEN. And over the past few years, as sanctions and other economic tools have become more and more important, FinCEN has been evolving its operations and activities to keep pace.

To discuss the current state of FinCEN and what its future holds, Lawfare Contributing Editor Brandon Van Grack and I had a conversation with its current director, Andrea Gacki, for the latest installment of our The Regulator series, focusing on the policy makers at the front lines of national security and economic statecraft. We discussed FinCEN's involvement in the historic Binance settlement, what new policies FinCEN is rolling out to tackle everything from beneficial ownership to residential real estate, and how it is working with similar organizations around the globe.

It's the Lawfare Podcast for January 29th: Discussing FinCEN with Director Andrea Gacki.

To begin, before we even get to all things FinCEN, I'm wondering if you can just walk us through your background? This isn't the first time you've been a director and, I think, not just to give the audience an understanding of your experiences, but, in part, because it probably helps inform some of how you view FinCEN and even using some of those tools that are available to FinCEN.

Andrea Gacki: So, yeah. Prior to becoming the FinCEN Director, which is a position I formally entered into duty on in early September, for the last five years, I was the Director of the Treasury Department's Office of Foreign Assets Controller, OFAC. And my job there was to lead an organization comparably sized to FinCEN, implementing and enforcing economic sanctions on behalf of the U. S. government. For the ten previous years to that, I was also at OFAC in various management roles overseeing key aspects of it. Prior to that, I got into sanctions by being at the Justice Department--Brandon's background as well--kind of where I first defended OFAC in some cases post-9/11.

So, from the OFAC perspective, looking at FinCEN, I gotta say, we're in the same family, the same kind of group in the Treasury Department. And they've been my colleagues for a long time. And I came to appreciate how much our missions were intertwined. A lot of OFAC designations depend on information that comes into FinCEN. And FinCEN sets the rules, gets the information, and ensures it's disseminated out. A proper functioning FinCEN is critical to the sanctions mission. And that's not just OFAC, but that's law enforcement, that's national security more broadly. So, I had a sense, I had some opinions about FinCEN, and I've always been--for a long time I've been sanctions-motivated and wanting to make sure sanctions were were a tool used appropriately and wisely, and that depends on the information coming in.

And then, as I was moving from OFAC to FinCEN, one of the great things that my team did at OFAC was they gave me a series of briefings, so I really understood how much FinCEN contributed to OFAC's mission. And to really--to enforcement cases, to sanctions designation cases, and to the, just to how quickly we move on. And when it comes to sanctions evasion, they made very clear that's FinCEN's job. They're the ones getting the reporting. They're on the front lines of learning where are the next front of moving beyond what OFAC is designated. So it was a pretty thrilling thing for me to finally appreciate and a good bridge for me to come to FinCEN.

Brandon Van Grack: I like the term "sanctions-motivated." That's good. So, there are probably some folks here that are trying to figure out like what the acronym FinCEN stands for. And I'm wondering if you could just talk a little bit about FinCEN, what it does, and what its relationship is with national security and foreign policy, too.

Andrea Gacki: Yeah. So, FinCEN stands for the Financial Crimes Enforcement Network. And it is a bureau within the Treasury Department situated under the Office of Terrorism and Financial Intelligence. So, Under Secretary Brian Nelson is my boss, as he was my boss when I was Director of OFAC. Ultimately, of course, we report to Secretary Yellen.

The mission of FinCEN is to safeguard the financial system from illicit use, combat money laundering and related crimes, and promote national security through the strategic use of financial information and collection, analysis, and dissemination of financial intelligence. And FinCEN does this by serving two primary roles: first, as a regulator, and next is the United States Financial Intelligence Unit. As a regulator, we are in charge of implementing and enforcing and administering the Bank Secrecy Act, setting the rules by which financial institutions and other entities Set up structures to analyze--to set up anti-money laundering programs, but also to develop reporting, suspicious activity reporting, which comes to FinCEN. The Financial Intelligence Unit part is how we take in, collect, analyze, disseminate. We sit on a lot of data that we have a great responsibility to protect and to share. There are international standards for any money laundering. And a financial intelligence unit, like FinCEN, is a central national agency that's responsible for receiving, analyzing, and disseminating the financial intelligence to competent authorities.

