How to Report “Pig Butchering” Crypto Fraud and Qualify for a Whistleblower Award
2024 Revenue from Pig Butchering Scams Increased 40% Year-over-Year
According to a Chainanlysis report, revenue from pig butchering crypto frauds, also known as relationship investment scams, grew nearly 40% year-over-year (YoY). Additionally, the number of deposits to these scams increased by nearly 210% YoY.
Pig butchering scams exploit dating apps, social media platforms, messaging apps, and even random “wrong number” text messages to target possible victims. Once a fraudster establishes and builds a relationship with their target, they pitch fraudulent investment opportunities in cryptocurrencies, precious metals, or foreign currencies. Victims are then directed to deceptive trading platforms–operated by the same organized criminal gangs–where they convert their funds into cryptocurrency and then send the crypto to the fraudulent trading platforms. These platforms falsely display substantial investment gains, and victims ultimately find themselves unable to withdraw their funds. To make matters worse, the trading platforms often tell the victims that they are required to pay certain fees to access their (fake) investment gains. These “fees” are just another ploy used by the fraudsters to trick victims into sending additional crypto to their fraudulent platforms.
The Chainalysis report, titled Crypto Scam Revenue 2024: Pig Butchering Grows Nearly 40% YoY as Fraud Industry Leverages AI and Increases in Sophistication, found that cryptocurrency scams received at least $9.9 billion on-chain, an amount that may increase as Chainanalysis identifies more illicit addresses. The report noted that “crypto fraud and scams have continued to increase in sophistication, as the fraud ecosystem becomes more professionalized.” It also highlighted that “crypto drainers continued to proliferate and grew across the board — nearly 170% YoY revenue growth, almost 55% YoY increase in deposit size, and 75% YoY growth in number of deposits.”
Whistleblowers Can Help Combat Pig Butchering Crypto Frauds
Whistleblowers can assist the Commodity Futures Trading Commission (CFTC) in combatting these frauds by reporting original information about pig butchering crypto scams to the CFTC Whistleblower Office. The CFTC Whistleblower Reward Program offers monetary awards to whistleblowers whose original information leads to enforcement actions resulting in civil penalties in excess of $1 million. Whistleblowers reporting pig butchering crypto scams can receive CFTC whistleblower awards between 10% and 30% of the total monetary sanctions collected in successful enforcement actions. The largest CFTC whistleblower award to date is $200 million.
How to Report Pig Butchering Scams to the CFTC and Qualify for a Whistleblower Award
A whistleblower providing original information to the CFTC about an investment romance scam may qualify for an award if:
Their original information caused the CFTC to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the CFTC brought a successful enforcement action based in whole or in part on conduct that was the subject of the original information; or
The conduct (i.e., the pig butchering crypto scam) was already under examination or investigation, and the whistleblower provided original information to the CFTC that significantly contributed to the success of the enforcement action.
In determining an award percentage of between 10% and 30%, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake.
If represented by counsel, a whistleblower may submit a tip anonymously to the CFTC. In certain circumstances, a whistleblower may remain anonymous, even to the CFTC, until an award determination. However, even at the time of a reward, a whistleblower’s identity is not made available to the public.
To report a pig butchering crypto fraud and qualify for an award under the CFTC Whistleblower Program, the CFTC requires that whistleblowers or their attorneys report the tip online through the CFTC’s Tip, Complaint or Referral Portal or mail/fax a Form TCR to the CFTC Whistleblower Office. Prior to submitting a tip, whistleblowers should consult with an experienced whistleblower attorney and review the CFTC whistleblower rules to, among other things, understand eligibility rules and consider the factors that can significantly increase or decrease the size of a future whistleblower award.
CFTC Partners with Federal Agencies and NGOs to Combat Pig Butchering
The CFTC’s Office of Customer Outreach and Education is partnering with other federal agencies and non-governmental organizations (NGOs) to raise awareness about relationship investment scams targeting Americans through “wrong number” text messages, dating apps, and social media. This effort includes an infographic that identifies the warning signs of pig butchering:
Additionally, the interagency Dating or Defrauding? social media awareness campaign warns Americans to be skeptical of any request from online friends for cryptocurrency, gift cards, wire transfers, or other forms of payment. The campaign provides information about how to recognize relationship investment scams, what to do if you are affected, and why to share the information to warn others.
Combatting Scams in Australia and the United Kingdom
In response to the growing threat of financial scams, the Australian Government has passed the Scams Prevention Framework Bill 2025. The Scams Prevention Framework (SPF) imposes a range of obligations on entities operating within the banking and telecommunications industries as well as digital platform service providers offering social media, paid search engine advertising or direct messaging services (Regulated Entities). In the first article of our scam series, Australia’s Proposed Scams Prevention Framework, we provided an overview of the SPF. In this article, we compare the SPF to the reimbursement rules adopted by the United Kingdom and consider the likely implications of each approach.
UK Model
The United Kingdom is a global leader in the introduction of customer protections against authorised push payment (APP) fraud. A customer-authorised transfer of funds may fall within the definition of an APP scam where:
The customer intended to transfer the funds to a person, but was instead deceived into transferring the funds to a different person; or
The customer transferred funds to another person for what they believed were legitimate purposes, but which were in fact fraudulent.
Reimbursement Requirement
A mandatory reimbursement framework was introduced on 7 October 2024 (the Reimbursement Framework) and applies to the United Kingdom’s payment service providers (PSPs). Under the Reimbursement Framework, PSPs are required to reimburse a customer who has fallen victim to an APP scam. The cost of reimbursement will be shared equally between the customer’s financial provider and the financial provider used by the perpetrator of the scam. However, PSPs will not be liable to reimburse a victim who has been grossly negligent by failing to meet the standard of care that PSPs can expect of their consumers (Consumer Standard of Caution) (discussed below), or who is involved in the fraud. Where the customer is classed as ‘vulnerable’, failure to meet the Consumer Standard of Caution will not exempt the PSP from liability.
Consumer Standard of Caution
The Consumer Standard of Caution exception consists of four key pillars:
Intervention – Consumers should have regard to interventions made by their PSP or a competent national authority such as law enforcement. However, a nonspecific ‘boilerplate’ warning will not be sufficient to shift the risk onto the customer.
Prompt reporting – Consumers, upon suspecting they have fallen victim to an APP scam, should report the matter to their PSP within 13 months of the last authorised payment.
Information sharing – Consumers should respond to reasonable and proportionate requests for information made by their PSP in assessing the reimbursement claim. Any requests for information must be limited to essential matters taking into account the value and complexity of the claim.
