Year: 2021

UK Art Dealers Are Misusing the Law to Avoid New Money-Laundering Regulations. Compliance Experts Say It Will Backfire

Money Laundering
Art businesses should not be fooled into thinking they can use “reliance” as a loophole, experts say. The UK’s art market has been subject to stringent new regulations since an anti-money laundering directive came into force in January 2020. While the new requirements to conduct identity checks and other due diligence on art buyers initially came as a shock to an industry that has for centuries operated on handshakes, much of the market is now accustomed to these processes. But experts say that some art businesses may have misunderstood a key part of the regulations, and could be unwittingly breaking…

EBA publishes guidelines on money laundering and terrorist financing risk factors

Money Laundering, Terrorism
The EBA has published its final revised Guidelines on money laundering and terrorist financing risk factors.The revisions consider changes to the EU Anti Money Laundering and Counter Terrorism Financing (AML/CFT) legal framework and address new ML/TF risks, including those identified by the EBA’s implementation reviews. In addition to strengthening financial institutions’ risk-based approaches to AML/CFT, the revision supports the development of more effective and consistent supervisory approaches where evidence suggested that divergent approaches continue to exist. The Guidelines are central to the EBA’s work to lead, coordinate, and monitor the fight against money laundering and terrorist financing. The Guidelines are…

Money launderers ‘prey on generation Covid’

Fraud, Money Laundering
Criminals are seizing on young people’s Covid-related financial troubles to hire them to unwittingly launder money, experts say. More than four in 10 cases of money mules involved victims aged 21 to 30, with the numbers rising last year, fraud prevention service Cifas said. Banks said criminals posted fake job adverts on social media, targeting “generation Covid” struggling for work. It is part of a wider trend of fraudsters exploiting the crisis. ‘Fake job adverts’ Criminals want to move money through accounts to make it look less suspicious to banks. Money mules are given a cut for allowing their account…

Accountants are on the frontline in the war on economic crime

Financial Crime
Why do we need to talk about global perspectives on economic crime right now? IFAC, the global organisation for the accountancy profession, explains.“The root of the problem is that the economic incentive is always going to drive criminals to innovate and take risks,” says Scott Hanson, Director, Public Policy & Regulation at IFAC. “They’re always got that motivation to stay two steps ahead.” Add to that the accelerated pace of technological change, and the challenge is augmented exponentially. “The unfortunate news is that for every door that policymakers, law enforcement, and their professional allies, like accountants, close, technology opens new…

North Korea is the most isolated country on the planet, but it still finds ways to steal billions of dollars

Financial Crime, Sanctions
The Department of Justice said last month that North Korea has used cyberattacks to steal over $1 billion since 2015 to fund its nuclear weapons program. Heavy sanctions, imposed by both the US and the UN, prevent North Korea from participating in the formal global economy. The regime often circumvents these sanctions, mostly through secretive ship-to-ship transfers of luxury goods, chemicals, and coal, which is North Korea’s primary export. North Korea’s nuclear program is essential to the Kim regime, and it devotes all the resources it can to increasing and improving its arsenal. The rise of digital currencies has created…

AFME calls for regulatory certainty on the treatment of crypto assets

Digital Currencies, Money Laundering, Terrorism
The Association for Financial Markets in Europe (AFME) has called for UK authorities to provide regulatory certainty on the treatment of crypto assets in its response to HM Treasury’s consultation on the UK approach to crypto assets and stable coins. AFME has also pushed for a review of existing financial services legislation to identify and address obstacles to distributed ledger technology (DLT) innovation. The association has recommended a more “granular crypto-asset taxonomy” to clarify the treatment of existing use cases that will support the UK approach to fulfil regulatory objectives and encourage innovation. This will support greater certainty on which…

ING acknowledges decision by French financial regulator

Money Laundering
ING has acknowledged the decision published today by the financial regulator in France, the Autorité de contrôle prudentiel et de résolution (ACPR), on ING in France, following its inspection in 2018, for shortcomings in its anti-money laundering (AML) and anti-terrorist financing framework. Based on the ACPR findings, ING in France has put in place all the necessary corrective measures to strengthen its processes and management of compliance risks. Based on the inspection, the ACPR has reprimanded ING in France and imposed a sanction of €3 million. In the context of significantly increased attention on the prevention of financial economic crime…

