Year: 2020

British Virgin Islands joins UK overseas jurisdictions in public company ownership commitment

Compliance
September 30th 2020, London –  Transparency International UK welcome the announcement made last week by the Government of the British Virgin Islands that they would be opening their company ownership register to the public.  Andrew Fahie, the Premier of the British Virgin Islands, speaking to the House of Assembly stated the territory would adopt a publicly accessible register of beneficial ownership for companies, in line with international standards by 2023.The British Virgin Islands join the rest of the British Overseas Territories and Crown Dependencies in announcing their commitment to transparent company ownership.  The secrecy offered by companies registered in the British Virgin…

FinCEN Files sparks fresh UK inquiry into laundering of dirty billions

Money Laundering
The Treasury Committee says it will examine the effectiveness of anti-money laundering systems and sanctions, listing areas of concerns investigated by ICIJ. Image: Photo by Kirsty O’Connor/PA Images via Getty Images Prompted by the FinCEN Files, a powerful U.K. parliamentary committee has launched a fresh anti-money laundering inquiry 19 months after it outlined findings that the nation’s response to billions of pounds in money-laundering was “fragmented.” In light of the International Consortium of Investigative Journalists’ recent investigation, the U.K. Treasury Committee says it will examine the effectiveness of both anti-money laundering systems and sanctions. The Treasury Committee says the precise scale…

FinCEN wants to clamp down on small payments fueling crime

Compliance
Concerned that money transfers worth just a few hundred dollars are helping terrorists and fentanyl traffickers, the U.S. Treasury is pushing a new rule for banks, money transmitters and others. The top U.S. financial crime watchdog wants to slash the value of transactions that banks and other financial institutions must report as potentially suspicious, citing small payments used to plan terrorist attacks and to import deadly drugs. The Financial Crimes Enforcement Network, known as FinCEN, published a proposal with the Federal Reserve last week to require banks and others to collect and share with authorities information on potentially suspicious transactions…

Banks face financial crime headache over free trade zones

Exploitation
Banks are being urged to pay closer attention to the crime risks associated with free trade zones (FTZs), with fresh research warning of potential exposure to trade-based money laundering, as well drugs, weapons and counterfeit goods trafficking. Defined as areas where customs duties do not apply in the same way as in the rest of a country’s territory, there are now believed to be at least 3,500 free zones in operation around the world, up from just 79 in 1975. In some regions, FTZs are becoming more popular. In the UK, for example, government officials have this month announced plans…

Online agents are more attractive to money laundering criminals, warns HMRC

Money Laundering
Lack of face-to-face contact is a key reason why criminals graduate towards internet agents, its latest updated AML guidance says. HMRC has updated its AML guidance for sales and lettings agents including a warning that online-only operators are at higher risk than traditional high street firms. It claims that sales and lettings transaction made without face-to-face contact including online, over the phone or via an intermediary reduce an agent’s ability to spot whether money laundering is being attempted. “This is particularly true when dealing with customers in higher-risk overseas jurisdictions,” the guidance says. But leading AML software firm Smartsearch says…

Goldman Sachs fined by FCA and PRA over 1MDB in $2.9bn global resolution

Investigation
Firm to clawback $174m from executives Goldman Sachs International (GSI) has been fined £96.6m by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) for risk management failures in connection with 1Malaysia Development Berhad (1MDB). In a statement, the FCA and PRA said GSI had “failed to assess and manage risk to the standard that was required given the high risk profile of the 1MDB transactions, and failed to assess risk factors on a sufficiently holistic basis”, and that GSI had also “failed to address allegations of bribery in 2013 and failed to manage allegations of misconduct in connection…

Bid to make gambling companies liable for stolen money

Compliance
Federal Independent MP Andrew Wilkie will introduce a bill to Parliament on Monday to make gambling companies liable if the person placing the bet is using stolen money. Under the legislation, if a bettor has paid for a gambling service using money they obtained illegally, the Federal Court could order the gambling company to compensate the victim of the original crime. The “Making Gambling Businesses Accountable” bill, which amends the Anti-Money Laundering and Counter-Terrorism Financing Act, uses the same definition of “stolen property” as the Criminal Code. Centre Alliance MP Rebekha Sharkie will second the bill and Mr Wilkie’s team…

