Year: 2023

FCA fines Bastion Capital limited £2.5m for serious financial control failings

Regulatory Fines
The FCA has fined Bastion Capital London Limited (in liquidation) £2,452,700 for serious financial crime control failings in relation to cum-ex trading. They failed to manage the risk of being used to facilitate fraudulent trading and money laundering. Between January 2014 and September 2015 Bastion executed trading to the value of approximately £49bn in Danish equities and £22.5bn in Belgian equities on behalf of Solo Group clients. The purported trades were carried out in a way that was highly suggestive of financial crime. The trading appears to have been carried out to allow the arranging of withholding tax reclaims in…

£5m Surrey Mansion at the centre of row over Russian bank sanctions loophole

Sanctions
The £5.3m sale of a 12-bedroom mansion in Surrey involved in a case of alleged banking fraud is heading for the high court in a bid by lawyers to send some of the proceeds to one of Russia’s state-controlled banks. Lawyers believe some of the money can be transferred to one of Vladimir Putin’s state-controlled banks, the National Bank Trust, without any breach of sanctions. They are seeking a court order to allow the transfer. Ministers now face questions over why the bank has escaped sanctions to date, with a former boss at the bank claiming the money could be…

Settlement Agreement between the US Department of the Treasury Office of Foreign Assets Control and Swedbank AS

Sanctions
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a settlement with Swedbank AS (Latvia) (“Swedbank Latvia”), a subsidiary of Swedbank AB (publ), headquartered in Stockholm, Sweden. Swedbank Latvia has agreed to remit $3,430,900 to settle its potential civil liability for 386 apparent violations of OFAC’s Crimea sanctions. Throughout 2015 and 2016, a customer of Swedbank Latvia used Swedbank Latvia’s e-banking platform from an internet protocol address in Crimea to send payments to persons in Crimea through U.S. correspondent banks. The settlement amount reflects OFAC’s determination that Swedbank Latvia’s apparent violations were not voluntarily self-disclosed…

UK Authorities Bust Northern Ireland’s Largest-ever Tax Evaders

Tax Evasion
The United Kingdom’s tax, payments, and customs authority said Wednesday that the ringleaders of a group that prompted Northern Ireland’s largest ever tax probe have been imprisoned, following the discovery of covertly recorded talks in a tapped accountant’s office. “The decade-long investigation into the £5 million (US$6.4 million) tax fraud ended yesterday (13 June 2023) with prison sentences issued to gang leaders 58-year-old Francis Devlin and 56-year-old Paul McStravick for a combined total of eight years [four years each],” HM Revenue and Customs (HMRC) said in a statement.Another 25 accomplices were sentenced to suspended jail terms, as the majority of…

More Action to fight fraud, Bribery and other economic crime

Corporate Liability
Businesses who commit fraud, money laundering and bribery will be subject to stricter scrutiny under new Home Office plans. The government has collaborated with prosecutors, the Law Commission, and the private sector to introduce the biggest reform of the identification doctrine – legislation used to hold companies criminally liable for offences – in more than 50 years. Under the proposal, added to the Economic Crime and Corporate Transparency Bill today, senior managers will be brought within scope of who can be considered the ‘directing mind and will’ of a business. It means if they commit an economic crime, the company…

Majority of law firms submitting no Suspicious Activity Reports – Study

Law Firms, Money Laundering
New research has revealed that just two in five law firms submitted any Suspicious Activity Reports (SARs) over the last two years on average. The study – conducted by risk management platform Thirdfort – found solicitors in the UK submitted 3,436 SARs in 2021/2022. Meanwhile, there were 9,813 registered law firms at the end of March 2022, according to the Solicitors Regulatory Authority. So, if each firm were to submit just one SAR, this would account for just 35% of law firms. Yet if certain firms are submitting numerous SARs, the actual proportion of firms submitting reports could be “significantly…

Older people hired as ‘money mules’ by gangs as cost of living crises bites

Money Laundering
More people in their 50s and 60s are being recruited to allow their bank accounts to be used in scams. A growing number of people aged in their 50s and 60s are allowing their bank accounts to be used to move money illegally. Fraud experts say that among the increasing number being recruited as “money mules” – those who allow their bank details to be used to transfer criminals’ cash – are older account holders, as well as business owners who use company bank accounts. Money mules are often not actually involved in crime, but allow their accounts be used…

