The Forthcoming ENABLERS Act: What’s in Store for the World of Anti-Money Laundering

By Anton Sorkin*

PDF Available

In today’s society, “it’s like the more money we come across, the more problems we see.”[1] The world is interconnected like never before, and U.S. regulators have taken the position that the free flow of money presents risks to financial systems and public safety.[2] Congress first attempted to regulate the flow of money through anti-money laundering (“AML”) regulation in 1970, beginning with the Bank Secrecy Act (“BSA”).[3] Since the BSA, Congress has enacted seven additional major regulations to enhance AML controls.[4] Despite this, global AML systems are viewed by many industry experts as a failure.[5] Congress is back at it again with a new AML progeny in its sights: the ENABLERS Act.[6]

The regulation boasts itself as modernizing the list of parties with diligence obligations in order to close loopholes that render existing AML tools largely ineffective.[7] The current scope of BSA-regulated parties is narrow: any foreign or domestic financial institution or individual, so long as it facilitates a banking transaction through the United States.[8] The Act, as written, expands BSA obligations to nearly every type of business imaginable, including accountants, payment service providers, trust companies, and in some instances, lawyers.[9] The goal in doing so is to entangle all possible “gatekeepers” to financial activities—categories of businesses that have had an increased spotlight in the wake of various financial document leaks.[10] Even the world art market finds itself in the crosshairs of the Act,[11] despite the government’s own study that failed to find a nexus between art markets and terrorism financing risk.[12] This represents a drastic expansion of government oversight, namely because of AML’s enforcement through audit power given to the Department of the Treasury.[13]

For most Americans, the most prominent aspect of the Act is the expansion of regulated payment processors. Previously, the payment-processing industry was largely unaffected by the BSA.[14] Non-bank entities that fell under BSA did so for obvious reasons. Western Union, for example, was a tool for sending money to persons abroad and was therefore classified as a regulated Money Service Business (“MSB”).[15] Now, ordinary transactions through services such as PayPal, Venmo, and Cash App will fall within the realm of the BSA.[16]

From a business perspective, much of the Act’s weight falls on the real estate industry. Due to the size and volume of real estate transactions involving foreign funding, they are often scrutinized as a potential store of wealth for proceeds of global corruption or a means to avoid sanctions.[17] The Act erodes the discreet nature of many real estate transactions, imposing BSA requirements upon anybody involved in the financing or legal entity arrangement of a transaction.[18]

On its face, the ENABLERS Act stands to become the most modern and agile tool in the fight again money laundering. Time will tell whether it accomplishes this goal, or, like its predecessors, falls short of preventing the illicit flow of funds and creates administrative burdens in many industries.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] The Notorious B.I.G., Mo’ Money Mo’ Problems (Bad Boy Records 1997).

[2] History of Anti-Money Laundering Laws, FIN. CRIMES ENFORCEMENT NETWORK, (last visited Sept. 14, 2022).

[3] Id.

[4] Id.

[5] The War Against Money-Laundering Is Being Lost, ECONOMIST (Apr. 12, 2021), laundering-is-being-lost. See also Ronald. F. Pol, The Global War on Money Laundering is a Failed Experiment, CONVERSATION (OCT. 20, 2019),

[6] ENABLERS Act, H.R.5525, 117th Cong. (2021); later included as an amendment within National Defense Authorization Act for Fiscal Year 2023, H.R. 7900, 117th Cong. (2022).

[7] Rep. Malinowski & Rep. Salazar, ENABLERS ACT: Confronting the “Enablers” of International Money Laundering & Putin’s Kleptocrats, subsites/ %20%20RUSSIA%20Update2.pdf (last visited Sept. 14, 2022).

[8] Who Is Subject to US AML Laws?, WILLKIE COMPLIANCE, (last visited Sept. 14, 2022).

[9] Sam Skolnik, Lawyers Fight Bill Forcing Them to Report Suspicious Client Acts, BLOOMBERG LAW (Aug. 29, 2022), practice/lawyers-fight-bill-forcing-them-to-report-suspicious-client-acts.