So, serving as both a regulator and an FIU means that FinCEN is actually unique among other FIUs. We belong to a collection of 170 FIU collection, like a group, the Egmont group of financial intelligence units. But we are unique in that we have a regulatory role as well.

Brandon Van Grack: Could you also just talk a little bit about those tools you have as a regulator? What makes FinCEN, not just in terms of the dual roles that you just said, but in terms of some of those tools as well?

Andrea Gacki: Yeah. And I might do this by trying to quickly sketch out a little bit of the functions that FinCEN has in it. We've got a regulatory team. Their work is to issue, interpret, and clarify regulations to combat money laundering and other forms of illicit finance. These require, I alluded to, approximately 300, 000 financial institutions to report timely and accurate information regarding suspicious activities and other transactional information, which we often call BSA data, to FinCEN. Then we maintain this information in a secure database, and, in addition to providing direct access to agencies with a need-to-know, like FBI, law enforcement, other entities, we also have teams of analysts who pour over this data, and they use advanced analytic tools and techniques to map out illicit networks and identify targets. And this is for further action, law enforcement, sanctions, a lot of roads that could take.

We also have a great deal of partnership both domestically and internationally. Domestically, we work very closely with U. S. banks and other private sector entities, and we issue advisories to direct and further drive reporting on priority risks and host events to exchange information with them. It's truly a partnership and we want to improve our overall regulatory regime. And then on the international front, as I mentioned, we can lean on a global network of FIUs with us through the Egmont group of FIUs.

And then, finally, I'll just conclude. But, we do have authorities to bring some bad actors to account. We've had a number of important enforcement actions we've brought to resolution recently. Those can be civil enforcement investigations, but, we also have a tool related to designating certain foreign institutions, jurisdictions, or other activities outside the United States as a primary money laundering concern. And I'll just conclude saying, one of the key things on our plate right now is implementing all the provisions of the Corporate Transparency Act to include beneficial ownership.

Scott R. Anderson: So, that's a great transition to my next question because I want to give people a case study about what FinCEN does, is doing, and how it fits into the broader enforcement and regulatory structure. So, let's talk about one of the biggest enforcement actions we've seen really, well, ever, honestly, but particularly recently that's been in the news that listeners may have heard of. That's the Binance settlement action, the biggest settlement in terms of dollar amount that we've ever seen in this space. And on top of that, a novel enforcement measures involved a monitorship for the first time, I believe. Tell us a little bit about this case, how it came about, and then FinCEN's role in it. How did FinCEN's work contribute to it and how will it continue to contribute to it now that it's going to be operating under this monitorship arrangement?

Andrea Gacki: I think you know well this is the biggest case in the Treasury Department's history and Binance itself is the world's largest virtual asset service provider. It's responsible for around 60 percent of centralized virtual currency spot trading. So I was at OFAC when this case was really coming into being. So, I can tell you, with all credit to my FinCEN colleagues at the time, that the case started at FinCEN. The case started and to really long-time, dedicated FinCEN employees who you know saw Binance's ads, noting that it would set up structures to evade AML laws in the United States, and I want to just give all credit to FinCEN for being a driving force here. But, obviously, FinCEN wasn't the only player here at the end of the day, and that's important for the global resolution of the case.

But, when it comes down to what Binance did is, as a money service business, it was required to register with FinCEN to establish, implement, and maintain an effective AML program, and, as appropriate, to file suspicious activity reports with FinCEN. Binance willfully violated these requirements, and it allowed a range of illicit actors to transact freely on the platform, and damages the integrity of, from our perspective, the financial institution. And we saw, at the end of the day, willfully fail to report over 100,000 suspicious activity transactions to FinCEN. And some of the counterparties ranged from terrorist organizations, ransomware attackers, child sexual exploitation sites, frauds, and scams. The scale, the scope, and the nature of the illicit activity occurring on the platform and the size of the scope, and scope of Binance as an operation, necessitated FinCEN and government partners taking action.

The civil monetary penalty that we entered into by consent order with Binance, which was 3.4 billion for FinCEN alone, is the largest itself in Treasury history. As you noted, it imposes a five-year monitorship, which is unique in FinCEN cases, and also requires significant compliance undertakings, including Binance's complete exit from the United States.

