Year: 2024

Improving the effectiveness of the UK Money Laundering Regulations

Money Laundering, Regulation
HM Treasury has published a consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘MLRs’), which place requirements onto a range of businesses to identify and prevent money laundering and terrorist financing. HM Treasury committed to consulting on changes to the MLRs as part of a wider programme of work aimed at reducing money laundering, which was set out in the Economic Crime Plan 2023-26. This consultation principally covers issues with the MLRs already identified by HM Treasury, for example in the 2022 Review of the UK’s…

Dawn crackdown on suspected money launderers across Greater Manchester

Money Laundering
Six people suspected of being part of an organised crime group involved in a large-scale drugs supply and money laundering conspiracy have been arrested. This morning (Thursday 29 February) specialist detectives from GMP Serious Organised Crime Group and Economic Crime Unit, supported by district resources and colleagues from neighbouring forces, executed thirteen simultaneous warrants at properties and residences across Bury, Bolton, Salford, and Rossendale.Three women aged between 35 to 40, and three men aged between 38 to 41, have been arrested on suspicion of money laundering. They remain in police custody for questioning.A 38-year-old man was also arrested on suspicion…

Bribery, fraud and anti-money laundering | UK Regulatory Outlook February 2024

Bribery, Corruption, Regulation
The Environment Agency has established a new Economic Crime Unit to combat money laundering and conduct financial investigations in the waste sector, made up of accredited financial investigators and financial intelligence officers and financial crime analysts. The unit comprises two teams: the Asset Denial Team, focusing on account freezing orders, cash seizures, pre-charge restraints and confiscations; and the Money Laundering Investigations team, responsible for conducting money laundering investigations targeting environmental offences. Businesses within the waste sector should ensure they are adhering to proper financial practices and reporting any suspicious activities. It is crucial that should the Economic Crime Unit launch…

New report finds AML compliance failures are rife in the UK

Money Laundering
AN ANALYSIS of more than 1,600 ‘anti-money laundering (AML) events’ recorded across the UK in the last decade shows money laundering is the most prevalent issue (27.5%), a new report has revealed. In its 2024 Money Laundering and Financial Crime Stats Report, SmartSearch inspected 1,664 AML events in the UK alone and found that while just over a quarter of the UK’s crimes and issues pertain to money laundering (27.5%), this was closely followed by AML compliance failures (23.9%) – which beat drug trafficking (19.8%) and financial fraud (13.4%) to the top spot. AML events include recorded crimes or issues…

Bank fined £1m by Isle of Man regulator

Regulatory Fines
Royal Bank of Scotland International has been fined £1m by the Isle of Man’s financial regulator for breaching its anti-money laundering and countering the financing of terrorism code.The firm was fined by the island’s Financial Services Authority (FSA) for failing to adequately carry out customer risk assessments in line with the code between 2015 and 2018.It followed an inspection reviewing elements of the bank’s Isle of Man non-personal customer book between June and July 2021.A spokesman for the bank said it had “already updated and improved our controls and procedures to ensure this cannot happen again”.A total of 2,239 non-personal…

UK art market feeling the heat as anti-money laundering legislation ramped up

Art Market, Regulation
HMRC has been issuing more regular fines and putting into force intensive checks, making art-related businesses sweatRiah Pryor19 February 2024ShareUnder the AML broiler: HMRC fined at least 31 UK art market participants from January 2021 to March 2023 © M4OS Photos/Alamy Stock PhotoUnder the AML broiler: HMRC fined at least 31 UK art market participants from January 2021 to March 2023© M4OS Photos/Alamy Stock Photo The British art market is under mounting pressure from anti-money laundering (AML) legislation. HMRC, the UK’s tax authority, fined at least 31 art market participants from 10 January 2021, when it began supervising the art…

New York Attorney General Files Lawsuit Against Citibank Over Fraud Protection Failures

Fraud, Prosecutions
New York Attorney General Letitia James has initiated legal action against Citibank, N.A. (Citi), accusing the banking giant of neglecting to protect customers and refusing reimbursement to victims of fraud. The lawsuit alleges a range of misconduct, including the failure to implement robust online security measures, misleading account holders about their rights following unauthorized access, and illegal denial of reimbursement to victims of fraud. Alleged Misconduct by Citibank: Inadequate Security Measures: The lawsuit contends that Citibank’s lax approach to online security, insufficient monitoring systems, and failure to respond promptly and effectively to fraudulent activities have enabled scammers to steal millions…