MEPs call for creation of EU financial crimes authority in wake of FinCEN Files scandal

Consultation
European Commission pledges to step up fight against money laundering. European Commission Vice-President Dubravka Šuica has pledged to step up the fight against money laundering, saying that planned new legislation in the New Year aims to address “shortcomings” in existing legislation. Šuica, responsible for the democracy and demography portfolio in the Commission, told MEPs, “we aim to ensure that dirty money has no place to hide in the EU. We must close the door on dirty money.” She was speaking at the Parliament’s Plenary on Thursday in a debate with members on recent money laundering revelations about how the world’s…

Over £300,000 recovered from accounts suspected of use in money laundering

Money Laundering
Investigation by North Yorkshire Police after reports of investment scam. After receiving information about a company that was suspected of laundering money from investment scams, North Yorkshire Police identified two business bank accounts which they believed held monies obtained through fraud. Using powers introduced in the Criminal Finances Act 2017, Account Freezing Orders (AFO’s) were obtained on both bank accounts and a frozen funds investigation was commenced. One bank account contained £210,000 and the other £124,000. These AFO’s enabled North Yorkshire Police to investigate and obtain evidence into a large scale money laundering network involving two companies, whilst preventing this…

Unexplained Wealth Orders: Suspected money launderer gives up £10m of property

Money Laundering
Around £10m of property has been surrendered in a major victory against some of northern England’s most dangerous criminals. The apartments and homes were given up to the National Crime Agency by a Leeds businessman who investigators suspect of being a major money-launderer.  The NCA says Mansoor Mahmood Hussain acted for gangsters, including a murderer and drug trafficker. The agency believes he laundered their profits through a property empire.  Over two decades, Mr Hussain, known as Manni, developed his portfolio across West Yorkshire, Cheshire and London while posing as a legitimate businessman.  His social media accounts show him living a…

Leicester textile firms ‘involved in money laundering

Money Laundering
A network of clothing manufacturers in Leicester are involved in money laundering and VAT fraud, a BBC investigation has found. The companies are based in the city’s garment district where a local MP said such activity was “endemic”. Some of the firms involved have supplied fast fashion brands, including Boohoo. Boohoo told the BBC it would never knowingly conduct business with anyone acting outside of the law. It has now terminated its relationship with one of the firms highlighted by the investigation by BBC Radio 4’s File on 4. Leicester textile firms face enforcement action Clothes factories ‘doubled staff during pandemic’…

Crown chairman Helen Coonan admits casino ‘facilitated’ money laundering

Money Laundering
The former Howard government minister insists, however, that Crown didn’t turn a blind eye to illegal activity The Crown Resorts chairman, Helen Coonan, has admitted the company facilitated money laundering at its Melbourne casino but denied it was “turning a blind eye” to criminal activity instead blaming it on “ineptitude”. The concession was made at the New South Wales Independent Liquor and Gaming Authority’s inquiry into Crown’s suitability to hold a Sydney casino licence. Coonan was asked on Tuesday about Crown’s relationship with SunCity, a high-roller junket partner with alleged criminal links. She was challenged on why Crown did not shut down SunCity’s private…

UK financial regulator failed to prosecute half of money-laundering criminal probes

Money Laundering
The UK financial regulator has discontinued half of its criminal investigations into breaches of the money laundering rules since January, and is yet to bring a single prosecution — despite a pledge to make full use of its powers. Figures released under a freedom of information request show that, in the year to date, seven out of 14 criminal investigations into contraventions of the money launderingregulations have been shut down by the Financial Conduct Authority. Five of these were “single track”, or solely criminal, probes, while the other two were “dual track” investigations that could have resulted in either criminal or civil proceedings. As a…

Criminals exploit Covid-19 as fraud moves increasingly online

Fraud
Unauthorised fraud fell by eight per cent to £374.3 million in first half of 2020, as the banking industry prevented £853 million of losses. Criminals are exploiting and adapting to Covid-19 with a rise in online data harvesting and a fall in cheque and contactless card fraud. £207.8 million was lost to Authorised Push Payment (APP) fraud, in line with the same period last year. Finance providers were able to return £73.1 million of APP fraud losses to victims, up 86 per cent compared to last year. £47.9 million of losses were reimbursed to victims under APP voluntary Code in first…