Scott R. Anderson: So, tell us a little bit about how this monitorship we think is going to work. And and you mentioned this is kind of the first time we've seen this as a novel measure. Is this a new tool in the toolbox that we're going to see in other cases moving forward?

Andrea Gacki: So, yeah, Scott, the monitor is unique to FinCEN, a new concept for FinCEN. Not new for Justice Department-led investigations of which Treasury has played a role. But, we think it's a critical aspect of the resolution with Binance and that is really key because of the details of the Binance case.

 Binance turned a blind eye to its legal obligations. It processed and failed to report to FinCEN suspicious activity involving a broad range of illicit actors. We think in this case, the monitor is going to play an important role in light of the significant remediation required and because of the opacity of finances operations. But, I would hesitate to call this a new model for us. Compliance undertakings are part of many FinCEN enforcement cases before this, part of the enforcement toolkit, and we will, of course, consider it when appropriate in upcoming cases. I don't want to prejudge whether a similar approach is going to work for other enforcement act cases that might come down the line.

Brandon Van Grack: One of the other sort of big undertakings that FinCEN is involved in is concerning beneficial ownership information in terms of setting up a database, reporting. I'm wondering if maybe just as a starting point, talking a little bit about what in fact is beneficial ownership information. So, how does that relate to what you just talked about in terms of FinCEN's mission? And then we can talk a little bit about the database and some of the changes that just went into effect this month.

Andrea Gacki: So, just a step back at the broadest level, beneficial ownership is meant to peel back layers of corporate anonymity, to ensure that the opacity of corporate structures aren't used to funnel a whole range of illicit activity. It's a key plank in the administration's anti-corruption agenda. But, it has its basis in a law that passed with overwhelming bipartisan approval, the Corporate Transparency Act, which was part of the broader anti-money laundering act enacted in 2021 that had a lot of measures to improve U. S. AML CFT effectiveness.

What the Corporate Transparency Act does, in terms of beneficial ownership, is it requires many companies doing business in the United States to report information about their beneficial owners. So, these are the actual human beings, the individuals, who ultimately own or control them. And sometimes they have to report the people who actually form the company. Collectively, this information is going to be called beneficial ownership information. We sometimes call it BOI.

Just to come back to my starting point, this is all to address what we've long seen, is that criminals use anonymous companies to hide or launder the proceeds of their crimes. We know that dirty money has a corrosive effect on the U. S. economy, and corporate anonymity facilitates crime and disadvantages small businesses across America. So what we want through this change--what the aim of this change is to make the United States less hospitable to dirty money and support law enforcement, intelligence, and national security professionals as they work to safeguard our nation.

The framework that we've instituted, as Brandon, we opened up the database for filings on January 1st of this year. Filing is simple, it's secure, it's free of charge, and the information is not an annual requirement. Unless a company needs to update or correct its information, it reports once and does not need to report again. So, we're trying to navigate the critical need for this information and balance it with the impact on small business.

Brandon Van Grack: And so, previously, the point is this information-- and actually, maybe do a public service announcement for some of our acronyms. So, you already described BOI, BSA is Bank Secrecy Act, and AML is Anti-Money Laundering. We will try to throughout this provide those announcements. So the point is this information was not previously collected. Can you talk a little bit-- the database went live. Are you able to sort of provide some numbers in terms of like what volume? It's only been, it's been less than a month now or about a month. And so, can you give us a sense of how the database is working?

Andrea Gacki: Sure. In the first week that it was stood up, we collected 100,000 reports--100,000 companies reported successfully. As of yesterday, we were up to 300,000 reports. We also have a contact center that's set up specifically for beneficial ownership. So far, we've received 18,000 tickets for assistance. We've closed--we've resolved--16,000 of those. So, things are going strong, but we have a long road to completion, too.

Brandon Van Grack: I'm totally intimidated by anything technology-related in database, so, God bless you. Best of luck. So, maybe just one other piece on that, which is first is a collection, then is the use. And so, can you talk a little bit about what does access look like and whether, in fact, government agencies and law enforcement is in fact getting access to the database?

