Month: November 2021

Are Trade Finance Firms Failing to Tackle Crime Risks

FCA, Financial Crime
UK trade finance firms are failing to assess their financial crime risks adequately, according to regulators. These firms must fundamentally reassess their anti-crime regime, said the Financial Conduct Authority (FCA) as it promised to step up policing efforts. But experts say trade finance firms also lack the skills and technology necessary to achieve adequate compliance. Trade finance covers a variety of instruments that support international trade, including credit, factoring, and insurance. These mitigate risks such as currency fluctuations, political instability, non-payment, and counterparty default. But the complex nature of trade finance leaves it open to abuse by international criminals. A…

Anti-Money Laundering and Counter Terrorist Financing: Supervision Report 2019-20

Money Laundering, Terrorism
Annual report for 2019 to 2020 on anti-money laundering and counter-terrorist financing supervision. Downoad: Anti-money laundering and counter-terrorist financing: Supervision Report 2019-20 This report provides information about the performance of AML/CTF supervisors between 6 April 2019 – 5 April 2020 and fulfils the Treasury’s obligation, under Section 51 of the MLRs, to publish an annual report on supervisory activity. The report includes supervisory and enforcement data on both the statutory and Professional Body Supervisors, highlighting any notable changes in supervisory activity and any fines that supervisors have issued. The report concludes that actions taken by supervisors have remained broadly consistent…

Post-Brexit payments space is ‘breeding ground for financial crime as Wild West culture’ looms, warns rising City star

Financial Crime
After the UK left the European Union, a range of payment providers reported so-called IBAN discrimination as a number of companies across Europe began to refuse Euro account bank details if they contained the country code ‘GB’. As a result of Brexit, sending a payment to Eurozone countries resulted in additional charges. Whilst the fee is nominal, it means that payments can be short of the required full amount being sent. In an exclusive interview with City A.M., rising City star Anastasia Demetriou, a former Howard Kennedy solicitor and currently general counsel at IFX Payments in London, warns that without…

How Goes the War Against Laundering

Money Laundering
If a willingness to do the right thing were the fuel that powered the attack on money launderers, that initiative would be a total success. Compliance professionals, regulators and law enforcement officers are motivated, but we struggle to think outside the box and change our method of operation. It’s time for us to work together and recalibrate. We have a pretty good idea about the amount of illicit funds that slip past the efforts of law enforcement, regulators, and the private sector. One need only assess the findings of the UNODC about their estimates of illicit funds seeking money laundering…

Singapore: MAS Proposes Information Sharing to Prevent Money Laundering & Terrorism Financing

Money Laundering, Regulation
The Monetary Authority of Singapore (MAS) has released1 for consultation the proposals in its paper, FI-FI Information Sharing Platform for AML/CFT, which will require Financial Institutions (FIs) to share with each other information on customers or transactions, where they cross material risk thresholds, on a secured digital platform owned and operated by MAS to be named ‘Collaborative Sharing of ML/TF Information & Cases’ (COSMIC). Although the proposals are primarily addressed to the initial participant FIs that MAS has identified as major players in the commercial and small-medium enterprises banking segment comprising the three local banks and three qualifying full banks,…

Understanding the Impact of Job Scams

Fraud
As part of our latest job scams campaign, the Disclosure and Barring Service (DBS) has been working with JobsAware and Cifas, to understand the impact of scams, and how information collected as part of a scam, is then used by scammers. Signs of a potential job scam Job scams are on the rise, and in 2020, seasonal job scams increased by 88% compared to 2019. With figures predicted to increase again this year, it’s important to remain vigilant and familiarise yourself with the signs of a potential job scam or fraudulent job advert. The first two phases of this campaign…