Treasury Publishes 2024 National Risk Assessments for Money Laundering, Terrorist Financing, and Proliferation Financing

Counter Terrorist Financing, Money Laundering
WASHINGTON – Today, the U.S. Department of the Treasury published the 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing. These reports highlight the most significant illicit finance threats, vulnerabilities, and risks facing the United States. The reports detail recent, significant updates to the U.S. anti-money laundering/counter-financing of terrorism framework and explain changes to the illicit finance risk environment. These include the ongoing fentanyl crisis, foreign and domestic terrorist attacks and related financing, increased potency of ransomware attacks, the growth of professional money laundering, and continued digitization of payments and financial services. These assessments also address how…

UN to investigate claims of corruption in Iraq aid project

Corruption
The UN Development Programme (UNDP) is dispatching a team to Iraq to assess allegations of corruption in its $1.5bn (£1.2bn) construction programme following a Guardian investigation. According to an internal document obtained by the Guardian, the UNDP’s administrator, Achim Steiner, has “commissioned a management review and assessment of the allegations” after revelations its staff were allegedly taking kickbacks in return for helping business people obtain lucrative construction contracts. The six-page document, sent to donors on 25 January, aimed to reassure western capitals that the UNDP could hold itself to account through internal oversight mechanisms. At a subsequent meeting, several donors…

Frankfurt Chosen as Host for EU Anti-Money Laundering Authority

Money Laundering, Regulation
Frankfurt has been selected as the headquarters for the European Union’s Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA). The decision was made through a joint vote on Thursday by Members of the European Parliament (MEPs) and EU ambassadors. Out of nine candidate cities that applied to host AMLA and presented their cases in public hearings, Frankfurt emerged victorious in the first round of voting, securing a majority of validly cast votes. The co-rapporteurs for AMLA, Emil Radev of the European People’s Party (EPP) from Bulgaria and Eva Maria Poptcheva of Renew from Spain, expressed their confidence in…

EU told Slovakia that its reforms risked ‘irreparable damage’ to rule of law

Financial Crime
Brussels told Slovakia it risked doing “irreparable damage” to the rule of law, it has emerged, before the country’s MPs approved legal reforms that critics say are aimed at protecting the prime minister’s political and business allies. The Slovakian news outlet SME reported on Wednesday that the European commissioner for justice, Didier Reynders, had written last week to Robert Fico’s government urging it not to fast-track the legislative package through parliament. The request was ignored and the changes – including scrapping a special prosecutor’s office dealing with high-level corruption, lowering penalties for financial crimes and cutting the statute of limitations…

UAE Removed from FATF ‘Grey List’ as Kenya and Namibia Face Increased Monitoring

Money Laundering
The Financial Action Task Force (FATF), an international crime watchdog, announced the removal of the United Arab Emirates (UAE) from its ‘grey list.’ Simultaneously, Kenya and Namibia have been added to the list, subjecting them to heightened scrutiny due to concerns over inadequate measures against money laundering and terrorism financing. The decision came during the FATF Plenary, where the organization stated, “At this Plenary, the FATF added Kenya and Namibia to the list of jurisdictions subject to increased monitoring.” Kenya’s Treasury had already disclosed the news earlier in the day, emphasizing its full commitment to implementing the FATF’s action plan.…

Hezbollah-linked Picasso and Warhol stash raises red flag to art world

Art Market, Money Laundering
When police swooped on a high-security warehouse near London’s Heathrow airport, officers took away nearly two dozen works of art belonging to alleged Hezbollah financier Nazem Ahmad. At the same time, at an auction house in central London, they seized art that Mr Ahmad, a Beirut art gallery owner who the US wants to put on trial, had hoped to sell. The seized works included Picasso’s 1962 linocut Nature morte a la pasteque (Still Life with a Watermelon) and several by Andy Warhol, including Details of Renaissance Paintings (Leonardo da Vinci, The Annunciation, 1472). A Stanley Whitney painting, Sing All…

Germany’s BaFin warns Deutsche Bank of potential fines if it doesn’t improve money laundering controls

Money Laundering
The Federal Financial Supervisory Authority of Germany, BaFin, has “threatened to impose penalty payments” on Deutsche Bank, the country’s largest lender, if it doesn’t fix what it refers to as “defects” concerning its money laundering controls. Deutsche Bank fintech newsBaFin extends monitoring of Deutsche BankThe regulator has extended the stay of its special representative at Deutsche Bank until 30 October 2024 to report on and assess the progress of the bank’s implementation of safeguards against money laundering and terrorist financing. The representative was first instated by BaFin in 2018. BaFin says: “On November 21, 2023, BaFin ordered Deutsche Bank AG…