HMRC issues £3.2 million in Money Laundering penalties

Money Laundering, Regulatory Fines
Hundreds of businesses fined a total of £3.2 million for breaching anti-money laundering rules have been named by HM Revenue and Customs (HMRC). The 240 supervised businesses named today were fined between 1 July and 31 December 2022 by HMRC for breaching Money Laundering Regulations aimed at preventing criminals from exploiting illicit cash. Certain types of business are required to register with HMRC which is a supervisory body for Money Laundering Regulations. Xpress Money Services Ltd, based in London, was hit with a large fine of £1.4 million for failing to carry out risk assessments, not having appropriate anti-money laundering…

Four Questions: Understanding Sanctions Imposed Against Russia

Sanctions
Russia’s invasion of Ukraine and the subsequent sanctions that the U.S., European Union (EU) and other countries imposed against Russia in the wake of this act of aggression have been the focus of worldwide media attention since February 2022. In this installment of our Four Questions column, ACAMS Today speaks to George Voloshin, CAMS, CGSS, ACAMS’ global subject-matter expert (SME) on anti-financial crime (AFC), about potential scenarios for the Russian war. Voloshin, who specializes in sanctions, also discusses such topics as the effectiveness of the sanctions imposed against Russia, Russia’s complicated relationship with China and developments AFC professionals should look…

UK SFO delays decision on whether to charge Glencore staff until year-end

Bribery
The SFO is investigating former employees of Glencore’s UK subsidiary Glencore Energy UK Limited over potential criminal offences in relation to its operations in West Africa. The SFO’s decision has been delayed before. The agency said in October it aimed to make a decision in relation to 11 individuals employed by or associated with Glencore by April, but this was pushed back earlier this year. The SFO now hopes to make a decision on bringing criminal charges by the end of 2023, its lawyer Alexandra Healy said at a hearing at London’s Southwark Crown Court on Monday. The ex-Glencore employees…

Silver pound swindlers: UK’s senior population lose more than £12.6 million in the last year to courier fraudsters

Fraud
People over the age of 70 are being disproportionately targeted by courier fraud, new data from the City of London Police reveals. Data from the National Fraud Intelligence Bureau, run by the City of London Police, the national lead force for fraud, revealed that people in their 70s or older lost more than £12.6 million to courier fraud last year, 77 per cent of all money stolen by this type of fraud. The split of fraud reports made by men and women aged 70 or above was 37 per cent and 63 per cent. Shockingly, data shows 153 reports were…

Your 5-minute snapshot of all the latest fincrime developments in the US

Financial Crime
Last year, the US published its 2022 National Illicit Finance Strategy, providing a roadmap to close the loopholes that criminals and illicit actors exploit. It outlines four main priorities and 14 supporting actions: Increase transparency and close legal and regulatory gaps in the US AML/CFT frameworkMake AML/CFT regulatory framework for financial institutions more efficient and effectiveEnhance operational effectiveness in combating illicit financeSupport technological innovation and harness technology to mitigate illicit finance risksIn this article, I’m going to look at the latest developments across the US AML/CFT regime which it can be argued remains a model of effectiveness and innovation. Treasury…

Brazilian Former President Collor Sentenced for Corruption

Corruption, Prosecutions
Brazil’s top court sentenced Brazilian former President Fernando Collor de Mello to eight years and ten months in prison for “passive corruption and money laundering” linked to the Brazilian fuel retailer during his time as senator. The country’s Supreme Court found that Collor received the equivalent of over US$4 million in bribes to secure contracts for the construction company UTC Engenharia with BR Distribuidora, the country’s largest fuel distributor.Collor attempted to conceal part of his illicit gains by registering luxury cars under the names of shell companies. Brazilian investigators discovered at least five high-end vehicles, including models like Ferrari 458…

Russia has been using the Chinese yuan to get around sweeping Western sanctions — but this side door may be closing