Andrea Gacki: Yeah. Right now-- so, we finalized a rule at the end of 2023. We finalized a rule that establishes the rules for access and the parameters by which access will be obtained. Let me tick through who will get access. Who will get access are federal agencies involved in national security, intelligence, and law enforcement; state, local, and tribal enforcement agencies, if they have court authorization; foreign law enforcement agencies; judges, prosecutors, and other authorities, but they have to meet specific criteria; and Treasury officers and employees. That was set by statute. We set up rules around that. Importantly, financial institutions also, with customer consent, can have access to beneficial ownership information. This will facilitate their compliance with customer due diligence requirements under applicable law. But that goes more broadly, as they need to know their customer, including, for example, sanctions compliance, they'll be able to use this information and their regulators will have access to the information for supervisory purposes.

Right now, the database is being populated, so we're going to be rolling out access in stages. And our final rule establishes that only authorized recipients will have access to this information. And the authorized recipients have to protect that information and use it only for purposes under the Corporate Transparency Act. And authorized recipients can only redisclose beneficial ownership information in ways that further the objectives of the Corporate Transparency Act. Our database is non-public, it's secure, and it uses information controls typically used in the federal government to protect non-classified information systems at the highest security level. So, we're going to be working out on rolling out access to beneficial ownership information, but, these are some important ground rules for access.

Scott R. Anderson: So, talking about gathering information from sensitive sources, another program that you all have been standing up for a while now, but it's still in process, is a whistleblower program. A system by which it could be a very valuable tool for collecting information from a variety of domains when you're dealing with transactions that might not be fully available or visible to the public, ways you can get access to different sources of information for enforcement purposes that obviously could be valuable. Tell us a little bit about the program, where it is right now, where it is progress-wise, what the goal is, the end state you're envisioning for it is. And I'd be curious to what you can share about what you're doing with it right now. What are we seeing in terms of how it's being used?

Andrea Gacki: And this is something that I, of course, knew about when I was at OFAC, because it has a sanctions dimension, and it had captured my interest and many others' interest even before I got to come to FinCEN to have a part of it. But, the whistleblower program at FinCEN, which was established by statute, recently expanded by statute as well, is designed to incentivize individuals to provide information to the U. S. government about violations of the Bank Secrecy Act, but also U. S. economic and trade sanctions violations. So, under the new program, individuals who provide FinCEN with information about the violations can be eligible for financial awards if the information they provide leads to a successful enforcement action. The program has tremendous potential to be a force multiplier, to really help direct enforcement efforts to those that are most important in the U. S. government. To date, FinCEN has received nearly 250 tips and the program's popularity is continuing to grow each year. The tips have nearly doubled between fiscal year 2022 and 2023. And we've set up a team to manage this, manage these tips, and to distribute them to our enforcement colleagues across the U. S. government.

Brandon Van Grack: Can you tell us a little bit about the volume? Like, how much is this actually happening right now? Do we have a sense about how useful a tool it has been, or, is that still something that's in progress, figuring out the right way to calibrate and provide the right incentives to make it as valuaBle as, obviously, it could be?

Andrea Gacki: I think that we still have work to do to stand it up. We are working on regulations that will govern the process of tip and award submissions and adjudications. That process will likely involve developing an online portal so that members of the public can safely and securely submit tips and award applications to FinCEN. And these rulemaking and technological efforts are underway.

I also think it's too soon to say. In part because of--the timeline for enforcement cases is sometimes protracted. And I can't share any instances of potential rewards at this time. But, I can say that we're eager to operationalize this at FinCEN.

Brandon Van Grack: When you talk about whistleblower programs, there's sort of a pragmatism to it, right? Which is what the government is trying to do just broadly is, in a cost-benefit analysis onto what to do with information, substantially increase the benefit and therefore change the behavior. I'm wondering what you would-- as you just said, there are still aspects of the program that are under development. There haven't been any awards issued yet because of the timeline of these. So what would you say to someone to answer two questions for this program-- I want to call it a nascent program--which is, one is, what would you say to someone when you have this nascent program that hasn't issued awards yet in terms of concerns about security? And two, in terms of prospects of benefit, prospects of award, how would you sort of respond to concerns raised about that or questions?

