Month: October 2021

Cryptocurrency fraud continues to plague UK

Digital Currencies, Fraud
So far in 2021, news reports reveal that cryptocurrency fraudsters have cheated over £146m ($200USD) out of victims in Great Britain. City of London police informed Bloomberg that since the start of this year, losses have mushroomed by 30% up on the number for the whole of 2020. The UK’s national fraud and cybercrime reporting centre is based within City of London police, where officials say that over 50% of the 7118 victims in this year to date are aged between 18 and 45. Detective chief inspector, Craig Mullish, said: “Reports of cryptocurrency fraud have increased significantly over the past…

Tory Donor Mohamed Amersi Involved in Telecoms Corruption Scandal

Bribery, Corruption
A prominent Tory donor who contributed to Boris Johnson’s leadership campaign was involved in one of Europe’s biggest corruption scandals, a BBC investigation has discovered. Mohamed Amersi has given nearly £525,000 to the party since 2018. Leaked documents reveal how he worked on a series of controversial deals for a Swedish telecoms company that was later fined $965m (£700m) in a US prosecution. Mr Amersi denies any wrongdoing. The 61-year-old is a corporate lawyer who worked as a consultant for Telia between 2007 and 2013. Working with the International Consortium of Investigative Journalists and the Guardian, BBC Panorama has obtained…

Crypto Crime Landscape Shifts to Bigger Threats Targeting Smaller Numbers

Digital Currencies, Money Laundering, Terrorism
The use of cryptocurrencies for illicit activities from ransom money, money laundering and funding for terrorist activities continues unabated. The tightening regulation does not appear to be making enough of a difference yet. Over the past eighteen months, the Covid crisis appears to have made matters worse as the authorities shifted their focus to fighting the pandemic. While the Financial Action Task Force (FATF) continues to warn about illicit use of virtual currencies, even the task force’s member nations – including some of the leading G20 economies – have failed to transpose the latest FATF Standards into their domestic regulation.…

NatWest Pleads Guilty to Money Laundering Failings

Money Laundering, Regulatory Fines
Britain’s NatWest bank has pleaded guilty to failing to prevent the laundering of nearly £400m. Natwest gave guilty pleas in a London court to three offences of failing to “adequately monitor and therefore prevent money laundering” by one of its customers between 2012 and 2016. The Financial Conduct Authority (FCA) first brought the case to public attention in March, accusing the bank of paying round £365m into the customer’s accounts – of which around £264m was in cash. “The facts of the case are complex, the likely sentence is a very large fine,” a lawyer for the Financial Conduct Authority…

Police Seize $2.7m of Crypto From a British Teenager in a Credit Card Fraud Scheme

Digital Currencies, Financial Crime, Money Laundering
Police in England seized more than $2 million worth of crypto from a 17-year-old involved in a credit card scam. Lincolnshire Police said seized 48 bitcoin and other cryptocurrencies after discovering money-laundering links in the case. The teenaged boy was charged with false representation and money laundering. Police in an English county said they’ve seized more than $2 million worth of cryptocurrency from a 17-year-old boy who obtained the coins through online fraud. Detectives from the Lincolnshire Police’s cybercrime unit took possession of the digital currency in a case centered on an unnamed boy involved in an April 2020 credit…

The U.K. Gambling Commission Sanctions Victoria Gate Casino Leeds for Customer Care and AML Failures

Money Laundering, Regulatory Fines
Leeds’ Victoria Gate Casino (VGC Leeds), trading as Global Gaming Ventures, has been handed a £450,000 penalty package by The UK Gambling Commission (UKGC). It comes after a shortfall in the firm’s AML and customer care duties, after an investigation undertaken by the UKGC. These failings, the Commission claims, came from VGC failing to effectively implement its anti-money laundering and safer gambling policies and procedures. The Commission investigated the handling of 10 customers following concerns identified at a compliance assessment in July 2019. Helen Venn, Commission executive director, explained: “These failings were identified as part of our ongoing drive to…

