Month: September 2024

FCA fines Starling Bank £29m for failings in their financial crime systems and controls

Money Laundering, Regulatory Fines
The FCA has fined Starling Bank Limited £28,959,426 for financial crime failings related to its financial sanctions screening. It also repeatedly breached a requirement not to open accounts for high-risk customers. Starling grew quickly, from approximately 43,000 customers in 2017 to 3.6 million in 2023. However, measures to tackle financial crime did not keep pace with its growth. When the FCA reviewed financial crime controls at challenger banks in 2021, it identified serious concerns with the anti-money laundering and sanctions framework in place at Starling. The bank agreed to a requirement restricting it from opening new accounts for high-risk customers…

New York Regulator Fines Nordea $35 Million for Compliance Failures

Due Diligence, Prosecutions
The New York Department of Financial Services (DFS) has reached a $35 million settlement with Nordea Bank Abp over serious compliance failures and inadequate due diligence practices. The settlement, announced on August 27, 2024, by DFS Superintendent Adrienne A. Harris, follows an extensive investigation into the bank’s role in facilitating potentially illicit financial activities. The investigation, sparked by the 2016 Panama Papers leak, revealed Nordea’s involvement in helping hundreds of customers create tax-sheltered companies using offshore accounts. Further scrutiny uncovered the bank’s connections to major money laundering schemes, including the Russian Laundromat, the Azerbaijani Laundromat, and the Hermitage Capital Allegations.…

Secretive Cyprus-Registered Funds Were Used to Hide Megayachts and Luxury Real Estate Linked to Sanctioned Russian Banker

Uncategorized
In Cyprus, a new type of investment fund was marketed to clients as a way to avoid disclosing their ownership of assets. In one case, these funds were used to obscure the ownership of offshore companies that allegedly held luxury assets linked to powerful Russian banker Andrei Kostin, including two megayachts worth tens of millions. Key FindingsTwo megayachts linked to Andrei Kostin were hidden behind secretive investment funds in Cyprus, known as “registered alternative investment funds.”The funds were managed by a company called Inveqo, owned by the wife of a sanctioned Cypriot lawyer.Registered alternative investment funds, or RAIFs, were marketed…

Student Smishing Scams on the Rise

Fraud
At the start of the 24/25 academic year, the Students Loans Company (SLC) is reminding students to be vigilant of smishing scams. Scammers target students at this time of year as they receive their first maintenance loan payment. SLC is expecting to pay £2bn to students over the autumn term and last year it stopped £2.9m of maintenance loan payments being taken by smishing and phishing scams, where students received and acted on false communications. Smishing, which is fraud involving text messages, is currently the most popular form of scam, with students usually being asked to click a link to…

Wells Fargo Enters Agreement with OCC to Strengthen Anti-Money Laundering Controls

Money Laundering, Prosecutions
Wells Fargo Bank, N.A., has entered into a formal agreement with the Office of the Comptroller of the Currency (OCC) to address deficiencies in its anti-money laundering (AML) and financial crimes risk management practices. The agreement, announced today, outlines a comprehensive plan to enhance the bank’s compliance with the Bank Secrecy Act (BSA) and U.S. economic sanctions laws. The OCC identified several areas of concern, including violations related to internal controls, suspicious activity reporting, customer due diligence, and compliance with sanctions enforced by the Office of Foreign Assets Control (OFAC). In response, Wells Fargo has committed to implementing a wide-ranging…

UK Conservative Party Advisor Lobbied for Firm Founded by Russian Oligarchs

Corruption
The man who served as chief of staff under former British Conservative Prime Minister Liz Truss has been lobbying for a company part-owned by two sanctioned Russian oligarchs. Romania’s Logging Industry Continues to Cheat the Timber Tracing SystemSix months after the fraud was exposed and Romanian authorities promised to stop it, wood processing companies continue to cheat Europe’s most sophisticated timber tracing system, allowing illegally harvested wood to enter the legal market. EU Parliament Calls for Sanctions on Georgia and its LeadersThe European Parliament voted in favor of a resolution calling for the EU to stop funding the country of…

