What You Need to Know 

Key takeaway #1: On August 13, 2026, FinCEN issued a Financial Trend Analysis showing 67,540 Bank Secrecy Act (BSA) reports filed between 2023 and 2025 involved more than $4.9 billion in reported suspicious activity potentially related to human smuggling. 

Key takeaway #2: Money services businesses (MSBs) filed approximately 97% of the reports, while depository institutions filed only approximately 3% but accounted for nearly 61% of the total reported suspicious activity. 

Key takeaway #3: Financial institutions should consider whether the red flags and typologies highlighted in the FTA are appropriately incorporated into their automated transaction-monitoring scenarios for detecting potentially suspicious human smuggling-related activity. 

Background 

On August 13, 2026, the Financial Crimes Enforcement Network (FinCEN) issued a Financial Trend Analysis (FTA) examining patterns and trends in BSA data associated with suspected human smuggling (i.e., the transportation of persons into or within the U.S. that are not authorized to be there). The analysis is based on 67,540 BSA reports filed between January 1, 2023, and December 31, 2025.  The analysis sample comes from reports that included a code from a 2023 alert that FinCEN asked financial institutions to include in suspicious activity reports (“SARs”) and other reporting mentioning suspicious activity relating to human smuggling.   Although the reports were filed between 2023 and 2025, they may describe activity before this period. 

The reports show a total of $4.9 billion in potential human smuggling activity, which may include both attempted and completed transactions.  One notable feature of the reporting is that although MSBs filed approximately 96.6% of the reports, they accounted for only approximately $519 million in reported suspicious transactions (10.6% of the total value of reported activity).  By contrast, depository institutions filed only 3% of the reports, but those filings accounted for approximately $3 billion, or 61% of the total value of the reported suspicious activity.  FinCEN says that BSA reports filed by depository institutions were less likely than those filed by MSBs to involve an international transfer, and that the amounts involved in individual reports were typically far higher, with several single reports noting transactions of more than $100 million. 

The bulk of the reports concerned suspects with addresses in the U.S. (especially Texas, California, New York, Florida, and New Jersey) followed by Mexico, and distantly by Guatemala, Honduras, Colombia, and other countries. 

The FTA comes against a background of previous FinCEN guidance regarding human smuggling (including alerts on January 13, 2023 and September 11, 2014)  and recent efforts to target the activity of cartels and transnational criminal organizations. Most recently, Executive Order 14406, Restoring Integrity to America’s Financial System, highlighted the use of cross-border funds transfers to facilitate human trafficking and directed Treasury to issue guidance to financial institutions identifying related red flags and suspicious-activity typologies. Other recent efforts include a major MSB enforcement initiative along the southwest U.S. border, a southwest border geographic targeting order (GTO), and the State Department’s designation of various Central and South American cartels as foreign terrorist organizations (FTOs). 

Key Indicators Identified by FinCEN 

FinCEN quantified several recurring typologies that MSB filers noted as indicators of suspicious activity in their BSA reports: 

Indicator Percentage 
 
No verifiable familial connection between originator and beneficiary 57% 
Money flows outside typical transaction patterns 39% 
Geographic activity outside the customer’s usual pattern 23% 
Money sent to high-risk jurisdictions 20% 
Money sent to different unrelated receivers 17% 
Money sent along known migration routes 13% 
Structuring to avoid recordkeeping requirements 11% 
One originator sent money to many beneficiaries 5% 
Many originators sent money to one beneficiary 1% 

Source: FinCEN, Human Smuggling: 2023-2025 Threat Pattern & Trend Information, Figure 6. FinCEN Financial Trend Analysis 

FinCEN notes that a single BSA report may contain multiple indicators.  Depository institution filings tended to highlight frequent cash deposits, peer-to-peer (P2P) payments and wire transfers among persons and businesses with no apparent relationship, and excessive cash deposits and withdrawals at ATMs along the U.S.-Mexico border, often by persons not employed by cash-intensive businesses. 

FinCEN noted that many of these typologies are consistent with human smuggling “red flags” the agency has published in previous alerts and guidance. 