Andrea Gacki: Right. This is a nascent program. And while we set up the regulations, we look to, however, the statutes that authorize this program. And they set up three basic protections. Those statutes are the Anti-Money Laundering Act and the Whistleblower Improvement Act. The three protections, commitments, are first, there are certain confidentiality protections for whistleblowers. Second, the statute prohibits retaliation by employers against individuals who provide information. And third, the statutes provide a robust funding mechanism to ensure that eligible whistleblowers, who often provide information at great personal and professional risk, receive monetary awards. So those are the underpinnings, that's the statutory authorization. And against those, FinCEN will now develop the rules.

Scott R. Anderson: So, talking about nascent programs, let's shift to another nascent program, or anticipated program, that we see coming down the pike because we're anticipating an announcement later this year about residential real estate which is a topic that's kind of been an increasing focus, real estate generally, I should say. We've seen it in the sanctions context, in the CFIUS context over the last five or six years. It's a big focus, new authorities in that space. Tell us why FinCEN is interested in residential real estate with this new rule, and can you give us a little bit of a sneak peek about what it might look like and what we should be expecting in terms of timeframe, substance, things along those lines?

Andrea Gacki: The U. S. residential real estate market we've long seen as vulnerable to exploitation by illicit actors. The Treasury Department's been seeing that the residential real estate market in particular sees people rely on opaque legal structures and all-cash transfers, and this has been used to anonymously launder money and evade the scrutiny of banks and other financial institutions involved in real estate purchases. So, on December 15th, 2023, FinCEN submitted a proposed rule to the Office of Management and Budget. And this proposed rule is under review and the proposal is to develop regulations to combat money laundering and promote transparency in the residential real estate sector. We aim to publish this notice of proposed rulemaking in early 2024. There will be a 60-day comment period.

And this rule is building on Treasury's experience with geographic targeting orders that we've issued specific to residential real estate purchases, and also takes into account public comments received in response to an advanced notice of proposed rulemaking we put out in 2021.

Brandon Van Grack: What is the targeting order? Can you talk about that?

Andrea Gacki: Sure. A geographic targeting order is a device by which FinCEN can authorize or seek collection around certain geographic areas, focusing on certain illicit activity to drive data collection and evaluate an illicit risk.

Brandon Van Grack: Staying with the topic of forthcoming rules, there's also anticipated rules with respect to investment advisors. And can you talk a little bit about what that expected rule covers and why?

Andrea Gacki: So, again, another anticipated rule under development. I can't go into great detail, but I can offer some thoughts. Which is, when it comes to investment advisors, unlike many other financial services professions, this sector has never been subject to comprehensive anti-money laundering, countering the financing of terrorism obligations, despite the fact that the sector manages trillions of dollars in assets.

Right now, there is a patchwork of anti-money laundering coverage in the sector. Certain investment advisors apply, implement, some measures to protect against anti-money laundering, including because they're duly registered as broker dealers or part of a financial holding company that is already subject to such requirements.

So, for decades, this sector has been vulnerable to criminals and other illicit actors. They've used investments to gain access to the U. S. financial system, to invest in U. S. securities and other assets, and facilitate crime, like corruption, fraud, tax evasion, along with other illicit activities. And this vulnerability has increased as the industry has grown.

There's also a national security dimension to this vulnerability as well. We've identified investment advisors serving as an entry point into the U. S. financial system for Russian oligarchs and for Russian government-affiliated funds. Foreign states, like China and Russia, have also used investment advisors to access certain technology and services with long-term national security implications through investments in early-stage companies.

So, by proposing AML CFT program and suspicious activity report-filing requirements for certain investment advisors, Treasury is taking action to keep the dirty money out of the United States and protect our economic and national security. We look forward to proceeding with a robust rulemaking process and we will be welcoming public comments from interested parties.

Brandon Van Grack: That's a, that's a busy 2024 for you all.

Andrea Gacki: It is.

Brandon Van Grack: You're going to be an expert on policymaking. All right. Go ahead, Scott.