Squid Game Crypto Token Collapses in Apparent Scam

Digital Currencies, Fraud
A digital token inspired by the popular South Korean Netflix series Squid Game has lost almost all of its value as it was revealed to be an apparent scam. Squid, which marketed itself as a “play-to-earn cryptocurrency”, had seen its price soar in recent days – surging by thousands of per cent. However, as the BBC reported, it was criticised for not allowing people to resell their tokens. This kind of scam is commonly called a “rug pull” by crypto investors. This happens when the promoter of a digital token draws in buyers, stops trading activity and makes off with…

Treasury Highlights ‘Weaknesses’ in Anti-Money Laundering Effort

Money Laundering
About 12% of the professionals supervised by anti-money laundering authorities are ‘at risk’, according to the latest annual report of supervisory activity published by HM Treasury. Anti-money laundering and counter-terrorism financing: Supervision Report 2019-20 concludes that efforts should continue to address ‘significant deficiencies’ in supervision by the 22 legal and accountancy sector supervisors. The report covers the activities of the Solicitors Regulation Authority as well as bodies such as the Financial Conduct Authority and Gambling Commission. The SRA is by far the largest of the nine legal sector supervisory bodies – the Bar Standards Board has an AML population of…

FATF’s Updated Guidance Tells Regulators to Focus on Business Models Over Technology and Terminology

Digital Currencies, Regulation
On October 28, 2021, the Financial Action Task Force (FATF) released its updated guidance for how member jurisdictions should regulate cryptocurrency businesses. Back in March, FATF released a draft version of today’s guidance for industry review — you can read our comments on that release here. Today’s guidance largely mirrors the March proposal, with the key theme being FATF’s focus on regulating cryptocurrency businesses as VASPs based on their function and business model, rather than their underlying technology, self-described business category, or custodial status. Below, we’ll break down the most important provisions of FATF’s guidance and tell you how Chainalysis…

U.S. Imposes Further Sanctions in Connection With Nord Stream 2 Gas Pipeline

Sanctions
The Nord Stream 2 gas pipeline, Secretary of State Antony Blinken said in a statement, targeting Russia-linked Transadria Ltd. and its vessel. The State Department submitted a report to the U.S. Congress listing two vessels and an entity, Transadria Ltd., involved in the pipeline, Blinken said, but did not give details on the second vessel. Washington opposes the $11 billion pipeline, which runs under the Baltic Sea to bypass Ukraine and carry gas from Russia’s Arctic region to Germany. Nord Stream 2 has faced stiff opposition from the United States and some European states, which say it will make Europe…

$56 Million in Seized Cryptocurrency Being Sold as First Step to Compensate Victims of BitConnect Fraud Scheme

Digital Currencies, Fraud
On Friday, U.S. District Judge Todd W. Robinson granted a request from the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of California for authority to liquidate approximately $56 million in fraud proceeds seized from the self-described “number one promoter” of BitConnect, a cryptocurrency, who consented to the seizure. This liquidation is the largest single recovery of a cryptocurrency fraud by the United States to date. According to court documents, on Sept. 1, Glenn Arcaro, 44, of Los Angeles, pleaded guilty to participating in a massive conspiracy to defraud BitConnect investors in the United States…

A Single AML Supervisor and Rulebook Might Just Be What’s Needed to Drive True Collaboration in Europe

Regulation
As European finance ministers agreed to progress plans for a major reform of anti-money laundering regulation in the European Union, Nina Kerkez outlines the likely benefits and challenges. Earlier in November, European finance ministers agreed draft proposals for establishing a single rulebook and centralised supervision within the European Union for anti-money laundering (AML) and terrorism financing (TF). The Economic and Financial Affairs (ECOFIN) council has backed up the Commissions approach to present legislative proposals in early 2021. It is expected that the reforms should be drawn up in a comprehensive way, and the Commission will have to ensure that legislation…

More Than 1,000 Arrested and $27m Intercepted in Massive Financial Crime Crackdown