COVID-19: Trends in money laundering and terrorism financing

Money Laundering
COMMITTEE OF EXPERTS ON THE EVALUATION OF ANTI-MONEY LAUNDERING MEASURES AND THE FINANCING OF TERRORISM (MONEYVAL) STRASBOURG The Council of Europe’s MONEYVAL Committee has issued a report aimed at helping the global community to counter new criminal activities which are exploiting the COVID-19 pandemic, including the sale of counterfeit medicines and cybercrime. The Committee, which specialises in measures to tackle money laundering and terrorist financing, focuses in its new report on threats, vulnerabilities and best practices. The aim is to assist policymakers, practitioners and the private sector in applying a more targeted and effective response to the money laundering and terrorist financing risks in Europe. The report found…

INSIGHT: U.K. Tax Authority Getting Ready to Bite on Evasion

Compliance, Corruption, Fraud, Investigation
The U.K. tax authority is indicating its intention to enforce legislation and investigate corporations for failure to prevent tax evasion. Mukul Chawla QC and Kate Ison of Bryan Cave Leighton Paisner LLP review the current status of inquiries and discuss what action organizations need to take to ensure their procedures are robust and compliant. The focus by HM Revenue & Customs (HMRC) on organizations, under the Criminal Finances Act 2017, for the corporate offense of failure to prevent tax evasion, appears to be making steady progress. The number of investigations and inquiries that HMRC is currently undertaking, and the wide…

What are the repercussions if a financial services firm is found guilty of facilitating tax evasion?

Corruption, Fraud, Investigation
The offence of failure to prevent the facilitation of tax evasion (also known as the Corporate Criminal Offence or CCO) was introduced with great fanfare following the government initiative; ‘No Safe Havens’, which was part of an international initiative to increase tax transparency. As of 31 July 2020, HMRC announced that they had 10 CCO investigations open and a further 22 ‘opportunities under review’, meaning that HMRC are considering whether to open an investigation. Within these 32 investigations or ‘opportunities’, HMRC have disclosed that over a third relate to businesses within the financial sector. Businesses in the financial sector are…

Danske Scandal Reveals Top-Down Culture That Silenced Staff

Corruption
The bank at the center of Europe’s worst ever money laundering scandal has yet to fully address the corporate culture issues that led it astray in the first place. That’s according to the watchdog that oversees Danske Bank A/S. Denmark’s biggest bank spent years locked in a top-down hierarchy that left its management cut off from people further down the organization, according to Jesper Berg, the director general of the Danish Financial Supervisory Authority. “You go from a very hierarchical institution to an institution where staff needs to flag mistakes and speak up more,” he said in a phone intervie “They…

Corporate transparency and register reform

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Detail of outcome The government response sets out a range of proposals to improve the reliability and accuracy of information on the Companies Register, including: identity verification: introducing compulsory identity verification for all directors, People with Significant Control and those filing information on behalf of a company reforms to Companies House powers: providing the Registrar of Companies stronger powers to query, seek evidence for, amend or remove information and to share it with law enforcement partners when certain conditions are met protecting personal information: improving the processes for removing personal information from the register company accounts: the response proposes further…

AUSTRAC and Westpac agree to proposed $1.3bn penalty

Corruption, Money Laundering
Westpac and AUSTRAC have today agreed to a 1.3 billion dollar proposed penalty over Westpac’s breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). Westpac and AUSTRAC have agreed that the proposed penalty reflects the seriousness and magnitude of compliance failings by Westpac. The Federal Court of Australia will now consider the proposed settlement and penalty. If the Federal Court determines the proposed penalty is appropriate, the penalty order made will represent the largest ever civil penalty in Australian history.  In reaching today’s agreement, Westpac has admitted to contravening the AML/CTF Act on over 23 million occasions, exposing Australia’s…

FATF Releases Updated Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing Report