One institution, for example, identified a potential funnel account that received numerous small-dollar P2P transfers from more than 30 senders. The customer moved incoming funds between checking and savings accounts before making structured cash withdrawals below currency transaction reporting thresholds at multiple branches and ATMs. FinCEN also highlighted suspicious activity involving travel agencies, including excessive cash and third-party deposits, P2P payments for purported visa services, airline refunds, bulk airline-ticket purchases, and charter flights. FinCEN noted that such activity may involve sham travel agencies as well as legitimate businesses that may be unwittingly facilitating human smuggling. 

Implications for Financial Institutions 

FinCEN’s analysis provides financial institutions with additional data and context about potential human smuggling, including the potential weighting of different red flags. Financial institutions may wish to consider whether the red flags and typologies highlighted in the FTA are appropriately reflected in their automated transaction-monitoring scenarios, including scenarios involving combinations of customer, counterparty, geographic, and transactional indicators.  

The deadline to file OFAC’s Annual Report of Blocked Property (“ARBP”) is approaching fast.  All “U.S. persons” — including U.S. financial institutions, companies, and individuals — who hold property blocked pursuant to any OFAC sanctions program should take a moment to assess their reporting obligations, as set forth in 31 C.F.R. § 501.603.

This annual reporting obligation applies across all OFAC sanctions programs and covers a wide range of asset types — from bank accounts and wire transfers to securities, real estate, digital assets, and intangible property.

OFAC rules require all U.S. persons to report to OFAC by September 30, 2026, any blocked property they held as of June 30, 2026.

Who Must File an ARBP with OFAC?

  • Any U.S. person holding blocked property as of June 30, 2026.  A “U.S. person” is typically defined to include United States citizens, permanent resident aliens, entities organized under the laws of the United States or any jurisdiction within the United States (including their foreign branches), and any person physically located in the United States. 
  • With respect to property blocked under OFAC’s Cuban Asset Control Regulations, the reporting obligation also applies to “persons subject to the jurisdiction of the United States,” which has a similar definition but includes non-U.S. subsidiaries of U.S. entities.

What Constitutes “Blocked Property”?

  • The term “blocked property” means property in any form, whether digital, physical, tangible or intangible, that is blocked pursuant to OFAC regulations.

What is Not Considered “Blocked Property” for the Purposes of the ARBP?

  • Property that was unblocked or permitted to be transferred by an OFAC general or specific license, or that was previously blocked pursuant to a sanctions program that was terminated on or before June 30, 2026, unless the relevant specific or general license includes a condition requiring the submission of a separate unblocking report.
  • Property that was unblocked pursuant to OFAC’s removal of a person from OFAC’s SDN List.
  • Property that is subject to “reject” sanctions rather than blocking sanctions.  These prohibit transactions involving the property but do not require a U.S. person to immobilize and retain the property.
  • Assets immobilized pursuant to Directive 4 of Executive Order 14024.

How to File an ARBP with OFAC

  • Individuals or entities filing an ARBP with OFAC must use spreadsheet form TD-F 90-22.50 to make their reports. Please note that OFAC only accepts the most current version of the form (OMB No. 1505-0164).
  • Guidance on filing the 2026 ARBP, including how to complete OFAC’s ARBP spreadsheet, may be found here.
  • The ARBP must be submitted via the OFAC Reporting System (ORS).
  • First-time ORS users should email OFACReport@treasury.gov to request registration instructions in advance of the deadline. Establishing an account usually takes 24 hours.  As a result, individuals or entities expecting to file an ARBP with OFAC may wish to request access credentials well before September 30th.

Common Issues with ARBPs

According to OFAC guidance, the most common reasons for OFAC to return an ARBP submission include:

  • Incorrect ORS Report IDs;
  • Missing or incomplete sanctions target information;
  • Failure to explain the sanctions target’s property interests in the property listed on the ARBP; and
  • Formatting changes to the Excel template (e.g., password-protecting the file) that prevent OFAC from reviewing the submission.