[10] Will Fitzgibbon, House Committee Advances ‘Once in a Generation’ Crackdown on Enablers of Financial Crime, INT’L CONSORTIUM INVESTIGATIVE JOURNALISTS (June 23, 2022),

[11] Nicholas O’Donnell, “ENABLERS Act” Pursues Art Market but Threatens Longstanding Protections Against Government Intrusion, JD SUPRA (July 21, 2022),

[12] Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art, U.S. DEP’T TREASURY (Feb. 2022), /Treasury_Study_WoA.pdf.

[13] Id.

[14] Peter D. Hardy & James Mangiaracina, Closing the Gate: House Adopts ENABLERS Act Amendment to 2023 NDAA, ONPRACTICE (July 21, 2022),

[15] Money Services Business Definition, FIN. CRIMES ENFORCEMENT NETWORK, (last visited Sept. 14, 2022).

[16] ENABLERS Act, supra note 6.

[17] Malinowski & Salazar, supra note 7.

[18] AML Takeaways From Watchdog’s Real Estate Guidance, LAW360 (Aug. 29, 2022),

Two Insider Trading Cases May Shape the Future of NFT and Cryptocurrency Regulation

By Daniel Factor*

PDF Available

The allure of digital assets is largely based on their decentralized and unregulated design. The summer of 2022, however, could mark the beginning of a new era of cryptocurrency and non-fungible token (“NFT”) regulation.[1] Although the prospect of government oversight makes many digital asset investors quiver, the Securities and Exchange Commission (“SEC”) and Department of Justice (“DOJ”)’s recent actions offer a glimpse into the new ways in which federal law can prevent fraud and secure cryptocurrency and NFT traders’ confidence in the digital market.

Since its founding in 1933, the SEC has aimed to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital information.[2] The SEC enforces federal securities laws through investigations, administrative proceedings, civil lawsuits seeking injunctive relief and monetary penalties, and criminal referrals to the DOJ.[3] In addition to pursuing both formal and informal referrals from the SEC, the DOJ independently pursues criminal violations of federal securities law.[4]

On June 1, 2022, the DOJ announced its first criminal indictment related to an NFT insider trading scheme.[5] The now-unsealed indictment charged Nathaniel Chastain, a former product manager at OpenSea, with wire fraud and money laundering for using confidential information for personal financial gain.[6] OpenSea is a platform for users to buy, sell, and create NFTs.[7] As is pertinent to these allegations, the platform lists “featured NFTs” on its homepage.[8] The DOJ alleges that Chastain selected the featured NFTs, purchased the featured items before publishing the list, and sold the NFTs for a profit due to the tokens’ “featured” status, which drove up their publicity, demand, and price.[9]

The DOJ’s novel allegations avoided the question of whether NFTs are securities and thus subject to insider trading and securities laws within the SEC’s ambit.[10] By alleging wire fraud and money laundering, the DOJ likely increased its chances of success in court[11] and signaled its “commitment . . . to stamping out insider trading – whether it occurs on the stock market or the blockchain.”[12] Moving forward, some experts speculate that, if the charges are successful, “the DOJ could theoretically use it as a model to police market manipulation for other assets, regardless of whether they are considered securities.”[13] Chastain’s case also raises questions about the scope of liability for companies that list and issue NFTs.[14] As for NFT collectors and traders, the charges against Chastain should provide a degree of confidence that employees of exchange platforms are not abusing confidential information and harming the market’s integrity.

Additionally, on July 21, the DOJ announced its first insider trading case involving cryptocurrency markets.[15] The allegations against Ishan Wahi, a former manager at Coinbase, are similar to those against Chastain insofar as both employees leveraged confidential information regarding an upcoming announcement to trade digital assets for profit.[16] Like OpenSea, Coinbase is a digital asset trading platform that periodically features certain assets on its website.