Money Laundering
The Financial Action Task Force(FATF), an intergovernmental organization that develops policies to combat money laundering and terrorism financing, has released an updated report, titled, Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing. Published on September 14, 2020, the report notes that virtual or digital assets have been using innovative technology to quickly transfer value, globally, and may offer certain benefits, such as making digital payments faster and at more competitive rates. However, the FATF cautions that the anonymity associated with virtual assets can “attract criminals, who have used [them] to launder proceeds from a range of offenses such as…

The intensity of regulatory scrutiny of AML and crypto-assets

Compliance
As envisaged in its 2019/20 Business Plan, the Financial Conduct Authority (FCA) is consulting on proposals to extend its financial crime reporting obligation to additional firms irrespective of their total annual revenue. The proposed extension would cover all crypto-asset exchange and custodian wallet providers, as well as all electronic money institutions, Multilateral Trading Facilities (MTFs) and Organised Trading Facilities (OTFs). Under the proposed requirements each firm must provide information to the FCA on the location of its customers, the jurisdictions in which it has business and which of those jurisdictions it considers high risk. In addition, firms must disclose the resources it…

2020 Half year fraud report

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Whether it’s elaborate scams and attempts by criminals to con innocent victims into handing over their money or providing access to data which can then be used to gain illicit funds, stories of those impacted by fraud are becoming increasingly common. In particular, Covid-19 has seen criminal gangs focus on taking advantage of people’s fears and uncertainties around the virus, sometimes to devastating effect.  This is demonstrated by a sharp rise in the number of impersonation scams, which nearly doubled in the first six months of the year, with almost 15,000 cases reported. Such scams occur when the victim is…

How Anonymous Companies Are Used to Launder Money in U.S. Real Estate

Money Laundering
Alongside the world’s worst COVID-19 death rates, the United States is facing an impending economic recession following the first wave of the pandemic. But, while millions of Americans struggle to stay afloat amid record job losses, there is a sector that seems strangely unaffected by the post-pandemic economic fallout: Real estate purchases. Alarmingly, in the U.S., there are few regulations and checks of who is purchasing homes. As a result, housing remains a key vehicle for criminals looking to stash cash, launder money, and buy up homes in a tight market. In the wake of the 2008 recession, the U.S. real estate…

Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing

Money Laundering, Organised Crime
Download the PDF Here. Paris, 14 September 2020 – Virtual assets use innovative technology to swiftly transfer value around the world and have many potential benefits, including making payments faster and cheaper. But the anonymity associated with them also attracts criminals, who have used virtual assets to launder proceeds from a range of offences such as the drugs trade, illegal arms smuggling, fraud, tax evasion, cyber attacks, sanctions evasion, child exploitation and human trafficking. In response, the FATF Report Virtual Assets – Red Flag Indiciators of Money Laundering and Terrorist Financing will help national authorities detect whether virtual assets are being used for…

What the FinCEN files tell us about the UK’s role as an enabler of corruption & money laundering – and what needs to change.

Money Laundering
The FinCEN files, more than 2,500 documents relating to $2tn (£1.56tn) of transactions, have once again highlighted the vast amount of illicit wealth that flows through the global economy.  This is a great piece of journalism that paints a vivid picture of the dirty money being handled by the financial sector. Nothing about this story, however, should come as a surprise. The UK Government has stated that roughly £100 billion of illicit wealth impacts the economy every year. And that’s just the UK. It’s not a surprise that the leak shows how UK banks continually failed to address suspicious activity and instead…

Statement by FinCEN Regarding Unlawfully Disclosed Suspicious Activity Reports

Compliance
The Financial Crimes Enforcement Network (FinCEN) is aware that various media outlets intend to publish a series of articles based on unlawfully disclosed Suspicious Activity Reports (SARs), as well as other sensitive government documents, from several years ago. As FinCEN has stated previously, the unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports. FinCEN has referred this matter to the U.S. Department of Justice and the U.S. Department of the Treasury’s Office of…

Thousands of secrets suspicious activity reposted offer never-before-seen picot of corruption and complicity – and how the government lets it flourish.