Scott R. Anderson: So, in terms of what FinCEN has been working on, of course, we've already hit on that you play a central role, interact, with a lot of different federal agencies, a lot of different enforcement authorities and regulatory authorities.

Something we spent a fair amount of time on, including with our last guest here on The Regulator series, is export controls. And you all have done a joint announcement that came up in that conversation about export control violations in suspicious activity reports. Can you tell us a little about this collaborative effort? What brought it about? What is new about it? And how effective has it been? What have we seen come out of it?

Andrea Gacki: So I know you had Assistant Secretary Axelrod on recently to discuss export control evasion, and he did a wonderful job in describing the genesis of FinCEN's partnership with BIS, or excuse me, the Department of Commerce Bureau of Industry and Security to issue a series of advisory products to help financial institutions identify and report suspected export control violations.

This began in June of 2022, where we issued a joint alert to financial institutions that highlighted tactics and red flag indicators of suspicious activities that were indicative of Russian and Belarusian actors seeking to evade export controls and acquire sensitive dual-use technologies and support of Russia's invasion of Ukraine. We followed it with a supplemental alert in May, 2023 in a public financial trends analysis and an analytical product that outlined patterns to assist law enforcement in understanding the problem set and potential avenues for disruption. And then we recently issued a notice highlighting, red flags for global export control evasion in new key terms for financial institutions.

This has been incredibly important to focus on export controls because this is where Putin is building its war machine in Ukraine. And so, across the Treasury Department export controls, but also sanctions evasion, we've been engaging in a concerted effort to disrupt the financing of and the export of the critical components that Russia still needs to wage war. It has not completely indigenized. We're making apparatus. And so there are points of disruption and vulnerability and you will see so much action coming out of both the Treasury Department and the Commerce Department at that.

And we know that the procurement of technology requires money. And so we saw with Commerce an opportunity to partner on this issue and ensure that not only the U. S. financial institutions, but also the broader global financial system, are not being used to facilitate payments for the procurement of technology software tooling that furthers Russia's war efforts. I would say that we've always had a good partnership with Commerce. Certainly we did in my time at OFAC, as well. I feel like we've recently brought it to the next level. As with many things with the tragedy of Russia's invasion of Ukraine. It's also produced some synergies and partnerships that have allowed us to leverage our authorities in better ways.

Brandon Van Grack: Just on that, when Assistant Secretary Axelrod was on here, he gladly remarked that this was the first joint announcement, I think, with FinCEN. And I'm just wondering, even beyond the Department of Commerce, how has engagement with other agencies and departments transformed similarly, and I suppose, within the context that you just described, following the Russian invasion?

Andrea Gacki: Immediately after Russia's invasion of Ukraine, FinCEN was at the forefront of standing up like-minded financial intelligence units around the world in order to share information related to Russia, Russia's sanctions evasion, Russian export control evasion. I think we have not only partnered internationally, but also domestically. We have put together many what we call "FinCEN exchanges," like publi-private partnerships. Commerce has been a key feature. So has the FBI. So has DOJ. So has OFAC. Where we have brought together financial institutions with law enforcement, sanctions professionals, civil enforcement, all the authorities in order to build information-sharing networks, and make sure that we are helping our financial institutions do their important role of detecting and reporting this information. And then that law enforcement and other enforcement professionals can, take action.

Scott R. Anderson: So, your note about working to set up these offices, these regulatory offices in other countries, really leads into another topic I want to touch on before our time together ends. And that's this issue of multilateral engagement. You noted the context of Russia's invasion of Ukraine as being a bit of a paradigm-shifting even, which is true in so many areas. And we are seeing so many new types of engagement as the United States is increasingly focused on economic statecraft tools as a big front in major power competition essentially of this era, which involves not just Russia but also China and also frankly lots of other countries in a different array, different set of challenges than we were dealing with two decades ago, three decades ago.

How does FinCEN fit into that? What is the multilateral engagement strategy? What have you all been doing? And what do you all expect to be doing in the years to come as these issues become even more to the forefront than they have been these last few years?