EU proposes sanctions on Chinese firms aiding Russian war effort

Sanctions
The EU is proposing to sanction companies in mainland China for the first time as part of its latest measures aimed at shutting down loopholes that allow Russia to route military technology via third countries to its weapons factories. Three companies in mainland China, as well as four in Hong Kong and one in India, are on a 91-page document of companies and individuals who EU member states want to add to a growing sanctions list before the second anniversary of Russia’s invasion of Ukraine. As the EU, the UK and US representatives prepare to meet in Brussels on Wednesday,…

Lloyds to face AML controls investigation

Money Laundering, Regulation
The Financial Conduct Authority (FCA) of the UK has initiated an investigation into Lloyds Banking Group’s Anti-Money Laundering (AML) controls. As detailed in the lender’s annual report, Lloyds underlined that the investigation is related to its compliance with the money laundering regulations in the UK and the Financial Conduct Authority’s rules and principles of business, focusing on its controls framework. The report mentions that the bank has been cooperating with the investigation and cannot estimate the potential financial impact or if there would be any. At the time of the announcement, Lloyds declined to comment on the matter. The Financial…

PEP Guidance Reflecting Recent UK Regulatory Changes

Regulation
In December 2023, the UK government announced changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLRs”) in relation to the treatment of Politically Exposed Persons (“PEPs”) entrusted with prominent public functions in the UK (“domestic PEPs”). These changes came into force on 10 January 2024. The update means that under the MLRs, when dealing with domestic PEPs (or a family member or known close associate of a domestic PEP) the starting point for banks and other regulated firms is to treat them as inherently lower risk than non-domestic PEPs. This means…

Former San Francisco Resident Sentenced To Four Years In Prison For Crimes Related To “Ichioka Ventures” Cryptocurrency Fraud Scheme

Fraud, Prosecutions
William Koo Ichioka was sentenced to serve four years in prison and ordered to pay a $5 million fine for committing multiple felonies in connection with an investment fraud scheme involving cryptocurrencies and other investment vehicles. The sentence was handed down by the Hon. Vince Chhabria, United States District Judge. Ichioka, 30, formerly of San Francisco and New York, pleaded guilty to five charges—wire fraud, two counts of aiding and assisting in the preparation of a false or fraudulent tax return, committing fraud in connection with the purchase and sale of securities, and engaging in commodities fraud—on July 12, 2023.…

Tory MP earns £900 an hour from arms firm run by bribery suspect

Bribery
A Conservative MP is set to earn £900 an hour from a North Macedonian arms company whose owner was embroiled in a bribery scandal, openDemocracy can reveal. Mark Pritchard, who has been the MP for The Wrekin since 2005, began working for the firm ATS Group in November – but only declared it in Parliament’s transparency register last week. ATS Group’s owner and CEO was arrested in Belgrade in 2019 following a months-long investigation by Serbian authorities into allegations of bribery over the alleged theft of technical documents from a rival arms manufacturer in Užice, Serbia. In the latest register…

UN Staff on £1.5bn Iraq Aid Project ‘Demanding Bribes’

Bribery
Staff working for the UN in Iraq are allegedly demanding bribes in return for helping businessmen win contracts on postwar reconstruction projects in the country, a Guardian investigation has found. The alleged kickbacks are one of a number of claims of corruption and mismanagement the Guardian has uncovered in the Funding Facility for Stabilization, a United Nations Development Programme (UNDP) scheme launched in 2015 and backed by $1.5bn (£1.2bn) in support so far from 30 donors, including the UK. Since the 2003 US-led invasion, the international community has pumped billions of aid dollars into Iraq. Twenty years on, the country…

Ex-boss of China’s state-run bank Everbright arrested on corruption charges

Corruption, Prosecutions
The former head of China’s state-owned banking giant Everbright Group has been arrested for alleged corruption, prosecutors have said. Tang Shuangning, 69, was arrested on suspicion of taking bribes and embezzlement following the conclusion of an investigation by the anticorruption authority, China’s Supreme People’s Procuratorate said on Monday. Tang was earlier this month expelled from the ruling Communist Party for alleged violations of party discipline, including bringing unauthorised books into the country and accepting illicit gifts. The former bank chairman is the latest in a long line of high-profile figures within China’s financial sector to be ensnared in President Xi…

