Trump’s action may bring problems to banks and cryptocurrency companies | rtp marketslot88, rtp agenasia88

In a recent interview with the right-wing US media Breitbart News, US President Trump said that his administration is "very seriously" considering defining Mexican cartels as foreign terrorist organizations (FTO). However, the pressure this policy shift has put on the banking sector has cast doubt on the feasibility of this expansion of the counterterrorism regime.

01. Trump: Will “very seriously” consider designating Mexican drug cartels as terrorist organizations

Trump's action against Mexican cartel gangs comes after he declared a state of emergency at the U.S.-Mexico border last month. The move is aimed at securing billions more funding for the border wall he advocates than Congress is willing to approve. On March 14, the Senate rescinded the border emergency declaration — a resolution that Trump immediately vetoed. See Trump’s tweet below:

Tweet to the effect: I look forward to vetoing the just-passed Democratic resolution that would open the borders while increasing crime, drugs, and human trafficking in the United States. I'm grateful to all those strong Republicans who voted for border security and the wall we desperately need!

Defining cartels as terrorist groups could therefore be a tactic by Trump to gain political leverage for his controversial border wall.

According to the U.S. Department of State, a Foreign Terrorist Organization (FTO) must be a foreign organization that has either engaged in terrorism or possesses the means to engage in terrorism and "threats the safety of U.S. nationals or the national security of the United States."

In addition, the legal implications of classifying an organization as an FTO require:

“If any financial institution in the United States becomes aware that it possesses or controls funds that have an interest in a designated FTO or its agents, the financial institution must retain possession or control of the funds and report the funds to the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).”

Under this Department of State provision, which requires "substantial support," any financial institution that fails to report to OFAC those terrorist-related funds will be subject to civil penalties of $50,000 per violation, or twice the amount that the institution fails to report.

02. Former Director of the U.S. Drug Enforcement Administration: Trump should classify cartels as a terrorist organization

On the surface, classifying Mexican drug cartels as a terrorist blocker seems warranted. The drug-related violence that has paralyzed Mexican society and the health hazards posed by cartels to U.S. residents through the distribution of toxic substances such as fentanyl and methamphetamine in the United States have made these Mexican groups a U.S. national security threat that adversely affects the United States’ response to foreign terrorist groups such as Al-Qaeda and ISIS.

Derek Maltz, former director of the U.S. Drug Enforcement Administration (DEA) Special Operations Group, said:

“Based on the rising murder rate in Mexico, a large number ofBetween missing people, unprecedented death and damage to young Americans from the cartels' poison, and widespread corruption, I believe the United States should designate the ruthless cartels as a terrorist organization immediately. ”

Homicides in Mexico increased by 33% in 2018, setting a record for the second consecutive year, with investigators investigating 33,341 murders last year, according to official Mexican government data. Additionally, a 2018 Congressional Research Service report attributed 150,000 intentional homicides since 2006 to organized crime. For details, see:

Meanwhile, in the United States, a record 72,000 people died from opioid (opioid) overdoses in 2017, surpassing all U.S. military casualties in the Iraq and Vietnam wars.

03. The U.S.’s “ringleader strategy” has brought about the split of the cartel

What led to the violence in Mexico was the fragmentation of criminal gangs, which was triggered by the US-led "kingpin strategy" (note: the "kingpin strategy" is to attack these organizations by assassinating or arresting the "kingpins" who monopolize these organizations). A prime example of the negative impact of this flawed strategy is the arrest and indictment and resulting violence of El Chapo Guzman, the top cartel drug lord in the Mexican state of Sinaloa, who has been associated with much of the drug violence in Mexico over the past few decades.

(Wikipedia: Joaquin Guzman was arrested in 1993, but successfully escaped from prison and fled to Guadalajara in 2001. He has been wanted by the Mexican government ever since. On February 22, 2014, Guzman was arrested, ending a 13-year Escape career. But on July 12, 2015, he dug a tunnel at least 15 meters deep and 1,500 meters long from a high-security prison in the capital, Mexico City, and escaped again on January 8, 2016. Forbes selected him as the most influential person in the world. Due to concerns that Guzman could escape from prison again, the Mexican government extradited Guzman to the United States on January 19, 2017, and is currently being held in Manhattan Prison in New York State, USA on February 1, 2019. On the 2nd, the New York Federal Court convicted Guzman of all 10 charges, including drug trafficking, illegal possession of firearms, money laundering, etc. Although the court has not announced a sentence, it is expected that the 61-year-old Guzman will be sentenced to life imprisonment without parole)

So, as U.S. law enforcement cuts off proverbial "kings," creating a power vacuum, the drug cartels splinter into a host of new gangs and lay the foundation for brutal internal strife.