Sanctions
Bank of China has restricted yuan transactions between Russian clients and Western banks, per RBC. The bank made the move over fears of secondary sanctions from the West, a source told RBC. Russia has been using the Chinese yuan to get around Western sanctions. Russia has been using China’s yuan to get around sanctions — but at least one major Chinese bank has restricted transfers from Russia over fears of secondary sanctions from the West. The Bank of China, a major Chinese lender, has started restricting transactions using the yuan between Russian clients and lenders in the US, the European…

‘Currency traders’ had ‘wined and dined’ man into money-laundering operation, court told

Money Laundering, Prosecutions
Judge Helen Boyle said a common feature of money-laundering cases was that people hoped to emulate the high life apparently enjoyed by others. A young man was wined and dined in Dublin by “currency traders” but when they told him to make “no noise” about €10,000 landing in his bank account he found himself at the centre of a money-laundering investigation. Judge Helen Boyle told the young man that people involving themselves in this crime often believed there was easy money to be made but she said that everyone had to work for their income. Detective Garda Michelle Quinn said…

UK Crypto, Stablecoin Laws Approved by Parliament’s Upper House

Digital Currencies, Regulation
The Financial Services and Markets Bill stands to recognize crypto as a regulated activity and stablecoins as a means of payment under existing laws. U.K. parliamentarians have voted through a new bill that could recognize crypto as a regulated activity in the country.The approval of the Financial Services and Markets Bill (FSMB) on Monday by Parliament’s upper chamber, the House of Lords, means the bill is going to enter the final stages before it is put into law. The wide-ranging bill, spanning over 340 pages, was introduced in July to take advantage of Brexit freedoms and give regulators more power…

Food, Car Companies Used by ‘Ndrangheta Targeted in Raids Across Italy, Belgium and Germany

Money Laundering, Prosecutions
POLICE in Italy, Belgium and Germany today carried out joint operations against the food and car companies used by the Italian mob to launder money and traffic drugs. The operation on Monday led to 31 arrests of ‘Ndrangheta suspects who allegedly used its well-established network to transport mainly cocaine from South America to Germany and Italy via several European ports. “To this end, the organised crime group (OCG) set up businesses in Germany to facilitate the drug smuggling. To cover its drug transports, the OCG used international companies trading in cars and food,” Europol said. During the joint action day,…

Access to Public Information is too Restrictive in some European States

Regulation
The Group of States against Corruption of the Council of Europe (GRECO) today expressed concern about the restrictive access to public information in European states. In its annual report for 2022, GRECO recalls the role that access to information plays in ensuring public transparency and in facilitating the pursuit of corrupt behaviour. It regrets that in some countries, governments are still accorded a broad margin of discretion for determining what is in the public domain and whether to exclude certain documents from free access. “Government entities are often reluctant to disclose information and prefer to apply exceptions enabling them to…

Fleetwood Town Owner Guilty of Fraud and Money Laundering

Fraud, Money Laundering, Prosecutions
Fleetwood Town’s owner has been found guilty of fraud and money laundering.A trading standards investigation found Andrew Pilley, of Thornton Cleveleys, mis-sold energy contracts and posted fake customer comments on websites.The 52-year-old was remanded in custody at Preston Crown Court and will be sentenced at a later date. A representative for the League One side said the charges did not relate to activities at the football club and the verdict would not affect its future.Pilley was found guilty of two counts of running a business with the intention of defrauding creditors, one count of false representation and one count of…

New Crackdowns on Crypto Enablers and ‘Pig Butchering’ on the Way

Digital Currencies, Money Laundering
The US cryptocurrency enforcement chief has said that the country was stepping up scrutiny of crypto exchanges to target illicit behavior on the platforms. The Department of Justice (DOJ) is targeting crypto companies that engage in crimes themselves or allow crimes like money laundering to happen, Eun Young Choi, director of the agency’s National Cryptocurrency Enforcement Team (NCET), told the FT. On the target list with crypto exchanges are with the “mixers and tumblers” that obscure the trail of transactions, she said. “… they’re allowing for all the other criminal actors to easily profit from their crimes and cash out…

OFAC Sanctions Dubai-based Financial Services Firm and CEO for Role in Russian Sanctions Evasion

Digital Currencies, Sanctions
On May 19, 2023, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 22 individuals and 104 entities operating in 20 countries for their role in facilitating Russian sanctions evasion. Concurrently, OFAC has expanded its Russian sanctions program for future targeting of individuals and entities involved in key sectors of the Russian economy. One of the individuals sanctioned today, an Irish national named John Desmond Hanafin, has an active Ethereum address included as an identifier on his SDN List entry. Hanafin is the founder and CEO of Huriya Private FZE LLE, a Dubai-based financial services company also sanctioned today…

iSpoof Scam Website Mastermind Sentenced to 13 Years in Prison

Fraud, Prosecutions
A U.K. court has sentenced the main administrator of a scam website known as iSpoof to 13 years and four months in prison. The administrator enabled criminals to make calls impersonating banks, retail companies, or government institutions, tricking people into disclosing their security data so that their accounts could be emptied. In the U.K. alone, victims lost the equivalent of more than $52 million, with projected global losses exceeding $124 million. According to Eurojust, iSpoof itself generated over four million dollars in just 16 months.Most of the four million dollars went to Tejay Fletcher, the website administrator and mastermind of…

DR Congo Exposes Tens of Thousands of Ghost Workers Across Government Ministries

Fraud
Auditors in the Democratic Republic of the Congo have uncovered a massive public payroll fraud, involving tens of thousands of ghost workers across government ministries, costing the public purse over US$800 million annually, according to a statement from the General Inspectorate of Finance. The audit found that 145,604 civil servants are paid based on fabricated payroll identification numbers, while 53,328 have more than one identification number and therefore receive multiple salaries. In addition, 43,725 officials are paid without being on the staff list of ministries that are supposed to employ them.The fraud was orchestrated by 961 payroll officers, who themselves…

Watchdog Proposes First Set of Global Rules for Crypto Sector

Digital Currencies, Regulation
INTERNATIONAL securities watchdog IOSCO unveiled on Tuesday the first global approach to regulating cryptoasset and digital markets, drawing on lessons from last year’s collapse of the FTX exchange that fuelled concerns over consumer protection. The industry, which typically only has to comply with anti-money laundering checks, has been calling for a global approach to regulation as different jurisdictions follow their own rules. The moves come after crypto exchange FTX began U.S. bankruptcy proceedings last November following a liquidity crisis that prompted intervention from regulators worldwide. Tuesday’s recommendations are a “turning point in addressing the very clear and proximate risks to…

Japan’s Crypto Anti-Money Laundering Measures to Start in June

Digital Currencies, Money Laundering
Lawmakers in Japan have decided to enforce stricter Anti-Money Laundering (AML) measures to trace cryptocurrency transactions from June 1. On May 23, the Japanese parliament made the decision to roll out tougher AML procedures from next month, according to a report the same day from local media outlet Kyodo News. The move aims to bring Japan’s legal framework in line with global crypto regulations. Lawmakers revised the AML legislation in December after it was deemed insufficient by the international financial watchdog, the Financial Action Task Force (FATF). According to reports, a vital feature of the new measures is the enforcement…

Skillonnet Agrees Settlement for U.K. AML Failures

Money Laundering, Prosecutions
Britain’s Gambling Commission has agreed a six-figure settlement with online gaming operator SkillOnNet for social responsibility and anti-money laundering failures. The operator will pay £305,150 in lieu of a financial penalty as a part of its settlement, with the proceeds to be directed to socially responsible causes. The penalty relates to breaches of the Licence Conditions and Codes of Practice (LCCP) and follows a regulatory review which found that the operator had insufficient policies, procedures and controls to comply with its Anti-Money Laundering (AML) responsibilities. The review also found deficiencies in SkillOnNet’s responsible gambling policies, procedures, controls and practices, including…

Australian casino group to pay US$290 mn over money laundering failings

Money Laundering
Australia’s Crown Resorts is set to pay a civil penalty of Aus$450 million (US$290 million) for lax money laundering controls that saw cash being carried into a casino in paper bags, shoe boxes and suitcases. Crown admitted failing to take appropriate measures to spot and prevent money laundering and terrorism financing at its Melbourne and Perth casinos, in an agreement announced Tuesday by the casino group and the government’s financial crime body. In a sign of the gravity of its behaviour, Crown agreed to pay Aus$450 million — a penalty subject to approval by the Federal Court at a hearing…

European Commission Details Further Plans for the EU’s New Anti-Money Laundering Authority

Money Laundering
The European Commission has written a memo detailing further aspects of the European Union’s new Anti-Money Laundering Authority (AMLA), which is expected to be fully resourced by the end of 2025, with direct supervision established by 2026. While the memo has not been made publicly available, media outlet euObserver has reported on its contents, highlighting the Authority’s intended scale, logistics, and facilities. According to the euObserver, the memo outlines the following plans: Staffing levels: The AMLA will begin with 150 staff members in its first year of operation, growing to 300-350 across the next two years, with an expected total…

Drug trafficking and money laundering kingpin told to hand over £630k

Money Laundering, Prosecutions
A former haulage firm owner jailed for moving drugs and dirty cash across Europe has been ordered to pay back £630,000. Thomas Maher, aged 42, of Wiltshire Close, Warrington, was sentenced to 14 years and eight months in prison in December 2020.Thomas MaherEvidence obtained by the National Crime Agency as part of Operation Venetic – the UK law enforcement response to the takedown of encrypted global communications service EncroChat – showed that he operated a transportation network spanning Europe, moving drugs into the UK and Ireland and the profits in the other direction. In one exchange of messages with a…

Ladbrokes owner ‘could face big penalty’ as it reveals talks with prosecutors

Bribery
A nearly four-year bribery investigation into the owner of Ladbrokes could end in a “substantial financial penalty”. Entain said it is in talks with the Crown Prosecution Service (CPS) and admitted misconduct “may have occurred”. The two sides are trying to reach a so-called deferred prosecution agreement, which removes the threat of prosecution for a company if it lives up to certain conditions. The case is a bribery investigation into Entain’s former subsidiary in Turkey. Authorities opened a probe into its suppliers in 2019, expanding it less than a year later to look at wrongdoing within the Entain group itself.…

What are the sanctions on Russia and are they hurting its economy?

Sanctions
What are sanctions?Sanctions are penalties imposed by one country on another, to stop them acting aggressively or breaking international law.They are among the toughest actions nations can take, short of going to war, and can be imposed at very short notice. What are the diamond sanctions?The UK is banning the import of diamonds from Russia. The US set out similar plans to ban Russian diamonds last year and the EU has announced plans to do so.Russia earned more than £4bn in 2021 from diamond exports, the US says. However, most Russian diamonds are sent to countries like India to be…

MAS – Strengthening Financial Institutions Countering the Financing of Terrorism Controls

Counter Terrorist Financing, Law, Regulation & Guidance, Terrorism
MAS conducted an industry-wide survey of CFT-related controls, and followed up with a series of thematic reviews to assess FIs’ TF risk understanding and examine the effectiveness of their CFT-related controls. This paper sets out MAS’ key observations, and highlights our supervisory expectations that FIs should review against their own controls. FIs should benchmark themselves against the practices and supervisory expectations set out in this paper in a risk-based and proportionate manner, and conduct a gap analysis. In doing so, FIs should give due regard to the risk profile of their business activities and customers. Where FIs observe any gaps…

Factors influencing the choice of technique to launder funds: The APPT framework

Money Laundering
This paper proposes a new framework to provide insights into the techniques launderers adopt to clean illicit funds, drawing on existing literature and theories including rational choice, public value, structural coupling, and stakeholder. The proposed APPT framework is named after four factors that explain the choice of techniques: the Actors involved, Predicate crime, the Purpose of laundering, and Technological innovations. While the current literature on money laundering primarily directs attention toward aspects such as regulatory frameworks, the stages of money laundering, and ways of detecting it, there is a lack of understanding about the reasons underlying a launderer’s choice of…

Artcurial auction house embroiled in provenance row with London Dealer

Art Market, Money Laundering
A London dealer is at odds with Artcurial over a painting he purchased last year, for which he claims that the Paris auction house was unwilling to provide the requisite provenance information to comply with anti-money laundering (AML) rules. Artcurial insists that it adhered to all its obligations at all times, and cancelled the sale last month. Patrick Matthiesen bought Narcissus (around 1640), a work recently reattributed to the French Baroque painter Laurent de la Hyre, for €918,400 (est €200,000-€300,000) on 9 November 2022. The large canvas had no provenance other than a 1929 “anonymous sale” at Christie’s in London.…