Four insights for UK firms in the year of the PEP

PEPs
The recent review by the Financial Conduct Authority (FCA), along with updates to the UK’s anti-money laundering regulations, has resulted in new requirements for firms: they must now classify ‘domestic’ PEPs as inherently lower risk compared to ‘non-domestic’ PEPs as long as there are no ‘high-risk indicators’ present. With the recent election completed and new MPs in office, UK firms are now facing the challenge of adjusting to these changes in guidance. As firms make operational adjustments in light of the UK’s regulatory update, the spotlight on PEPs presents an opportunity to reflect on four key insights. The FCA review…

SEC Charges Macquarie Investment Management Business Trust with $79.8 Million Fraud Settlement

Fraud, Prosecutions
The Securities and Exchange Commission (SEC) announced today that Macquarie Investment Management Business Trust (MIMBT), a registered investment adviser, has agreed to pay $79.8 million to settle charges of fraud. The case involves the overvaluation of illiquid assets and the execution of unlawful cross trades that favored certain clients over others. According to the SEC’s order, from January 2017 through April 2021, MIMBT managed the Absolute Return Mortgage-Backed Securities strategy, which primarily invested in mortgage-backed securities, collateralized mortgage obligations (CMOs), and treasury futures. The firm is accused of overvaluing approximately 4,900 largely illiquid CMOs held in 20 advisory accounts, including…

Walgreens to Pay $106.8 Million in Major Healthcare Fraud Settlement

Fraud, Prosecutions
Retail pharmacy giant Walgreens has agreed to pay $106.8 million to settle allegations of widespread fraud against government health care programs, the U.S. Department of Justice announced on Friday. The settlement resolves claims that Walgreens billed Medicare, Medicaid, and other federal health care programs for prescriptions that were never actually dispensed to patients. The alleged fraudulent activity spanned over a decade, from 2009 to 2020, during which Walgreens is accused of submitting false claims for payment, resulting in the company receiving tens of millions of dollars for prescriptions that were processed but never picked up by beneficiaries. Principal Deputy Assistant…

Mirabaud & Cie SA seriously violated financial market law

Money Laundering, Regulatory Fines
The Swiss Financial Market Supervisory Authority FINMA has found that Mirabaud & Cie SA breached its anti-money laundering obligations and seriously violated financial market law. FINMA determined this in enforcement proceedings. The bank failed to review and document sufficiently the economic background of client relationships and transactions. The bank may not accept any new clients with increased money-laundering risks until compliance with the law has been restored. Furthermore, FINMA has confiscated CHF 12.7 million of unlawfully generated profits and opened three proceedings against individuals.In June 2023, FINMA concluded enforcement proceedings against Mirabaud & Cie SA that were opened in June…

Danske’s France settlement ends final probe over suspected money laundering

Money Laundering, Regulatory Fines
COPENHAGEN (Reuters) -Danske Bank has reached a settlement with French authorities to end the final in a series of probes in multiple countries over suspected money laundering at its former branch in Estonia, the Danish bank said on Wednesday. Danske agreed to pay 6.33 million euros ($7.0 million) to settle an investigation in France, a fraction of the more than $2 billion it agreed to pay to end probes in the United States last year. The bank became the subject of several investigations after an internal probe in September 2018 uncovered about 200 billion euros of payments made through its…

Art Market Loopholes Again Threaten U.S. Economic Integrity and National Security

Art Market, Sanctions
Federal Indictment Charges Kremlin Allies with Money Laundering and Sanctions Evasion On September 5, the U.S. Department of Justice unsealed two criminal indictments charging dual U.S.-Russian citizens with multiple felonies for using art, antiques, and other methods to violate sanctions imposed after the 2022 illegal invasion of Ukraine—a scheme that also allowed the married couple to launder at least $1 million through the U.S. financial system. Dimitri and Anastasia Simes allegedly provided services to and received substantial benefits from sanctioned Russian individuals and entities, including Channel One Russia, the state-controlled television network, and oligarch Aleksandr Udodov. Anastasia, specifically, is charged…

Swedish Court Sends Ex-CEO of Swedbank to Prison

Money Laundering, Prosecutions
Overturning her previous acquittal, a Swedish court sent former Swedbank CEO Birgitte Bonnesen behind bars for 15 months for having made misleading, financially damaging statements about the bank’s poor anti-money laundering operations. An expert called the verdict of the Svea Court of Appeals “unprecedented.” The lower Stockholm District Court had cleared Bonnesen of all charges in January 2023. Following revelations in 2017–2018 that hundreds of billions of dollars could have been laundered through Danske Bank’s operations in the Baltics, Bonnesen was asked by reporters if Swedbank had similar problems with ties to that scandal. “The court concluded that two of…

