Month: March 2022

The Economic Crime Act – A Starting Point Not an End

Regulation
New economic crime legislation is welcome, but without bolder systemic reforms it will have little impact on the UK’s dirty money problem. ‘Just get with it. All money is good money, particularly if it helps build our schools and hospitals’. So went the argument from an unnamed UK government minister back in 2005, when questioned by a journalist about the flow of dubious Russian money into the UK. This view – while not express government policy – largely prevailed in the following 17 years, with successive governments failing to fully understand the implications of turning a blind eye to the…

Economic Crime Act Has Loopholes

Sanctions
A new UK government act designed to target the assets of Russian oligarchs and other money launderers comes with loopholes, according to an economic crime expert from the University of Portsmouth. Paul Gilmour, from the University’s School of Criminology and Criminal Justice is a leading expert on financial transparency, and publishes a new paper today in the Journal of Financial Crime. In it, he says that authorities need to fundamentally adapt their approach to combating money laundering, and strengthen measures to further enhance beneficial ownership transparency. Gilmour is concerned that new measures within the Economic Crime Act, which was recently…

Corporate Governance Snapshot: The Transformation Of Companies House

Companies House, Regulation
Following initial consultation in 2019, and follow-up consultations in 2020, the Government has now published its final position on the reform of Companies House ahead of introducing legislation to effect the changes. This snapshot summarises the key proposals. ENHANCED ROLE AND GREATER POWERS FOR THE REGISTRAR Registrar will have power to: query any filings (including company names) that appear erroneous, anomalous or suspicious, and which may impact integrity of the register/wider business environment. Additional power to reject filings where the Registrar has queried the information provided. Information already on the register in scope; remove material from the register more swiftly…

INTERPOL Introduces New Center to Fight Financial Crimes

Financial Crime, INTERPOL
INTERPOL said that it has launched a Financial Crime and Anti-Corruption Center (IFCACC) in order to fight the exponential growth in sophisticated transnational financial crime. The IFCACC is intended to prevent financial criminals from “undermining global financial systems, impeding economic growth and causing huge losses to businesses and individuals worldwide,” the world police body said in a statement Tuesday. The new crime center will expand and streamline the existing initiatives in tackling financial crimes, illicit money flows and asset recovery by “centralizing the international response to transnational financial crime and corruption,” INTERPOL Secretary General, Jürgen Stock, said. The Lyon-based organization…

Foreign Secretary Announces Historic Round of Sanctions on Russia

Sanctions
Liz Truss announces historic round of sanctions, taking the overall number of UK sanctions on Russia to more than 1,000 since the invasion of Ukraine. Foreign Secretary announces more than 370 new sanctions now possible thanks to new urgent Economic Crime Act powers after today the UK will have designated over 1,000 individuals and entities under the Russia sanctions regime since the invasion today’s designations also include Putin’s key political allies, regime spokespeople and Kremlin-backed disinformation agencies Foreign Secretary Liz Truss announces over 370 more Russian and Belarussian sanctions today (Tuesday 15 March), which means by the end of today…

Russia Considers New Anti-Transparency Measure to Shield Civil Servants From Sanctions

Regulation, Sanctions
On Mar. 5, 2022, a veteran Russian parliamentarian introduced an amendment to shield Russian civil servants from sanctions “by unfriendly states,” the latest in a series of moves by the Russian government to limit transparency. Sanctioned Parliamentarian Introduces Anti-Transparency Amendment Vladislav Reznik, a deputy since 1999 in the Russian Federation’s State Duma, introduced the proposed amendment to Russia’s Federal Law No. 273-FZ of December 25, 2008, according to Russian news agency Interfax and state media outlet TASS. The proposed amendment would prohibit Russian government entities at all levels (federal, federal subjects, and local) as well as state companies and public…