Albanian Government Made No Significant Progress Against Money Laundering and Financial Crime in 2020

Financial Crime, Money Laundering
Albania is a source country of cannabis and a home base for organized crime groups moving narcotics from source countries into European markets. Albanian nationals are heavily involved in trafficking illicit narcotics throughout Europe but the government needs to do more, according to a new US State Department report. The International Narcotics Control Strategy Report provides a country-by-country analysis of crime including drug trafficking, money laundering, and the government’s response. It found that Albanian cannabis is sent to Turkey and exchanged for heroin and cocaine which is then smuggled across Europe by Albanian nationals. Furthermore, the illicit profits of these…

Financial Crime Surges in 2020 Following Shift to Digital Banking and Commerce

Financial Crime
A huge rise in financial crime was recorded last year, driven by the rapid shift to digital banking and commerce following COVID-19 lockdowns. This is according to Feedzai’s Financial Crime Report Q1 – 2021, which compared the volume of financial fraud and crime in Q4 and Q1 2020, with the latter quarter mainly unaffected by the pandemic. The study found there was a 650% surge in account takeover (ATO) in Q4 compared to Q1, with malicious actors taking advantage of the growth in online accounts during the crisis. The authors noted that the expansion of online banking and real-time payment…

The Challenges of Combating Money Laundering in a Pandemic World

Money Laundering
By Adriana Babi – Compliance Researcher and member of OAB Compliance Commission In a pandemic scenario full of uncertainties, efforts are directed towards the pursuit of normality, and what we know is that for some time to come, we will live this “new normal”, but how to conceptualize the current reality in the perspective of combating Money Laundering and Financing of Terrorism (LD / FT)? In general terms, money laundering consists of transforming resources obtained illegally into lawful resources. In Brazil, the crime of money laundering is regulated by Law 9,613, of March 1998, whereas terrorism consists of the practice…

Implications of the Anti-Money Laundering Act (2020) for FinTechs

Money Laundering
By Jeff Horvath, Co-Founder and CEO, DigiPli The Anti-Money Laundering Act of 2020 (AMLA 2020) became law in early January, with major implications across institutional finance, including FinTechs. It introduced the biggest changes to the AML regime since the PATRIOT ACT of 2001 and was passed with strong bipartisan support. The Act remediates certain weaknesses in existing AML requirements, addresses new issues arising from advances in the financial markets and technology, and enhances regulatory coordination. FinTechs with US operations should closely analyze AMLA 2020, as it will require both changes to their AML programs and controls, and impact how they…

Anti-Slavery Commissioner publishes recommendations for the Financial Industry

Slavery
Written by Latham & Watkins LLP, co-author Sabina Aionesei The report’s recommendations cover a number of areas, including culture and strategy, monitoring and reporting, investor engagement, policy formation and employee training, and philanthropy. A new report from the UK Independent Anti-Slavery Commissioner draws attention to how the financial services industry can help address the issue of modern slavery. The report, “Preventing Modern Slavery & Human Trafficking: An Agenda for Action across the Financial Services Sector” (the Report), aims to sound “a call to action for the industry”. The Report, which was released on 18 January 2021, is the result of…

Capital One: What its US$390m fine tells us about AML Regulation

Money Laundering, Regulatory Fines
The Financial Crimes Enforcement Network, or FinCEN, announced in January 2021 that Capital One would be required to pay a hefty $390 million penalty for AML violations under the Bank Secrecy Act (BSA). The bank admitted to wilfully failing to implement and maintain effective AML procedures to guard against money laundering, also failing to file thousands of Suspicious Activity Reports (SARs) and Currency Transactions Reports (CTRs) with respect to its Cash Checking Group business unit. The violations occurred from (at least) 2008 – 2014, seeing millions of dollars in suspicious transactions go unreported and therefore laundered through the bank into…