Wahi’s case will likely have a greater impact on the future of digital asset regulation because of the SEC’s parallel action. While the DOJ avoided the question of cryptocurrencies and NFTs as securities, the SEC alleges that nine of the twenty-five assets at issue in the case are securities.[17] Coinbase’s Chief Legal Officer, Paul Grewal, promptly responded on the same day of the SEC’s complaint’s filing with a blog post entitled Coinbase Does Not List Securities. End of Story.[18]

If the court finds that certain digital assets, as the SEC alleges, qualify as securities, a myriad of potential implications arises. For starters, the Howey test[19] would cover a wider range of assets, and other cryptocurrencies would likely be subject to SEC regulation. Additionally, such assets would have to be offered and sold pursuant to federal securities laws, and individual brokers would have to comply with registration and licensing requirements.[20] From a macro perspective, the SEC’s ability to oversee, investigate, and regulate digital assets would grow while the decentralized attraction of cryptocurrencies would shrink.

Overall, digital asset investors face a compelling dilemma. On one hand, investors should consider the DOJ and SEC’s role in preventing fraud by maintaining fair digital asset trading platforms. Common sense protections against insider trading can be essential to a market’s integrity. On the other hand, such investors may see these recent government actions as a threat to the basic decentralized nature of digital assets. Cryptocurrency enthusiasts tout the digital asset market’s ability to self-regulate, in part through the blockchain’s anonymity and complexity. Either way, the results of the Chastain and Wahi cases will weigh heavily on the future of digital asset regulation.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] See United States v. Chastain, No. 22-CR-305 (S.D.N.Y. filed May 31, 2022); United States v. Wahi, No. 22-CR-392 (S.D.N.Y. filed July 21, 2022).

[2] What We Do, SEC, (last modified Nov. 22, 2021).

[3] About the Division of Enforcement, SEC, (last modified Aug. 2, 2007).

[4] Michael D. Ricciuti et al., THE SECURITIES ENFORCEMENT MANUAL 394 (Michael J. Missal & Richard M. Phillips, eds., 2nd ed. n.d.).

[5] Press Release, U.S. Attorney’s Office, Southern District of New York, Former Employee of NFT Marketplace Charged in First Ever Digital Asset Insider Trading Scheme (June 1, 2022),

[6] United States v. Chastain, No. 22-CR-305 (S.D.N.Y. filed May 31, 2022).

[7] Id.

[8] Id.

[9] Andrew N. D’Aversa & David Axelrod, How the Feds Are Prosecuting NFT Insider Trading Scheme as Wire Fraud – and Why That Matters, COINDESK, (last updated June 11, 2022, 8:35 AM).

[10] Stuart D. Levi et al., ‘Insider Trading’ and NFTs: What Should Companies Be Doing?, SKADDEN ARPS, SLATE, MEAGHER & FLOM LLP (June 16, 2022),

[11] Id.

[12] U.S. Attorney’s Office, Southern District of New York, supra note 5.

[13] D’Aversa & Axelrod, supra note 9.

[14] Levi et al., supra note 10.

[15] Press Release, U.S. Attorney’s Office, Southern District of New York, Three Charged In First Ever Cryptocurrency Insider Trading Tipping Scheme (July 21, 2022),

[16] Wahi, supra note 1.

[17] Id.

[18] Paul Grewal, Coinbase Does Not List Securities. End of Story., COINBASE (July 21, 2022),

[19] Nathan Reiff, Howey Test, INVESTOPEDIA,,Securities%20Exchange%20Act%20of%201934 (last updated Aug. 11, 2022).

[20] John Carney, et al., SEC and DOJ Bring Parallel Crypto Insider Trading Cases; SEC Alleges Nine Tokens Are Securities, BAKER & HOSTETLER LLP (July 22, 2022),

Student Relief Plan—A Balm of Gilead or a Can of Gasoline?

By Christian Parkinson*

PDF Available

Small business owners are struggling to keep their businesses afloat as the United States faces its highest month-over-month inflation rates since 1982.[1] Will a well-intended “relief package” for student loan borrowers further stoke the country’s inflationary inferno?

As inflation has increased across the country, so have the costs of running small businesses.[2] Owners are having to spend more on the supplies and services they need to run their businesses, forcing them to raise their own prices to offset these additional costs. Such a hike in prices has led to a loss of customers and subsequent revenue. In fact, 75% of small businesses participating in Goldman Sachs’s coaching program reported financial struggle due to these increased costs. As supply costs run higher, any revenue gained is siphoned faster than owners could have predicted. The small business industry is known for its optimistic entrepreneurial spirit, but recent surveys from the National Federation of Independent Businesses measured its lowest reading ever on economic expectations.[3] Given this background, of course small business owners are fearful of the possibility of a hike in inflation, no matter if it is a byproduct of a well-intended “relief plan.”