Register of True Owners of Anonymous Companies on Track to Become a Worldwide Requirement

Regulation
The Financial Action Task Force’s proposed measures for strengthening the global standard a positive development in eliminating corporate secrecy Transparency International welcomes the proposed amendments to the global standard on company ownership, released yesterday. The draft revisions, put forward by the Financial Action Task Force (FATF) following a three-day plenary, have the potential to significantly strengthen countries’ resistance to dirty money. Most notably, FATF is finally gearing up to require that all countries set up a beneficial ownership register or use an alternative mechanism with equal efficiency. The encouragement for countries to make the registers public falls short of Transparency…

Joint Taskforce Relaunched to Protect Against Rise in Fraud Crime

Fraud
The Home Secretary Priti Patel announced the relaunch of the Joint Fraud Taskforce on 21 October 2021. In light of the 24% rise in fraud during coronavirus (COVID-19), the Home Secretary Priti Patel announced the relaunch of the Joint Fraud Taskforce on 21 October 2021, which will play a vital role in countering fraud through public-private sector partnerships. A crime that leaves devastating financial and emotional effects on victims will now be tackled jointly in a first-of-its-kind agreement between private sector companies and the government to protect people’s hard earned cash. To coincide with the first meeting of the relaunched…

How Governments Around the World Regulate Cryptocurrency

Digital Currencies, Regulation
In the early days of blockchain technology, cryptocurrencies operated in a gray area of the economy, their applications as unique as they were unregulated. But since then, as financial institutions have entered the industry and adoption has soared, the risk calculus has changed for regulators. While governments around the world have taken major steps to combat cybercrime and protect the users of cryptocurrencies, many believe the work is far from over. For this reason, it’s critical for investors, businesses, and institutions in the industry to understand both how governments regulate cryptocurrencies and how industry leaders can push the conversation forward.…

Credit Suisse Fined £147m and Undertakes to Forgive US$200m of Mozambican Debt

Bribery, Regulatory Fines
The Financial Conduct Authority has fined Credit Suisse over £147 million for serious financial crime due diligence failings related to loans worth over $1.3 billion, which the bank arranged for the Republic of Mozambique. These loans, and a bond exchange, were tainted by corruption. Credit Suisse has also agreed with the FCA to forgive US$200 million of debt owed by the Republic of Mozambique as a result of these tainted loans. Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: ‘The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and…

Chinese Tech Giant Huawei had Secret Offshore Contracts With Men Linked to Serbian State Telecom Company

Bribery, Corruption
Amid a Chinese push to gain influence in Serbia, Huawei appears to have paid large sums to a former Serbian state telecom executive through an offshore shell company. Key Findings A former executive at state telecom company Telekom Srbija likely received over $1 million through an offshore firm in the British Virgin Islands that had contracts with Chinese technology giant Huawei. The payments were linked to contracts with Huawei, some for consulting services that included introducing Huawei to government officials and arranging meetings for the Chinese company. In 2016, Huawei inked a major agreement with Telekom Srbija to overhaul Serbia’s…

‘Tick box’ AML Regime Isn’t Working, Society Tells Treasury

Money Laundering, Terrorism
Current money laundering regulations disproportionately affect small firms and promote ‘tick box compliance’, the Law Society has told the Treasury. Responding to a consultation about the effectiveness of the UK’s anti-money laundering regime, the Society warned that the current regime ‘undermines the effectiveness and proportionality of the measures’ and drives up costs for legal services consumers. Law Society president I.Stephanie Boyce said: ‘At its centre, the UK AML regime should be effective at reducing money laundering and terrorist financing. It must be built on an evidenced-based assessment of the risks and what works to mitigate those risks. ‘A risk-based approach…