Anti-money laundering rules to fight the culture of secrecy

Money Laundering
The new rules state that art and antique dealers in the United Kingdom and the European Union now have to notify the true recipients of their sales. Will the new anti-money laundering regulations improve the culture of secrecy deeply rooted in the art market? In society, it advocates ancient customs of commodity and body discretion that foster transactions. Collectors have long appreciated the secret wealthy, which is also part of the mysterious universe of auction houses. When a Botticelli bottle was auctioned last month for $ 92 million at Sotheby’s in New York, it was speculated that the buyer was…

Finance industry and police team up to stop over £45 million of fraud in 2020

Fraud
Staff working in bank, building society and post office branches stopped £45.3 million of fraud through the Banking Protocol in 2020. The scheme has prevented victims from losing £142 million of fraud and led to 843 arrests since its launch. Over 7,800 emergency calls were made last year, protecting customers from losing an average of £5,749 each to criminals. Branch staff at banks, building societies and Post Offices worked with the police to stop £45.3 million of fraud through the Banking Protocol rapid scam response last year, bringing the total amount of fraud prevented to £142 million since the beginning…

Crown Resorts chief Ken Barton resigns amid money laundering scandal

Money Laundering
The chief executive of Australian casino group Crown Resorts has quit amid a scandal over money laundering allegations within its casinos. Ken Barton’s departure follows that of several other company directors. Last week an inquiry found Crown was not fit to hold a gaming licence in New South Wales, meaning it cannot operate its newly built casino in Sydney. The report has also thrown doubt over Crown’s casinos in other cities. Crown, which is majority-owned by Australian billionaire James Packer, has been dogged by allegations of illegal activity for years at its casinos in Melbourne and Perth. Its operations overseas…

New U.S. Financial Crimes rules intensify risks for non U.S. banks

Money Laundering
Fitch Ratings-Stockholm/London/New York-24 February 2021: Significant revisions to US anti money-laundering (AML) rules intensify financial crime risks for non-US banks by increasing the scope of potential investigations by the US government and raising financial penalties, according to Fitch Ratings. Any weaknesses in governance could be ratings relevant but increased enforcement raises the potential for sanctions and fines that can have more meaningful consequences for ratings. Lower tolerance of governance failures from a wide range of stakeholders reinforces Fitch’s view that governance and financial crimes risks, along with associated penalties and indirect business costs, are becoming more punitive for banks globally.…

Biden in no rush to lift Venezuela sanctions

Sanctions
WASHINGTON (Reuters) – President Joe Biden’s administration is in “no rush” to lift U.S. sanctions on Venezuela but would consider easing them if President Nicolas Maduro takes confidence-building steps showing he is ready to negotiate seriously with the opposition, a White House official told Reuters. Signaling that the new U.S. president may be unlikely to loosen the screws on Venezuela anytime soon, the official emphasized that existing sanctions have enough special provisions to allow for humanitarian aid shipments to help Venezuelans cope with economic hardships and the COVID-19 pandemic. But the official, speaking on condition of anonymity, said Maduro’s Socialist…

Jersey firms fined for breaching financial crime measures

Money Laundering, Regulatory Fines
Three banking firms have been fined more than £700,000 for breaching anti-money laundering regulations. A Jersey Financial Services Commission (JFSC) investigation found the SGKH entities had failed to show “adequate risk management systems in place”. It included missing minutes from board meetings and a failure to notify the JFSC when rules were breached. The commission said it intended the fines to act as “a deterrent for all regulated businesses”. SGKH Bank, SGKH Trust and SGKH Corporate provide wealth management services from Jersey and form a sub-group of the UK regulated SG Kleinwort Hambros Bank. Between 1 January 2018 and May…

Frankenstein fraud, deepfakes & replay attacks

Fraud
Online fraud has accelerated during the coronavirus pandemic, meaning organisations must be more vigilant in the face of the seemingly ever-increasing threat and its impact on business The coronavirus pandemic has had a big impact on many areas of our lives, not least our relationship with the office. Organisations have had their hands forced when it comes to accelerating digital transformation, while digitally identifying and onboarding both customers and employees has pulled focus on the digital identity sector. It’s good news for digital ID specialists, but the flipside is it’s also a huge opportunity for cybercriminals engaging in identity fraud.…

Europe’s new AML rules will include provisions to report on crypto-to-crypto transactions for the first time