Andrea Gacki: This is a great question, something certainly at the forefront of our planning as we look to the future. From my perspective, the increased dialogue and coordination with our foreign counterparts has played a really crucial role especially, for example, in our efforts to disrupt Hamas and other terrorist financing and facilitators following the events of October 7th and subsequent events. We saw immediately after the October 7th attacks that Hamas solicited donations and redoubled efforts to continue its terrorist activities. Our goal has been to cut off that financing. And one thing that FinCEN in particular has done is we have worked very closely with Israel's Financial Intelligence Unit and other key partners, other key Financial Intelligence Units, to develop the Counter Terrorist Financing Taskforce-Israel. So, along with the FIUs of Israel, Germany, and the Netherlands, we are leading a core group of FIUs with weekly meetings to share intelligence, to share typologies, and to establish open and regular communication among task force members. This is just one domain that we are collaborating really closely with our international colleagues.

Next week I'm actually going to my first ever Egmont Group Annual Meeting. It will be in Malta. I've never been. And I'm looking forward to meeting with FIUs from around the world to strengthen our partnerships and to identify common areas of investigative interest.

Brandon Van Grack: And I think you mentioned this before, but another public service announcement, the Egmont Group. Could you just remind everyone what it is?

Andrea Gacki: Yeah. And the Egmont Group is the international body, an agreement, that establishes a membership of 170 financial intelligence units from around the world who basically are committed to working together, establishing best practices, etc.I know that FinCEN was a very leading member in establishing the Egmont Group.

Scott R. Anderson: Heading into this meeting, do you all have a sense of what the goal is, where you want to see international cooperation go in this space? Are there specific objectives, things you're working towards or trying to build a consensus towards that might give us a sense of where multilateral cooperation might be five years from now, given all these new fronts, all these new initiatives FinCEN is facing and no doubt hoping to get some international cooperation on in different fronts?

Andrea Gacki: Well, from my perspective--and this is my first time going. I'm relatively new to the role of FinCEN Director. From my perspective, FinCEN has a long history of being a leader in the Egmont Group. And my goal is to continue to build those technical connections and professional relationships across all FIUs, not just the FIUs of our natural allies. But one of my key objectives going there is actually to form those connections with countries that we don't always see eye-to-eye with. And so, that's what I'm looking forward to in the coming week. But, as for particular policy outcomes at this time, I apologize. I don't have much more to say at this point.

Brandon Van Grack: One thing, why I at the outset wanted to get into your career arc is because, not just from different agencies, but over sort of different geopolitical events, you've sort of experienced cooperation, sort of engagement, in different ways. And I'm wondering on the multilateral piece, my experience , which is now somewhat dated, cooperation, information-sharing was very difficult. And you talked a little bit about some of the cooperation around Israel. But, I'm wondering, just even sort of, we'll say post-Russia invasion, has there been a demonstrable change? And that's in part compared to sort of even your experience back at OFAC Director and sort of prior.

Andrea Gacki: So, when I was OFAC Director, one of the things that was a little tough in that role is that we didn't have a counterpart in many countries until the UK developed the Office of Financial Sanctions Implementation. We have had developed in my final years at OFAC a really great partnership, including detailing staff to each other and publicly articulating our partnership with regular meetings. That was incredible. But, often when I would go to foreign countries to talk about sanctions risks, I was often met with the FIUs of different countries as close, if not quite on the mark of who a sanctions counterpart might be.

The one thing I really am fortunate to have at FinCEN is this built-in international network. I was immediately welcomed into the job by so many directors of other financial intelligence units. I think that--I am committed to information-sharing. I can only hope to improve on it. Brandon, you may not remember this, but, many years ago when we talked once, you paid me what I thought was the highest compliment I'd ever almost ever heard about OFAC. And I've heard a lot of criticism, true. But, the compliment was you said that oFAC was very generous with its information and expertise. And I don't know if you remember that or I--

Brandon Van Grack: I was very vulnerable at the time. I do think it may be involved around JCPOA.

Andrea Gacki: And so I thought that that was just a wonderful thing that I want any organization that I lead to be known for. And so, coming into FinCEN, I want to ensure that we are actively, but appropriately, sharing information and, facilitating appropriate use of law enforcement tools, other tools. And so that's a key objective for me.

