Enforcement and Prosecution Policy and Trends, Miscellaneous February 17, 2026

OFAC Enforcement Action Against Academic Institution Provides Important Compliance Guidance

By Patrick Rowan, Alex J. Brackett, Farnaz Farkish Thompson and Sarah Wake

On February 12, 2026, Treasury’s Office of Foreign Assets Control (OFAC) announced the settlement of an enforcement action against IMG Academy (“IMG”) that highlighted the sanctions risks that U.S. academic institutions face and the steps OFAC recommends the institutions to take the address the risks. The enforcement action stemmed from IMG accepting tuition payments from two Specially Designated National (“SDN”) individuals who had been sanctioned under the Foreign Narcotics Kingpin Designation Act for providing support to a sanctioned Mexican Drug Trafficking Organization (“MDTO”).

IMG is an elite sports training and boarding school for grades 6-12 that is located in Bradenton, Florida. IMG’s student body includes athletes from all over the world. In two separate instances, SDNs enrolled their children in IMG’s boarding programs, entering into yearly tuition contracts for each academic year. One child of an SDN attended IMG for five academic years, from 2018 until graduation in 2023. The other child attended IMG for two academic years, from 2020 to 2022. Tuition for each child was around $100,000 a year.

Enforcement and Prosecution Policy and Trends, Securities and Commodities February 13, 2026

When AI Isn’t Privileged: SDNY Rules Generative AI Documents Not Protected

By Garen S. Marshall, David Hirsch, Aaron R. Marienthal, Jeffrey P. Ehrlich, Elizabeth Peters and Alice Moscicki

Executive Summary

Independent, unsupervised use of generative AI to analyze legal exposure may not be privileged. A federal court held that a defendant’s AI prompts and outputs relating to a criminal investigation of his conduct were not protected after they were seized pursuant to a search warrant.

Platform terms matter. If an AI provider reserves rights to retain, train on, or disclose user inputs, courts may find confidentiality—and therefore privilege—compromised.

Structure AI use under counsel’s direction. The ruling leaves open whether counsel-directed enterprise AI use on a secure platform with strong confidentiality terms may be treated differently. Governance and process may be outcome-determinative.

Government Contracts January 22, 2026

DoW Announces Line-by-Line Review of Certain 8(a) Contracts Amid Government-wide Scrutiny of the 8(a) Program

By Edwin O. Childs, Brett Barnett, Michael J. Podberesky, Abram J. Pafford, John Adams, Jack White, Elissa Baur, Benjamin L. Hatch, Michael Scoville, John S. Moran, Laura Colombell Marshall, James Dougherty, Jason M. Vespoli and Michael A. Brody

On January 16, 2026, the Secretary of War Pete Hegseth posted a video on social media announcing that the Department of War will conduct a “line‑by‑line review of every small business, sole source, 8(a) contract that is over $20 million,” focusing on impermissible pass‑throughs to large businesses. This action by the DoW aligns with broader federal investigations and audits of the 8(a) program.

Fraud, Deception and False Claims January 12, 2026

Creation of DOJ Fraud Division Signals Increased White-Collar Enforcement

By Brett Barnett, Edwin O. Childs, John Adams, Ryan Buchanan, Alex J. Brackett, Mindy Sauter, Michael J. Podberesky, Stephen Weiss, David Pivnick, Shalika Shah Kotiya, Brandi G. Howard, Jack White, M. Cole Davidson and Steven McCool

On Jan. 8, 2026, the White House announced the establishment of the DOJ’s Division for National Fraud Enforcement. The Trump administration stated that the new division will “combat the rampant and pervasive problem of fraud in the United States” and “enforce the Federal criminal and civil laws against fraud targeting Federal government programs, Federally funded benefits, businesses, nonprofits, and private citizens nationwide.” This announcement expands upon the Trump administration’s efforts to use the False Claims Act in connection with increased enforcement in areas including DEI initiatives, healthcare fraud and cybersecurity issues. While the creation of the new division accompanied no change in law, federally funded entities should be aware that it may signal increased white-collar enforcement mirroring the administration’s policy priorities.

To learn more, see our post at The FCA Insider.

Anti-Money Laundering, Compliance, Enforcement and Prosecution Policy and Trends January 6, 2026

FinCEN Announces Data-Driven Operation Targeting Southwest Border MSBs

By Jeffrey M. Hanna, Salwa S. Kamal and Vanessa Chen

On December 22, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a multifaceted data-driven operation to address potential money laundering, focused on more than 100 U.S. money services businesses (MSBs) operating along the southwest border. MSBs are non-bank financial institutions that provide certain financial services, including money transmission, check cashing, and foreign currency exchange. This operation will focus on MSBs’ potential non-compliance with the Bank Secrecy Act (BSA) and other regulations by examining Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs), which MSBs and other financial institutions must submit under BSA regulations.