European Commission, Money Laundering
EUROPE’S new AML rules will include far closer scrutiny of crypto exchanges, we can reveal. Right now exchanges must only report currency to crypto transactions. Under new rules to be announced within weeks, the exchanges will also be obliged to report on crypto to crypto transactions, AML Intelligence has learned. The changes will be part of the European Commission’s announcement of the rollout its AML Action Plan. The move to demand reports of crypto to crypto transfers was welcomed today by Pawel Kuskowski CEO of crypto AML/KYC compliance company, Coinfirm. “I think this is critical to have crypto to crypto…

Universities are leaving themselves open to money laundering by accepting cash

Money Laundering
It is a sign of how narrowly we perceive the threat posed by money laundering that the problem is too often framed around taxi companies, car washes, and less than reputable property developers. But in reality, the conduits for this global scourge are increasingly complex, and we should not pretend that our lauded education system is somehow immune. A startling investigation by the Times newspaper found that at least 49 universities across the UK have accepted more £50 million in cash payments over the past five years for tuition, accommodation, and other course fees. Those who received the banknote payments…

UK’s SFO slapped down over attempts to flout jurisdiction rules

Serious Fraud Office
In another blow to the agency’s credibility, the U.K.’s Serious Fraud Office (SFO) cannot attempt to force foreign companies to hand over evidence held overseas, according to a recent court ruling. The U.K.’s Supreme Court ruled unanimously the SFO breached its authority when it attempted to compel U.S. engineering services company KBR—whose British subsidiary is under investigation for possible bribery and corruption offenses—to supply documents held outside the United Kingdom or face criminal sanction. Lawyers criticize what they see as another example of the SFO’s heavy-handedness to secure results—in this case by trying to use powers it never had in…

Dubai’s DFSA fines former DIFC employee US$165,000

Money Laundering, Regulatory Fines
The Dubai Financial Services Authority (DFSA) has levied a fine of $165,000 against Ashish Bhandari – a former relationship manager with a private bank in Dubai International Financial Centre (DIFC) – due to his involvement in breaches of anti-money laundering regulations. The authority has also restricted him from performing any function in connection with the provision of financial services in or from the DIFC. On September 17, 2020, the DFSA decided to take enforcement action against Bhandari for being knowingly involved in breaches of Anti-Money Laundering (AML) legislation from 2011 to 2013 and for obstructing the DFSA in 2017 and…

Four nations including Morocco and Cayman Islands added to FATF ‘grey list’

FATF, Money Laundering
Four nations have been added to the Financial Action Task Force ‘grey list’ following an extensive 3-day virtual summit. The first FATF plenary of 2021 wrapped up Thursday with the announcement that the Cayman Islands, Morocco, Burkina Faso and Senegal were now on the ‘list of jurisdictions under increased monitoring’ – joining fifteen other territories already there. While by no means a ‘do-not-approach’ list, it does highlight jurisdictions that have identified gaps in their AML frameworks and committed to working with FATF to resolve them. All four countries will now be subject to periodic assessment going forward as they work…

Malaysia’s AmBank agrees to $700m settlement for role in 1MDB scandal

Money Laundering, Regulatory Fines
Malaysian banking group AMMB Holdings Berhad (AmBank) said on Friday it will pay the government 2.83 billion ringgit ($699 million) to settle claims linked to a massive financial scandal at state fund 1MDB, a hefty payment that is expected to have a material impact on the group’s earnings. AmBank Group has been under scrutiny over its role in the alleged theft of $4.5 billion from 1Malaysia Development Berhad, a state fund former prime minister Najib Razak set up in 2009. Last year, Najib was found guilty of corruption and money laundering over the transfer of millions of dollars linked to…

DAC6, the EU’s New International Tax Reporting Mandate

Tax Evasion
INSIGHT: DAC6 Hallmark Interpretation—More Art Than Science DAC6, the EU’s new international tax reporting mandate, comes with many unknowns for taxpayers and their advisers. Among these unknowns are how different jurisdictions will interpret five categories of hallmarks subject to disclosure. Keith Brockman explains what a hallmark is and why the first two are particularly worrisome. Taxpayers are anxious about the EU’s new international tax transparency initiative: The rules can be subjective and the penalties are significant. As taxpayers have started to read the principles enumerated in the new reporting requirements, known as DAC6, they’re discovering that interpretation may be more…