Fraud, Money Laundering
LYON, France: An operation coordinated by INTERPOL codenamed HAECHI-II saw police arrest more than 1,000 individuals and intercept a total of nearly USD 27 million of illicit funds, underlining the global threat of cyber-enabled financial crime. Taking place over four months from June to September 2021, Operation HAECHI-II brought together specialized police units from 20 countries, as well as from Hong Kong and Macao, to target specific types of online fraud, such as romance scams, investment fraud and money laundering associated with illegal online gambling. In total, the operation resulted in the arrest of 1,003 individuals and allowed investigators to…

Ex-Credit Suisse Bankers Say It Still Aids Hidden Accounts

Tax Avoidance
(Bloomberg) — Former Credit Suisse Group AG bankers have told criminal investigators that the bank is still helping U.S. clients hide accounts from the Internal Revenue Service, even after the firm paid $2.6 billion in penalties in 2014 and promised to stop the practice. Those bankers “have come forward with credible information that Credit Suisse continued to assist additional Americans with concealing assets from the United States after 2014,” according to a Nov. 18 filing in a civil lawsuit. “In some instances, the concealment is ongoing today.” The latest allegations of wrongdoing come during a tumultuous year for the Zurich-based…

Swiss Watchdog Faults Two More Banks in Venezuela Money Laundering Probe

Money Laundering
ZURICH, Nov 18 (Reuters) – Switzerland’s financial regulator reprimanded two more Swiss banks for breaching their obligations to combat money laundering as it wrapped up a five-year investigation into banks’ dealings with people linked to Venezuela’s state oil company PDVSA. The FINMA watchdog contacted 30 Swiss banks during its investigation. It has already taken issue with two former chief executives of private bank Julius Baer (BAER.S) and rapped Credit Suisse (CSGN.S) for anti-corruption failings. read more FINMA has now reprimanded five banks in total since the investigation began in 2016. In the final case disclosed on Thursday, the regulator criticized…

Three Swiss Subsidiaries of the Oil-Related Group SBM Offshore Convicted of Corruption Offences

Bribery, Corruption
Bern, 23.11.2021 – The Office of the Attorney General of Switzerland (OAG) has sentenced three Swiss subsidiaries of the multinational group SBM Offshore and ordered them to pay an amount of over CHF 7 million, including a fine of CHF 4.2 million. These three companies failed to take all the reasonable organisational measures required to prevent the bribery, of foreign public officials in Angola, Equatorial Guinea and Nigeria In a summary penalty order dated 18.11.2021, the OAG sentenced the Swiss companies SBM Holding Inc. SA, Single Buoy Moorings Inc. and SBM Production Contractors Inc. SA and ordered them to pay…

Understanding the Reasons Behind Malta’s FATF Grey Listing

FATF, Money Laundering
The 2018/2019 evaluation MONEYVAL, a Council of Europe body tasked with assessing compliance with the principal international standards to counter money laundering and the financing of terrorism, published an evaluation report on Malta in September 2019. This evaluation exercise was not specific to Malta: in fact, regular evaluations on countries around the world are carried out. These evaluations are carried out either by the FATF itself or, as in Malta’s case, by other FATF-style regional bodies such as MONEYVAL. The FATF is the international standard-setter for Anti Money Laundering/Counter Funding of Terrorism (AML/CFT). MONEYVAL is a regional player that falls…

Is FATF Playing Politics With Pakistan

FATF, Regulation
When the Financial Action Task Force (FATF) disclosed in June that Pakistan would remain on its list of jurisdictions under increased monitoring, critics of the decision responded with a question: is the intergovernmental watchdog’s criticism of Pakistan largely political? Such an argument may seem, at least superficially, to be borne out by the facts. After all, critics noted, Pakistan completed 26 of the 27 steps required of it under a 2018 FATF action plan. After praising Pakistan’s efforts to date, FATF in June called on the nation to take six additional steps, including enhancing its international cooperation on financial-crime investigations,…

Ex-Prison Warden in Lithuania Struck $1M Deal with Sanctioned Belarusian State Truckmaker

