Month: April 2021

Recent AML Enforcement Trends in the U.K.

Money Laundering
IntroductionThe UK has stepped up its anti-money laundering (AML) enforcement approach in recent months, both issuing larger fines and looking to expand the scope of activities it regulates. Historically, the UK has consistently taken a robust approach to AML, and post-Brexit, we expect this trend to continue, as the government works with other regulators internationally in combating cross-border economic crime. BrexitPre-Brexit, the UK adopted the European Union’s extensive AML framework. However, as of 31 December 2020, the onus is now on the UK to ensure that it keeps up to date with the latest international AML regulations and developments. The…

FATF’s Proposed Updated Guidance for Cryptocurrency Regulation

Digital Currencies, Regulation
On March 19, 2021, the Financial Action Task Force (FATF) released proposed updates to its 2019 guidance for how member jurisdictions should regulate and supervise the cryptocurrency ecosystem. If adopted by FATF and implemented by member jurisdictions, the new guidance would expand the definition of Virtual Asset Service Providers (VASPs) to include many non-custodial cryptocurrency businesses, making them subject to AML/CFT regulations. While Chainalysis is in favor of regulations that effectively prevent financial crime, we believe parts of the proposed guidance overreach by placing an unreasonable regulatory burden on new and emerging cryptocurrency markets where no evidence of criminal activity…

The failure of ABN Amro and other systemic banks to control money laundering

Money Laundering
Following several fines imposed by national regulatory authorities on banks such as ING and ABN Amro, the systemic banks started a KYC-race (Know Your Customer) to investigate “suspicious” transactions by looking into the history of account holders and shareholders of companies, the private expenses and possessions of shareholders and even the backgrounds of company’s clients. In this race, the banks have hired hundreds of controllers, who are equipped with a very menacing weapon, namely that of being able to block a company’s corporate bank account or even terminate the relationship. These controllers, often with little to no experience from the…

Biden-Harris administration: 100-day review of Sanctions policy

Sanctions
When the Biden administration took office on 20 January 2021 it had already announced that there would be reviews of how the US deals with international partnerships. Under the previous administration the US had left the Paris accord on climate change and the World Health Organisation (WHO). Within a day of taking office the new administration set in motion the reversal of both the withdrawal from the Paris agreement and WHO membership. US secretary of the treasury Janet Yellen has said that one of her top priorities is to review the US use of sanctions as well as those that…

Terrorists still raise money through crypto but the impact is limited

Digital Currencies, Money Laundering, Terrorism
Evidence suggests crypto’s role in terrorism remains relatively minor: “It has not yet become a primary means of terror financing.” We’re living today “amidst an explosion of risk related to fraud, money laundering, terrorist financing, and data privacy,” said United States Treasury Secretary Janet Yellen in February — and she specifically cited cryptocurrencies as a “tool to finance terrorism.” Yellen appeared to be flagging an important new turn in the war against terror, and it begged some questions: Is crypto in the hands of terrorists a real, present danger to governments and society? If so, should the cryptocurrency and blockchain…

U.K. money laundering enforcement – the political race to the bottom

Money Laundering
The last three years have seen some seismic changes in both EU and UK anti-money laundering legislation along with related enforcement reporting initiatives. Updated Money Laundering Regulations were enacted in 2017. In early 2018, the Treasury set up a new body; the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), to act as a ‘supervisor’ of AML supervisors with the responsibility for monitoring money laundering activity. 2018 also saw the first ‘Unexplained Wealth Order’ (UWO’s). The EU Parliament brought into force the sixth AML Directive with some stark changes to both penalties and reporting and data sharing policies. At first,…

Council of Europe calls for stronger financial intelligence units

Financial Crime, Intelligence
THE PARLIAMENTARY ASSEMBLY of the Council of Europe has criticised recent efforts to combat money laundering and terrorism financing and has stressed that financial intelligence units must be strengthened. In a resolution adopted in last month and announced Tuesday, the Parliamentary Assembly has invited all member states of the Council of Europe to improve their national FIUs and bring them more in line with the standards of the Financial Action Task Force, and its own FinCrime watchdog – MONEYVAL. The Parliamentary Assembly is a CoE body composed representatives elected to the national parliaments of its member states. It is entirely…