FICO: 5 Fraud Predictions for 2021

Fraud
With 2020 seeing an increase in cybersecurity concerns due to the COVID-19 pandemic, partly due to the influx of people now working from home as well as an increase in the use of digital services, many are left wondering what 2021 will bring. Matt Cox is Managing Director, EMEA Fraud, Cyber and Compliance at FICO, a company that uses predictive analytics and data science to improve operational decisions. Matt has over 20 years of experience within the financial services industry, specialising in fraud and financial crime. Here Matt looks ahead with his fraud predictions for 2021. Predicting the future is…

FinCEN Announces $390,000,000 Enforcement Action Against Capital One

Money Laundering
FinCEN Announces $390,000,000 Enforcement Action Against Capital One, National Association for Violations of the Bank Secrecy Act WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today announced that Capital One, National Association (Capital One) has been assessed a $390,000,000 civil money penalty for engaging in both wilful and negligent violations of the Bank Secrecy Act (BSA) and its implementing regulations. Specifically, FinCEN determined and Capital One admitted to wilfully failing to implement and maintain an effective Anti-Money Laundering (AML) program to guard against money laundering. Capital One also admitted that it wilfully failed to file thousands of suspicious activity reports (SARs), and…

U.S. Anti-Money Laundering Law Set to Change Antiquities Trade

Money Laundering
U.S. Anti-Money Laundering Law Set to Change Antiquities Trade as Buyers’ Identities No Longer Concealed The U.S. Congress recently passed the Anti-Money Laundering Act (the “Act”) of 2020, in which art and antiquities dealers are bracing themselves for more stringent federal oversight. Under the bill, the antiquities sector will no longer be spared from the Bank Secrecy Act (BSA). The new regulations require antiquities dealers to report any suspicious activities and any cash transactions exceeding US$10,000 to the authorities, and to ensure that potential buyers are not among those being sanctioned by the U.S. government. The liability of extensive record-keeping…

Digitization of Financial Services has Opened the Doors for More Complex Financial Crime

Money Laundering
Digitization of financial services has opened the doors for more complex financial crime, says ACAMS’ McDonell The continuing modernization and digitization of the financial services industry made easier access to financial services more available to everyone, but it also has created the opportunity for illicit actors to concoct more complex, digitized crimes. In an interview with Thomson Reuters Regulatory Intelligence, Rick McDonell, executive director of the Association of Certified Anti-Money Laundering Specialists (ACAMS), discusses this crucial development and notes how important it is for financial institutions to ensure that their compliance departments and officers are properly trained to detect this…

2020 Corruption Perceptions Index Reveals Widespread Corruption is Weakening Covid-19 Response, Threatening Global Recovery

Corruption
Corruption and COVID-19 worsening democratic backsliding The 2020 Corruption Perceptions Index (CPI) released today by Transparency International reveals that persistent corruption is undermining health care systems and contributing to democratic backsliding amid the COVID-19 pandemic. Countries that perform well on the index invest more in health care, are better able to provide universal health coverage and are less likely to violate democratic norms and institutions or the rule of law. Read the report “COVID-19 is not just a health and economic crisis. It is a corruption crisis. And one that we are currently failing to manage,” Delia Ferreira Rubio, Chair of Transparency…

Deutsche Bank Reaches $100 Million Deferred-Prosecution Deal

Bribery
Deutsche Bank AG agreed to pay more than $130 million to settle criminal and civil charges that it bribed foreign officials and manipulated the market for precious-metals futures through a trading tactic known as spoofing. The Frankfurt-based bank agreed to a deal in which it won’t be prosecuted as long as it doesn’t engage in the practices again for more than three years, and wasn’t required to plead guilty to the charges. The case was brought by federal prosecutors in Brooklyn, New York, and Washington who secured a $920 million fine against JPMorgan Chase & Co. last year, the largest…