Crowell assists financial institutions, multinational enterprises, technology companies, startups, and individuals in filing ARBPs.  Please contact any of the authors with any questions about OFAC’s blocked property report requirements.

Key Takeaways: The Bureau of Industry and Security (“BIS”) issued a temporary final rule under the Defense Priorities and Allocations System (“DPAS”) that restricts exports of shredded lithium-ion battery scrap containing cathode material, known as “black mass,” as well as tungsten and other waste by U.S. entities. Published on August 6, 2026, and effective immediately upon publication, the rule’s Directive Allocation Order takes effect on August 27, 2026, at which point all monthly sales of these materials must be allocated exclusively to U.S. buyers. The Directive Allocation Order remains in effect through August 27, 2027 (unless adjusted by BIS). Exports to non-U.S. persons require a separate DPAS authorization, which does not replace a BIS export license under the Export Administration Regulations (“EAR”), if required. BIS considered the directive necessary citing the threat to national defense and security posed by the “inadequate supply of critical minerals and materials” (“CMMs”).

What Happened: On August 6, 2026, BIS published a temporary final rule (FR Doc. 2026-16078) in the Federal Register implementing a Directive Allocation Order under § 700.33 of the DPAS that restricts the export of specified critical mineral materials from the United States without explicit BIS authorization. The rule follows a Presidential Determination issued on July 30, 2026, finding that certain recoverable CMMs are scarce and critical materials essential to national defense.

Scope: The Directive Allocation Order applies to U.S. persons engaged in the sale of black mass (Schedule B codes 8549.13.00.00, 8549.14.00.00, and 8549.19.00.00) and tungsten waste and scrap (Schedule B code 8101.97.00.00), requiring that these materials remain physically located within the United States unless otherwise authorized by BIS. Key elements of the order include:

  • Black mass defined: “Black mass” means any shredded lithium-ion battery scrap containing cathode material (including lithium, cobalt, nickel, and manganese), anode material (graphite, silicon), or other residual battery cell materials. Only materials meeting this definition under the covered Schedule B codes are subject to the order.
  • 100% domestic sales requirement: All monthly sales of covered black mass and tungsten waste and scrap must be allocated to U.S. persons, unless an adjustment or exception is granted in advance by BIS.
  • Duration: The order is effective 21 days after publication in the Federal Register (i.e., August 27, 2026) and expires August 27, 2027, unless adjusted or extended by BIS.
  • CBP enforcement: BIS will implement the rule with the cooperation of U.S. Customs and Border Protection (“CBP”); covered materials intended for export may be detained by CBP during BIS review.

Rationale for Change: BIS cited an inadequate domestic supply of CMMs as posing an increasing risk to national defense and security, noting that U.S. reliance on imports of certain CMM commodities from foreign sources threatens serious, sustained supply chain disruptions. BIS determined that urgent and compelling circumstances made compliance with the normal notice-and-comment rulemaking process impracticable, and accordingly issued the order as a temporary final rule consistent with section 709(b)(2) of the Defense Production Act (DPA) (50 U.S.C. § 4559(b)(2)). BIS has, however, opened a 90-day public comment period and invites comment on whether any additional sales requirements are necessary or appropriate to promote the national defense, as well as on the framework of the temporary regulatory provisions added to the DPAS.

Implications for Exporters: U.S. sellers of black mass or tungsten waste and scrap must immediately identify any non-U.S. customers and secure prior written BIS authorization– via a DPAS license or temporary license– before proceeding with such sales. Requests for adjustments or exceptions do not pause the obligation to meet domestic sales requirements, which remain in force until BIS provides written interim relief.

Request for Authorization: Companies subject to the domestic sales requirement may request a DPAS authorization from BIS. BIS has stated that it intends to respond to requests within 14 days of receipt and may grant interim relief in the form of a DPAS temporary license while a request is pending.

