Quality Control at a Sustainable Cost: Blockchain Solutions for Bank Secrecy and Anti-Money-Laundering Compliance

Featured Expert Contributor, Legal & Regulatory Challenges for Digital Assets

Alter_Daniel_web2_8784879218361By Daniel S. Alter, a Shareholder in the New York, NY office of Murphy & McGonigle P.C.

I’ve banged on this drum before in American Banker but—given recent and exciting developments in blockchain technology—it’s time to beat on it again.  The costs of Bank Secrecy Act and Anti-Money Laundering (BSA-AML) compliance are an enormous regulatory burden on financial institutions, particularly for small and middle market firms.  And considering the global security implications posed by terrorist financing and other criminal money-laundering operations, there are no corners to cut in meeting these requirements.

Yet, as one major vendor of compliance systems has observed, criminals are “increasingly laundering money through smaller regional banks, believing that these institutions do not have the millions to invest in the processes and technology needed” to combat the problem.  I say again, there is a private-market solution to this public-safety challenge. Continue reading “Quality Control at a Sustainable Cost: Blockchain Solutions for Bank Secrecy and Anti-Money-Laundering Compliance”

Ninth Circuit Judges Call for En Banc Review of FTC’s Authority to Obtain Monetary Relief

Featured Expert Contributor, Antitrust & Competition Policy — Federal Trade Commission

By M. Sean Royall, a Partner with Gibson, Dunn & Crutcher LLP, with Blaine H. Evanson, and Richard H. Cunningham, Partners, and Brandon J. Stoker, an Associate, with the firm.

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Less than two years ago, David Vladeck, a Professor at Georgetown University Law Center who served as the Director of the FTC’s Bureau of Consumer Protection from 2009 to 2012, described the argument that the FTC Act does not permit the agency to obtain equitable monetary relief as “repeatedly and uniformly rejected by every court to address it.”  Two Ninth Circuit judges, however, recently signaled that the landscape in this area may be changing in the wake of the Supreme Court’s 2017 Kokesh v. SEC decision.

In an extraordinary procedural move, on December 3, 2018, Ninth Circuit Judge Diarmuid F. O’Scannlain, joined by Judge Carlos T. Bea, wrote a special concurrence to his majority opinion in FTC v. AMG Capital Management, LLC et al., in which he described permitting the FTC to obtain monetary relief under Section 13(b) of the FTC Act as “an impermissible exercise of judicial creativity” that “contravenes the basic separation-of-powers principle that leaves to Congress the power to authorize (or to withhold) rights and remedies.”  Slip Op. at 36.  The concurrence called on the Ninth Circuit to hear the case en banc to reconsider its 2016 decision in in FTC v. Commerce Planet, Inc.,* which held that  the FTC may obtain monetary relief pursuant to Section 13(b), and walked through how the Kokesh decision calls the reasoning of Commerce Planet into question. Continue reading “Ninth Circuit Judges Call for En Banc Review of FTC’s Authority to Obtain Monetary Relief”

Airbnb v. NYC: Data Collection and Fourth Amendment Protection

airbnbDuring 2018, the hand-wringing demands for “better” protection of online consumers’ privacy (despite the likely costs, some of which we documented here) grew to a fever pitch. Easily forgotten amid the cacophony is data-collecting companies’ own expectation of privacy in their extremely valuable property. A federal court decision last week provides a timely reminder that businesses possess civil liberties too, which they can use to defend against unreasonable government intrusion. The decision also gives local, state, and federal regulators and legislators something to keep in mind as they rush to “do something” about data privacy.

The decision arises from New York City’s attempt to minimize the societal ills that purportedly accompany short-term rentals. Citing the difficulty of enforcing a 2010 city ordinance that prohibits certain rental arrangements, the City Council approved a second ordinance last year requiring all home-share “booking services” to hand over monthly transaction reports. Regulators could then scour the reports for violations of the 2010 law. The 2018 law, which was to take effect on February 2, imposes fines of up to $1,500 for each withheld listing. Continue reading Airbnb v. NYC: Data Collection and Fourth Amendment Protection”

End the Endless Extensions of the Seal Period in False Claims Act Qui Tam Cases

Featured Expert Contributor, False Claims Act

Stephen_Wood_03032014Stephen A. Wood, Chuhak & Tecson, P.C.