Goldman Sachs CEO David Solomon Loses $10 million over 1MDB Fines

Corruption
Goldman Sachs’ chief executive David Solomon will get a $10m (£7.3m) pay cut for the bank’s involvement in the 1MDB corruption scandal. 1MDB was an investment fund set up by the Malaysian government that lost billions due to fraudulent activity. The global web of fraud and corruption led to a 12-year jail term for Malaysia’s ex-prime minister Najib Razak which he is appealing. Goldman Sachs called its involvement in the scandal an “institutional failure”. Goldman Sachs helped raise $6.5bn for 1MDB by selling bonds to investors, the proceeds of which were largely stolen. Prosecutors alleged that senior Goldman executives ignored…

What does the Biden Administration mean for FinCrime?

Financial Crime
January 20, 2021. Inauguration Day. The end of an era. Following four years under President Donald Trump, the United States will have a new president. What should we expect under the administration of President Joe Biden and Vice President Kamala Harris? Your answer to this question will likely depend on your top priorities. At FINTRAIL, we have been working to help our clients understand and prepare for any and all financial crime-related changes that are anticipated under the new administration. While some specifics are up in the air, it is clear that tackling illicit finance will be a top priority.…

UK Gambling Regulator Fines White Hat Gaming over Anti-Money Laundering Failings

Money Laundering
UK gambling regulators have reached a £1.3m settlement with licensee White Hat Gaming after the company’s approach to social responsibility (SR) and anti-money laundering (AML) was found wanting. On Thursday, the UK Gambling Commission (UKGC) announced the regulatory settlement with White Hat Gaming regarding its “inadequate” policies and procedures for identifying and managing customers deemed to be at a higher risk for problem gambling and money laundering. The shortcomings involved seven customers’ accounts at four White Hat sites – Grandivy.com, 21Casino.com, Hellocasino.com and Dreamvegas.com – that emerged following a March 2019 UKGC compliance assessment. The following January, the UKGC notified…

Fraud Epidemic ‘is now National Security Threat’

Fraud
This paper explores the impact of fraud on the UK’s national security landscape, and sets out the case for adopting a fundamentally different pathway for responding to the problem. Download the paper here (PDF) Fraud against UK citizens, businesses and the UK public purse has reached epidemic levels – it is the ‘volume crime of our time’. Driven in part by growing public disquiet over the current response to fraud, 2020 saw increased political attention on the issue. The prevailing political narrative, however, fails to convey the full impact of fraud on the UK, beyond the perspective of financial losses…

HMRC Issues Record £23.8m Fine for Money Laundering Breaches

Money Laundering
Money services business fined for flouting money laundering regulations. Today (7 January 2021), HM Revenue and Customs (HMRC) published the latest list of businesses handed fines for breaching strict regulations aimed at preventing criminals from laundering illicit cash. The list includes money transfer company MT Global Limited, which has been handed the largest ever fine issued by HMRC, for significant breaches of the regulations between July 2017 and December 2019 relating to: risk assessments and associated record-keeping policies, controls and procedures fundamental customer due diligence measures Nick Sharp, Deputy Director of Economic Crime, Fraud Investigation Service, HMRC, said: “Businesses who…

Time for a Free Public Registry of Corporate Beneficial Ownership in the U.S.

Money Laundering
In the tumult of recent weeks, a major legislative milestone in the American fight against kleptocracy has sneaked by almost unnoticed. It demands our attention, especially because its work is only half done. On Jan. 1, the Corporate Transparency Act (CTA) was signed into law, when Congress overrode then-President Donald Trump’s veto of the National Defense Authorization Act, to which it was attached. The CTA mandates that the incorporators of new corporations or limited liability partnerships will have to file annually to the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN), listing the names, dates of birth,…

A Renewed Sanctions Strategy for the EU

Sanctions
Last week the European Commission released a communication on the future of Europe’s economic and financial system. This document, formally issued to European institutions including the Parliament, the Council and the Central Bank, places sanctions at the forefront as a key tool in the Commission’s strategy, especially when seen in contrast with previous publications of this type. The Commission’s ambition for the economic and financial system relies on a vision for “openness, strength and resilience”, based on three pillars: “Promoting a stronger international role of the Euro” “Further developing EU financial market infrastructures and improving their resilience, including towards the…