FATF Releases Updated Guidance on Virtual Assets

Digital Currencies, FATF
The FATF has issued its finalized guidelines providing clarifications on its previous crypto regulation recommendations. Key Takeaways Today FATF issued updated regulatory guidance on virtual assets and virtual asset service providers. It clarifies that NFTs or crypto-collectibles generally fall outside its virtual asset definition but may be considered such if used for payment or investment purposes. Developers, owners, and operators that “maintain control or sufficient influence” over DeFi protocols could be regulated as VASPs. VASPs are subject to various KYC, AML/CFT, licensing, and transaction reporting requirements depending on the jurisdiction. Today the global Financial Action Task Force (FATF), an independent…

Pandora Papers: 4 Takeaways From Massive Leak of World Leaders’ Finances

Tax Evasion
A massive leak revealing the secret assets of some of the world’s most powerful figures is putting new pressure on global leaders to crack down on shadowy finances. The so-called Pandora Papers consist of millions of leaked financial documents that were reviewed and analyzed for two years by more than a hundred news outlets, including The Washington Post and the BBC, that are part of the International Consortium of Investigative Journalists (ICIJ). The trove illustrates the secretive practices that world leaders and wealthy individuals have employed to keep their assets hidden in dozens of countries, including the United States. Here…

Pandora Papers: Dirty Money, Bribery and the U.K. High Street

Bribery
Money from a corrupt company at the centre of a global bribery scandal has been invested in the UK High Street. Documents from the Pandora Papers leak reveal how £7.5m ($10.2m) in earnings from Unaoil – a business which paid bribes to secure oil and gas contracts – was funnelled offshore. The money from Ata Ahsani, the British Iranian founder of Unaoil, was paid into large funds used to invest in UK property including a cinema complex in Sunderland and a business park near Hull. Ata Ahsani’s lawyers say he has not been convicted of anything and there is no…

Pandora Papers: Tax Avoidance Revelations Prompt Outraged Denials

Tax Evasion
International reaction to offshore data leak ranges from pledges to clamp down to anger and cries of old news. The Pandora papers’ revelations prompted an avalanche of international reaction on Monday, ranging from solemn government pledges to clamp down on tax avoidance to outraged denials and a few cries of “old news”. The leak published on Sunday by the Guardian and other global media partners revealed the leading role played by the US in the offshore industry, including in the state of South Dakota. It also showcased the use of offshore secrecy jurisdictions by world leaders past and present, as…

NBG Bank Fined €337,422 by FIAU For Money Laundering Breaches

Money Laundering, Regulatory Fines
A Malta-based bank has been fined €337,422 for a series of money laundering regulations breaches, including weak oversight over a “very well-known” businessman’s multi-million US Dollar transactions. In an announcement made on October 19, the Financial Intelligence Analysis Unit said that NBG Bank Malta had breached several anti-money laundering rules. NBG Bank Malta, formerly Finansbank Malta, was established in 2005 and is a subsidiary of NBG Group based in Greece. It services high-net-worth clients and corporations. In one of the files reviewed by the FIAU, it turned out that although a customer had been subject to adverse media reports in…

Hacking Humans: Social Engineering in Financial Fraud

Fraud
The phrase ‘social engineering’ may sound like something out of a behavioural psychology textbook, yet it represents a real and present threat facing citizens and financial institutions around the world. In fact, social engineering is a leading cause of financial crime today, wherein criminals dupe their victims through the use of psychological manipulation in order to commit financial fraud, such as disclosing confidential information and eliciting payments. And it’s on the rise. Fourthline recently gathered data pertaining to millions of bank account openings throughout Europe in the past year and found a 37% increase in social engineering attempts by fraudsters…

Everything You Need to Know About OFAC’s New Sanctions Guidance for Cryptocurrency Businesses

Digital Currencies, Sanctions
On October 15, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) released Sanctions Compliance Guidance for the Virtual Currency Industry. This guidance follows the recent designation of Russia-based cryptocurrency Over The Counter (OTC) broker Suex, as well as an updated Advisory on ransomware payments, which we wrote about in our blog. The newly-released brochure reiterates OFAC’s previous guidance and outlines best practices in one comprehensive document. Specifically, OFAC’s guidance covers: Sanctions-related compliance requirements for cryptocurrency businesses Consequences for non-compliance and examples of how timely reporting can mitigate those consequences Best practices for building a risk-based compliance…

