Designed for busy in-house counsel and compliance professionals, this newsletter summarizes some of the most important domestic and international Anti-Money Laundering (AML) regulatory and enforcement developments from the past few months, with links to primary resources.
The most notable domestic AML developments during the last quarter were:
- (i) FinCEN’s June 27, 2025 order providing banks with an exemption to the Customer Identification Program Rule by permitting them to use an alternative collection method for obtaining Tax Identification Number information rather than directly from the customer; and
- (ii) FinCEN’s June 25, 2025 orders under the 2024 FEND Off Fentanyl Act (FOFA), imposing special measures against three Mexican financial firms—CIBanco S.A., Institución de Banca Múltiple (CIBanco), Intercam Banco S.A., Institución de Banca Múltiple (Intercam), and Vector Casa de Bolsa, S.A. de C.V. (Vector)—that it identified under its new authority as being “of primary money laundering concern” in connection with fentanyl trafficking by Mexican drug cartels.
Swiss Prosecutors Issue Penalty to Former Morgan Stanley Subsidiary for Money Laundering Charges
On February 27, 2025, Switzerland’s Office of the Attorney General (OAG) announced the closure of a 2020 investigation into and the issuance of a summary penalty order against Morgan Stanley’s Swiss Subsidiary, Morgan Stanley (Switzerland) GmbH (MSSG), for actions taken by its predecessor, Bank Morgan Stanley (Switzerland) AG (BMSAG). The order found that BMSAG did not take “all necessary and reasonable organisational measures” to prevent one of its client advisors from committing money laundering involving assets originating from acts of bribery in Greece.
In 2020, the OAG opened a criminal investigation into MSSG in connection with one of its client advisor’s money laundering offenses. Specifically, in 2014, the OAG had opened criminal proceedings against that client advisor for “intentionally obstructing the confiscation of criminally acquired assets” stemming from bribes received by former Greek Defense Minister Apostolos-Athanasios Tsochatzopoulos. These bribes had allegedly flowed through BMSAG accounts owned by Tsochatzopoulos’ cousin and managed by the client advisor. In 2019, the Criminal Chamber of the Swiss Federal Criminal Court found the client advisor guilty of money laundering for acting in disregard of the bank’s internal anti-money laundering policies, including by “taking deliberate steps to deceive BMSAG’s compliance function and conceal the money laundering.” Later in 2023, the same Court found the client advisor guilty of money laundering with regard to four transactions carried out in July and August 2010, in which funds linked to the Greek bribery scheme passed through the relevant BMSAG account.
The 2020 OAG investigation determined that while BSMAG had anti-money laundering policies and procedures in place, its “implementation failed to adequately identify and prevent the money laundering risks . . . and [failed] to sufficiently clarify the origin of the funds.” In particular, the OAG found that BSMAG had failed to “adequately challenge the misleading and deceptive information” the client advisor had provided to the bank’s compliance department.
MSSG agreed not to challenge the summary penalty order and will pay a fine of one million Swiss Francs and the cost of the proceedings. The Swiss AG stated that MSSG’s penalty takes into account the bank’s cooperation and the time elapsed since the underlying offense occurred.
Members of Chinese Money Laundering Organization Plead Guilty
On April 7, 2025, DOJ announced that three individuals associated with a Chinese money laundering organization pled guilty to charges related to laundering drug trafficking proceeds. The individuals, Maoxuan Xia, Shao Neng Lin, and Zhou Yu, laundered over $92 million in illicit funds, which derived from the import and distribution of illegal drugs into the United States, primarily through Mexico. Xia and Yu, both Chinese nationals, each pled guilty to one count of money laundering conspiracy, one count of money laundering to the conceal the nature, location, source, ownership, and control of illicit proceeds, and one count of monetary transactions involving criminally derived property greater than $10,000. Lin, a California citizen, pled guilty to one count of money laundering conspiracy, two counts of money laundering to conceal the nature, location, source, ownership, and control of the illicit proceeds, and two counts of monetary transactions involving criminally derived property greater than $10,000. The case is part of Operation Take Back America, a DOJ initiative targeting illegal immigration, cartels, and transnational criminal organizations.
As part of their plea agreements, Xia, Lin, and Yu admitted to using shell company bank accounts to facilitate their laundering operations. Xia travelled around the United States to collect and deposit illicit funds, while Lin and Yu opened the bank accounts used in the scheme. The defendants face potential sentences of up to 20 years in prison for each conspiracy and money laundering count, as well as up to 10 additional years on each of the monetary transaction counts.
