🎸 This Week in GRC: The risks of not getting insurance
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Welcome to Issue 74 of This Week in GRC, MBK Search's weekly digest of the news and views in the world of governance, risk, and compliance.
🔔 This Week's Opening Bell
News this week of 90’s rock royalty Oasis reforming for a series of gigs across the United Kingdom and Ireland in 2025 prompted one noteworthy piece of advice: Get ticket insurance.
The concert series, which is expected to sell out at record pace, comes 30 years after the band released their debut album Definitely Maybe, and 14 years after their last infamous bust-up in 2009.
With their predilection for public fallings-out, what would a risk manager suggest to anyone lucky enough to nab tickets to see The Brothers Gallagher? Get ticket insurance, for the love of god, get ticket insurance.
But will the hatchet stay buried long enough to get through one Wonderwall singalong? According to the risk assessment: Definitely Maybe.
📰 This Week's Issue
🏠 FinCEN tackles AML in the real estate industry
📵 Telegram’s founder arrested
🤳 Social media immunity law questioned
🏢 Plus the latest GRC jobs and more.
📰 This Week's GRC Headlines
French Authorities Charge Telegram Founder Pavel Durov
French authorities have brought preliminary charges against Telegram founder Pavel Durov for alleged complicity in distributing illegal content on the messaging app and refusing to cooperate with investigations.
The charges, which include complicity in distributing child pornography, illegal drugs, and hacking software, represent a significant escalation in the French government's efforts to hold tech executives accountable for content on their platforms. Paris prosecutor Laure Beccuau cited Telegram's "almost complete absence of response" to judicial demands.
Durov faces up to 10 years in prison and a €500,000 fine if convicted. The judges placed him under court monitoring, forbade him from leaving France, and required a €5 million bail.
Durov's lawyer, David-Olivier Kaminski, called the charges "totally absurd," arguing that the head of a social network cannot be involved in criminal acts that do not concern him directly or indirectly.
The arrest has unnerved the social media industry, with some questioning the French government's actions. Unlike U.S. Big Tech companies, Telegram has a history of ignoring subpoenas and court orders from authorities.
Durov, who has a murky history with governments worldwide, imposed few restrictions on content shared on Telegram despite mounting concerns about illegal activity, misinformation, racism, and antisemitism on online platforms.
The charges are Telegram and Durov's most significant test yet, thrusting the entrepreneur into the center of the debate over how far authorities should go in regulating online content.
U.S. court questions social media immunity
The Third U.S. Circuit Court of Appeals has revived a lawsuit against TikTok, questioning the legal immunity granted to social media companies. The court ruled that TikTok could potentially be liable for recommending the "blackout challenge" video to 10-year-old Nylah Anderson, who tragically died attempting the challenge in 2021.
The appeals court's decision suggests that TikTok's algorithm, which recommended the dangerous content, might fall outside social media platforms' protections. The court indicated that TikTok's editorial judgment in promoting the video could make it more than just a neutral host of user-generated content.
This ruling challenges the broad legal shield provided by Section 230, a law that has protected tech companies from being held responsible for content posted by users. Politicians from both parties have criticized the law, arguing that it gives tech companies too much control over online content. While the law was initially designed to protect children from harmful content, its application has faced growing scrutiny.
TikTok defended its algorithm as protected speech under the First Amendment, while the Anderson family argued that the platform should not be immune if it directed harmful content to a child. The family expressed hope that holding TikTok accountable could prevent similar tragedies in the future.
This case adds to the ongoing debate over Section 230 and whether social media companies should continue to enjoy broad legal protections.
CFTC Fines Nasdaq Futures $22 Million for Incentive Program Violations
The Commodity Futures Trading Commission (CFTC) has fined Nasdaq Futures, Inc. $22 million for significant breaches related to its incentive programs. From July 2015 to July 2018, Nasdaq Futures, then a designated contract market (DCM) focused on energy futures, implemented a market maker incentive program known as the DMM program.
While the program publicly reported a fixed stipend for market makers, Nasdaq Futures failed to disclose a volume-based payment component that influenced payouts to specific participants. This crucial detail was neither revealed to the CFTC nor made public, violating the Commodity Exchange Act (CEA) and CFTC regulations.
The CFTC's investigation found that Nasdaq Futures not only withheld this information but also provided false statements when questioned, denying the existence of the volume-based component despite evidence to the contrary. This misrepresentation violated the CEA's core principles, which require accurate disclosure and compliance with regulatory obligations.