Under the rule, BIS may grant relief on the following grounds, among others:

  • The domestic sales requirement creates an undue or exceptional hardship on the requesting company that is not suffered generally by others in similar situations and circumstances;
  • Compliance with the domestic sales requirement would be contrary to the intent of the rule or the DPA (for example, because it would actually reduce the domestic supply of CMMs);
  • The covered materials will be sold to a person outside the United States solely for processing or refining, and the processed or refined material will be returned to the United States;
  • Compliance with the domestic sales requirement would result in irreparable harm to the requesting company; or
  • Additional time is needed to come into compliance with the domestic sales requirement.

Crowell & Moring will continue to monitor BIS’s implementation of the order and further regulatory developments related to critical minerals and materials export controls and DPAS enforcement.

On July 28, 2026, the Federal Communications Commission (FCC) updated its Covered List, established through the Secure and Trusted Communications Networks Act to include foreign-produced connected power inverters and advanced robotic devices. The designation of these products to the Covered List follows an Executive Branch national security determination that they “pose unacceptable risks to the national security of the United States or the safety and security of United States persons.”

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Key Takeaways: The UAE’s reclassification to Country Group A:5 in the U.S. Export Administration Regulations (“EAR”) is one of the most significant expansions of U.S. export licensing flexibility extended to a Middle Eastern partner in recent years. Exporters should promptly assess whether existing licensed shipments or pending BIS applications can now be restructured under a license exception under the EAR. This easing of export controls on the UAE likely will benefit U.S. aerospace and defense, oil and gas, and advanced technology sectors, including AI-enabling semiconductors.

What Happened: On July 10, 2026, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced a final rule granting the United Arab Emirates (“UAE”) significantly more favorable treatment under the EAR by moving the UAE to the more permissive Country Group A:5. BIS cited the UAE’s status as a “U.S. Major Defense Partner” and its support in advancing U.S. national security interests, including Operation Epic Fury, as the basis for the regulatory change.

Scope: Specifically, BIS removed the UAE from EAR Country Groups D:3 and D:4 lists, which will, among other things, eliminate restrictions on support for the UAE’s unmanned vehicle programs and simultaneously reclassified the UAE as Country Group A:5. The A:5 designation would ordinarily provide the UAE with eligibility for license exception Strategic Trade Authorization (“STA”), authorizing BIS exports, reexports, and in-country transfers for:

  • specific Commerce-controlled military items;
  • certain commercial satellites and spacecraft; and
  • dual-use items useful in oil and gas production, desalination, civil nuclear power generation, and other sectors.

However, the change comes with a limitation – License Exception STA can only be used for exports to the UAE government or select approved commercial entities (currently two UAE entities and eight major U.S. technology companies) and their subsidiaries, which are identified in a supplement listing Approved Ultimate Consignee and End Users for Advanced Computing Items and/or License Exception STA in the UAE. All other UAE-based recipients cannot rely on License Exception STA and are subject to standard license requirements. UAE commercial entities may submit requests to be included on the supplement.

There is a similar carveout for the UAE in the export controls on AI-related semiconductors and similar items – no license is required only if it is an approved end user identified on the supplement. This posture is consistent with the U.S.-UAE Artificial Intelligence Cooperation framework signed in May 2025, where BIS approved the UAE government and certain companies to receive advanced computing items, including AI chips and servers, in the UAE subject to the UAE’s reaffirmed commitment to make matching investments in U.S. AI digital infrastructure development.

Rationale for Change: This BIS considered this special status under the EAR warranted, citing the ongoing U.S.-UAE military partnership and the UAE’s commitment to preventing the diversion and misuse of sensitive U.S. technology.

Implications for Exporters: For exporters and trade compliance professionals, this rulemaking warrants attention. Companies with open export licenses or pending applications for UAE-destined shipments should assess whether the changed country group status permits restructuring under a license exception – including the newly available license exception STA – reducing administrative burden and processing time. Commercial entities may also consider requesting that BIS add them to the supplement identifying companies eligible for this more permissive treatment.

Crowell & Moring will continue to monitor BIS guidance and further regulatory developments related to the UAE’s expanded access to U.S.-controlled technology.