Money Laundering
This is part of the FinCEN Files investigation. A huge trove of secret government documents reveals for the first time how the giants of Western banking move trillions of dollars in suspicious transactions, enriching themselves and their shareholders while facilitating the work of terrorists, kleptocrats, and drug kingpins. And the US government, despite its vast powers, fails to stop it. Today, the FinCEN Files — thousands of “suspicious activity reports” and other US government documents — offer an unprecedented view of global financial corruption, the banks enabling it, and the government agencies that watch as it flourishes. BuzzFeed News has shared…

Eight-year NCA investigation denies organised crime group £17 million property portfolio

Drug Trafficking, Fraud, Money Laundering
Fifty nine properties worth an estimated £17 million have been recovered following National Crime Agency investigations into a prolific organised crime group carried out over almost a decade. In addition to a successful criminal investigation, the NCA conducted four linked civil recovery investigations over an eight-and-a-half year period into dozens of individuals who were suspected of financial links to drug dealers in East Birmingham. NCA officers established that the properties were acquired using the proceeds of crime including heroin importation and distribution, fraud and money laundering. Alam and Ameran Zeb Khan have both been convicted of drug trafficking offences, the…

A U.S. judge on Monday dismissed a lawsuit accusing Denmark’s Danske Bank A/S and four former top executives of defrauding shareholders by hiding and failing to stop widespread money laundering at its former Estonian branch.

Money Laundering
U.S. District Judge Valerie Caproni in Manhattan said shareholders in the proposed class action failed to sufficiently plead that the bank improperly reported revenue derived from money laundering or downplayed its supervision failures. She also said the plaintiffs, led by four pension funds in New York and Massachusetts, failed to show that Danske acted recklessly or with conscious disregard that its statements were false and misleading. “They allege in a conclusory way that defendants and employees of (Danske) received reports contradicting public statements, and fail to connect any of those reports to specific representations by specific persons,” Caproni wrote. The…

The Quiet Man in Stockholm Who Laundered China’s Oil Money for Iran

Corruption
This article from the Organized Crime and Corruption Reporting Project (OCCRP) and Sweden’s Sveriges Television (SVT) is part of an investigation in which Courthouse News Service and NBC News are partners. By all outward appearances, Hatam Khatoun Nema was a small-time money changer working from a nondescript office in Järfälla, a workaday Stockholm suburb. In reality, the Swedish-Iranian businessman ran an obscure Hong Kong company, H M E A CO., LIMITED, that laundered hundreds of millions of dollars through a web of shell companies and businesses stretching from Singapore to Panama.  A major customer of Nema’s operation was the Islamic Republic of Iran. Between…

CP20/17: Extension of Annual Financial Crime Reporting Obligation

FCA
Why we are consulting Our annual financial crime reporting obligation shows us the potential money laundering risk faced by a firm, based on its regulated activities and the nature of its customers. The obligation is set out in our Handbook SUP 16.23 Annual Financial Crime Report (REP-CRIM). When we introduced it, we committed to consulting on any future policy change and providing a cost benefit analysis. We currently assess whether REP-CRIM applies by looking at firm type, eg banks, building societies and mortgage lenders and activity type, eg intermediaries, e-money institutions and consumer credit firms. Approximately 2,500 of the 23,000…

Banks and financial institutions need to assess money-laundering risks and conduct appropriate due diligence when dealing with foreign public officials and their families or associates, five regulatory agencies said.

Money Laundering
People who are considered politically exposed may pose higher risks because their funds may be the proceeds of corruption or other illicit activities, the banking regulators said in a joint statement. The agencies added, however, that risks associated with politically exposed individuals vary and not all of them are automatically higher risk. The agencies don’t include U.S. public officials in the politically exposed persons category. “The risk depends on facts and circumstances specific to the customer relationship,” said the statement issued Friday by the Federal Reserve Board, the Federal Deposit Insurance Corp., the U.S. Treasury Department’s Financial Crimes Enforcement Network, the National…

Lori Loughlin jailed over college admissions scandal

Corruption
Lori Loughlin, star of beloved US sitcom Full House, has been given a two-month prison sentence for paying $500,000 in bribes to get her daughters into the University of Southern California. Her husband, fashion designer Mossimo Giannulli, will spend five months in prison for the same “breathtaking fraud”, a judge ruled.  Giannulli was ordered to pay a $250,000 fine and do 250 hours of community service, while Loughlin will pay $150,000 and do 150 hours.  Prosecutors said Giannulli deserves a tougher sentence because he was “the more active participant in the scheme,” while Loughlin “took a less active role, but was nonetheless…