Involvement of police – Consumers should consent to their PSP reporting the matter to the police on their behalf. PSPs must consider the circumstances surrounding a customer’s reluctance in reporting their claim to the police before relying on this exception.
Failure to meet one or more of the above pillars will only exempt the PSP from liability where the customer has been grossly negligent. This is a higher standard of negligence than required under the common law and requires the customer to have shown a ‘significant degree of carelessness’.
Vulnerability
A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm. Personal circumstances relevant to determining whether a customer is ‘vulnerable’ include:
Health conditions or illnesses that affect one’s ability to carry out day-to-day tasks;
Life events such as bereavement, job losses or relationship breakdown;
Ability to withstand financial or emotional shocks; and
Knowledge barriers such as language and digital or financial literacy.
The Consumer Standard of Caution is not applicable to vulnerable customers. Accordingly, where the victim has been classified as a vulnerable customer, PSPs cannot avoid liability on the grounds of gross negligence for failing to meet the Consumer Standard of Caution.
Limit on Reimbursement
PSPs will not be required to reimburse amounts above the maximum level of reimbursement, which is currently £415,000 per claim.
Key Distinctions Between the SPF and the UK Model
Financial Burden of Scams
Both the UK and Australian models seek to incentivise entities to adopt policies and procedures aimed at lowering the risk of scams. By requiring PSPs to reimburse scam victims, the UK’s model shifts the economic cost of scams from customers onto PSPs. A similar purpose is achieved under the SPF, which provides for harsh financial penalties for entities that fail to develop and implement appropriate policies to protect customers against scams. However, a significant point of difference is the extent to which these financial burdens benefit victims of scams directly.
Under the UK model, a victim of an APP scam will be able to recover the full amount of their loss (up to the prescribed maximum amount) so long as:
They were not grossly negligent in authorising the payment;
They were not a party to the fraud;
They are not claiming reimbursement fraudulently or dishonestly;
The amount claimed is not the subject of a civil dispute or other civil legal action;
The payment was not made for an unlawful purpose; and
The claim is made within 13 months of the final APP scam payment.
In contrast, there is no indication that any funds paid under Australia’s SPF civil penalty provisions will be directed towards the reimbursement of victims. However, under the Scams Prevention Framework Bill 2025, where a Regulated Entity has failed to comply with its obligations under the SPF and this failure has contributed to a customer’s scam loss, the customer may be able to recover monetary damages from the Regulated Entity.
Possible Effect on Individual Vigilance
The UK’s Reimbursement Framework recognises that PSPs, as opposed to individuals, have greater resources available to combat the threat of scams. However, there is a risk that by passing the economic cost of scams onto PSPs, individuals will become less vigilant. Where an individual fails to make proper inquiries which would have revealed the true nature of the scam, they may still be eligible for reimbursement so long as they have not shown a ‘significant degree of carelessness’. With this safety net, individuals may become complacent about protecting themselves from the threat of scams.
In contrast to the UK model, individuals will continue to bear the burden of unrecoverable scam losses under Australia’s SPF unless a Regulated Entity’s breach of SPF obligations has contributed to the loss. As a result, individuals will continue to have a financial incentive to remain vigilant in protecting themselves against the threat of scams.
Scope of Framework
Australia
The SPF applies to entities across multiple industries, reflecting Australia’s ‘whole of the ecosystem’ approach to scams prevention. Upon introduction, the SPF is intended to apply to banking and telecommunications entities as well as entities providing social media, paid search engine advertising or direct messaging services. It is noted in the explanatory materials that the scope of the SPF is intended to be extended to other industries over time to respond to changes in scam trends.
The purpose of this wider approach is to target the initial point of contact between the perpetrator and victim. For example, a perpetrator may create a social media post purporting to sell fake concert tickets. Successful disruptive actions by the social media provider, such as taking down the post or freezing the perpetrator’s account, may prevent the dissemination of the fake advertisement and potentially reduce the number of individuals who would otherwise fall victim to the scam.
United Kingdom
In contrast, the UK’s Reimbursement Framework only applies to PSPs participating in the Faster Payments Scheme (FPS) that provide Relevant Accounts.
FPS
The FPS is one of eight UK payment systems designated by HM Treasury. According to the Payment Systems Regulator, almost all internet and telephone banking payments in the United Kingdom are now processed via FPS.
Relevant Account
A Relevant Account is an account that:
Is provided to a service user;
Is held in the United Kingdom; and
Can send or receive payments using the FPS,
but excludes accounts provided by credit unions, municipal banks and national savings banks.
Effect of Single-Sector Approach
Due to the United Kingdom’s single-sector approach, different frameworks need to be developed to combat scam activity in other parts of the ecosystem. This disjointed approach may create enforcement issues where entities across multiple sectors fail to implement sufficient procedures to detect and prevent scam activities. Further, it places a disproportionate burden on the banking sector, failing to acknowledge the responsibility of other sectors to protect the community from the growing threat of scams.
Key Takeaways
While both the United Kingdom and Australia have demonstrated a commitment to adopting tough anti-scams policies, they have adopted very different approaches. Time will tell which approach has the largest impact on scam detection and prevention.
The authors would like to thank paralegal Tamsyn Sharpe for her contribution to this legal insight.
President Trump Imposes Sanctions on the International Criminal Court
On February 6, 2025, President Donald Trump issued an Executive Order titled “Imposing Sanctions on the International Criminal Court” (the “E.O.”). The E.O. was issued in reaction to the International Criminal Court’s (ICC) assertion of jurisdiction over non-member states, their leaders and personnel.
The ICC
The ICC (not to be confused with the United Nations International Court of Justice) is a treaty-based entity established in 2002 under a multilateral treaty known as the Rome Statute. The ICC has 124 member countries. About 40 countries, including the United States, China, Russia, Egypt, Israel, Saudi Arabia, Sudan, Singapore, Turkey, India, and Indonesia are not members.
The ICC has asserted jurisdiction over, and has opened preliminary investigations into personnel of, the United States and Israel (both of which are non-member states), and has issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu and Former Minister of Defense Yoav Gallant.
The E.O.
The E.O. finds that the ICC has engaged in “illegitimate and baseless actions” that target the United States and certain allies, including Israel. The E.O. notes that “[t]he ICC has no jurisdiction over the United States or Israel, as neither country is party to the Rome Statute or a member of the ICC.” The E.O. further notes that “[n]either country has ever recognized the ICC’s jurisdiction[.]”
The E.O. cites the American Servicemembers Protection Act of 2002, 22 U.S.C. 7421 et seq., which Congress enacted “to protect United States military personnel, United States officials, and officials and military personnel of certain allied countries against criminal prosecution by an international criminal court to which the United States is not a party.”