Cultural Property Crime Thrives Throughout Lockdown Pandemic

Financial Crime
Cultural property crime has continued unabated throughout the global COVID-19 pandemic and in some cases even surged to new heights, INTERPOL’s 2020 Assessing Crimes Against Cultural Property survey finds. The first such report compiled since the onset of the pandemic – and the first made publicly available – the survey leverages information supplied by 72 INTERPOL member countries on cultural property crimes, arrests and trafficking routes in 2020. The consolidated intelligence allows INTERPOL to analyze and compare emerging trends around the world. In total, 854,742 cultural property objects were seized globally in 2020, including numismatic items (coins, money or medals),…

Cartels and Crypto

Digital Currencies, Organised Crime
If the massive spike in traffic across the U.S.-Mexico border continues at its current pace, total border arrests in 2021 will be the highest since 2000, when nearly 1.7 million illegal border crossers were apprehended by U.S. authorities. Down in Texas’ 23rd District, which encompasses 40 percent of the total southern border, residents are no strangers to the dangers that come with illegal border crossings, specifically those connected to cartel activity. A worrisome new technological development has arisen that can potentially lay the groundwork for these criminal elements to increase their drug and human smuggling operations exponentially. Latin American cartels…

International City Businesses Hand Over €34m Proceeds of Crime in the UK’s Largest Account Forfeiture

Money Laundering
The City of London Police, Crown Prosecution Service (CPS) and the private sector have worked together, using specialist powers, to achieve the largest ever proceeds of crime forfeiture in the UK. Du Toit & Co LLP (a South African law firm operating from UK offices) and Xiperias Ltd (a Cypriot registered company, which claimed ownership of the bulk of the funds) both agreed to forfeit €34m, to settle litigation alleging that the funds in two bank accounts were from unlawful conduct. Temporary Commander Clinton Blackburn, from the City of London Police, said: “Money laundering, the process of legitimising money gained…

The Netherlands Has Twice as Many Compliance Officers as Community Police

Compliance, Financial Crime
Every day, 20% of all bank staff in the Netherlands is engaged in detecting financial crime. This is a direct consequence of the anti-money laundering and terrorist financing legislation introduced since 2001. Detection efforts are mostly manual and therefore very inefficient: 95% of all alerts generated by transaction monitoring systems are false positives. These are the findings of regulatory technology specialist Hyarchis in its new Regulatory Technology on the Rise report, published recently. In the Netherlands, more than 8,000 bank employees search for suspicious transactions every day. This is twice the number of community police officers in the Netherlands, according…

Scammers Tricked Dating App Users Into Investing $1.4m in Fake Crypto Apps

Digital Currencies, Fraud
Despite tough App Store moderation, scam apps can still make their way onto iOS. But it requires a lot of social engineering work. It’s said that love makes people do illogical things. Apparently, those things include investing money into shady cryptocurrency apps that then steal your money, as that’s what scammers reportedly were able to do to victims on dating apps including Tinder and Bumble. Cybersecurity firm Sophos released a report recently documenting “CryptoRom,” a scam that led to $1.4 million being stolen from victims across the United States and Europe. Cryptocurrency-related scams are on the rise as more people…

U.S. Sanctions Two Lebanese Businessmen and a Member of Parliament

Sanctions
The U.S. Treasury has imposed sanctions on two top Lebanese contractors and a lawmaker close to the Hezbollah movement over alleged large-scale corruption that undermined the rule of law in Lebanon. Businessmen Jihad al-Arab and Dany Khoury, close to former Lebanese Prime Minister Saad al-Hariri and Christian politician Gebran Bassil respectively, were sanctioned on Thursday for alleged corruption related to state contracts. Lawmaker Jamil Sayyed was sanctioned for allegedly seeking to “skirt domestic banking policies and regulations” and transfer $120 million abroad, “presumably to enrich himself and his associates,” a Treasury statement said. The allegations come amid an unprecedented economic…