US Prosecutors Empowered to Charge Foreign Officials with Bribery

Bribery
In a significant stride toward combating global corruption, the United States has enacted the Foreign Extortion Prevention Act (FEPA), allowing federal prosecutors to bring criminal charges against foreign government officials soliciting or accepting bribes from U.S. companies. The newly minted law, a component of the National Defense Authorization Act, addresses a longstanding gap in the fight against corruption, as it criminalizes the “demand” side of cross-border corruption, providing a crucial addition to the Foreign Corrupt Practices Act (FCPA). Historically, the U.S. government has focused on charging U.S. companies for engaging in corrupt practices overseas under the FCPA. However, the ability…

SEC Charges Global Software Company with Bribery

Bribery
The U.S. The Securities and Exchange Commission (SEC) has charged SAP, a multinational software company, with violating the Foreign Corrupt Practices Act by bribing government officials at least in seven countries including South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan. According to the Jan. 10 official press release, between December of 2014 and January of 2022 “SAP employed third-party intermediaries and consultants to bribe government officials to obtain business with public sector customers in the seven countries.” The company, based in Germany, “inaccurately recorded the bribes as legitimate business expenses in its books and records, despite the fact that…

Anti-money laundering: Council and Parliament strike deal on stricter rules

Money Laundering, Regulation
The Council and Parliament found a provisional agreement on parts of the anti-money laundering package that aims to protect EU citizens and the EU’s financial system against money laundering and terrorist financing. Vincent Van Peteghem Belgian Minister of FinanceThis agreement is part and parcel of the EU’s new anti-money laundering system. It will improve the way national systems against money laundering and terrorist financing are organised and work together. This will ensure that fraudsters, organised crime and terrorists will have no space left for legitimising their proceeds through the financial system. Vincent Van Peteghem Belgian Minister of FinanceWith the new…

Former Banking Executive Pleads Guilty to Evading Anti-Money Laundering Regulations

Money Laundering, Prosecutions
The former vice president of a bank located in Missouri pleaded guilty today to assisting high-risk bank customers in evading the bank’s anti-money laundering controls. Peter McVey, 45, of Kansas City, Missouri, who served as vice president and director of treasury services for a bank, pleaded guilty to failing to maintain an appropriate anti-money laundering program under the Bank Secrecy Act (BSA). According to court documents, between April 2014 and July 2022, McVey assisted high-risk bank customers engaged in deceptive sweepstakes and short-term online loan activities in evading the bank’s anti-money laundering controls. Specifically, McVey worked with other bank officials…

London Carpet Shop used in Iranian money laundering operation

Money Laundering
An Iranian man has been convicted of using a carpet business as a front for a money-laundering operation linked to small boats. Asghar Gheshalghian, 48, acted as a trusted middleman, accepting payments from migrants or their families, according to the UK’s National Crime Agency. He then released money to the criminal gangs following the completion of their journeys to the UK, charging a commission at the same time. Phone evidence showed links with at least eight Iranian migrants who later arrived in the UK by boat or lorry and claimed asylum. Gheshalghian also ran an unregistered money services business from…

UK warns of criminal sanctions evasion through artwork storage facilities

Art Market, Money Laundering, Sanctions
The National Crime Agency has issued an alert to artwork storage facilities, warning of potential criminal exploitation of the sector by individuals subject to Russia sanctions. With new individuals and entities being added to the sanctions list at frequent intervals, the alert highlights the need for the sector to conduct regular due diligence checks to understand any change in a client’s circumstances, or those of elites they may represent. High-net-worth individuals, such as Russian oligarchs hold art in specialist storage facilities for a range of reasons, including secure storage of art as an investment or as a store of value…

EBA issues guidance to crypto-asset service providers to effectively manage their exposure to ML/TF risks

Digital Currencies, Regulation
The European Banking Authority (EBA) today extended its Guidelines on money laundering (ML) and terrorist financing (TF) risk factors to crypto-asset service providers (CASPs). The new Guidelines highlight ML/TF risk factors and mitigating measures that CASPs need to consider, representing an important step forward in the EU’s fight against financial crime. CASPs can be abused for financial crime purposes, including ML and TF. The risks of this happening can be increased, for example because of the speed of crypto-asset transfers or because some products contain features that hide the user’s identity. Therefore, it is important that CASPs know about these…