DOJ Charges Cartel Leaders with Money Laundering Alongside First-of-Its-Kind Narco-Terrorism Indictment
On May 13, 2025, DOJ unsealed an indictment charging key leaders of the Beltran Leyva Organization (BLO), a faction of the Mexico-based Sinaloa Cartel, with narco-terrorism and drug trafficking, and certain defendants with money laundering in connection with trafficking “massive” amounts of fentanyl, cocaine, methamphetamine, and heroin into the United States. DOJ brought all three charges against defendants Pedro Inzunza Noriega and his son, Pedro Inzunza Coronel, and charged five other alleged cartel leaders with drug trafficking and money laundering.
Notably, DOJ has previously brought anti-money laundering charges against associates of drug-trafficking cartels like the Sinaloa Cartel, which DOJ alleges is “believed to be the world’s largest known fentanyl production network.” This indictment is the first to also bring narco-terrorism and material support of terrorism charges against members of the Sinaloa Cartel. DOJ makes clear that the indictment is a “direct result” of the Trump administration’s January 2025 Executive Order 14157, which designated the Sinaloa Cartel and other international cartels as Foreign Terrorist Organizations (FTOs) and advocated for the “total elimination” of these organizations from the United States. This indictment may represent a future focus by DOJ to use anti-money laundering prosecutions in connection with the Trump administration’s stated agenda to target international cartels and FTOs.
Luxembourg Court Sentences Edmond de Rothschild for 1MBD-Linked Money Laundering Offenses
On May 22, 2025, the Luxembourg judiciary announced that Edmond de Rothschild’s Luxembourg branch was convicted of money laundering and concealment. The bank will forfeit $28.4 million as part of a mutual agreement. This conviction is the first time that a Luxembourg bank has been convicted of money laundering, and is part of the ongoing international investigation into the embezzlement of over $4.5 billion from 1Malaysia Development Berhad (1MDB).
According to the Luxembourg court’s judgment, an unidentified United Arab Emirates national opened dozens of accounts with Edmond de Rothschild in the name of various European and offshore companies, through which the individual laundered money derived from 1MDB. While this settlement closes the investigation into the criminal liability of the bank and its employees, prosecutors continue to investigate the Emirati individual and his associated companies.
Mexico’s Finance Ministry Establishes Unit to Coordinate International Cartel Investigations
On May 27, 2025, Mexican President Claudia Sheinbaum issued a decree establishing the “general directorate specialized in criminal organizations” within Mexico’s finance ministry. The new unit is designed to enhance coordination with Mexican and international authorities, focusing on preventing high-impact crimes—such as money laundering—linked to criminal organizations. The directorate is empowered to request information from sectors identified as “vulnerable activities” under Mexico’s anti-money laundering law, including gambling, property sales, and precious metals trading.
Sheinbaum’s announcement is meant to signal Mexico’s commitment to international cooperation, particularly with United States authorities, in addressing cartel-linked financial crime. This announcement follows the U.S. Department of State’s designation of eight Latin American gangs, many of which are based or operate in Mexico, as FTOs. FinCEN followed these designations with a Geographic Targeting Order (GTO) aimed at combatting the “illicit activities and money laundering of Mexico-based cartels and other criminals along the southwest border of the United States.”
(For more a more detailed analysis on the impact of recent FTO designations, read our client alert, “FTO Designations Heighten Risks for Companies Operating in Latin America.”
To learn more about FinCEN’s GTO, read our client alert, “FINCEN Joins the Government-Wide Pursuit of Cartels.”)
European Commission Updates List of Jurisdictions That Are High Risk for Money Laundering
On June 10, 2025 the European Commission updated its list of “high-risk jurisdictions presenting strategic deficiencies in their national anti-money laundering and countering the financing of terrorism (AML/CFT) regimes.” The Commission is required to regularly update this list under Article 9 of the European Union’s 4th Anti-Money Laundering Directive. When updating the list, the Commission consulted the work of the Financial Action Task Force (FATF) and its list of “Jurisdictions Under Increased Monitoring.”
Countries added to the European Commission’s list are: Algeria, Angola, Côte d’Ivoire, Kenya, Laos, Lebanon, Monaco, Namibia, Nepal, and Venezuela. Countries removed from the list are: Barbados, Gibraltar, Jamaica, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates.
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