2,600 Belgian clients involved in Credit Suisse investigation

Investigation
Image Credit: Credit Suisse in Zurich. © Plaza Financiera, Flickr Commons The federal prosecutor’s office in Brussels has opened a criminal investigation into the Swiss bank Credit Suisse, in particular the dealings of 2,600 Belgian clients suspected of using Swiss bank accounts to evade taxes.  “A criminal investigation has been opened against Credit Suisse for money laundering and unlawfully acting as a financial intermediary, as well as against Belgian customers who have not yet undergone tax regularisation.” On several occasions, the tax authorities in Belgium have offered a partial amnesty to anyone wishing to repatriate money hidden in accounts abroad,…

Extending criminal liability for money laundering: update on Germany’s new draft law implementing the latest EU AML directive

Money Laundering
August 21 2020 In January, a draft bill reforming the crime of money laundering in Germany (section 261 of the German Criminal Code (StGB)) was leaked. In a February blog post, we criticised how broad the suggested definition was. Last week, the official draft bill was published by the Federal Ministry of Justice. Much to the surprise of German anti-money laundering (AML) circles, it goes even further. The most important change compared to the unofficial draft and the law in place today is the complete elimination of a catalogue of suitable predicate offences. A ‘predicate offence’ is the underlying crime that…

A Hidden Tycoon, African Explosives, and a Loan from a Notorious Bank: Questionable Connections Surround Beirut Explosion Shipment

Investigation
Since the devastating explosion of a store of ammonium nitrate in Beirut’s port on August 4, Lebanese citizens have taken to the streets in shock, outrage, and grief. Beirut’s Grain Silo Was One Man’s Refuge Through Years of War. On August 4, It Was Where He Died Read the story of one family’s loss from our partner Daraj.com. Above all, they have demanded answers: Where did the nearly 3,000 tons of explosive chemicals come from, and who owned it? Why did the rickety ship that brought the hazardous material to Lebanon end up stranded in the city’s port in late 2013?…

Insurance billionaire Greg Lindberg sentenced to 7 years in bribery case

Corruption
Greg Lindberg, the billionaire businessman at the heart of one of North Carolina’s worst government corruption scandals, will spend more than seven years in prison, a federal judge ruled Wednesday in Charlotte. U.S. District Judge Max Cogburn also ordered Lindberg to pay a $35,000 fine and placed him on three years’ probation for his scheme to bribe Insurance Commissioner Mike Causey with up to $2 million in campaign contributions. Eventually, Lindberg, one of the state’s largest political donors who wrote checks to both parties, funneled $250,000 earmarked for Causey through the state Republican Party, an illicit transaction handled by the party’s…

Regional Report: In face of massive EU AML scandals, prosecutors, regulators, banks looking to bolster information sharing, accountability, liability

Compliance
The Skinny:  In this regional report focusing on Europe, the ACFCS Netherlands Chapter looks at some of the EU AML scandals and issues in and out of banks that can make compliance difficult.  The takeaways come from the “Fintech and FinCrime in Europe” session, a panel from ACFCS Fincrime Virtual Week, the association’s first-ever fully online fincrime compliance conference.   More than 5,600 attendees, speakers and thought leaders registered for the event, which addressed the overarching themes of Disruption, Innovation and Resiliency. In the panel focused on compliance and regulatory trends in the EU, speakers highlighted several key trends, including: …
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Publication of Source of Wealth and Source of Funds (Private Banking/Wealth Management) FAQs  The Wolfsberg Group is pleased to publish Frequently Asked Questions (FAQs) on how Financial Institutions can identify, mitigate and manage money laundering risks by undertaking Source of Wealth (SoW) and Source of Funds (SoF) checks on relevant customers, when appropriate and/or required by applicable regulation. Such checks are to be considered among the key elements of customer risk assessment and risk management for certain customers, as defined by each Financial Institution. This document is primarily aimed at Financial Institutions’ Private Banking/Wealth Management customer segments and the Group…