Home > Law Enforcement > FinCEN Adviser Sentenced for Leaking Reports to BuzzFeed

FinCEN Adviser Sentenced for Leaking Reports to BuzzFeed

The suspicious activity reports focused on subjects such as Paul Manafort and the Russian Embassy.

By Michael Katz


A former senior adviser with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has been sentenced to six months in federal prison for unlawfully disclosing suspicious activity reports (SARs) and other sensitive information that pertained to Donald Trump’s former campaign manager Paul Manafort, the Russian Embassy, and Russian agent Maria Butina, among other subjects.  

Natalie Mayflower Sours Edwards previously pleaded guilty to participating in a conspiracy to disclose the SARs, which are documents financial institutions are required to file with FinCEN under the Bank Secrecy Act whenever there is a suspected case of money laundering or fraud. The reports are intended to help monitor any activity that is considered out of the ordinary, that might be a sign of illegal activity, or that might be a threat to public safety.

FinCEN is tasked with safeguarding the financial system from illicit use, combating money laundering, and promoting “national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.” The unit manages the collection and maintenance of SARs regarding potentially suspicious financial transactions, and willful disclosure of a SAR or its contents is a felony, except when necessary to fulfill official duties.

According to the allegations contained in the complaint and other court documents, Edwards disclosed several SARs to an unnamed reporter from an unidentified New York-based news organization, the contents of which were published over approximately 12 articles. Although the name of the news organization was undisclosed, specific articles were mentioned that can be easily linked to BuzzFeed, and the media outlet even acknowledged that it was the recipient of the illegally disseminated reports in a recent article.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

The US Attorney’s Office for the Southern District of New York said Edwards had access to each of the reports and saved them and thousands of other files with sensitive government information to a flash drive provided by FinCEN. She transmitted the SARs to the reporter by taking photographs or images of them and then texting the photographs or images over an encrypted application.

Edwards also sent or described to the reporter internal FinCEN emails or correspondence that appeared to relate to SARs or other information protected by the Bank Secrecy Act, as well as FinCEN non-public memoranda, which included investigative memos and intelligence assessments published by the FinCEN Intelligence Division. The memos contained confidential personal information, business information, and/or security threat assessments.

“Public servants who abuse the power entrusted to them will face steep consequences for their actions,” Audrey Strauss, US Attorney for the Southern District of New York, said in a statement. “Maintaining the confidentiality of SARs, which are filed by banks and other financial institutions to alert law enforcement to potentially illegal transactions, is critical to preserve the integrity of myriad investigations, and the financial privacy of individuals.”

According to the Justice Department, when Edwards was arrested in October 2018, she was in possession of a flash drive on which she saved the unlawfully disclosed SARs, and a cellphone that contained several communications over an encrypted application in which she transmitted SARs and other sensitive government information to the reporter.

In addition to her prison term, Edwards, 43, was sentenced to three years of supervised release.

Related Stories:

Financial Journal Comptroller Pleads Guilty in Embezzlement Scheme

Fintech CEO Pleads Guilty to COVID Loan Fraud

Cryptocurrency Firm Co-Founder Gets 8-Year Prison Sentence for ICO Fraud

Tags: , , , , , , , , , , ,

Home > News > Market Moves > Another Taper Tantrum on the Way? Don’t Worry, Says Market Sage
Market Moves

Another Taper Tantrum on the Way? Don’t Worry, Says Market Sage

Investors’ violent 2013 reaction, as the Fed eyed trimming its bond buying, is unlikely to recur these days, Leuthold’s Paulsen argues.
By Larry Light


Will we endure another taper tantrum, eight years after the last one shook the bond world? Although the Federal Reserve contends that it hasn’t even started “to talk about talking about” shrinking its bond purchases, it has indicated it will stop buying corporate paper (which, frankly, it didn’t do a lot of). Is that a trial balloon?

When a slowing of the Fed’s bond-buying program, known as quantitative easing (QE), eventually occurs—or even the idea of it gets out—the reaction won’t be anywhere near as jarring as 2013’s. So says James Paulsen, chief investment strategist at the Leuthold Group.

“Many investors worry what will happen when the Federal Reserve finally begins tapering,” Paulsen stated. “Quit worrying.”

One big reason: A version of it is actually occurring already, with no ill effects on markets or investor psyches. “Tapering has been happening for the past three months,” Paulsen wrote in a commentary.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

He’s referring to a slowing in the once-torrid growth of the US money supply, namely M2, the fuel for the economy. The yearly M2 increase (in real, that is, in inflation-adjusted terms) has shrunk from its February peak of around 25% to 13.8% in April. Meanwhile, annual growth in the nominal (unadjusted) supply declined from 27% to just under 18% over the same period. Paulsen called it a “good bet” that both the nominal and real money supply weakened even more in May.

This may sound odd given the surge in consumer spending as pandemic lockdowns disappear. Indeed, massive Washington stimulus and Fed QE, to the tune of $120 billion in bonds bought monthly, have led to a historic jump in the money supply, up 30% since the start of the pandemic.

But bank lending is where much money creation occurs, and that has been on the downswing since spring 2020. According to the St. Louis Fed, loan activity is off 15.5% through April from 12 months earlier.

After all, we still are in a recession, unemployment is dropping yet still high, and many businesses have failed. Further, the velocity of money has slowed, meaning folks aren’t spending quite as much of late. And higher inflation—the Consumer Price Index (CPI) rose 4.2% in April from a year earlier—has an influence on M2, Leuthold said.

For bond investors, the 2013 taper tantrum was painful, as bond yields escalated and prices slumped. The convulsion stemmed from remarks by Ben Bernanke, then the Fed chair, that the central bank might ratchet back its bond purchases. While that didn’t happen—and the credit markets’ violent reaction likely was a large reason Bernanke backed off—the prospect of diminishing Fed support was enough to scare a chunk of Wall Street.

In his recent report, Paulsen pointed out that the money supply has long been among the most crucial gauges of economic liquidity and monetary policy. “While the Fed impacts the money supply, its growth rate is ultimately determined by the actions of public-policy officials and private-sector players,” Paulsen wrote. “Most private-sector players stopped talking long ago and have been tapering most of this year.”

Related Stories:

Here’s Why Inflation Isn’t a Threat: Money Velocity

Perpetual Monetary Easing: Problem Creator for Pension Plans

Will Mega-Stimulus Bring Inflation After COVID and Recession Are Gone?

Tags: , , , , , , , , ,

«