The E.O. declares that the ICC’s actions set a dangerous precedent, endangering U.S. military and other personnel by exposing them to harassment, abuse, and possible arrest, which threatens U.S. sovereignty and undermines U.S. national security and foreign policy.
The E.O. cautions that “the ICC and parties to the Rome Statute must respect the decisions of the United States and other countries not to subject their personnel to the ICC’s jurisdiction, consistent with their respective sovereign prerogatives.”
The Sanctions
The E.O. imposes sanctions on Karim Kahn, the Chief Prosecutor of the ICC, and authorizes the imposition of sanctions on additional persons that “have directly engaged in any effort by the ICC to investigate, arrest, detain, or prosecute a protected person without consent of that person’s country of nationality[.]”
A ”protected person” is defined to include any U.S. person (unless the United States formally consents to the exercise of jurisdiction over that person or becomes a party to the Rome Statute); any foreign person who is a citizen or lawful resident of a U.S. ally that is not a party to the Rome Statute and that has not consented to the exercise of jurisdiction over that person; and officials of the U.S. government and U.S. allies.
The principal sanctions imposed on Khan (and to be imposed on future designees) are:
Blocking (i.e., freezing) of property and interests in property of the sanctioned person(s) that are in the United States, or that are or come within the possession/control of any U.S. person; and
Prohibiting any U.S. person from providing funds, goods, or services to the sanctioned person(s), or from receiving funds, goods, or services from the sanctioned person(s).
U.S. sanctions are potent tools that lie at the intersection of law, commerce, and international relations. While this particular deployment of sanctions is noteworthy because of its unusual nature, there are thousands of sanctions rules and regulations that govern many facets of international commerce. U.S. and foreign companies should be mindful of their compliance obligations.
Amended Illinois Whistleblower Act Increases Protections for Internal Reports
Newly effective amendments to the Illinois Whistleblower Act (“IWA”) provide greatly enhanced protections and remedies to Illinois employees who report unlawful conduct by their employers. The IWA protects both private and government employees who report information that they believe violates the law, or who refuse to participate in an activity that they believe violates the law.[1] However, until January 1, 2025, the IWA required that employees report the alleged misconduct to an external government body. As revised, the IWA now protects internal whistleblower reports as well. The IWA amendments also create a more employee-friendly standard for demonstrating that the whistleblower believed that unlawful conduct was occurring and expand the remedies available for violations of the statute. Taken together, the changes detailed below bring Illinois law in line with some of the broadest federal and state-level whistleblower protections, including the Sarbanes-Oxley Act of 2022 (“SOX”) and the Consumer Financial Protection Act (“CFPA”), both of which apply to disclosures made internally to the employer. Illinois also now mirrors several states that similarly provide whistleblower protection for internal disclosures, including New York, Minnesota, New Jersey, Virginia, and California.
Protecting Internal Disclosures
Prior to the amendment, which Governor JB Pritzker approved on August 9, 2024, an employee’s report of suspected misconduct to a supervisor was insufficient to gain protection under the IWA because whistleblowers had to report to external government authorities. For example, in 2020, an Illinois district court in Beasley v. City of Granite City held the IWA did not apply to a city police dispatcher’s internal report.[2] In that case, the dispatcher suffered retaliation by her captain after she helped her supervising lieutenant bring his own case against the captain. The court held that the dispatcher failed to state a claim under the IWA because she disclosed the retaliation only to the supervising lieutenant instead of “to a court, in any other proceeding, or to a government or law enforcement agency. ”[3] Although the dispatcher attempted to publicly disclose the wrongdoing via the lieutenant’s court proceeding against the captain, the court rejected such indirect reporting as insufficient under the IWA.[4]
Now, as of January 1, 2025, whistleblowers in Illinois will be protected for making internal disclosures.[5] Under the amended law, employers are prohibited from taking “retaliatory action” against an employee for disclosing or threatening to disclose information about the employer to any supervisor, principal officer, board member, or supervisor. [6] Importantly, “retaliatory action” includes an actual or threatened adverse employment action that would dissuade a reasonable worker from coming forward, or “any non-employment action that would dissuade a reasonable worker from disclosing information[.]” Adverse actions include, but are not limited to, firing, demotion, wage reduction, denying promotions, discipline, and threats. Retaliatory actions include, but are not limited to, the actual or threatened intentional interference with the ability to obtain future or former employment, and actual or threatened action related to interference with one’s immigration status.[7]
More Whistleblower-Friendly “Good Faith” Standard for Protected Activity
In addition to the protection for internal disclosures, the amended IWA also modifies the standard for whistleblower knowledge from requiring a “reasonable cause” to believe that the employer violated the law, to a “good faith” belief that the employer violated the law or posed a danger to the public. Although Illinois courts have not yet had an opportunity to define the “good faith belief” requirement, it may be easier for employees to bring a whistleblower claim as compared to SOX, which only covers employees who have a “reasonable belief” based on both an employee’s subjective and objective beliefs. Generally, good faith is considered to refer to honest dealing or a legitimate intent behind a person’s actions. For example, Illinois defines “good faith” in an unrelated statue as “honestly in fact in the conduct of the transaction.”[8] If the reporting employee must only show that they had an honest belief that their employer’s conduct violated law or policy or was a threat to public health or safety, employees may have an easier time meeting their initial burden.
Broader Remedies
Finally, the amended IWA increases the scope of potential penalties available against violating entities. The IWA now contains a criminal misdemeanor penalty and additional civil penalties including permanent or preliminary injunctive relief, back pay with interest, front pay, liquidated damages up to $10,000, compensation for litigation costs, and a civil penalty of $10,000 payable to the employee.[9] In addition to the private right of action, the amendment also allows for enforcement by the Attorney General.[10]
Put together, these amendments to the IWA greatly increase the range of protections for whistleblowers who report misconduct internally within their employer. Under the new statutory scheme, the police dispatcher in Beasley would have likely survived dismissal because she experienced retaliation in the form of threats, denial of comp time, and suspension after she reported misconduct within the organization to her supervisor. The amended IWA will provide employees in Illinois with the important opportunity to take advantage of whistleblower protections at the state level.
***
[1] See 740 ILCS § 174/15; see also Whistleblower Retaliation, available at https://katzbanks.com/practice-areas/whistleblower-law/.
[2] Beasley v. City of Granite City, 442 F. Supp. 3d 1066, 1072-73 (S.D. Ill. 2020).
[3] Id. at 1073.
[4] Id. at 1074.
[5] The new rules under the IWA only apply proactively.
[6] 740 ILCS § 174/15(c).