Sanctions
A former prison warden from Lithuania may have helped the regime of Belarusian dictator Alexander Lukashenko dodge sanctions by benefitting from a $1.1 million deal to export Belarusian trucks through Lithuania’s biggest seaport. The trucks in question were made by sanctioned Belrussian state company BelAZ, one of the world’s top manufacturers of large trucks and dump trucks, and a major source of income for Lukashenko’s regime. The European Union sanctioned BelAZ in June 2021 in the midst of a violent crackdown by Lukashenko on civil society, journalists, and opponents in the wake of a disputed election. Since then, EU businesses…

Rabobank Faces Punishment Over Customer Anti-Money Laundering Checks

Money Laundering, Prosecutions
AMSTERDAM, Nov 15 (Reuters) – Dutch cooperative Rabobank (RABO.UL) said on Monday it had been ordered by the Dutch central bank to fix its customer due diligence practices and that it is facing a “punitive enforcement procedure.” In a statement, Rabobank said it had received an instruction from De Nederlandsche Bank (DNB) on Oct. 12 to remedy deficiencies in its compliance with laws against money laundering. It said it was too early to say whether the procedure would result in a fine. “These deficiencies mainly concern the execution, recording and outsourcing of client due diligence, transaction monitoring and reporting of…

US and UK Agree to Heighten the Focus on Illicit Use of Cryptocurrency

Digital Currencies
The U.S. and U.K. governments have “committed and agreed to heighten the focus on illicit use of cryptocurrency and ransomware,” the U.S. Department of Justice announced. According to the FBI, high crypto prices have partially made ransomware “incredibly lucrative for the criminals.” Governments Collaborate to Focus on Illicit Use of CryptoThe U.S. Department of Justice (DOJ) announced Friday that Deputy Attorney General Lisa Monaco and officials from its National Security Division and Criminal Division met with U.K. Home Secretary Priti Patel in Washington, D.C., on Thursday. “In their meeting, both governments discussed their close cooperation against numerous threats to their…

Swedish Bombardier Executive Denies Bribing Azeri Official

Bribery
A former manager at the railway equipment company Bombardier Transportation in Sweden denied on Tuesday charges of paying a US$100 million bribe to win a contract in Azerbaijan. He did not approve the deal and had no contacts with Azeri officials, the manager’s lawyer claimed at the trial in the Stockholm District Court. The former business area manager, Thomas Bimer, is charged with aggravated bribery when Bombardier in 2013 won a tender worth $340 million to upgrade the signalling system for a stretch of railway in Azerbaijan. Bombardier and Trans-Signal-Rabita (TSR), a local partner in Azerbaijan, colluded with an official…

PrivatBank Latvia hit with yet another fine for anti-money laundering failures

Money Laundering, Regulatory Fines
Latvia’s banking regulator, the Financial and Capital Market Commission (FKTK) said November 23 it was hitting AS PrivatBank with a fine of more than three quarters of a million euros “for breaches of regulatory requirements in the field of anti-money laundering and combating terrorism and proliferation financing (AML/CTPF)”, plus various other measures.The sanctions come following inspections carried out in 2020 as a result of which FKTK “has concluded that AS “PrivatBank” needs to strengthen internal governance, improve its internal control system, implement and improve risk management culture corresponding to the nature of Bank’s activities and ensure full-scale internal audit functioning.”…

Israel to impose new AML rules on digital currencies

Digital Currencies, Money Laundering, Regulation
Israel is bringing its digital currency industry under the purview of its anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. The move is meant to stamp out crime from the sector and give it legal recognition and certainty. Israel’s Authority for Combating Terror Financing and Money Laundering recently announced that it’s seeking to raise its monitoring of digital currency transactions. Authority Director Shlomit Wegman said that the move would give the agency the ability to stamp out crime from Bitcoin. With the new regulations, virtual currency service providers (VASPs) now have clear standards to operate under, Wegman…

L.A. Casino Fined $500,000 for Looking the Other Way When a Gambler Brought Duffle Bags Stuffed With $100m