U.S. Departments of Treasury and Justice Launch Oligarch Whistleblower Programme

Regulation, Sanctions
The US Department of Treasury’s Financial Crimes Enforcement Network has created a new whistleblower programme that will pay more than $5 million to any whistleblower with original information that helps them seize assets of Russian elites seeking to evade US sanctions. Titled the Kleptocracy Asset Recovery Rewards Program, the scheme is aimed at seizing stolen assets by elites and their associates and the proceeds of their corruption. The Treasury Secretary can authorise greater amounts than $5 million should a case merit it. Jeffrey Newman, a partner in the firm of Newman & Shapiro which represents whistleblowers worldwide, said:“This programme can…

Anti Money Laundering Body Puts UAE on Global ‘Gray’ List

Regulation, Whistleblowing
DUBAI, United Arab Emirates — A global body focused on fighting money laundering has placed the United Arab Emirates on its so-called “gray list” over concerns that the global trade hub isn’t doing enough to stop criminals and militants from hiding wealth there. The decision late Friday night by the Paris-based Financial Action Task Force puts the UAE, home to Dubai and oil-rich Abu Dhabi, on a list of 23 countries including fellow Mideast nations Jordan, Syria and Yemen. While not expected to dent business in the Emirates, a federation of seven sheikhdoms on the Arabian Peninsula home to a…

Russian Money Diverted to “Grey Listed” UAE as Sanctions Mount

Financial Crime
Huge swathes of Russian money are being diverted from Europe to Dubai as Western sanctions increase pressure on Russia over its invasion of Ukraine. Last week, the Financial Action Task Force (FATF) placed United Arab Emirates on a “grey list”, singling out the Gulf nation for greater scrutiny with regards to potential for money-laundering. A high-profile business hub, UAE has always attracted the world’s mega-rich. Its present reluctance to side with either the West or the Kremlin has sent out a message to Russians that their money will still be protected there. UAE has also failed to match sanctions imposed…

You Cannot Just Take an Oligarch’s London home

Sanctions
It has taken Russia’s invasion of Ukraine for the UK to pursue more concerted action against the flow of dirty money through the City of London and the capital’s property market. Government reforms announced on Monday focused on lifting the veil of secrecy around corrupt real-estate ownership. These are just the first steps toward potentially seizing assets — but the steps are significant. Multimillion-pound properties in London have proved a convenient and safe place to stash Russian fortunes. Hereon, anonymous foreign beneficiaries of British real estate are to face restrictions on selling if they hide behind shell companies. Whether these…

Super Yacht Detained in Canary Wharf

Sanctions
Officers from the National Crime Agency’s Combating Kleptocracy Cell have this morning served a detention notice on a superyacht owned by a Russian national. Following some fast-paced work by intelligence officers in the Cell – supported by colleagues from Border Force Maritime Intelligence Bureau – the ultimate owner of the vessel Phi was identified. This information was passed to Transport Secretary Grant Shapps MP, who today ordered the first ever detention of a superyacht in UK waters. As a result NCA officers issued the notice of detention. Owned by a Russian businessman, Phi is the third biggest yacht built by…

“No One in Government Cared Until the War”: How the U.K. Left it Too Late to Fight Financial Crime

Financial Crime
“It’s not like anyone sat down in London and said, ‘how do we attract all this money?’. There isn’t an ‘attract illicit finance to the UK’ strategy department in the Cabinet Office”. Yet over decades of experience monitoring the financial connections between the UK and Russia, Tom Keatinge has seen that whenever our government has had the opportunity to address international money laundering and tax avoidance, “it always seems to have gone in the direction of enabling this to occur. Doors have been left ajar.” Two and half weeks after Russian tanks rolled into Ukraine, the British government was scrambling…