[7] 740 ILCS § 174/5
[8] Ill. Admin. Code tit. 38, § 1050.1250
[9] 740 ILCS § 174/25, 30.
[10] 740 ILCS § 174/31.
Renewed Prohibition on Use of Sub-Regulatory Guidance – Key to False Claims Act Cases
It’s déjà vu all over again.”[1] Attorney General Pam Bondi has not surprisingly renewed the prior Trump administration’s prohibition on the use of sub-regulatory guidance, potentially altering the landscape for False Claims Act cases pursued during the second Trump administration.
This development is the latest in a series of efforts to allow reliance on government guidance — or not. To catch everyone up:
On February 5, 2025, Bondi issued a memorandum, titled “Reinstating the Prohibition on Improper Guidance Documents” (the “Bondi Memo”).
The Bondi Memo expressly withdrew prior Attorney General Merrick Garland’s own July 1, 2021. memorandum, titled “Issuance and Use of Guidance Documents by the Department of Justice” (the Garland Memo).
The Bondi Memo also tacitly revived prior Attorney General Jeff Sessions’ November 2017 memorandum, titled “Prohibition on Improper Guidance Documents” (the “Sessions Memo”), and a January 2018 memorandum from Associate Attorney General Rachel Brand, titled “Limiting Use of Agency Guidance Documents in Affirmative Civil Enforcement Cases” (the “Brand Memo”).[2]
In this latest Bondi Memo, the DOJ states, “[g]uidance documents” that have not undergone “the rule making process established by law yet purport to have a direct effect on the rights and obligations of private parties” are not lawful regulatory authority. This recission is to “restore the Department to the lawful use of regulatory authority” and advance DOJ’s “compliance with its mission and duty to uphold the law.” Accordingly, DOJ attorneys likely will not be permitted to rely on agency guidance to establish a violation of law or a false statement in a False Claims Act case.
DOJ’s reliance on agency guidance already was in doubt after the Supreme Court’s 2024 decision in Loper Bright, which reworked how courts should view agency guidance. The Garland Memo had asserted that DOJ attorneys “may rely on relevant guidance documents . . . including when a guidance document may be entitled to deference or otherwise carry persuasive wait with respect to the meaning of applicable legal requirements.” Loper Bright, however, made clear that agencies are not entitled to deference unless deference is expressly provided for by statute. And even prior to Loper Bright, the Supreme Court, in Kisor v. Wilkie, confirmed agency guidance “never forms the basis for an enforcement action’’ because such documents cannot “impose any legal binding requirements on private parties.” 588 U.S. 558, 584 (2019) (internal citations omitted). The Bondi Memo is yet another attack on what may be considered agency overreach.
Because the Garland Memo itself rescinded two memoranda from the previous Trump administration DOJ officials, these prior Sessions and Brand memoranda tacitly are restored by the recission of the Garland Memo. Both memoranda restricted DOJ’s use of sub-regulatory guidance and prevented DOJ from using guidance documents to “determine compliance with existing regulatory and statutory requirements.” See Sessions Memo & Brand Memo (prohibiting use of “noncompliance with guidance documents as a basis for proving violations of applicable law.”)
What presently is murky is whether DOJ still may use guidance documents to establish scienter. The Brand Memo had provided that “some guidance documents simply explain or paraphrase legal mandates from existing statutes or regulations, and the Department may use evidence that a party read such a guidance document to help prove that the party had the requisite knowledge of the mandate.” It has been a longstanding DOJ practice to use guidance documents to show scienter, and the practice was permitted under the first Trump administration and the perhaps now-restored Brand Memo. The Bondi Memo does not directly address the use of agency guidance to show scienter, nor does it announce any new policy. However, more guidance is coming: The Bondi Memo directs the associate attorney general to prepare a report within 30 days “concerning strategies and measures that can be utilized to eliminate the illegal or improper use of guidance documents.”
What to Expect
This restriction on the use of guidance documents to bring FCA and other cases — in conjunction with Loper Bright — prevents DOJ attorneys from basing claims against recipients of government funding based on potential legal violations derived from or supposedly clarified in agency guidance. However, we anticipate DOJ likely will still use guidance documents in efforts to establish scienter. The forthcoming Associate Attorney General report may shed more light on DOJ’s plans in this area.
[1] Baseball lore includes the story that Yogi Berra said this after Mickey Mantle and Roger Maris hit back-to-back homeruns in 1961, as they were chasing Babe Ruth’s homerun record.
[2] Foley’s previous analysis of the Brand Memorandum and its impact on the health care landscape is located here: DOJ Memoranda Ushering in New Era for Health Care Enforcement.
Bipartisan Support For A CTA Pause And Livy Explains The Inequity Of Student Loan Forgiveness
As the courts wrestle with various challenges to the Corporate Transparency Act, Congress is also taking an interest. Last week, the House of Representatives passed H.R. 736 which would allowcompanies formed or registered before January 1, 2024, to submit beneficial ownership information to FinCEN by January 1, 2026, instead of by January 1, 2025, as required under the current statute. The bill passed the House with overwhelming bipartisan support by a vote of 408 to zero. The next day, Senator Tim Scott introduced a companion bill in the Senate, S. 505.
A Two Thousand Year Old Explanation For Why Student Loan Forgiveness Is Inequitable
I have just finished reading books 1-5 of Ab Urbe Condita (From the Founding of the City) by the Roman historian Titus Livius (aka Livy) who lived and wrote in the first century B.C.E. This famous retells the history of Rome from its founding until 9 B.C.E. in 142 books, only a portion of which survive completely. One of the great pleasures of reading the ancients is the realization that as Qoheleth observed long ago “The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun”. Ecclesiastes 1:9.
In the early days of the Roman republic, citizens were expected to serve in the military at their own expense. In 406 B.C.E., however, the Roman Senate decided to curry the favor of plebeians by paying soldiers out of the public treasury:
decerneret senatus, ut stipendium miles de publico acciperet, cum ante id tempus de suo quisque functus eo munere esset (the senate resolved that a soldier should receive a stipend from the public treasury, when before that time whoever served did so at his own expense).
Many of plebeians thought this a great boon since, according to Livy, their property would not be diminished whilst they served in Rome’s numerous wars. Their elected Tribunes, however, discerned otherwise. First, they asked:
unde enim eam pecuniam confici posse nisi tributo populo indicto? (where will the state be able to get the money except by levy on the people (i.e., taxes)?
Thus, it was understood, at least by some, two thousand years ago that the governments do not create wealth. Rather, governments take wealth from the many and redistribute to a chosen few.