On July 15, 2026, U.S. Court of International Trade (CIT) Judge Richard K. Eaton issued an update in the International Emergency Economic Powers Act (IEEPA) refund litigation explaining that the Court will begin issuing refund orders for individual plaintiffs in the IEEPA tariff refund litigation. 

The orders are being issued in individual cases because it is the Government’s position that a court order directing the reliquidation of entries, whose liquidation has become final, would be necessary to provide the Government with the authority to reliquidate these finally liquidated entries and provide complete relief to Plaintiffs. In other words, the DOJ will not voluntarily refund duties on finally liquidated entries without a court order compelling it to do so. The CAPE system — the Government’s voluntary refund system — has not accepted for processing any finally liquidated entries, nor any entries liquidated for more than 80 days. As a result, the Government has represented that it will refund estimated IEEPA duty deposits only to Plaintiffs that challenge the duties in court, meaning that relief for finally liquidated entries is available only to importers who have filed suit.  These orders will cover all remaining liquidated IEEPA tariffs paid by importers.  Non-plaintiffs will be unable to otherwise recover these tariff payments.

Next steps for non-Plaintiffs

In order to be covered by an individual refund order covering all IEEPA tariff payments, importers must file a complaint with the Court of International Trade. The essential elements required for a complaint is the name of the legal entity importing into the U.S., the importer ID numbers associated with that legal entity, and confirmation that IEEPA tariffs were paid by the importer. 

On July 17, 2026, the United States Department of Justice (DOJ) announced that it had entered into a Deferred Prosecution Agreement (DPA) with The Scoular Company (Scoular), an agricultural supply chain company based in Omaha, Nebraska, to resolve allegations that Scoular relied on customs brokers to bribe Mexican government officials to allow Scoular goods to pass customs inspections and be delivered to Mexico from the United States. As part of its resolution, Scoular agreed to pay a $9,769,521 criminal penalty and forfeit an additional $414,351. Scoular also committed to continue cooperating with DOJ on any ongoing or future criminal investigations, implement a compliance and ethics program designed to prevent and detect violations of the Foreign Corrupt Practices Act (FCPA), and periodically report to DOJ on remediation and implementation of compliance measures throughout the term of the DPA.

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Key Takeaway: DDTC’s proposed rule would shift ITAR Part 130 reporting from a transaction-linked model to consolidated annual submissions. It also proposes raising monetary thresholds for the first time since 1993. By making notifications of political contributions and fees or commissions related to foreign arms sales simpler and clearer, the proposal will make reporting more straightforward for industry while providing better information to the State Department.

On June 15, 2026, the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) published a proposed rule to amend the International Traffic in Arms Regulations (“ITAR”), 22 CFR Part 130, governing disclosure of political contributions and fees or commissions paid in connection with foreign defense sales. The rule is issued in support of Executive Order 14268, which in part directed the State Department to reduce regulatory burdens associated with U.S. arms transfers. The proposed rule applies to applicants, suppliers, and vendors as defined under 22 CFR Part 130. Public comments are due on or before August 14, 2026.

Background: Part 130 of the ITAR requires covered parties to report political contributions and fees or commissions associated with U.S. direct commercial sales (“DCS”) and foreign military sales (“FMS”). Under the existing framework, reports are submitted transaction-by-transaction alongside ITAR authorization applications or within 30 days of FMS contract award. This structure frequently produces estimated figures, inconsistent formats, and duplicate filings that DDTC must reconcile manually before reporting to Congress under Section 36(a) of the Arms Export Control Act (“AECA”). Further, the current reporting thresholds have remained unchanged since July 1993.

Scope of the Proposed Rule: Part 130 reporting for individual ITAR authorizations and FMS contracts would be replaced by an annual report submitted at the time of DDTC registration renewal. The annual report would be signed and certified by a designated senior officer. Structurally, Part 130 statements would be removed from DDTC’s DSP-5, DS-6004, and DSP-85 license application forms.