In addition, Nasdaq Futures ignored recommendations from its regulatory service provider regarding specific trading activities and failed to document these decisions, further contributing to the penalties imposed.
CFTC's Director of Enforcement, Ian McGinley, emphasized the importance of transparency in market operations, stating that Nasdaq Futures' actions represented a serious breach of its duty to provide accurate information to the CFTC and market participants.
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🔥 This Week's GRC Hot Takes
Hot takes and analysis from those on the shop floor
1) Should compliance and legal be separate? Matt Kelly at Radical Compliance draws on Disney to make his case.
2) In need of audit risk assessment tips? Norman Marks has published his playbook for building audit plans. 3) “The fox knows many things, but the hedgehog knows one big one,” which prompts Patrick Healy to ask “Are you a risk management hedgehog?”
📺 This Week's GRC Podcast
A new find for This Week in GRC. Ivan Prokofyev’s “A Journey Into Fraud Prevention” sounds like a GRC Lord of the Rings crossover, but it’s no fantasy. This week’s episode with AML expert Anna Stylianu covers one of those topics that seems obvious prima facie, but there are plenty of layers: the interplay between AML and fraud.
✍️ What MBK Search is Talking About
Five Key Regulatory Changes in FinCEN’s New Anti-Money Laundering Rule for Real Estate
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a new rule to strengthen anti-money laundering (AML) measures in the residential real estate sector. This rule marks a significant shift in regulatory oversight, aiming to curb illicit actors’ exploitation of the U.S. real estate market. Here, we explore five critical aspects of the new regulation, poised to impact real estate transactions and the financial services industry.
1: Comprehensive Reporting on Non-Financed Property Transfers
The cornerstone of the new FinCEN rule is the mandatory reporting of certain non-financed residential real estate transactions. Traditionally, real estate transactions involving cash or other non-financed methods have been less scrutinized, creating a vulnerability for money launderers to exploit. The rule now requires that any non-financed transfer of residential property to legal entities or trusts be reported through a newly established “Real Estate Report.” This aims to enhance transparency and reduce the anonymity these transactions have afforded illicit actors. By extending the reporting requirements nationwide, FinCEN addresses gaps left by previous, geographically limited orders, ensuring that suspicious transactions are captured irrespective of location.
2: Introduction of a Reporting Cascade for Compliance
FinCEN has introduced a “reporting cascade” system to facilitate compliance with the new reporting obligations. This system outlines a hierarchy of responsibility for filing reports, starting with the entity or individual most directly involved in the closing or settlement of a transaction. If that party cannot report, the responsibility cascades to the next involved party. This approach ensures that there is always a designated reporter, reducing the likelihood of compliance gaps. The cascade is essential for real estate professionals, who may find themselves at different levels of reporting responsibility depending on their role in a given transaction.
3: Exemptions and Safeguards for Certain Transactions
Not all transactions are subject to the new reporting requirements. The rule includes several exemptions, particularly for transfers from estate planning or other low-risk activities. For example, transfers directly to individuals are not covered, reflecting FinCEN’s intent to focus on transactions with higher risk of money laundering. Additionally, the rule provides a “reasonable reliance” standard, allowing reporting entities to rely on information provided by other parties, provided there is no reason to doubt its accuracy. This safeguard is intended to ease the compliance burden while maintaining the integrity of the reporting process.
4: Enhanced Focus on Beneficial Ownership Transparency
A key element of the new rule is reporting detailed information about the beneficial owners of legal entities and trusts involved in non-financed real estate transactions. This includes the names, addresses, and identifying numbers of these individuals, which must be reported to FinCEN. This focus on beneficial ownership aligns with global efforts to enhance transparency and crack down on the misuse of legal entities for money laundering. Real estate professionals and financial institutions must be prepared to accurately collect and report this information, as failure could result in significant penalties.
5: Increased Demand for Compliance and Audit Roles
The introduction of this rule signals a growing need for expertise in compliance, risk management, and internal audit within the real estate and financial services industries. Professionals in these fields will ensure businesses can navigate the new regulatory landscape effectively. The rule’s complexity, combined with the significant penalties for non-compliance, will likely lead to increased demand for roles specializingz in AML compliance and auditing real estate transactions. As firms adjust to these new requirements, those with skills in regulatory compliance will find themselves in high demand, particularly in organizations heavily involved in real estate transactions.
🧑💼This Week's Hottest GRC Jobs
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