On August 24th, 2022, Joe Biden’s administration announced that the Department of Education will “provide up to $20,000 in debt cancellation to Pell Grant recipients…and up to $10,000 in debt cancellation to non-Pell Grant recipients” to individuals whose income is less than $125,000.[4] As cheers were heard among the millions burdening student debt, there seemed to be a silence of uncertainty among small business owners. Will this “relief plan” only trigger a heavier inflationary toll on these already struggling owners, or will inflation not be affected?

Wall Street economists argue that a rise in inflation would be minimal or possibly would not be felt at all.[5] They explain that there will be a tempering effect when student loan repayments restart in January 2023. Experts from Goldman Sachs explain that the total outstanding student debt is about $1.7 trillion, and the relief plan will reduce that balance by about $400 billion.[6] Therefore, only about a quarter of outstanding balances will be completely forgiven or “erased,” leaving most borrowers to resume repayment schedules come 2023. The experts predict the resumption of monthly payments will likely lead borrowers to maintain or lower their current personal spending behaviors, which may dampen any stoking effects on inflation.[7]

However, economic officials for previous Democratic presidencies have warned that the student relief plan will increase inflation.[8] These Harvard-trained economists reason that consumers will have more money to spend because their monthly loan payments will be reduced or completely eliminated.[9] In other words, money that would be going towards these loans is now “freed” for discretionary spending. Although no checks are being sent to borrowers from the government, experts calculate that the amount of money that may be freed up by this relief plan reaches into the trillions of dollars.[10] This will, in turn, increase consumer spending in an already strangled supply chain market and truly stoke inflation into an inferno.

Will the cries of small businesses closing their doors be drowned out by those celebrating the reduction of student debt? Or is the predicted inflationary monster merely a shadow casted by presidential opponents? As experts continue to disagree on the future effects of the student loan relief plan, an already burdened group of small business owners anxiously brace for its effects.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Trevor Wheelwright, The Effects of Inflation on US Small Businesses, BUSINESS, (last visited Aug. 31, 2022).

[2] Joe Camberato, The Impact of Inflation on Small Businesses and How to Manage It, FORBES, businesses-and-how-to-manage-it/?sh=5544ff7eae41(last visited Aug. 31, 2022).

[3] Lydia DePillis, After Enduring a Pandemic, Small Businesses Face New Worries, N.Y. TIMES, (last visited Aug. 31, 2022).

[4] FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need It Most, WHITE HOUSE, president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/ (last visited Aug. 31, 2022).

[5] Aimee Picchi, Biden’s Student Loan Relief Won’t Fuel Inflation, Wall Street Says, CBS NEWS, (last visited Aug. 31, 2022).

[6] Id.

[7] Id.

[8] Jim Tankersley, Biden’s Student Loan Plan Sets Off Fierce Debate Among Economists, N.Y. TIMES, (last visited Aug. 31, 2022).

[9] Id.

[10] Id.

3M Subsidiary Files for Bankruptcy After More Than 230,000 Veterans File Lawsuits

By Jaclyn Perkins*

PDF Available

Aearo Technologies, a subsidiary of 3M, filed for Chapter 11 bankruptcy on July 26, 2022.[1] More than 230,000 veterans are bringing lawsuits against Aearo Technologies alleging that the company’s combat earplugs were defective and caused hearing loss and tinnitus.[2] After being considered one of the largest product liability civil cases in the United States, 3M decided to put Aearo into Chapter 11 bankruptcy because doing so would allow a fair, equitable, and fast process to resolve the veterans’ claims.[3]

Chapter 11 bankruptcy allows a company to reorganize their financial affairs during a time of financial distress. Through Chapter 11, 3M and Aearo Technologies are seeking bankruptcy protection and a stay of proceedings.[4] Both companies explained that filing for Chapter 11 bankruptcy was a move made due to their unhappiness with the multidistrict litigation proceedings and not because of “changed financial circumstances.”[5] Additionally, the companies stated in their brief to the bankruptcy court that the multidistrict litigation was “broken beyond repair.”[6]