Bribery and Corruption : An unholy cocktail of outsider and insider threats

Bribery, Corruption
This is the fifth in a series of articles analysing the top 10 serious and organised crime threats to the UK and how they have evolved over a decade. This article traces the journey of and response to the threat of bribery and corruption – a threat that the UK remains far too complacent about. Bribery and corruption can no longer comfortably be seen as something that only happens overseas or is confined to the underworld of organised crime. It permeates all levels of society, poses a genuine risk to national security, exacerbates illegal migration, eats into the public purse,…

£6m fine for online operator Gamesys

Regulatory Fines
A gambling business will pay a £6 million penalty after a Commission investigation revealed social responsibility and Anti-Money Laundering (AML) failings. Gamesys Operations Limited – which operates 12 websites including ballycasino.co.uk, doublebubblebingo.com and jackpotjoy.com – will also have to undergo a third-party audit to ensure it is effectively implementing its anti-money laundering and safer gambling policies, procedures and controls. The failures were revealed during a Commission compliance assessment in May 2022. Social responsibility failures included: not always identifying customers at risk of experiencing harms associated with gambling by:placing inappropriate reliance on checks which indicate whether a customer had a historical…

Clyde & Co fined £500k after admitting due diligence failure

Law Firms, Regulatory Fines
Top-50 firm Clyde & Co has been fined half a million pounds after admitting failing to carry out due diligence on a corporate client for more than four years. The firm’s former partner Edward Henry Mills-Webb was also fined £11,900 by the Solicitors Disciplinary Tribunal after admitting that he ‘materially contributed’ to the failure to check more than a dozen transactions as required by anti-money laundering regulations. There was no evidence that the client or its principals were involved in money laundering or financial crime. It is the second sanction levied on Clyde & Co in the past seven years.…

HSBC fined £57.4m for customer deposit protection failings

Regulatory Fines
HSBC has been fined £57.4m by the Bank of England for “serious failings” over its measures to protect customer deposits.The bank failed to accurately identify deposits eligible for Britain’s Financial Services Compensation Scheme, the Bank’s Prudential Regulation Authority (PRA) said.Under the scheme, customer deposits are protected up to the value of £85,000. HSBC said it was pleased to have resolved the “historic matter”. The fine is the second highest to date imposed by the regulator, reflecting the seriousness of the failings, the PRA said.The regulator said the problems occurred between 2015 and 2022.Under depositor protection rules, banks must have systems…

NCA investigation ends in eight year jail term for east London money launderer who took payments for small boats crossings

Money Laundering, Prosecutions
A man investigated by the National Crime Agency for laundering money made by people smuggling networks involved in small boats crossings has been jailed for eight years.Iranian Asghar Gheshlaghian, 48, was convicted last week of running an unregistered money services business from an office block in Wood Green, as part of a network of bankers transferring money using the hawala system. He acted as a trusted middleman, accepting payments from migrants or their families, and then releasing money to the criminal gangs following the completion of their journeys to the UK, charging a commission at the same time. Gheshlaghian, who…

Deepfakes Are a Threat to UK Banks

Fraud
As fraudsters continue utilizing innovative technology for their illicit activities, financial institutions find themselves in an endless game of catch-up. A particularly concerning development for UK banks involves the surge in deepfake technology threats. According to a report from Sumsub, there was a 300% increase in deepfake incidents from 2022 to 2023 in the UK, with AI-driven identity fraud ranking among the top five in 2023. The UK’s vulnerability to such attacks is heightened due to its economic prominence, widespread adoption of digital banking, and considerable online presence. In an interview with the Financial Times, David Duffy, CEO at Virgin…

US and UK sanction senior Houthis over Red Sea shipping attacks

Sanctions
The US and the UK have imposed sanctions on four senior Houthi officials for their roles in supporting or directing attacks on commercial shipping in the Red Sea. Those targeted include Houthi defence minister Mohamed Nasser al-Atifi, commander of Houthi naval forces Muhammad Fadl Abd al-Nabi, coastal defence forces chief Muhammad Ali al-Qadiri and Muhammed Ahmad al-Talibi, described as the Houthi forces director of procurement. “The Houthis’ persistent terrorist attacks on merchant vessels and their civilian crews … threaten to disrupt international supply chains and the freedom of navigation, which is critical to global security, stability, and prosperity,” the US…