But redistribution was not the only problem. The proposal was fundamentally inequitable:
neque id, etiamsi ceteri ferant, passuros eos, quibus iam emerita stipendia essent, meliore condicione alios militare, quam ipsi militassent, et eosdem in sua stipendia inpensas fecisse et in aliorum facere (Even if others should suffer it, those who had earned their discharge by service would not endure that others should serve on better terms than themselves – to have paid their own expenses and to pay the expenses of others).
In other words, some citizens were being forced to pay twice – once for themselves and then again for others.
New Administration Establishes International Criminal Court-Related Sanctions
On Feb. 6, 2025, President Trump issued an executive order (EO) establishing International Criminal Court (ICC)-related sanctions. The EO characterized the ICC as “ha{ving} engaged in illegitimate and baseless actions targeting America and our close ally Israel.”
The EO imposes sanctions on persons listed in its annex, which currently includes Karim Khan, prosecutor of the ICC since 2021. The EO also authorizes sanctions on any foreign person determined by the U.S. State Department to, e.g., have directly engaged in any effort by the ICC to investigate, arrest, detain, or prosecute a protected person without consent of that person’s country of nationality or to have provided material assistance or support for such activities or persons sanctioned under the EO. As a result of these sanctions, U.S. persons generally may not engage in any unlicensed transactions with Khan, and his property in the U.S. is blocked (i.e., frozen). The sanctions also impose travel-related restrictions. These prohibitions would also extend to anyone else sanctioned under this authority.
These new ICC-related sanctions represent one of several actions President Trump has taken under the International Emergency Economic Powers Act (IEEPA), which provides the president with broad authority to regulate international transactions in response to a declared “national emergency.” IEEPA has previously been used to target China, Canada, and Mexico.
U.S. and international businesses must carefully monitor the Trump Administration’s use of IEEPA to regulate international trade. Prohibitions established under IEEPA can take effect immediately, and non-compliance can lead to significant penalties.
Criminal Charges Lodged Against Alleged Phobos Ransomware Affiliates
Unfortunately, I’ve had unpleasant dealings with the Phobos ransomware group. My interactions with Phobos have been fodder for a good story when I educate client employees on recent cyber-attacks to prevent them from becoming victims. The story highlights how these ransomware groups, including Phobos, are sophisticated criminal organizations with managerial hierarchy. They use common slang in their communications and have to get “authority” to negotiate a ransom. It’s a strange world.
Because of my unpleasant dealings with Phobos, I was particularly pleased to see that the Department of Justice (DOJ) recently announced the arrest and extradition of Russian national Evgenii Ptitsyn on charges that he administered the Phobos ransomware variant.
This week, the DOJ unsealed charges against two more Russian nationals, Roman Berezhnoy and Egor Nikolaevich Glebov, who “operated a cybercrime group using the Phobos ransomware that victimized more than 1,000 public and private entities in the United States and around the world and received over $16 million in ransom payments.” They were arrested “as part of a coordinated international disruption of their organization, which includes additional arrests and the technical disruption of the group’s computer infrastructure.” I’m thrilled about this win. People always ask me whether these cyber criminals get caught. Yes, they do. This is proof of how important the Federal Bureau of Investigation (FBI) is in assisting with international cybercrime, and how effective its partnership with international law enforcement is in catching these pernicious criminals. This is why I firmly believe that we must continue to share information with the FBI to assist with investigations, and why the FBI must be allowed to continue its important work to protect U.S. businesses from cybercrime.
Business Impacts of Trump’s Executive Order Pausing FCPA Enforcement
On February 10 President Trump issued an Executive Order, Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security, signaling a shift in U.S. enforcement priorities regarding foreign bribery. The directive places a temporary halt on investigations or enforcement actions related to the Foreign Corrupt Practices Act (FCPA) for a period of 180 days and orders a review of ongoing FCPA investigations.
Key Provisions of the Executive Order
The Executive Order mandates several important actions by U.S. Attorney General Pam Bondi, including:
Ceasing new FCPA investigations and enforcement actions: For the next 180 days, the Attorney General is required to refrain from initiating any new investigations or actions related to the FCPA.
Review of existing FCPA cases: The Attorney General must conduct a detailed review of all ongoing FCPA investigations and enforcement actions. This review will determine the appropriate course of action to ensure that FCPA enforcement stays within the administration’s priorities.
Issuing updated guidelines or policies: The Attorney General is tasked with issuing revised guidelines or policies concerning FCPA enforcement during this review period.
Approval for continued cases: Any FCPA investigations or enforcement actions that continue or are commenced after the new guidelines or policies are issued will require specific authorization from the Attorney General.
Potential extension: The review period may be extended by an additional 180 days at the Attorney General’s discretion.
The Executive Order also follows a memorandum issued by Bondi on February 5, 2025, which stated that the DOJ would prioritize cases relating to transnational criminal organizations and cartels. This necessarily means a much narrower focus for FCPA enforcement, which had been prioritized more broadly under prior administrations. Specifically, the Total Elimination of Cartels and Transnational Criminal Organizations Memorandum states that the FCPA unit should prioritize investigations involving foreign bribery that facilitates the operations of cartels and transnational criminal organizations, shifting away from cases without such connections.
What Does This Mean for Companies?
For businesses, this Executive Order has several implications. Keeping in mind that these developments are still unfolding, here is how we expect the situation to impact corporate clients:
A major shift in DOJ corporate enforcement: The pause in FCPA enforcement signals a significant decrease in the Department of Justice’s corporate enforcement activities, including FCPA investigations. While this might lead to a reduction in the number of FCPA cases in the near term, it is important to note that enforcement priorities remain in flux.
Anti-Bribery compliance advice remains unchanged for now: Companies should continue to maintain robust anti-corruption policies and internal controls to mitigate the risk of non-compliance with anti-bribery laws.
The FCPA is a criminal law that remains on the books: The FCPA remains the law of the land and violations are federal crimes. Enforcement priorities may shift, but businesses should not assume that the risks associated with FCPA violations have dissipated. The statute of limitations for the FCPA is five years, with the possibility of extension in cross-border cases through mutual legal assistance treaties, meaning future administrations could still pursue FCPA cases for actions taken during this period.
The SEC’s and CFTC’s role in FCPA enforcement: While the DOJ may slow down its FCPA enforcement, the U.S. Securities and Exchange Commission (SEC) retains jurisdiction over FCPA cases for public companies. As an independent agency, the SEC has not yet indicated any plans to ease its approach to FCPA enforcement. Moreover, the SEC can pursue bribery cases without relying solely on the FCPA framework, further complicating the enforcement landscape for businesses. In addition, the U.S. Commodity Futures Trading Commission (CFTC) has in more recent years taken the view that it may bring enforcement actions in cases involving foreign corrupt practices under Commodity Exchange Act provisions.