Inside Hamas’ Pocketbook : Financing Terrorism through online financial platforms

Counter Terrorist Financing, Terrorism
In the wake of the 7 October attack and the war that has followed, Hamas, the Palestinian Islamic resistance movement, has conducted much of its financial activity through established and emerging online financial platforms (OFPs) to support its rule in the Gaza Strip. Even though Hamas is designated as a terror organisation (and is therefore sanctioned) in the US, UK, EU and elsewhere, it has been able to take advantage of compliance-related loopholes and poor counter-terror financing (CTF) practices OFPs suffer from. Some of the OFPs Hamas uses and abuses include technologies such as online payment processors, virtual assets service…

FCA charges first individual with running a network of illegal crypto ATMs

Prosecutions, Regulation
The FCA has charged Mr Olumide Osunkoya, who is 45 and resides in London, for unlawfully running multiple crypto ATMs without FCA registration. Crypto ATMs are machines that allow you to buy or convert money into cryptoassets. Mr Osunkoya is accused of running crypto ATMs, which processed £2.6m in crypto transactions across multiple locations between 29 December 2021 and 8 September 2023 without the required registration. The charges mark the FCA’s first criminal prosecution relating to unregistered cryptoasset activity under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). These are also the…

Post-Soviet Union Elite’s Involvement in UK Money Laundering

Uncategorized
Dr Henry Balani, Global Head of Industry & Regulatory Affairs for Encompass Corporation comments: “Money laundering in the UK is a far more complicated an issue than one might expect, and there are thousands of unique and intricate relationships between UK finance professionals and international criminals which continues to contribute to the money laundering economy. Historically, London has been the centre of a vast physical empire that has now developed a financial powerhouse to support potential nefarious activities. Covid-19 and lockdown has certainly not helped either, as digital identity authentication and paperless transactions, for example, have made it easier for…

Money launderer jailed after extradition to UK

Money Laundering
A man who laundered more than £2m has been jailed after being extradited back to the UK. Calin Barta, 29, originally from Romania, was sentenced at Guildford Crown Court to four years and 10 months in prison. Three years ago, Surrey Police executed a warrant at an address in Woking as part of an investigation into indecent image offences. However, whilst at the property, officers said they found multiple mobile phones and bank card readers along with 38 passports in different names but all with the same photo. Barta returned to Romania while he was on bail, said police. Surrey’s…

Lack of City of London oversight hurting efforts to halt dirty money, FCA warns

Money Laundering
A lack of proper oversight across the City of London’s network of lawyers, bookkeepers and accountants is hampering efforts to crack down on dirty money being funnelled through the UK, the City watchdog has warned. The latest report by the Financial Conduct Authority (FCA) flagged concerns over the work of the UK’s 25 professional bodies – which oversee the accounting and legal sectors – and found that some were spending as little as £73 a year on anti-money laundering supervision or were outsourcing it entirely to third parties. It also found “weaknesses” in how bodies were using their powers, resulting…

UK announces new sanctions under Iran, Russia laws

Sanctions
LONDON, Sept 10 (Reuters) – Britain on Tuesday announced a new wave of sanctions, adding seven designations under its Iran sanctions regime and three under its Russia regime.Some of those sanctioned included firms and organisations with ties to the drone industries in Russia and Iran.The announcement came after U.S. Secretary of State Antony Blinken said Russia had received ballistic missiles from Iran and would likely use them in Ukraine within weeks.Alongside that announcement, made during a visit to Britain, Blinken said the U.S. would also impose new sanctions, including on airline Iran Air.France, Germany and Britain strongly condemned Iranian transfers…

Banks must refund fraud up to £85,000 in five days

Fraud, Regulation
UK banks must refund fraud victims up to £85,000 within five days under new rules. Most High Street banks and payment companies voluntarily compensate customers who are tricked into sending money to scammers. But in a world first, these refunds will become mandatory from 7 October, the Payment Systems Regulator (PSR) has announced. The watchdog has reduced the maximum compensation from a previous proposal of £415,000. It said the new cap of £85,000 would cover more than 99% of claims. It also announced that once a bank or payment company had refunded a customer, it could claim half back from…