Brandon Van Grack: Maybe sort of transitioning from objectives to priorities as well, if sort of giving you the floor to talk about what--and we've covered a number of anticipated changes, regulations and rules. It seems like it's going to be a very busy year for you. But, in terms of priorities, anything else that we haven't touched on that you want to sort of identify or highlight for priorities for FinCEN for this coming year?

Andrea Gacki: For the upcoming year, we have a lot of work ahead of us. We're certainly not done with beneficial ownership, off to a great start. We have a big compliance and outreach job ahead of us, and we're taking that on wholeheartedly. We've also got more rulemakings to follow including under the terms of the Corporate Transparency Act, revising FinCEN's customer due diligence rule, which was issued in 2016 and sets the rules for how financial institutions gain beneficial ownership information. We've got to look at that. So we've got that and of course the residential eeal estate investment advisor rulemaking is ahead of us. A lot of big work. But I think that other than that, I think that we will just at FinCEN need to remain responsive to national security events and pivot our authorities as necessary to use our tools in order to combat those threats.

I wish I could be more precise than that in my outlook. Believe me, I do. It would make it, my job, a lot easier. But, instead, I think other than the huge work that we still have ahead of us in implementing aspects of the Anti-Money Laundering Act, I just want to make sure that FinCEN is there and ready to act when it comes to national security threats.

Brandon Van Grack: It does feel like an ambitious 2024. In terms of resources and personnel, where does FinCEN stand on that?

Andrea Gacki: Well, since I've come to FinCEN, I have been really gripped by the breadth of the mandates. It is huge, and it's diverse, and we are doing our best, but, we are pretty leanly staffed. Now we've had fortune--, we've gotten a lot of support from the Treasury Department, from the budget. We've been fortunate in many respects. But, I'd be lying if I didn't say I'd love a little more, to get a little bit more done.

Scott R. Anderson: Well, that is a good point to wind up our conversation on. But Andrea Gacki, thank you so much for joining us here today on the Lawfare Podcast.

Andrea Gacki: Thank you, Scott. Thank you, Brandon.

The Lawfare Podcast is produced in cooperation with the Brookings Institution. Please be sure to rate and review us wherever you get your podcasts. And be sure to check out Lawfare's other podcasts, including Rational Security, a casual, lighthearted chat about national security news that I co host each week with my colleagues Quinta Jurecic and Alan Rozenshtein. In addition, be sure to visit LawfareMedia.org for extensive written coverage of national security law and policy issues, and consider becoming a material supporter of Lawfare to gain access to an ad-free version of this and other Lawfare podcasts, among other perks. For more information, visit LawfareMedia.org/support.

This podcast was edited by Jen Patja Howell and produced by Cara Shillenn of Goat Rodeo. Our music is performed by Sophia Yan. As always, thank you for listening.

Scott R. Anderson is a fellow in Governance Studies at the Brookings Institution and a Senior Fellow in the National Security Law Program at Columbia Law School. He previously served as an Attorney-Adviser in the Office of the Legal Adviser at the U.S. Department of State and as the legal advisor for the U.S. Embassy in Baghdad, Iraq.
Brandon L. Van Grack is a partner and co-chair of the National Security and Crisis Management practices at Morrison & Foerster LLP. He is a former senior national security official at the U.S. Department of Justice, where he served as Chief of the Foreign Agents Registration Act (FARA) Unit, Senior Assistant Special Counsel to Special Counsel Robert S. Mueller III, Counsel to the Assistant Attorney General for the National Security Division, Trial Attorney in the Counterintelligence & Export Control Section, and as a prosecutor in the U.S. Attorney’s Office for the Eastern District of Virginia.
Andrea Gacki serves as Director of the Financial Crimes Enforcement Network, a bureau within the Department of the Treasury tasked with combating financial crimes including money laundering and terrorist financing.
Jen Patja is the editor and producer of The Lawfare Podcast and Rational Security. She currently serves as the Co-Executive Director of Virginia Civics, a nonprofit organization that empowers the next generation of leaders in Virginia by promoting constitutional literacy, critical thinking, and civic engagement. She is the former Deputy Director of the Robert H. Smith Center for the Constitution at James Madison's Montpelier and has been a freelance editor for over 20 years.

Subscribe to Lawfare