London used as ‘money-laundering base’, mafia trial prosecutor says

Money Laundering
In Italy’s largest mafia trial in three decades, the UK’s capital has been roped in as a potential hotspot for organised crime, particularly post-Brexit. The trial will see around 900 witnesses testify against more than 350 ’Ndrangheta defendants, including politicians and officials charged with being members of Italy’s most powerful criminal group. Defendants are set to respond to charges of money laundering through companies set up in the UK, with the alleged purpose of mimicking lawful economic activity. “’Ndrangheta interests in the UK have figured prominently as clans have used the country as an investment and money-laundering base,” the prosecutor…

Law profession has struggled with AML rules, says firm fined £10,000

Money Laundering
A Surrey law firm has been fined £10,000 for breaches of the anti-money laundering rules in its training, approach to risk assessment and in a conveyancing transaction which produced £850 in fees. QualitySolicitors Brett Holt accepted the fine by reaching an agreement with the Solicitors Regulation Authority (SRA) but said that a “significant proportion” of law firms had “struggled to achieve compliance” with the 2017 Money Laundering Regulations. In the agreement, approved by the Solicitors Disciplinary Tribunal, Brett Holt accepted that in a property transaction in late 2017 it failed to undertake identity checks and retain copies of address verification…

Former Netflix executive convicted of fraud after orchestrating more than $500,000 in bribes and kickbacks

Fraud
Ex-Netflix IT chief Michael Kail on Friday was convicted of 28 counts of fraud and money laundering. Kail created a “pay-to-play” scheme, taking bribes and kickbacks from tech startups hoping to do business with Netflix. Kail, who was indicted in 2018, must also forfeit a Los Gatos home he purchased with the funds. Former Netflix vice president of IT Michael Kail was convicted by a federal jury on Friday of 28 counts of fraud and money laundering, the US Department of Justice announced in a press release. Kail, who was indicted in 2018, used his position to create a “pay-to-play”…

Biden was tough on drugs for decades. Now he faces challenges in fighting money laundering

Money Laundering
WASHINGTON — Decades ago, then-Sen. Joe Biden established himself as a sort of drug czar on Capitol Hill. In the 1980s, he helped launch the Office of National Drug Control Policy. And a decade later, Biden became one of the masterminds behind Plan Colombia, a $7.5 billion bilateral program focused on, among other things, fighting drug trafficking in the Americas. While running for president, he vowed to enforce “sanctions on international actors engaged in the trafficking of illicit drugs,” and Congress gave him a stronger anti-money laundering law that could help achieve that goal. But with the emergence of new…

New Magnitsky style sanctions regime will strengthen Britain’s toolkit for tacking global corruption and dirty money

Corruption, Sanctions
Transparency International UK welcomes the announcement of a new corruption sanctions regime by Foreign Secretary Dominic Raab. The new regime gives Britain the power to designate individuals and companies involved in serious corruption around the world, adding another option to the UK’s growing array of sanctions for corruption offences. The UK Government has published an initial list of 22 designated persons who are the first targets of the regime. Those that are designated will have their British assets frozen and be banned from travelling to the UK. The regime is international in scope, enabling the UK to align itself with…

Fighting fraud during the pandemic

Fraud
The City of London Police are the national policing lead for fraud and run Action Fraud and the National Fraud Intelligence Bureau. Action Fraud has received 6,073 reports of coronavirus related fraud and cyber crime since 01 March 2020, resulting in losses of £34.5m. Dedicated national fraud units have made over 150 arrests and taken down over 2,000 websites, phone numbers and email addresses linked to frauds since the pandemic began. The City of London Police has arrested 156 criminals believed to have been committing fraud during the national restrictions imposed as a result of the coronavirus pandemic. Data released…