Solicitors Regulation Authority Visits 85 Firms in a Year as Part of AML Crackdown

Money Laundering
Regulators went to an average of seven law firms a month in the past year following up concerns about a lack of anti-money laundering policies. In its first report as a professional supervisor, the Solicitors Regulation Authority said it made a total of 85 visits in the period and carried out a further 168 desk-based reviews. The most common reason for non-compliance with anti-money laundering regulations was not having a proper risk assessment in place, poor client due diligence and insufficient checks on the source of funds. Other reasons for rule breaches were a failure of staff to follow procedures,…

Wells Fargo Pays $72.6m to Resolve Justice Department Claims it Defrauded Currency Customers

Fraud, Regulatory Fines
Wells Fargo paid $72.6 million to settle a government lawsuit accusing the bank of defrauding hundreds of commercial customers. The bank admitted to overcharging 771 businesses on foreign exchange transactions from 2010 through 2017, according to the Justice Department lawsuit filed Monday. Wells Fargo told the commercial customers they were being charged certain fixed rates, but then incentivized salespeople to “overcharge FX customers,” according to the lawsuit. The bank then concealed the overcharges and gave “false explanations” for the inflated prices, the government said. “We all put trust in our banking institutions to deal with us honestly, fairly, and transparently…

Founders of Crypto ICO Plead Guilty to Tax Evasion After Raising $24m from Investors

Digital Currencies, Prosecutions, Tax Evasion
The owners of a cryptocurrency company have pleaded guilty to tax evasion, announced Acting U.S. Attorney for the Northern District of Texas Chad E. Meacham. Bitqyck founders Bruce Bise, 60, and Samuel Mendez, 65, were charged with tax evasion in August. Mr. Bise pleaded guilty on Sept. 9; Mr. Mendez pleaded guilty this morning. According to plea papers, Mr. Bise and Mr. Mendez admitted that Bitqyck raised approximately $24 million from more than 13,000 investors. Instead of fulfilling their promises to these investors, the defendants used Bitqyck funds on personal expenses, including casino trips, cars, luxury home furnishings, art, and…

Anti-Money Laundering Act is a Wake-up Call for Compliance Officers to Modernise AML Programs

Money Laundering
Earlier this year, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a $390 million penalty against Capital One for “willful” anti-money-laundering (AML) failures that happened during a period between 2008-2014. For compliance operators in the space, the action was a strong signal of rigorous enforcement, and perhaps a sign of increased pressures to come. Anti-Money Laundering May Now be Getting its Time in the Spotlight Looking at the U.S. market, aside from recent enforcement actions, imminent regulatory changes are paving the way for this increased interest in AML compliance. On the very first day of 2021, the U.S.…

Jordan, Mali and Turkey ‘Grey Listed’ by Global Finance Watchdog

Money Laundering
Jordan, Turkey and Mali were categorized last week as “Jurisdictions under Increased Monitoring,” or countries that have to work on removing strategic deficiencies in their systems to counter money laundering, terrorist and proliferation financing, a global finance watchdog said. The Financial Action Task Force’s (FATF) issues black lists and grey lists when a country is deemed to be at high risk of money laundering and terrorism financing. But issuance of the latter means that the country has pledged to work with the FATF to address those issues. Jordan joins Yemen and Syria as the third Arab country on the list,…

Real Estate Developers and Used Car Dealerships Will Soon be Brought Under Jamaica’s Anti-Money Laundering Laws

Money Laundering, Terrorism
Signals are being sent that real estate developers and used car dealerships will soon be brought under Jamaica’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework given their high vulnerability to financial crimes. In fact, the authorities have detailed cases of crimes involving real estate transactions and drug dealers getting involved in real estate acquisitions in Jamaica’s AML/CFT National Risk Assessment report for 2021, which was recently released by the Bank of Jamaica. The report observes that the proceeds of crime have been used by criminals to finance real estate development projects as a means of laundering money in Jamaica.…