3M plans to create a trust with $1 billion for the victims.[7] This amount of money is inadequate for the victims, especially comparing the amount to the large judgments rendered in federal court. Shortly after learning about 3M’s trust, plaintiff Joseph Sigmon stated that “3M believes each veteran’s hearing damage is worth less than $5,000.”[8] Sigmon continued by saying, “Would [the] 3M CEO Mike Roman want to lose his hearing in exchange for $5,000?”[9] The veterans suing 3M risked their lives to be on the front line protecting the United States, only to be harmed by allegedly defective earplugs.

3M’s strategy to put Aearo Technologies in bankruptcy is similar to those implemented by Johnson & Johnson and Purdue Pharma LP.[10] Bryan Alstock, an attorney representing the veterans, said that “3M’s bankruptcy maneuver is further proof that they value their profits and stock price more than the well-being of the veterans.”[11] The move from federal court to bankruptcy court is viewed as an escape from the civil litigation system because cases were not being ruled in 3M’s favor.[12] U.S. District Court Judge M. Casey Rodgers thought that 3M is running away to another forum because it does not like the rulings she is giving.[13] Although Judge Rodgers allowed the move to bankruptcy court, she also ruled that 3M could not relitigate claims in bankruptcy court that were settled in her court.[14]

3M’s tactic of trying to avoid responsibility may soon backfire. Chief U.S. Bankruptcy Judge Jeffrey Graham will rule in the near future whether to halt litigation and force 3M to settle with the veterans.[15] This ruling may change the way large corporations decide to handle mass tort litigation in the future. There has been a history of large corporations filing for Chapter 11 bankruptcy to move litigation to the bankruptcy court so they can keep their companies intact while paying significantly less in judgments. Plaintiffs are still able to receive money from judgments in the bankruptcy court, but only a small fraction of what they could get in civil court. Here, some of the victims have already received multimillion-dollar judgments. To date, 3M has lost 10 out of 16 trials, awarding nearly $265 million to 13 plaintiffs.[16] Having to pay such large judgments is most likely the driving force behind 3M’s tactic to switch to bankruptcy court. Although 3M is trying to avoid paying these large judgments by having Aearo Technologies file for Chapter 11 bankruptcy and moving to bankruptcy court, hopefully Judge Graham’s ruling will thwart their tactics and prevent other large corporations from participating in this very popular strategy.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Brendan Pierson, Florida Judge Sharply Questions 3M Bankruptcy Strategy, REUTERS (Aug. 16, 2022, 3:21 PM), questions-3m-bankruptcy-strategy-2022-08-11/.

[2] Steven Church & Jeremy Hill, 3M Unit Goes Bankrupt in Bid to Resolve Lawsuits Over Military Earplugs, BLOOMBERG (July 26, 2022, 8:06 AM), /articles/2022-07-26/3m-unit-goes-bankrupt-in-bid-to-corral-earplug-lawsuits#xj4y7vzkg.

[3] Bob Tita, Veterans Suing 3M Over Earplugs Oppose Shifting Cases to Bankruptcy Court, WALL ST. J. (Aug. 11, 2022, 7:00 AM), earplugs-oppose-shifting-cases-to-bankruptcy-court-11660175831.

[4] Robert Klonoff, 3M’s Bankruptcy Maneuver Raises Issues for Justice System, LAW360 (Aug. 11, 2022, 6:46 PM), raises-issues-for-justice-system.

[5] Id.

[6] Id.

[7] Id.

[8] Gretchen Morgenson, 3M Is Creating a $1 Billion Trust for Service Members Who Say Its Earplugs Didn’t Protect Them From Hearing Loss, NBC NEWS (July 26, 2022, 9:23 AM), say-earplugs-didnt-protect-rcna40032.

[9] Id.

[10] Church & Hill, supra note 2.

[11] Id.

[12] Steven Church, 3M Awaits Bankruptcy Ruling That May Sink Litigation Tactic, BLOOMBERG (Aug. 22, 2022, 2:28 PM), 22/3m-awaits-bankruptcy-ruling-that-could-sink-litigation-tactic.

