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ANALYSIS: Libra Sends Strong Message With CEO and GC Hires

May 22, 2020, 4:41 PM

The Libra Association’s recent announcements of its first CEO, former Under Secretary of the Treasury for Terrorism and Financial Intelligence (TFI) Stuart Levey, and first general counsel, former director of the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), fundamentally change the outlook for the Libra cryptocurrency project.

These moves follow almost a year of delay, negative news coverage and the loss of several original members, but the Libra project has now positioned itself as well as possible to satisfy U.S. regulators and Congress and move the project forward.

Note: The author worked at FinCEN during Robert Werner’s term as Director, and during Stuart Levey’s term as the Under Secretary for TFI.

First Treasury Under Secretary for TFI, First Libra CEO

Levey will take over as CEO of the Libra Association this summer as well suited as anyone could be to address the U.S. regulatory issues that have put the brakes on the Libra project and to convince regulators and Congress that Libra will be in full compliance with all U.S. laws and regulations.

He served as the Treasury Department’s first Under Secretary for TFI from 2004 to 2011. He oversaw the post-9/11 implementation of the U.S. anti-money laundering/combating the financing of terrorism (AML/CFT) regime by FinCEN, expansion of U.S. sanctions by OFAC, and creation of Treasury’s Office of Intelligence and Analysis (OIA) to bolster financial intelligence analysis in the U.S. intelligence community. He served in both the Bush and Obama administrations, and under congresses controlled by Republicans and by Democrats.

Moving to HSBC as Chief Legal Officer in 2012, Levey undertook remediation of problems at an international financial institution besieged by U.S. regulatory authorities. HSBC had been penalized $500 million by FinCEN, the Federal Reserve, and the Officer of the Comptroller of the Currency for AML/CFT and OFAC sanctions violations in 2012. He oversaw the bolstering of AML/CFT and OFAC sanctions compliance at HSBC, which has not been punished for regulatory violations in these areas since 2012.

Levey is unquestionably a leading authority on the regulatory compliance problems that Libra faces, and he will have unmatched credibility in discussions with U.S. regulatory authorities or in testimony before Congress.

From OFAC and FinCEN Director to Libra General Counsel

Werner worked under Levey for many years at both the Treasury Department and HSBC. As Director of OFAC in 2004–06, then as Director of FinCEN in 2006, he was responsible for implementing the strategies on sanctions and AML/CFT decided on by Levey. After stints at Merrill Lynch and Bank of America, Werner worked for Levey at TFI again in 2009–10. At HSBC in 2012–16 he was responsible for the global operation and assurance of financial crime compliance policies, including AML/CFT, sanctions, and anti-bribery and corruption, client selection, and reputational risk programs, according to his Linkedin profile.

As General Counsel of the Libra Association, Werner will bring ample experience at the highest levels—both in government and in financial institutions—in the regulatory fields that present the Libra project with its most significant challenges. Werner and Levey should be an effective leadership team as they steer the Libra project through its U.S. regulatory problems.

If the Libra Association is looking to round out its leadership roster with additional former Treasury Department officials who also worked with Levey at HSBC, there is also Jennifer Shasky Calvery, who was FinCEN Director in 2012–16. She oversaw the bureau’s early actions reacting to the emergence of cryptocurrencies, including the virtual currency regulatory guidance issued in 2013–14 and the Ripple Labs enforcement action in 2015. There have been no public statements of interest in such a hire, however.

The hiring of Levey as CEO and Werner as General Counsel does not guarantee that the Libra Association will be able to resolve the regulatory issues of the Libra project successfully, but it does fundamentally change Libra’s prospects for success. Furthermore, since April there have been additional signs that the Libra Association has been addressing the issues that regulators in the United States and other countries have raised. Those issues will be the subject of Part 2 of this series.

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