The proposed regulation would maintain a supplementary reporting requirement and to the extent a company discovers that a payment or offer to pay made in the previous reporting period was not included in the annual report or when a payment actually made is substantially different in amount from a previously reported estimate, the company must submit a supplementary report within 30 days of that discovery. Additionally, in the case of a merger or acquisition, the parent, acquiring entity, or new entity that maintains the DDTC registration would be responsible for reporting all information required under Part 130 not previously reported to DDTC by the absorbed or acquired entity. This report would be required within six months of the acquisition.

The proposed amendments would raise the monetary thresholds as described below: 

  • Threshold value: The total value of the ITAR authorization, FMS contract, or furnished defense articles to trigger Part 130 reporting would change from $500,000 to $1,000,000.
  • Aggregate political contributions: The aggregate sum of political contributions for the transaction that would require reporting would change from $5,000 to $10,000.
  • Aggregate fees or commissions: The aggregate sum of fees or commissions for the transaction that would require reporting would change from $100,000 to $200,000.

Implications for industry: Trade compliance teams should assess whether the proposed threshold adjustments affect their current Part 130 exposure and update internal screening accordingly. Additionally, companies should determine how to adjust their Part 130 compliance practices to reflect an annual instead of a transactional-based reporting structure. Given the obligations related to acquired/absorbed entities, companies should consider if Part 130 diligence is warranted in pre-closing due diligence and/or post-closing integration.

Crowell will continue to monitor DDTC’s proposed rulemaking and any final rule affecting Part 130 reporting obligations under the ITAR.

On June 17, 2026, the U.S. Department of Justice’s (DOJ( National Security Division (NSD) announced that it had issued a declination for Robert Bosch GmbH (Bosch) relating to potential violations of the Export Control Reform Act, 50 U.S.C. § 4819 (ECRA). Specifically, the DOJ declined to criminally prosecute Bosch’s violations of the Export Administration Regulations’ (EAR) Foreign Direct Product Rule (FDPR), which apparently resulted from two Bosch subsidiaries’ export of products and software manufactured with equipment that was the direct product of U.S. software or technology to Huawei Technologies Co., Ltd. and its “Entity List” affiliates, including Huawei Tech. Investment Co., Ltd., Hong Kong (collectively, Huawei). The same day, the U.S. Department of Commerce Bureau of Industry and Security (BIS) announced a parallel civil administrative settlement with Bosch.

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On June 4, 2026, Crowell Partners Caroline Brown and Anand Sithian hosted the ACSS New York Chapter at the New York office for an in-person panel discussion titled “Renewed Focus on Cartels, Transnational Criminal Organizations, and Foreign Terrorist Organizations: Compliance Challenges for Financial Institutions and Multinationals.” The sold-out event brought together practitioners from the financial crime compliance community for a timely and substantive conversation at the intersection of sanctions, narcotics trafficking, and AML risk.

The panel featured Crowell’s Caroline Brown alongside Ray Donovan, former Special Agent in Charge of the DEA and lead agent in the capture of Joaquín “El Chapo” Guzmán, now CEO of Stack21 Solutions, and Joe Twinem, former OFAC and FinCEN official and Global Sanctions/AML Strategy Leader at BNP Paribas.  Howard Spieler, Citibank, moderated the panel discussion.

The audience reflected a broad cross-section of the financial crime ecosystem, bringing together sanctions and AML compliance professionals from major global financial institutions, attorneys from leading law firms, professionals from the Big 4 and advisory firms, and specialists from compliance intelligence and data companies.

The panel tackled the most pressing questions facing compliance professionals today, including the implications of cartel Foreign Terrorist Organization (FTO) designations for sanctions and AML exposure, the deepening role of Chinese and Indian networks in the fentanyl supply chain, and how OFAC, FinCEN, and allied regulators are deploying sanctions to disrupt trafficking networks. Panelists also offered practical guidance on identifying red flags linked to cartel activity and narco-financing, and closed with a candid discussion about whether the existing sanctions toolkit is equal to the scale of the threat.

Following the program, guests enjoyed a post-panel quiz before networking over drinks and appetizers. Thank you to our panelists, attendees, and the ACSS New York Chapter for making this event such a success.