Britain’s Money Laundering Scandal Goes Back a Long Way

Money Laundering
The war in Ukraine has turned a lot of people’s attention to oligarchs in the UK. How did these guys all end up in London, seemingly owning half of Belgravia? In Butler to the World, Oliver Bullough offers an answer. I read his earlier work Moneyland slack-jawed at the blatant – and mundane – techniques employed to register UK Ltd companies through frontmen and use them to launder money. I thought the middle men would be glamorous and slick, not running a website from an office above a chip shop. In this work Bullough looks at the bigger picture: the…

Using AI to Fight Money Laundering

Money Laundering
The Fintech industry’s rapid growth and use of new technologies to meet the rise in demand for online services has brought with it increased levels of cyber crime. Criminals have taken advantage of the benefits digital banks offer to access money, launder illicit money and fund terrorism worldwide. The growth in technology for blockchain and digital payments provides new opportunities for criminals to launder funds at faster speeds and larger scales than they might have been able to previously. According to UK Finance, criminals stole a total of £753.9 million through fraud in the first half of 2021, an increase…

Six Steps Exchanges Can Take to Comply With Cryptocurrency Sanctions

Digital Currencies, Sanctions
With the Russian invasion of Ukraine ongoing and extensive sanctions being levied accordingly, cryptocurrency-specific designations may be close behind. Below, we outline six steps exchanges can take to strengthen compliance. 1) Collect Know Your Customer (KYC) information and screen it against sanctions listsAny cryptocurrency business should explore collecting KYC information from new users upon sign-up, recording information such as customer names, addresses, phone numbers, emails, and related documentation. As part of the KYC process, cryptocurrency businesses should screen this information against sanctions lists to refrain from doing business with any designated individuals, entities, or with sanctioned countries. Because each country…

EU Anti Money Laundering Supervision Improving But Not Yet Always Effective

Money Laundering, Terrorism
The EBA published today the findings from its assessment of competent authorities’ approaches to the anti-money laundering and countering the financing of terrorism (AML/CFT) supervision of banks. Since the EBA started those reviews in 2019 and strengthened its AML/CFT guidance, national supervisors have started to adopt meaningful reforms to improve their AML/CFT supervision, but the EBA found that significant challenges remain in important areas such as the identification and assessment of money laundering and terrorist financing (ML/TF) risks. The EBA found that most competent authorities in its sample were committed to strengthening their approach to AML/CFT supervision. Several competent authorities…

Microsoft Fired Employees After Allegations of Bribery in the Middle East and Africa, a Report Says

Bribery
A former Microsoft employee accused the tech giant of turning a blind eye on employees, subcontractors, and government operators engaging in bribery. The Wall Street Journal first reported the story. In an essay published Friday on Lioness, an outlet that documents stories from whistleblowers, Yasser Elabd brought to light accusations of Microsoft employees using local partner companies to help sell the company’s products to customers. In a statement sent to Insider, Becky Lenaburg, deputy general counsel at Microsoft said: “We believe we’ve previously investigated these allegations, which are many years old, and addressed them. We cooperated with government agencies to…

Jewellery Industry Accused of Silence over Russian Diamonds

Sanctions
Insiders say current sanctions do nothing to halt flow of Russian gems to the west because majority are exported rough and get reclassified in India In the photographs, Vladimir Putin stands with a faint smile on hisface. Behind him, the enormous cavern of a mine stretches out, the earth ringed red and ochre. In other photographs from his visit to the Siberian mining city of Mirny, the Russian president is pictured meeting local miners and inspecting one of the dark stones they cut from the earth. Soon, the rock in his hand will be swept into a vast and complex…

German Resort’s Rift Over Russian Oligarch Resonates Across Country

Sanctions
FRANKFURT — A German politician who mobilized a protest against a now-sanctioned Russian resident of his resort town has attracted a following, but also angry emails and a threatening phone call. This mirrors Germany’s ambivalence to becoming a sanctuary for wealth in a culture that cherishes privacy but that critics say has allowed the mega-rich to squirrel away assets in secrecy. And while Britain, France, Italy and Spain have seized yachts and other property since Russia’s invasion of Ukraine and the subsequent imposition of sanctions on influential Russians, Germany appears to have sat on its hands. “For years, Germany has…

