Publication
Heightened Government Enforcement Activity Against Foreign-Originated Fraud Schemes
By Jason Spitalnick and James Melendres
Over the past few months, the federal government has signaled concerted enforcement scrutiny of financial fraud that originates abroad and victimizes U.S. investors and consumers. This new focus involves numerous federal agencies, including the Securities and Exchange Commission (SEC), the Department of Justice (DOJ), and the Department of the Treasury.
SEC’s Cross-Border Task Force and Gatekeeper Liability
On September 5, 2025, the SEC announced the formation of a Cross-Border Task Force (CBTF) to “strengthen and enhance the Division of Enforcement’s efforts to identify and combat cross-border fraud harming U.S. investors.” While the CBTF will pursue traditional securities law violations such as market manipulation and insider trading, it will apply a specialized cross-border lens, with an immediate emphasis on companies based in China and other jurisdictions perceived to pose high regulatory risk. As part of its mandate, the CBTF will also focus enforcement efforts on U.S.-based “gatekeepers”—including auditors and underwriters—who help foreign firms access U.S. capital markets. The possible repercussions of the formation of the CBFT include enhanced cooperation tools to enable faster access to foreign data; surveillance tools specifically geared to cross-border issues; increased Enforcement Division scrutiny of gatekeepers; and enhanced scrutiny of thinly traded issuers whose shares are uniquely susceptible to market abuse.
Interagency Guidance on Cross-Border Information Sharing by Financial Institutions
Also, on September 5, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), in consultation with staffs of the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA), issued guidance “to encourage and promote appropriate, voluntary cross-border sharing of information between and among financial institutions, including appropriate foreign financial institutions, to help combat the threats posed by money laundering . . . illicit finance activity . . . and fraudsters.” While the guidance, by its own terms, does not alter or amend existing law, its publication reinforces that the applicable agencies encourage lawful information sharing—in a manner that does not violate the Bank Secrecy Act—in order to facilitate the identification of money laundering, fraud, and other financial crimes.
DOJ and Treasury Prioritization of Organized Digital Scam Networks
Finally, on October 14, 2025, the DOJ, the Department of Treasury’s Office of Foreign Assets Control (OFAC), and the Treasury’s FinCEN announced significant enforcement actions against Southeast-Asian scam networks targeting Americans through “pig butchering” cryptocurrency investment schemes and other types of fraud. Specifically:
- The U.S. Attorney’s Office for the Eastern District of New York (EDNY) charged Chen Zhi, founder and chairman of Prince Holding Group (Prince Group), with operating forced-labor camps across Cambodia that perpetrated fraudulent cryptocurrency investment schemes. According to DOJ, Prince Group coerced workers into executing “pig butchering” scams that involved gaining victims’ (including U.S. residents) trust online and then deceiving them into investing in fake crypto assets. One Prince Group network in Brooklyn laundered approximately $18 million of illicit proceeds from over 250 American victims between May 2021 and August 2022.
- The DOJ’s National Security Division and EDNY also initiated a civil in rem forfeiture action seeking approximately 127,271 bitcoin, worth about $15 billion, from proceeds of the Prince Group’s fraud and money laundering schemes—the largest forfeiture action DOJ has ever pursued.
- OFAC sanctioned 146 individuals and entities associated with the Prince Group, placing them on the Specially Designated Nationals and Blocked Persons List. These designations were made under OFAC’s transnational criminal organization authorities.
- On October 15, 2025, FinCEN issued a final rule under section 311 of the USA PATRIOT Act that severs Huione Group, a Cambodia-based financial services conglomerate, from the U.S. financial system. FinCEN determined: “Huione Group serves as a critical node for laundering proceeds of cyber heists carried out by the Democratic People’s Republic of Korea and for transnational criminal organizations in Southeast Asia perpetrating virtual currency investment scams, commonly known as ‘pig butchering’ scams, among others.” The rule prohibits U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for, or on behalf of, Huione Group, and requires that financial institutions take reasonable steps not to process transactions for the correspondent account of a foreign banking institution in the United States if such a transaction involves Huione Group.
These recent announcements and developments reflect a concerted and coordinated emphasis on cross-border enforcement to protect U.S. persons. This will continue to be an important dynamic to monitor. Financial firms with operations and affiliates abroad should consult counsel, conduct appropriate reviews of policies and procedures to ensure compliance with applicable laws and regulations, and consider enhanced due diligence when dealing with high-risk jurisdictions.
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Founded in 1938, Snell & Wilmer is a full-service business law firm with more than 500 attorneys practicing in 17 locations throughout the United States and in Mexico, including Los Angeles, Orange County, Palo Alto and San Diego, California; Phoenix and Tucson, Arizona; Denver, Colorado; Washington, D.C.; Boise, Idaho; Las Vegas and Reno-Tahoe, Nevada; Albuquerque, New Mexico; Portland, Oregon; Dallas, Texas; Salt Lake City, Utah; Seattle, Washington; and Los Cabos, Mexico. The firm represents clients ranging from large, publicly traded corporations to small businesses, individuals and entrepreneurs. For more information, visit swlaw.com.