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The False Claims Act’s qui tam provisions permit private persons or entities to bring suit in the name of the government against defendants who are claimed to have violated the law.  An action is commenced by filing a complaint under seal and serving upon the government “substantially all material evidence and information the person possesses.”  31 U.S.C. § 3730(b)(2).   Once filed, the government has 60 days to investigate the case.  Id.  At the end of its investigation, the government must make an election—either take over the case or decline to intervene.  31 U.S.C. § 3730(b)(4).  The government may also move to dismiss the action or attempt to settle with the defendant during this time period.  See 31 U.S.C. § 3730(c)(2).

Neither the statute itself nor the legislative history of the FCA contemplates that the government should have an indefinite period of time in which to investigate a potential False Claims Act violation.  Yet, that has been an unfortunate reality in many qui tam cases, where the proceedings have remained under seal at the request of the government for years.  This practice is not only contrary to the statutory language and legislative history, it is abusive and potentially threatens a defendant’s fundamental right to due process.  It is incumbent upon both courts and defendants to put a stop to this abuse and require the government to live within the statutory dictates and Congress’ stated intent. Continue reading “End the Endless Extensions of the Seal Period in False Claims Act Qui Tam Cases”

Congressional Investigations and the Attorney-Client Privilege

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with Emily R. Garnett, an Associate in the firm’s Denver, CO office.

As Democrats assume control over the U.S. House of Representatives for the next Congress, many insiders anticipate an increase in congressional oversight investigations. Although much of the focus will be directed at the Trump administration itself, certain industries are also likely to be targeted, including health care, energy, financial services, pharmaceuticals, technology, and for-profit higher education, to name just a few. For many targets of this oversight activity, this will be their first foray into the unique world of congressional investigations where some of the usual rules don’t really apply.

Although it may look a lot like discovery in civil litigation, there are significant differences between litigating a lawsuit and responding to a congressional investigation. Unlike ordinary civil litigation, in a congressional investigation, the rules of evidence, the rules of procedure, and even common-law privileges don’t really apply, meaning that Congress does not even necessarily recognize an otherwise valid assertion of the attorney-client privilege in response to a request for documents or witness testimony. This reality can be of critical importance to a company that finds itself on the receiving end of a congressional subpoena. Continue reading “Congressional Investigations and the Attorney-Client Privilege”

Artificial Intelligence Will Benefit Us Immensely—If We Don’t Get in the Way

IRobotIdeas are becoming more expensive. Larger teams of scientists are taking longer and spending more to discover less. A common theory for these diminishing returns compares exploring the laws of nature to exploring land. Pioneers chart the most accessible areas. Later generations must grope their way across remote and forbidding terrain to find anything new; their expeditions need more preparation, more equipment, and more support. One of the many marks of increasing strain is the advancing age at which Nobel laureates reach their prize-winning breakthroughs. It appears that young scientists need more time to master the growing body of knowledge that lies between them and the frontier of a field.

Scientific discovery drives technological innovation, which in turn drives productivity growth. According to a recent study, the average researcher in the 1930s generated more productivity growth than do 20 researchers today. American spending on research and development has grown ten-fold since the 1950s. American productivity growth, meanwhile, has shrunk. Slowing productivity growth and slowing economic growth go hand in hand. Continue reading “Artificial Intelligence Will Benefit Us Immensely—If We Don’t Get in the Way”

What Did We Learn From the Supreme Court Oral Argument in Apple v. Pepper?

supreme courtWe’ve blogged previously about the Supreme Court’s biggest antitrust case of the October Term 2018, Apple v. Pepper. The case asks the Court to decide whether iPhone users who buy apps from Apple’s App Store may sue Apple for alleged antitrust violations, or whether only third-party app developers may bring such claims. The answer turns on whether and how the Court applies the rule announced in Illinois Brick Co. v. Illinois, which holds that only the direct purchaser of a good or service may sue an allegedly abusive monopolist for damages.

The Court heard oral argument in the case on Monday morning. Apple is represented by Daniel Wall of Latham & Watkins. He argues that the Illinois Brick rule is dispositive here for Apple because the plaintiffs’ antitrust claim hinges on precisely the sort of “pass through” theory of harm that Illinois Brick prohibits. Continue reading “What Did We Learn From the Supreme Court Oral Argument in Apple v. Pepper?”