InSight Crime, a Latin American-focused organized crime foundation and publisher, posted on January 16, 2019:

"In recent years, Mexico's most important criminal organization - The Sinaloa Cartel, Jalisco Cartel New Generation and the Zetas - have splintered or been threatened by smaller groups that are diversifying their criminal portfolios and using extreme violence to try to control major territorial swaths. ”

Currently, at least eight major criminal organizations are vying for control of Mexico's drug trade, along with dozens, if not hundreds, of smaller gangs involved in everything from kidnapping to extortion, oil theft and other illicit money-making rackets.

04. Being listed as a "terrorist organization" will lead to a surge in "anti-money laundering" costs

While the Mexican cartel's situation may meet the basic criteria for classification as an FTO (foreign terrorist organization), the resulting fallout could result in serious cost increases for the U.S. banking industry, according to data analytics firm LexisNexis. Of that amount, the U.S. banking industry already spends more than $25 billion annually on anti-money laundering (AML) compliance.

LexisNexis found that 67% of U.S. financial services companies already “believe AML compliance has had a negative impact on productivity” and that “compliance costs and operational delays are rising as the indirect costs of increasingly complex compliance requirements increase.”

While banks must comply with the U.S. Treasury Department’s Foreign Narcotics Kingpin Designation Act, which overlaps with OFAC review requirements for terrorism-related entities, extending the Counter-Terrorism Financing (CTF) regime to Mexican drug trafficking organizations will increase regulatory complexity and cost burdens for financial institutions.

In this regard, Andrew Lewis, former deputy secretary of the U.S. Department of Defense (DoD) Counter-Terrorism Task Force, said that when it comes to the enforcement of financial crimes, “the government usually targets the easiest targets, which are banks that have the money to pay fines. ” He added:

"If this moves forward, I think you're going to see a lot of concern in the banking industry because from a risk compliance perspective, they're going to have to spend a lot of time and money to address the underlying issues. For example, if bank customer A has a remittance operation with customer B or company C, if these legal entities are later found to be drug dealers or terrorists, will the bank involved be sued in court for not doing enough in anti-money laundering/KYC? ”

Lewis also said that these expanded terrorism sanctions will particularly hit small and medium-sized banks hard, which will require these banks to conduct deeper customer due diligence on tens of thousands or more legal entities, resulting in a significant increase in costs.

Smaller banks already spend more than ten times more on anti-money laundering (AML) compliance as a percentage of total assets than larger banks, according to LexisNexis. At the same time, Lewis said designating the cartel as a terrorist organization “would add significantly to the $25 billion currently already spent by the U.S. banking industry on AML. ”

05. Cryptocurrency companies are under greater pressure

Reports suggest that Mexican cartels are increasingly laundering money through the use of cryptocurrencies, and Trump's move to "seriously" consider designating cartel groups as terrorist organizations could also exacerbate problems in the cryptocurrency industry.

Mexican cartels are using cryptocurrency money-laundering networks in some countries to hide their drug proceeds from authorities, according to testimony before the U.S. Senate Judiciary Subcommittee on Border Security and Immigration in December 2018.

According to Malcolm Wright, chief compliance officer at blockchain company Diginex, if a cartel is classified as a terrorist organization, then all crypto transactions related to these groups will also be subject to OFAC sanctions.

"If the cartel is ultimately designated a terrorist organization, OFAC will require cryptocurrency exchanges to conduct appropriate scrutiny."

In this regard, Lewis said that the increased sanctions-review risk due to pressure from OFAC may make many cryptocurrency companies and Bitcoin exchanges no longer welcome customers of banks. To date, the only time the U.S. Treasury Department has imposed OFAC sanctions on the cryptocurrency space was an enforcement action against two Iranian ransomware operators in November 2018, blacklisting the Bitcoin addresses of the two Iranians behind the SamSam ransomware: Ali Khorashadizadeh and Mohammad Ghorbaniyan.

Both Lewis and Wright confirmed the Senate testimony and said there is evidence that cartels and criminal organizations are exploring money laundering through cryptocurrencies.

Lewis, who has been working on cryptocurrency for the U.S. government since 2013, said:

“There is cartel activity in the cryptocurrency space, although not to a very significant extent. There is no doubt that this will increase.”

06. Trump’s campaign against cartels is unlikely to make much progress at the moment

Finally, Lewis does not believe that the Trump administration will designate Mexican drug trafficking organizations as terrorist organizations:

"...because going through the bureaucracy is a difficult process, and the United States has many similar capabilities in sanctioning individuals under the Foreign Narcotics Kingpin Designation Act."

In any case, as U.S. foreign policy increasingly resembles the plot of a Sicario sequel, any national security provisions that increase the compliance burden on U.S. financial institutions are likely to be opposed by the banking industry.

(Source: Tim Lloyd)