International anti-bribery laws still apply: Many other countries have their own anti-corruption laws, such as the UK Bribery Act. With the United States potentially scaling back its FCPA enforcement, there may be a rise in international enforcement actions to fill the gap. Furthermore, companies are increasingly adopting a global perspective on anti-corruption, extending their policies to cover not only the FCPA but also other anti-bribery measures, such as kickbacks and commercial bribery. As a result, businesses should remain vigilant in their anti-corruption efforts, as a broad range of laws could still impact their operations.
Reputation and public perception matter: Bribery and corruption scandals can damage a company’s reputation, even if those incidents occur outside the scope of FCPA violations. Companies should be cautious about relaxing their anti-corruption compliance measures, as the public’s increasing sensitivity to corruption-related issues can lead to negative publicity, regardless of the jurisdiction or legal framework involved.
Looking Ahead
The enforcement landscape for anti-corruption laws in the United States is evolving rapidly. Although the pause in FCPA enforcement may offer a temporary respite for companies, the full implications of these changes are yet to be seen. It is crucial for businesses to stay informed as the situation develops and to continue to maintain anticorruption compliance measures and internal controls that implement anticorruption best practices.
If your company is navigating these changes or has concerns about its compliance practices, consulting with someone experienced in anti-corruption law can provide valuable guidance. Stay tuned for further updates on this significant shift in U.S. enforcement policy.
What Federal Contractors and Grant Recipients Need To Know About EO 14173’s Certification and Non-Discrimination Requirements Concerns
Executive Order (EO) 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” creates new obligations that could carry significant risks for any organization doing business with the United States federal government. Federal contractors, subcontractors and recipients of federal grant money are or will soon be subject to potential liability under the False Claims Act (FCA).
Quick Hits
EO 14173 is raising potential compliance concerns for organizations during business with the federal government under the FCA, subject to civil and criminal penalties.
Organizations doing business with the federal government now have obligations to certify that they do not operate any programs promoting diversity, equity and inclusion that violate any applicable Federal anti-discrimination laws..
These same organizations also must agree that their compliance with all federal nondiscrimination laws in any federal contract, subcontract, or grant recipient and makes that certification a “material” term for purposes of the FCA.
Organizations doing business with the federal government may want to consider steps to take to minimize compliance risks under the FCA, which can open the door to civil and criminal exposure.
EO 14173, which was signed on January 21, 2025, and other executive actions have raised questions for employers doing business with the federal government as to what programs the government may target and whether efforts to maintain compliance with still-existing federal civil rights and antidiscrimination laws could pull them within federal regulators’ crosshairs. Notably, EO 14173 appears to implicate potential civil or criminal liability for private companies and federal contractors under the FCA, one of the government’s primary tools for combating fraud against the federal government.
The FCA imposes liability on individuals or companies that defraud the federal government by making materially false or fraudulent statements to influence the government to pay out. Those statements must be material to the government’s decision to make the payment. It also includes a “qui tam” provision that allows private individuals, known as “relators” or “whistleblowers,” to file lawsuits on behalf of the government and potentially receive a portion of any recovered damages.
The U.S. Department of Justice (DOJ) has said it collected more than $2.9 billion in settlements and judgments in all fraud claims brought under the FCA in the last fiscal year ending on September 30, 2024, with more than $2.4 billion stemming from qui tam suits.
Specifically, EO 14173 states that agency heads must “include in every contract or grant award: A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes” of the FCA.
That language requires organizations doing business with the government to certify that they do not have any DEI programs that are unlawful under federal antidiscrimination laws and seeks to make such a certification a material term for purposes of the FCA. Of particular concern is that such claims under the FCA could come not only from the government but also from individuals inside and outside of the organization in qui tam suits.
Next Steps
These actions put employers doing business with the federal government on notice that the new administration is empowering interested individuals, such as applicants, employees, and others to join or possibly replace traditional federal employment agencies, such as the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP), as watchdogs on compliance obligations.
Employers may want to review or audit all their existing DEI or Diversity, Equity, Inclusion, and Accessibility (DEIA) programs or initiatives and to determine if they align with lawful practices under applicable federal anti-discrimination laws.
Employers doing business with the federal government may also want to consider options to create active, robust, and ongoing compliance programs to assist with this new obligation and certification under the FCA. Employers may consider thorough analysis protected by the attorney-client privilege as part of these compliance programs.
AML/BSA Audits: Answers to Frequently Asked Questions (FAQs)
Conducting periodic audits is essential for effectively managing anti-money laundering and Bank Secrecy Act (AML/BSA) compliance. Auditing AML/BSA compliance allows financial institutions, including foreign banks, to assess the efficacy of their compliance programs—and to make updates to their compliance programs when necessary.
By conducting AML/BSA audits, financial institutions can also demonstrate the efficacy of their compliance programs to the Federal Financial Institutions Examination Council (FFIEC) when necessary. FFIEC examinations can present substantial risks, so it is imperative for financial institutions to ensure that they are as prepared as possible.
“Financial institutions need to prioritize effective AML/BSA compliance management. A key step toward effectively managing compliance is to gain a clear understanding of the efficacy of a financial institution’s compliance program. Not only are financial institutions federally required to conduct periodic AML/BSA audits, but periodic auditing also provides critical insight into whether a financial institution’s compliance policies, procedures, and protocols are functioning as intended.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
With this in mind, what do financial institution executives and directors need to know about conducting AML/BSA audits? Here are the answers to some important FAQs:
Are Financial Institutions Required to Conduct AML/BSA Audits?
Federal regulations require financial institutions to conduct audits (or “independent testing”) as part of their efforts to ensure anti-money laundering and Bank Secrecy Act (AML/BSA) compliance. However, this is as far as the regulations go. As a result, as the FFIEC makes clear, a financial institution’s auditing program, “should be commensurate with the [money laundering/terrorist financing (ML/TF)] and other illicit financial activity risk profile of the bank and the bank’s overall risk management strategy.”
In other words, while AML/BSA auditing and risk assessment is mandatory, the federal regulations leave it up to financial institutions to determine what specific auditing measures are necessary. An informed and custom-tailored approach is critical, and financial institutions should work with their outside counsel to develop an auditing strategy that allows them to manage AML/BSA compliance with confidence.
How Often Are Financial Institutions Required to Conduct AML/BSA Audits?
Just as the federal regulations do not establish substantive requirements for AML/BSA audits, they also do not establish a mandatory frequency. With that said, the FFIEC advises that financial institutions, “may conduct independent testing over periodic intervals (for example, every 12-18 months) and/or when there are significant changes in the bank’s risk profile, systems, compliance staff, or processes.”