Ireland stops anonymity in trading of cryptocurrency

Digital Currencies, Regulation
BUYERS and sellers of Bitcoin and other cryptocurrencies are no longer able to trade virtual assets anonymously in Ireland under an expanded anti-money laundering regime. As of today, cryptocurrency service providers in Ireland will have to comply with money laundering rules and other basic regulations for the first time. This means that they must register with the Central Bank and carry out due diligence on their customers, which entails accounting for the origin and destination of client assets. The Central Bank has warned all companies that exchange or transfer virtual assets like Bitcoin, as well as those that provide financial…

FCA has increased surveillance over last 12 months

FCA, Money Laundering
The Financial Conduct Authority (FCA) has highlighted the importance of anti-money laundering (AML) and said that it has increased its surveillance. Two of its biggest sanctions in the last 12 months related to failures to address financial crime and AML risks. Speaking at the AML & ABC Forum 2021, Mark Steward, executive director of enforcement and market oversight at the FCA, said that the City regulator currently has 42 AML investigations ongoing – 25 into firms and 17 against individuals. These involve, for example, systems and controls over politically exposed persons, customers with significant cash-intensive operations, correspondent banking and trade…

The fight against offshore financial crime will be a long campaign

Tax Evasion
On the fifth anniversary of the Panama Papers’ launch, experts say there’s been progress in the fight against dirty money — but much more is needed. In May 2016, weeks after hundreds of journalists released the Panama Papers’ massive exposé of the secret financial dealings and hideaways of politicians, fraudsters and celebrities, a group of world leaders — embarrassed, outraged or knowing a good media opportunity when they saw one — met in London to denounce the global flood of dirty money. British Prime Minister David Cameron, Nigerian President Muhammadu Buhari, Emirati deputy foreign minister Anwar Gargash and others signed…

What Is a Company Formation Agent?

Money Laundering
Put simply, a formation agent is a company that creates other companies on behalf of clients around the world. The process is quick, easy, and remarkably cheap. Although many turn to formation agents for legitimate business reasons, illicit actors might seek out their services to dodge taxes, hide their ownership of high-value assets, or squirrel away dirty money. It’s no coincidence that these firms are exceptionally popular in tax havens and financial secrecy jurisdictions. Even a cursory internet search turns up an abundance of eager firms in Belize, Panama, Luxembourg, Liechtenstein, Cyprus, Seychelles, Malta, the Cayman Islands, and the British…

UK Sanctions 22 Individuals for ‘Serious International Corruption’

Sanctions
The U.K. government has imposed asset freezes and travel bans against 22 individuals from six countries in its first set of measures under the nation’s new Global Anti-Corruption sanctions regime. The move, announced this week, seeks to “prevent those responsible from entering the U.K. or laundering their ill-gotten assets here,” and “ensure that the U.K. is not a safe haven for those involved in serious corruption, including those who profit from it,” Foreign Secretary Dominic Raab wrote in a statement delivered to Parliament on Monday. The first group of individuals sanctioned under the new regime hail from Russia, South Africa,…

Concern over corruption red flags in 20% of U.K.’s PPE procurement

Corruption
Full transparency over ‘vip’ lane and scrutiny of high-risk contracts essential to restore public trust April 22, 2021 – The way the UK Government handled bids for supplying personal protective equipment (PPE) and other COVID-19 response contracts appears partisan and systemically biased in favour of those with political access, new research from Transparency International UK finds. Read the report. Launched today, Track and Trace is the most comprehensive study to date of public procurement during the pandemic and involved a painstaking review of nearly 1,000 contracts worth a total of £18 billion. The report details how critical safeguards designed to…

Explaining the U.K.’s “Unexplained Wealth Order”

Unexplained Wealth Orders
Leaders of organized criminal groups, dictators who steal from their people, crooked officials, and other shady characters have become adept at hiding their millions in Western capitals. The convoluted corporate networks, hidden bank accounts, and sophisticated proxy schemes that underlie these financial flows are largely beyond the grasp of all but the most dedicated specialists. But there’s one sector where the corruption takes physical form, turning cities like London into virtual showcases of tainted foreign wealth: Real estate. Sherlock Holmes’ iconic address on Baker Street is owned by structures connected to the daughter of former Kazakhstani dictator Nursultan Nazarbayev. In…