Because MSBs operating along the southwest border face heightened risk of “cartel-related money laundering,” including the use of proceeds from drug trafficking, human smuggling, and terrorism, this operation is consistent with President Trump’s designation of certain international criminal cartels and organizations as foreign terrorist organizations.

Anti-Money Laundering October 23, 2025

Reducing BSA Compliance Obligations? A Look at the Senate’s STREAMLINE Act

By Jeffrey M. Hanna and Chelsea Smith Press

The Senate has introduced the Streamlining Transaction Reporting and Ensuring Anti-Money Laundering Improvements for a New Era Act, or the STREAMLINE Act, an initiative led by Senate Banking Committee Chairman Tim Scott and Senator John Kennedy, with support from several Republican co-sponsors.

For the first time in over five decades, the bill would modernize key components of the Bank Secrecy Act (“BSA”). Some key proposed changes include: (1) increasing the reporting thresholds, (2) instituting periodic inflation adjustments, and (3) requiring Treasury to update and rationalize reporting processes and related form. Industry groups, including the American Bankers Association and leading credit unions and community banking associations, have expressed support.

This article summarizes the bill’s core provisions that may impact banks, credit unions, money services businesses, and businesses that engage in large cash transactions.

Anti-Money Laundering, Compliance, Enforcement and Prosecution Policy and Trends October 16, 2025

FinCEN Eyes Easing Compliance Burdens on Financial Institutions

By Jeffrey M. Hanna, Elissa Baur and Patrick A. Wallace

The Financial Crimes Enforcement Network (“FinCEN”) has recently taken two steps in furtherance of the Trump Administration’s deregulatory agenda. In late September, FinCEN posted a notice to the Federal Register soliciting comments on a proposed “Survey of the Costs of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Compliance” to be completed by non-bank financial institutions (“NBFIs”). On October 9, FinCEN published a series of frequently asked questions (“FAQs”) aimed at clarifying the requirements around filing suspicious activity reports (“SARs”). Both actions point to an effort to ease compliance costs and align compliance efforts with law enforcement priorities.

Government Contracts September 10, 2025

Department of Defense Issues Final Rule on Cybersecurity Standards for Contractors

By Edwin O. Childs, Andrew Konia, Abram J. Pafford, Todd R. Steggerda, Jack White, James Dougherty, Jason M. Vespoli, Maura Naehr, John Sullivan and Sophie Marsh

After years of waiting, the U.S. Department of Defense (DoD) posted to the Federal Register for public inspection on September 9, 2025, a final rule implementing the Cybersecurity Maturity Model Certification 2.0 (CMMC 2.0) standards into the Defense Federal Acquisition Regulation Supplement (DFARS) (the Final Rule), which was formally published a day later on September 10, 2025. The Final Rule’s requirements will become effective in the DFARS as of November 10, 2025, and pertain to all DoD contractors and subcontractors. Defense contractors should ensure their compliance with the standards as soon as possible in order to maintain eligibility to compete for DoD contracts and perform DoD subcontracts, as well as to avoid bid protests and/or civil False Claims Act allegations.

Enforcement and Prosecution Policy and Trends August 15, 2025

State AGs Step Up Enforcement: Recent Lessons from Privacy Law Enforcement in Connecticut and Nebraska

By Nathanael Williams, Erin Ashwell and Eric Olshan

As comprehensive state privacy laws continue to take root across the United States, recent enforcement actions by the attorneys general of Connecticut and Nebraska highlight an important shift — ensuring privacy law compliance vis-à-vis comprehensive privacy laws or other means is a top enforcement priority outside of California.

Read on to learn more about state actions in Connecticut and Nebraska and how they highlight how companies that prioritize consumer trust and regulatory compliance stay ahead of the curve.

Fraud, Deception and False Claims August 4, 2025

California Defense Contractor and Private Equity Firm Agree to Pay $1.75M to Resolve False Claims Act Liability Relating to Voluntary Self-Disclosure of Cybersecurity Violations

By Todd R. Steggerda, Edwin O. Childs, Michael J. Podberesky, Abram J. Pafford, Brett Barnett, Jack White, Andrew Konia, Jason M. Vespoli, Maura Naehr and John Sullivan

On July 31, 2025, the U.S. Department of Justice (“DOJ”) announced a $1.75 million False Claims Act (“FCA”) settlement with Aero Turbine Inc. (“Aero Turbine”), a California-based defense contractor, and private equity firm Gallant Capital Partners LLC (“Gallant Capital”). The settlement arises out of allegations that Aero Turbine failed to comply with certain cybersecurity requirements under an Air Force contract and provided impermissible foreign third party access to sensitive defense information. This settlement highlights yet another example of the DOJ’s increased scrutiny of cybersecurity requirements (under the Cyber Fraud Task Force), specifically including the protection of Controlled Defense Information (“CDI”), under the FCA. The settlement is also an example of DOJ’s focus on (1) pursuing private equity investors and (2) rewarding entities that self-disclose and remediate wrongdoing.

Subject to Inquiry

THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS