Month: July 2024

Illinois judge orders $120 million payment in crypto fraud case

Digital Currencies, Prosecutions
An Illinois district judge has ruled in favor of the U.S. Commodity Futures Trading Commission (CFTC), ordering Oregon resident Sam Ikkurty and his company Jafia, LLC to pay over $120 million, partly in restitution, to victims of what the CFTC described as a “Ponzi”-like scheme. Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois issued the opinion on Monday, which was posted by the CFTC on Wednesday. The ruling stated that Ikkurty and Jafia made “material misrepresentations” and engaged in fraud without proper registration. In a notable part of the order, Judge Rowland classified cryptocurrencies…

SEC hands out $37 million to whistleblower

Whistleblowing
The Securities and Exchange Commission has awarded a whistleblower with $37 million for providing new and critical information that led to the success of an enforcement action. According to the agency’s order, one whistleblower received the regulatory bounty for information and assistance that led the staff to open the investigation into “hard-to-detect violations.” He was the initial source that alerted the SEC to a previously unknown conduct and thereafter provided assistance that helped advance investigations. Specifically, he gave useful information at the earliest stages of the investigation and later provided supplemental information. Committed to protecting the anonymity of informants, neither…

U.K. Crime Agency Asks Court to Permanently Seize Russian Oligarch’s Money

Proceeds of Crime
Britain’s National Crime Agency has for the first time asked a court to permanently seize funds held by a Russian oligarch, arguing that they are “proceeds of crime,” because he allegedly moved the money in violation of sanctions regulations.The agency, known as the NCA, applied on May 1 for a forfeiture order for 1.1 million British pounds (US$1.4 million) from Petr Aven, a billionaire who the U.K. says has “been involved in supporting the Government of Russia” during its war in Ukraine.The money has been frozen since the U.K. sanctioned Aven in 2022. The NCA believes it has now gathered…

Federal Reserve & California Regulators Levy $63 Million in Penalties Against Silvergate for Anti-Money Laundering Violation

Uncategorized
The Federal Reserve Board and California’s Department of Financial Protection and Innovation (DFPI) have imposed a combined $63 million in penalties on Silvergate Capital Corporation and its subsidiary, Silvergate Bank, for inadequate transaction monitoring in violation of anti-money laundering (AML) laws. The announcement, made on Monday, July 1, 2024, comes as part of a coordinated effort between federal and state authorities. The penalties break down as follows: $43 million fine from the Federal Reserve Board$20 million payment to the California DFPI$50 million in penalties assessed by the U.S. Securities and Exchange Commission (SEC), offset by the payments to the Federal…

U.S. is seizing Los Angeles mansion from family of Armenian politician accused of bribery

Bribery, Prosecutions
The U.S. is seizing a more than 30,000-square-foot Los Angeles mansion from the family of an Armenian politician, a sprawling estate on the Westside which federal prosecutors allege was paid for with millions of dollars in bribes. The home belonging to the family of Gagik Khachatryan is situated in LA’s Holmby Hills neighborhood, wedged between Beverly Hills and Bel Air, and was estimated by U.S. prosecutors to be worth $63.5 million in May 2022. An updated estimated value of the home was not given Monday. But the American government will sell it off for the “highest obtainable market price” and…

FATF Updates High-Risk and Monitored Jurisdictions List, Reshaping Global Financial Landscape

FATF, FinCEN
The Financial Crimes Enforcement Network (FinCEN) has announced significant changes to the Financial Action Task Force’s (FATF) list of jurisdictions with strategic deficiencies in their anti-money laundering, counter-terrorist financing, and counter-proliferation financing (AML/CFT/CPF) regimes. These updates, stemming from the FATF’s June 2024 plenary meeting, are poised to have far-reaching implications for the global financial system and U.S. financial institutions. In a notable shift, the FATF has added Monaco and Venezuela to its “Jurisdictions Under Increased Monitoring” list, commonly referred to as the “grey list.” This designation indicates that both countries have acknowledged deficiencies in their financial crime prevention systems and…

Spanish Court Asked to Fine Duro Felguera €160M in Venezuela Alleged Bribery Case

Bribery, Prosecutions
Spanish anti-corruption prosecutors have asked a court to impose a fine of 160 million euros ($173 million) on the engineering and construction company Duro Felguera S.A., which they allege bribed Venezuelan officials in return for securing a contract to build a power plant.Prosecutors have also requested prison sentences and fines for two of Duro Felguera’s previous presidents, as well as Nervis Villalobos, Venezuela’s former energy vice-minister, according to an indictment seen by OCCRP.“All the commissions paid by ‘Duro Felguera’ were aimed at ensuring the company was privileged both in the awarding of the construction of the thermoelectric power plant and…

U.S. Financial Regulators Propose Sweeping Changes to Anti-Money Laundering Rules

Money Laundering, Regulation
On July 19, 2024, a coalition of U.S. financial regulators unveiled a comprehensive proposal to overhaul anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations for banks and other financial institutions. This joint initiative, led by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury, along with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC), represents the most significant update to AML/CFT rules in decades. The proposal aims to modernize the…

FinCEN Intensifies Efforts to Combat Fentanyl Trafficking & Money Laundering

Drug Trafficking, Money Laundering
The Financial Crimes Enforcement Network (FinCEN) has launched a comprehensive initiative to tackle the twin threats of fentanyl trafficking and money laundering, highlighting the critical role of financial intelligence in combating these interconnected crises. This effort, part of the broader Counter-Fentanyl Strike Force led by the Treasury Department, aims to disrupt the financial networks fueling the devastating opioid epidemic across the United States. At the heart of this initiative is the “Promoting Regional Outreach to Educate Communities on the Threat of Fentanyl” (PROTECT) series, a set of ten planned events across U.S. cities most impacted by the opioid crisis. These…

FCA takes first enforcement action against firm enabling cryptoasset trading

Regulatory Fines
CB Payments Limited (CBPL) has been fined £3,503,546 by the Financial Conduct Authority (FCA) for repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers. CBPL is part of the Coinbase Group, which operates a prominent cryptoasset trading platform that is accessible globally. CBPL does not undertake cryptoasset transactions for customers but it acts as a gateway for customers to trade cryptoassets via other entities within the Coinbase Group. CBPL is not currently registered to undertake cryptoasset activities in the UK. The firm entered into a voluntary requirement (the VREQ) in October 2020, which followed significant…

UK – HMRC criminal investigation into alleged exports of perfume to Russia

Sanctions
In a civil judgment handed down earlier this week, it was revealed (at paragraph 63) that an individual, David Crisp, was arrested by HMRC on 10 October 2023 and electronic devices were seized. The allegation is that companies managed by Mr Crisp were knowingly exporting perfume to Russia in breach of the UK’s sanctions. As of the date of the judgment, HMRC had confirmed (at paragraph 69) that the criminal investigation remains ongoing but so far no charges have been made and Mr Crisp is no longer on bail. The judgment itself is of note for the Court removing Mr…

FCA calls on firms to improve treatment of politically exposed persons (PEPs)

Money Laundering
The FCA has told financial firms – including banks, payment firms and lenders – to do more to ensure parliamentarians, senior public servants and their families are not treated unfairly. Under legislation adopted by Parliament, financial firms are required to do extra checks on so-called politically exposed persons (PEPs). This follows global standards set by the international Financial Action Task Force and implemented by more than 200 jurisdictions. There have been concerns about how firms in the UK are meeting these requirements and so the FCA has reviewed how firms are treating PEPs. The FCA found that most firms in…

The Monetary Authority takes disciplinary action against DBS Bank (Hong Kong) Limited for contraventions of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance

Regulatory Fines
The Hong Kong Monetary Authority (HKMA) announced today (5 July) that it had completed an investigation and disciplinary proceedings for DBS Bank (Hong Kong) Limited (DBSHK) 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 a pecuniary penalty of HK$10,000,000 against DBSHK for contraventions of the AMLO.The disciplinary action (Note 2) follows an investigation by the HKMA on DBSHK’s systems and controls for compliance with the AMLO. The control deficiencies identified in the investigation relate to DBSHK’s failure to continuously monitor business relationships and…

The EBA issues ‘travel rule’ guidance to tackle money laundering and terrorist financing in transfers of funds and crypto assets

Digital Currencies, Regulation
The European Banking Authority (EBA) issued today new Guidelines on the so-called ‘travel rule’, i.e. the information that should accompany transfers of funds and certain crypto assets. This rule will help tackle the abuse of such transfers for money laundering and terrorist financing purposes. The Guidelines specify which information should accompany a transfer of funds or crypto assets and also list the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto-asset service providers (CASPs) and intermediary CASPs (ICASPs) should take to detect missing or incomplete information, and what they should do if a transfer of funds or a transfer…

Ten years after an ICIJ exposé, Danish authorities charge Nordea bank with money laundering violations

Money Laundering, Prosecutions
Danish authorities last week indicted Finland-based Nordea, one of Northern Europe’s largest banks, for violating anti-money laundering laws by failing to stop $3.7 billion of suspicious transactions involving Russian clients, shortcomings previously exposed by an International Consortium of Investigative Journalists’ investigation a decade ago. The indictment, by the Danish Special Crime Unit (NSK), covers transactions that took place from 2012 to 2015 and is the result of an investigation that lasted nearly eight years. “Nordea failed to adequately investigate the bank’s Russian customers’ transactions and ignored warnings about transactions to exchange offices in Copenhagen,” the NSK said in a statement.…