Money Laundering, Regulatory Fines
Federal prosecutors say the unnamed whale — described only as a Chinese national — made over 100 visits to the Bicycle Hotel & Casino over eight months in 2016 Officials at the Bicycle Hotel & Casino in Bell Gardens, Calif., admitted they filed financial reports for a high roller’s huge cash transactions in the name of the gambler’s assistant, which was against the law. These wagers were too rich for the Department of Justice’s blood. A Los Angeles County casino was hit with a hefty fine for failing to properly alert financial regulators and the Internal Revenue Service when a…

Crypto Exchange Chatex and Russian Nationals Indicted for Roles in Ransomware Operations

Digital Currencies, Sanctions
Today, the Department of Justice (DOJ) and U.S. Treasury’s Office of Foreign Asset Control (OFAC) announced joint indictments, arrests, and sanctions designations against organizations and individuals associated with ransomware attacks against U.S. companies. Telegram bot-based P2P cryptocurrency exchange Chatex, which shares a founder with recently sanctioned OTC service Suex, has now been added to the Specially Designated Nationals and Blocked Persons (SDN) List, thereby prohibiting Americans from doing business with the company. Additionally, three other companies were sanctioned for their role in setting up key infrastructure Chatex relied on to operate. It’s important to remember that unlike violations of anti-money…

Head of Mexico’s FIU forced to resign after $35,000 cash is found on private jet carrying guests to his wedding

Bribery, Corruption
The head of Mexico’s Financial Intelligence Unit (UIF) has been forced to resign following a scandal related to his wedding in Guatemala. Santiago Nieto, long seen as a trusted ally of President Andres Manuel Lopez Obrador in his campaign to root out corruption, stepped down from the position on Monday. It came after Guatemalan authorities seized $35,000 in cash from a private jet carrying influential guests to Nieto’s wedding to Carla Humphrey, a counsellor with Mexico’s National Electoral Institute (INE), in the city of Antigua. Wedding guest Juan Francisco Ealy Ortiz, the president of the prominent Mexican newspaper El Universal,…

Moscow’s Tallest Tower Is a Cybercriminal Cash Machine

Digital Currencies, Financial Crime
The crown jewel of Moscow’s business district, a 97-story glass tower known alternately as Federation Tower East or Vostok, is a tribute to Russia’s post-Soviet economic influence and national strength. Promotional materials for the building, which was the tallest in Europe when it was completed in 2017 and is now No. 2, boast of its highly paid staff and its supposed fortification against “missiles and explosions.” Its apartments are rented and owned by high-ranking government officials and C-suite executives. Residential units sell for upwards of $36 million. The building has also been home to more than a dozen companies since 2018…

HKMA Takes Disciplinary Actions Against 4 Banks

Money Laundering, Regulatory Fines
HKMA Takes Disciplinary Actions Against 4 Banks for Contraventions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance The Hong Kong Monetary Authority (HKMA) announced today (19 November) that it had completed investigations and disciplinary proceedings for four banks under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the Laws of Hong Kong) (AMLO) (Note 1). The Monetary Authority (MA) has imposed pecuniary penalties of a total of HK$44,200,000 against China Construction Bank (Asia) Corporation Limited (CCBA), CTBC Bank Co., Ltd., Hong Kong Branch (CTBCHK), Industrial and Commercial Bank of China (Asia) Limited (ICBCA) and UBS AG, Hong Kong…

Homebuyers Bidding Against Criminals Using Property to Launder Money

Money Laundering
Australians heading to auctions this weekend could be outbid by financial criminals who are using the property market to launder money, an inquiry has been told. The Senate has been told Australia is a “honey pot destination” for organised crime and its outdated laws are allowing widespread money laundering in the property sector and contributing to inflated house prices. It is examining the strength of Australia’s money-laundering and counter-terrorism financing laws, which have not undergone a substantial update since they were introduced in 2006. Representatives from the Australian Criminal Intelligence Commission, Australian Federal Police, Home Affairs and the financial crimes…