[13] Pierson, supra note 1.

[14] Id.

[15] Church, supra note 12.

[16] Brian Bushard, 3M Commits $1 Billion for Military Members Who Claim Earplugs Were Faulty, FORBES (July 26, 2022, 3:51 PM), /3m-commits-1-billion-for-military-members-who-claim-earplugs-were- faulty/?sh=73c6b87b548d.

The IRS Offered to Refund Income Taxes Paid on Unsold Crypto Staking Rewards 

PDF Available

By Ian Stanford*

           On February 2, 2022, the IRS announced it would refund $3,293 to a Nashville couple who had paid that amount in taxes for Tezos tokens they had acquired through staking.[1] The couple, Joshua and Jessica Jarret, filed a lawsuit in May 2021 arguing that tokens acquired through staking should be considered property created by the taxpayer thus not taxable until they are sold.[2] Staking rewards are earned by locking one’s cryptocurrency up in order to help validate transactions on the blockchain.[3] Estimates show that the staking of cryptocurrencies resulted in fifteen billion dollars of staking rewards in 2021.[4] As the nascent industry of cryptocurrencies continues to grow, the IRS’s handling of the taxation of staking rewards will be an issue of significant importance.

           In 2014, the IRS issued Notice 2014-21 which provides that cryptocurrencies are to be treated as property for federal tax purposes.[5] While the notice discusses the tangentially related issue of cryptocurrency mining, the IRS has not yet issued official guidance on how tokens earned through staking should be treated for tax purposes. Because of this, the case brought by the Jarrets has garnered much attention from the crypto community. However, it is important to note that the IRS’s offer of a refund to the Jarrets does not mean that other taxpayers can now stop paying taxes on their tokens earned through staking. The IRS did not issue any additional guidance, they simply offered the individual taxpayers a refund. 

           The Jarrets rejected the IRS’s offer because the IRS did not provide a reason as to why the refund was offered.[6]The Jarrets hope that by continuing their lawsuit they can induce the IRS to issue new guidance regarding the taxation of staking rewards.[7] Accordingly, the refund offered to the Jarrets should not be relied upon as a precedent by future taxpayers until official guidance is provided. Indeed, the 2021 IRS 1040 form instructions indicated that taxpayers should include as a transaction “[t]he receipt of new virtual currency as a result of mining and staking activities.”[8]

           If the IRS chooses to issue guidance stating that staking rewards are not taxable until the tokens are sold, it will have two strong policy reasons to support its decision. First, the taxation of unsold tokens earned through staking creates a potential liquidity issue for taxpayers. The receipt of new tokens does not provide a taxpayer with any cash to pay for the taxes incurred. Thus, the taxing of staking rewards forces taxpayers to raise the cash needed to pay the tax from other sources which may result in inefficient economic outcomes. Second, given that cryptocurrencies may decrease in value after the staking rewards are received, the IRS may be imposing taxes at values far above the actual value eventually received by the taxpayer.

           The pending legal battles and the ultimate path the IRS decides to take in taxing staking rewards will have a large economic impact in the growing blockchain industry. Many blockchains, like Bitcoin, who do not utilize a proof-of-stake validation system will not be as concerned. However, individuals and corporations that are engaged in staking should keep a close eye on the outcome of this case and any other guidance the IRS may issue in the future.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Kamran Rosen, In Huge Precedent, IRS Refunds Income Taxed on Unsold, Staked Crypto, Forbes (Apr. 3, 2022, 3:41 PM),

[2] Id.

[3] Ethereum, (Apr. 3, 2022, 3:58 PM),

[4] Staked, (2021),

[5] IRS., Notice 2014-21 (2014),

[6] Pallav Raghuvanshi & Shira Peleg, A Recent Court Case Leaves Many Speculating on the Taxation of Staking Rewards, National Law Review (Apr. 3, 2022, 4:20 PM),

[7] Cheyenne Ligon, IRS Offers Tezos Staker Refund on Rewards Tax in Break From Current Policy, CoinDesk (Feb. 3, 2022),

[8] IRS, 1040 Instructions (2021),