As a general rule, financial institutions will want to conduct regularly scheduled audits as a matter of course so that they can maintain a clear understanding of the health of their AML/BSA compliance programs on an ongoing basis—and, for most, this will involve adopting an annual schedule. However, financial institutions must also make informed decisions about when additional mid-cycle audits are necessary.
Can (and Should) Financial Institutions Use Internal Personnel to Audit AML/BSA Compliance?
The FFIEC advises that financial institutions which, “do not employ outside auditors or consultants or do not have internal audit departments may . . . us[e] qualified bank staff who are not involved in the function being tested.” However, while it is permissible to use internal personnel in appropriate cases, financial institution leaders must make an informed and strategic decision about whether this is truly the best approach. If a financial institution does not have internal personnel who devote time to remaining up-to-date on AML/BSA compliance (and who also are not directly involved in the institution’s AML/BSA compliance efforts), then engaging outside counsel will be necessary.
How Can Financial Institutions Document the “Independence” of their AML/BSA Auditors?
Independence is critical when conducting an AML/BSA audit. In fact, rather than stating that financial institutions must conduct internal audits, the federal anti-money laundering regulations state that financial institutions must conduct “independent testing.” Further elaborating on what we just discussed, the FFIEC advises that the internal auditor involved in conducting an AML/BSA audit should, “not [be] involved with the function being tested or other BSA-related functions at the bank that may present a conflict of interest or lack of independence.”
When engaging outside counsel to conduct an AML/BSA audit, the act of engaging outside counsel itself will generally be enough to satisfy any potential concerns about independence (though the scope of outside counsel’s engagement should still be clearly defined). When using internal personnel, additional steps will be necessary to demonstrate that these personnel have subject matter expertise, are unbiased and do not have a personal interest in the outcome of the audit process.
How Can Financial Institutions Document Their Compliance with the AML/BSA “Independent Testing” Requirement?
Documenting compliance with the AML/BSA “independent testing” requirement involves thoroughly documenting the entire audit process as well as its findings and any subsequent remedial action. Another benefit of engaging outside counsel is that it allows this documentation to be protected under the attorney-client privilege. In any case, comprehensiveness is key, as any gaps in a financial institution’s audit documentation will raise questions about why those gaps exist. If there isn’t a clear answer, FFIEC examiners will have little choice but to err on the side of assuming noncompliance.
What Compliance-Related Concerns Should an AML/BSA Audit Examine?
AML/BSA audits must be both comprehensive and custom-tailored. In the words of the FFIEC, “Independent testing of specific BSA requirements should be risk-based and evaluate the quality of risk management related to ML/TF and other illicit financial activity risks for significant banking operations across the organization. . . . Risk-based independent testing programs vary depending on the bank’s size or complexity, organizational structure, scope of activities, risk profile, quality of control functions, geographic diversity, and use of technology.
In brief, AML/BSA audits should focus on a financial institution’s specific risks—and they should examine these risks from all relevant perspectives. The types of issues that will typically need to be addressed during the AML/BSA auditing process and transaction testing include:
Monitoring systems for potentially suspicious activity, including filtering criteria and alerts
Processes for generating, reviewing, filing, and submitting Suspicious Activity Reports (SARs)
Processes for generating, reviewing, and filing Currency Transaction Reports (CTRs)
“Know your customer” compliance, including customer identification program (CIP), customer due diligence (CDD) policies and procedures
Adherence to other anti-money laundering recordkeeping requirements
Again, these are just broad examples. When preparing to conduct an AML/BSA audit, determining not only the scope of the audit, but also how the audit will be conducted, is essential. Following a systematic approach that is focused on a financial institution’s specific compliance obligations and risks is the only practical way to effectively assess compliance consistently on an ongoing basis.
What Should Financial Institutions Do if They Discover Compliance Failures During an AML/BSA Audit?
This is not an uncommon scenario. When financial institutions uncover compliance failures during an AML/BSA audit, the key is to address these failures as efficiently as possible. The specific remedial measures that are necessary will depend on the specific circumstances involved—and this, too, requires informed decision-making. Crucially, during the financial institution’s next AML/BSA audit, assessing the efficacy of these remedial measures should be a top priority.
What Types of Issues Are Likely to Trigger Scrutiny from the FFIEC?
Issues in any of the areas listed above have the potential to trigger scrutiny from the FFIEC. However, this list is far from exclusive. The FFIEC’s examiners exhaustively assess not only the efficacy of financial institutions’ compliance programs, but also the efficacy (and independence) of their auditing processes and procedures.
How Can Financial Institutions Mitigate Their Risk of Facing FFIEC Scrutiny?
In light of everything we have discussed thus far, financial institutions can mitigate their risk of facing FFIEC scrutiny by taking a comprehensive and proactive approach to both managing and monitoring AML/BSA compliance. If financial institutions have documentation on-hand that clearly demonstrates good-faith efforts to comply with all pertinent laws and regulations, they are both far less likely to face intensive FFIEC scrutiny and far less likely to face serious consequences in the event of an FFIEC examination.
What Should You Do if the FFIEC Opens an Examination of Your Financial Institution’s AML/BSA Compliance Efforts?
Of course, even if a financial institution is fully federally compliant, this won’t necessarily stop the FFIEC from scrutinizing its AML/BSA compliance program. If the FFIEC opens an examination of your financial institution’s AML/BSA compliance efforts, you will want to engage your institution’s outside counsel promptly.
What Are the Risks of Failing to Effectively Manage AML/BSA Compliance for Financial Institutions?
If FFIEC examiners identify flaws or oversights in a financial institution’s AML/BSA compliance program or its auditing procedures, the consequences can be significant. The Bank Secrecy Act imposes substantial penalties for violations. These include not only regulatory and civil penalties, but even criminal penalties in some cases.
Do Financial Institutions Need to Engage Outside Counsel to Conduct Their AML/BSA Audits?
With all of this in mind, do financial institutions need to engage outside counsel to conduct their AML/BSA audits? While the federal anti-money laundering regulations do not strictly require financial institutions to engage outside counsel to conduct their independent testing, doing so is strongly recommended for all of the various reasons discussed above. Working with experienced outside counsel allows financial institutions to both confidently manage AML/BSA compliance on an ongoing basis and confidently interface with the FFIEC when necessary.