Swiss Banks Hold More Than $200 Billion in Stashed Russian Cash

Sanctions
(Bloomberg) — Swiss banks may hold more than $200 billion of Russian wealth, the country’s banking lobby estimates, as sanctions shine a spotlight on the extent of Russian wealth stored in overseas vaults. Banks probably hold between 150 billion ($160 billion) and 200 billion Swiss francs of Russian client money in offshore accounts, according to the Swiss Bankers Association. Credit Suisse Group AG Chief Executive Officer Thomas Gottstein said earlier this week that Russian money accounted for about 4% of assets at the bank’s wealth management division. The country of 8.6 million inhabitants has long been attractive for wealthy Russians,…

We Were Leaked the Panama Papers. Here’s How to Bring Down Putin’s Cronies

Financial Crime
Seven years ago, an anonymous source who went by the name “John Doe” provided us with the data that became the Panama Papers – 2.6 terabytes of leaked documents from the Panamanian law firm Mossack Fonseca. The leak turned out to have quite an impressive Russian component. We found shell companies connected to Vladimir Putin’s judo friends, Boris and Arkady Rotenberg, to the oligarch Alisher Usmanov and the wife of the Kremlin spokesman Dmitry Peskov. But, most significantly, we stumbled across Sergej Roldugin, a professional cellist and godfather of Putin’s eldest daughter, who had a central role in a network…

Treasury Publishes National Risk Assessments for Money Laundering, Terrorist Financing, and Proliferation Financing

Money Laundering, Risk Assessments, Terrorism
WASHINGTON – The U.S. Department of the Treasury today issued the 2022 National Risk Assessments (NRAs) on Money Laundering (NMLRA), Terrorist Financing (NTFRA) and Proliferation Financing (NPFRA). These documents highlight the most significant illicit finance threats, vulnerabilities, and risks facing the United States. The United States is vulnerable to all three forms of illicit finance because of the size and sophistication of the U.S. financial system and centrality of the U.S. dollar in the payment infrastructure of global trade. These NRAs are the third iteration of the NMLRA and NTFRA since 2015 and second for NPFRA since 2018. They take…

Tencent Dives on Report of Record Fine for Money Laundering

Money Laundering, Regulatory Fines
Tencent Holdings Ltd. extended losses to close more than 10% lower after the Wall Street Journal reported it faces a record fine for violating Chinese anti-money laundering regulations. The People’s Bank of China found Tencent’s WeChat Pay had allowed the transfer of funds for illicit purposes such as gambling, the newspaper reported, citing unidentified people familiar with the matter. WeChat Pay was also judged non-compliant with other rules that required Tencent to identify users and merchants transacting on the platform, the Journal said. A probe into potential money-laundering would open a new front in Beijing’s sweeping crackdown on the internet…

Lack of System Tuning, Unsustainable Alert Backkigs Leads to $140 million USAA AML Penalty

Money Laundering, Regulatory Fines
Over the years, more and more attention has been drawn to banks and anti-money laundering failings, with news headlines hitting the mainstream, over the last decade hitting historic figures in the billions of dollars – just against one institution. Banks often include in their responses that such issues were “historic,” with the caveat they have since moved on and corrected the identified deficiencies, but from time to time, the failings have been found to be more recent – case in point, USAA Federal Savings Bank (USAA FSB). The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Office of the…

Entire Former Board of Swedbank Estonia Suspected of Money Laundering

Money Laundering
TALLINN – The Office of the Prosecutor General has brought suspicions against the banking unit of Swedbank Estonia and its former heads of participating in money laundering exceeding 100 million euros, the daily Postimees writes citing the weekly Eesti Ekspress. Robert Kitt, who was a member of the management board of Swedbank in the period 2011-2019, told Postimees that he had followed the law in force and the recommendations given by the supervisory body in his activities during his time on the management board of Swedbank. He confirmed that he is aware of the prosecutor’s office’s suspicion. “I have received…