Investigating the illicit trade in stolen art and antiquities

Art Market, Financial Crime
At a landmark conference in Siem Reap, Cambodia, in September 2022, that country’s Minister of Culture and Fine Arts issued a poignant statement encapsulating exactly what it means for a nation to be repatriated of its ancient, looted treasures. “As each statue arrives back in Cambodia,” Phoeurng Sackona told government officials, historians and art experts, “We become more united with our history, our national identity, and our ancestors” The repatriation of stolen antiquities and other artworks – increasingly issues of diplomatic relations and concern – is just the final stage of a painstaking process spanning many years. Cross-border investigators have…

UK crime agency to pursue up to 100 lawyers accused of helping traffickers

Law Enforcement
The National Crime Agency is preparing to pursue up to 100 lawyers it believes are helping traffickers abuse modern slavery laws to secure asylum for people entering the UK. A potentially controversial sweep is being undertaken by the NCA, the British equivalent of the FBI, to identify solicitors who may be breaching their professional code or committing crimes by providing services to organised crime. Ministers have claimed that Albanian criminal gangs are misusing the modern slavery and asylum system at a time when record numbers of people are referred to the Home Office as potential victims of exploitation. The NCA…

Deutsche Bank to pay $75 million settlement to Epstein Victims

Civil Action
Deutsche Bank will pay $75 million to settle litigation alleging the German lender financially benefited from supporting Jeffrey Epstein’s sex trafficking scheme, according to a report Wednesday. The settlement concerns an unnamed defendant who launched a proposed class-action suit in November 2022, alleging Deutsche Bank did business with Epstein while knowing he used funds in the account to support sex-trafficking activity, the Wall Street Journal said Wednesday. The Journal, citing people familiar with the matter, said Deutsche Bank did not admit wrongdoing. A Deutsche Bank spokesperson declined comment. Deutsche Bank benefited financially by supporting Epstein’s “sex trafficking organization to successfully…

Property register fines worth £1bn not yet imposed

Law, Regulation & Guidance, Regulation
The UK has so far failed to impose fines worth as much as £1bn on foreign companies breaking a landmark transparency law, BBC analysis reveals.Since January, overseas firms that own UK property can be fined up to £2,500 a day unless they declare their owners.Thousands are still to do so, including firms which have been linked to oligarchs such as Roman Abramovich, but no fines have yet been issued.The government said it was “building cases” against unregistered companies.The register was introduced as part of the Economic Crime Act in February 2022, following Russia’s invasion of Ukraine. Ministers said it would…

‘Disgraceful breach of trust’: how PwC, one of the world’s biggest accountancy firms, became mired in a tax scandal

Corruption
PricewaterhouseCoopers used government secrets to help clients in Australia and the US avoid tax – a scandal that has forced resignations and threatens contracts worth hundreds of millions In the depths of winter 2015, an Australian tax specialist adopted the language of a spy. “For your eyes only,” he wrote, while emailing government secrets to colleagues who would later use them to help clients and make millions of dollars. Nearly eight years later, that email and dozens more like it have engulfed PwC in a scandal that has forced resignations, possible criminal and corruption investigations, invited furious rebuke and accusations…

U.S. Anti-Money Laundering Vulnerabilities Counter its Efforts to Aid Ukraine, Experts Say

Money Laundering, Sanctions
The U.S. is a magnet for the world’s dirty money, financial crime experts say, as they weigh in on how vulnerabilities in America’s anti-money laundering laws counter the country’s efforts to aid Ukraine in its defense against the Russian invasion. Illicit proceeds equal an estimated two percent of U.S. gross domestic product, according to findings in the Treasury’s 2022 Strategic Action Plan. Russian oligarchs, experts note, contribute to this problem by funneling their ill-gotten gains through industries that are exempt from rigorous anti-money laundering checks. And that’s a lot of money. The combined illicit wealth of just three Russian oligarchs…