Trump Pauses FCPA Enforcement and Resets Priorities
On February 10, 2025, President Donald Trump issued an executive order titled, “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security” (“FCPA EO”) that directs the Department of Justice (“DOJ”) to pause enforcement of the Foreign Corrupt Practices Act (15 U.S.C. 78dd-1 et seq.) (“FCPA”) for 180 days until new Attorney General (“AG”) Pam Bondi issues new FCPA guidelines and policies on enforcement. The FCPA EO seeks to eliminate “excessive barriers to American commerce abroad,” states that current FCPA enforcement has been “stretched beyond proper bounds and abused in a manner that harms the interests of the United States,” and states that “overexpansive and unpredictable FCPA enforcement against American citizens and businesses . . . actively harms American economic competitiveness and, therefore, national security.”
For the uninitiated, the FCPA is a criminal statute enacted in 1977, which the DOJ and U.S. Securities & Exchange Commission (“SEC”) have employed to impose over $31 billion in penalties over the last 48 years, as well as secure scores of criminal convictions. During the Biden Administration alone, the DOJ and SEC imposed total penalties over $4 billion under the FCPA, so the fact that President Trump just stopped the DOJ from enforcing the FCPA with a stroke of a pen was a change in the enforcement landscape to say the least.
Trump’s FCPA EO follows a wave of fourteen memoranda issued by AG Bondi last week, aimed at overhauling the DOJ’s enforcement priorities. As part of her first day directives, AG Bondi issued a memorandum titled, “Total Elimination of Cartels and Transnational Criminal Organizations,” (“Total Elimination Memo”) which outlines the DOJ’s “fundamental change in mindset and approach” with the goal of the “total elimination” of Cartels and Transnational Criminal Organizations (“TCOs”).[1] The Total Elimination Memo immediately ends the kleptocracy task forces and shifts the DOJ’s enforcement priority to Cartels and TCOs, including redirecting the DOJ’s FCPA Unit and Money Laundering and Asset Recovery Section (“MLARS”) to prioritize cases involving Cartels and TCOs.
Key Takeaways from the FCPA EO and Total Elimination Memo
The FCPA still remains a valid statute, even though the DOJ is pausing criminal enforcement of it for at least 180 days.
The FCPA’s statute of limitations is 5 years, and the EO does not provide violators any legal defense.
It is unclear if the SEC will follow the DOJ’s lead or continue to enforce the civil provisions of the FCPA against US issuers.
Private lawsuits with an FCPA nexus (typically shareholder suits) are not impacted.
The overall risk of FCPA criminal enforcement under the new Trump Administration just decreased significantly. The many pundits who opined that FCPA enforcement would continue unabated in 2025 were wrong.
After AG Bondi issues the new FCPA guidelines, companies should review and revise their compliance programs to comport with the new DOJ guidance.
Given Trump’s stated view that the FCPA “actively harms American economic competitiveness,” the door may be open for a “Trump discount” on penalties, and companies should seriously consider whether to attempt to resolve any potential FCPA liabilities during the current administration once the new guidelines are issued.
Detailed summaries of the FCPA EO and Total Elimination Memo are below.
FCPA EO
The FCPA EO specifically orders the following:
For a period of 180 days following the date of this order, the Attorney General shall review guidelines and policies governing investigations and enforcement actions under the FCPA. During the review period, the Attorney General shall:
cease initiation of any new FCPA investigations or enforcement actions, unless the Attorney General determines that an individual exception should be made;
review in detail all existing FCPA investigations or enforcement actions and take appropriate action with respect to such matters to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives; and
issue updated guidelines or policies, as appropriate, to adequately promote the President’s Article II authority to conduct foreign affairs and prioritize American interests, American economic competitiveness with respect to other nations, and the efficient use of Federal law enforcement resources.
Further, the FCPA EO provides that the AG may extend the review period for an additional 180 days and that any FCPA investigations and enforcement actions initiated or continued after the revised guidelines or policies are issued under subsection (a) must be governed by such guidelines or policies and specifically authorized by the AG. The FCPA EO mandates that after the revised guidelines or policies are issued, the AG must determine “whether additional actions, including remedial measures with respect to inappropriate past FCPA investigations and enforcement actions, are warranted and shall take any such appropriate actions or, if Presidential action is required, recommend such actions to the President.”
Total Elimination Memo
AG Bondi mandates that for a period of 90 days—to be renewed or made permanent thereafter—the FCPA Unit must prioritize investigations related to foreign bribery that facilitates criminal operations of Cartels and TCOs (e.g., bribery of foreign officials to facilitate trafficking of narcotics and firearms) and “shift focus away from investigations and cases that do not involve such a connection.” The memorandum also suspends the FCPA Unit’s exclusive requirement to authorize, prosecute, and try these bribery FCPA cases and opens the door for U.S. Attorney’s Offices (“USAOs”) nationwide to bring such cases. USAOs need only to provide the FCPA Unit with a “24-hours’ advance notice of the intention to seek charges” and provide any existing memoranda to the FCPA Unit in advance of seeking charges.
Similarly, under the same 90-day constraint, AG Bondi directed MLARS to prioritize investigations, prosecutions, and asset forfeiture actions that target Cartels and TCOs. The memorandum also disbands the Department’s Task Force KleptoCapture, the Department’s Kleptocracy Team, and the Kleptocracy Asset Recovery Initiative within MLARS and redirects their resources towards the total elimination of Cartels and TCOs. Recently, the Task Force KleptoCapture and Kleptocracy Asset Recovery Initiative targeted Russian oligarchs’ assets and enforced sanctions following Russia’s invasion of Ukraine.
The memorandum also:
Elevates two joint task forces, Joint Task Force Vulcan and Joint Task Alpha, to the Office of the AG to focus efforts on enforcing against Cartels and TCOs, such as Tren de Aragua and La Mara Salvatrucha;
Proposes legislative reforms to control the manufacture and distribution of fentanyl and counterfeit pills; and
Suspends approval or authorization requirements for capital-eligible offenses, terrorism and International Emergency Economic Powers Act charges, and racketeering charges related to Cartels and TCOs for a period of 90 days, potentially to be renewed or made permanent thereafter.
[1] The memorandum incorporates elements of President Donald Trump’s January 20, 2025, Executive Order, “Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists,” which designates certain Cartels as Foreign Terrorist Organizations or Specially Designated Global Terrorists, finding that Cartels “institute a national-security threat beyond that posed by traditional organized crime.” See generally, The White House, Executive Order: Designating Cartels And Other Organizations As Foreign Terrorist Organizations And Specially Designated Global Terrorists (Jan. 20, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/designating-cartels-and-other-organizations-as-foreign-terrorist-organizations-and-specially-designated-global-terrorists/?utm_source=sfmc&utm_medium=email&utm_campaign=701cx000002bYOAAA2&utm_content=Alert&utm_id=101800&sfmc_id=00Q4W00001dLmZJUA0&subscriber_id=6548422.