US Regulators Slap National Bank of Pakistan With $55m Fine

Money Laundering, Regulatory Fines, Terrorism
The National Bank of Pakistan has agreed to pay $55m in fines imposed on its New York branch by three US regulators. According to Reuters, the Federal Reserve Board, the Federal Reserve Bank of New York and the New York State Department of Financial Services recently announced the NBP will be fined the amount due to non-compliance and anti-money laundering violations. The National Bank of Pakistan’s shares dropped by 7.2% following the announcement. However, the bank said there were no findings of improper transactions or wilful misconduct and that it has substantially enhanced its compliance programme. The NBP is one…

Weak Money Laundering Laws Put Australia at Risk of Becoming a Haven for Russian Cash

Money Laundering
Australia’s lax money laundering laws mean the nation is at risk of becoming a haven for Russian cash belonging to oligarchs who are seeking to avoid sanctions over the war in Ukraine, experts say. The country is one of only three – along with Haiti and Madagascar – yet to commit to bringing lawyers, accountants and real estate agents under the umbrella of anti-money laundering and counter-terrorism finance laws (AML-CTF). Having failed to act on a promise it made eight years ago to bring the professions into the AML-CTF system, the government now faces a race against time to take…

New Zealand Moves to Crack Down on Corporate Secrecy After Pandora Papers

Money Laundering, Regulation
New Zealand has pledged to end corporate secrecy by establishing a public beneficial ownership registry. The government announced a new transparency bill this week to stop the abuse of locally-based, secretive companies by criminals. The legislative crackdown came in response to revelations made in the International Consortium of Investigative Journalists’ Pandora Papers investigation, the government said. The proposed law, to be introduced later this year, will require companies and limited partnerships registered in New Zealand to disclose the identity of the person who owns or controls them. “The Pandora and Panama papers highlighted some key vulnerabilities which need to be…

Proposals to Reduce the Liability Burden on CCO

Compliance
In the US, chief compliance officers can be held liable for their financial services firms’ failures to comply with regulations – whether they’re involved or not. In this article, we look at a framework proposed by the New York City Bar Association to help to reduce the burden on CCOs. “These career-ending enforcement actions discourage individuals from becoming or remaining compliance officers and performing vital functions that regulators stretched too thin would otherwise be unable to perform, particularly when other options, such as providing legal advice or becoming an outside compliance service provider or businessperson, involve less personal risk.” Framework…

Money Laundered Millions Seized in Jersey to be Sent to Kenya

Corruption, Money Laundering
Millions of pounds that was seized in Jersey from money laundering is being returned to Kenya in a world first. The £3million was confiscated in 2016 following the conviction of Jersey-registered company Windward Trading Ltd. for money laundering offences. The money originated in Kenya, and was being fed through the Jersey company. Despite the 2016 conviction of the company, two individuals from Kenya linked to the company are still awaiting trial. Now, Jersey has agreed to send the money back after Her Majesty’s Attorney General for Jersey signed an Asset Recovery Agreement (ARA) with the Kenyan government. The money will…

Deutsche Bank to Wind Down in Russia, Reversing Course After Backlash

Financial Crime
FRANKFURT, March 11 (Reuters) – Deutsche Bank (DBKGn.DE), which faced stinging criticism from some investors and politicians for its ongoing ties to Russia, said on Friday in a surprise move that it would wind down its business in the country. Deutsche joins the ranks of Goldman Sachs (GS.N) and JPMorgan Chase (JPM.N), which were the first major U.S. banks to exit after Moscow’s invasion of Ukraine. Those moves put pressure on rivals to follow. read more . Deutsche had resisted pressure to sever ties, arguing that it needed to support multinational firms doing business in Russia. But on Friday evening…