Author: gracechurchfcp

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…

UK economic crime regime

Regulation
This guide to the UK economic crime regime sets out information on the relevant legislation impacting solicitors and firms. Money Laundering Regulations 2017The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) set out the main anti-money laundering (AML) requirements for firms. This legislation has been amended by the: Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which came into force on 10 January 2020 and implemented broad changes to the MLRsMoney Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020, which made narrow changes mainly to the requirements around trust registrationThe Money Laundering and Terrorist…

NEW RESEARCH FROM TI-RUSSIA ACTS AS A REMINDER THAT THE UK NEEDS TO DOUBLE-DOWN ON ITS ROLE AS AN ENABLER OF FINANCIAL CRIME

Money Laundering, Trade Based Finance
Have you ever bought something that’s never arrived, or wasn’t quite what you expected? Frustrating, isn’t it, and maybe far too frequent an occurrence. Now imagine you wanted this to happen, and you intended to spend hundreds of thousands, possibly millions of pounds in the process. Your friends would think you’d gone mad. Yet this is exactly how hundreds of millions of pounds has been moved out of Russia and into the UK in recent years. Here’s how it works. Imagine you’re an organised criminal gang or a senior politician. You’ve managed to generate some income from activity that is…

National Crime Agency calls on parents to help young people recognise the signs of money muling

Money Laundering
The National Crime Agency is asking parents and carers to help young people avoid being persuaded or manipulated into laundering criminal cash. The NCA’s call follows three weeks of coordinated law enforcement action against money mules – a term given to individuals enlisted by criminals to move the proceeds of crime through their bank accounts in return for a cut of the sum. Around 6 in 10 money mules are under the age of 30, with most of these recruited between the ages of 17 and 24 while attending sixth form, college or university. At this age, young people may…

UK publishes two new Russia sanctions regulations and two new General Licences

Sanctions
On 14 December 2023, the UK Government introduced two regulations (The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2023 and The Russia (Sanctions) (EU Exit) (Amendment) (No. 5) Regulations 2023) amending The Russia (Sanctions) (EU Exit) Regulations 2019 to impose further restrictions on goods, technology, and sources of funding that the UK Government considers could support Russia’s war against Ukraine. The majority of the amendments came into force on 15 December 2023; however a number will come into force on 26 December 2023 and 1 January 2024. Separately, on 15 December, the UK also designated Novikombank, which is now…

New unit to crack down on firms dodging Russian sanctions

Sanctions
Companies who are found to be dodging strict trade sanctions, including those imposed since the war in Ukraine, will face tougher penalties with the creation of a new Office of Trade Sanctions Implementation (OTSI). Industry and Economic Security Minister Nusrat Ghani is today [11 December 2023] announcing the creation of a new unit to crack down on companies dodging Russian sanctions. The OTSI will be responsible for the civil enforcement of trade sanctions, including those against Russia. The unit will help businesses comply with sanctions and investigate potential breaches, issuing civil penalties and referring cases to HMRC for criminal enforcement…

Financial services regulation: Adapting to change

Regulation
The Financial Conduct Authority (FCA) is making significant changes in response to its new responsibilities and past regulatory failures, but it needs to manage the related risks if it’s to meet its commitments, including reducing and preventing financial crime, according to a new report by the National Audit Office (NAO). The FCA regulates approximately 50,000 firms in an industry worth more than £170 billion to the UK economy. The financial services sector is undergoing significant changes; the FCA began a transformation programme in 2020-21 in response to these changes and this will take a number of years to realise. Reshaping…

RBC Slapped with $7.4M Penalty by Fintrac Over Anti-Money Laundering Non-Compliance

Money Laundering, Prosecutions
Canada’s financial intelligence agency, the Financial Transactions and Reports Analysis Centre of Canada (Fintrac), has levied a substantial $7.4 million penalty against the Royal Bank of Canada (RBC) for its non-compliance with anti-money laundering (AML) and terrorist financing measures. Fintrac’s findings reveal multiple violations, including the failure to submit suspicious transaction reports when there were reasonable grounds to suspect connections to money laundering offenses. Out of 130 case files reviewed, RBC neglected to submit 16 suspicious transaction reports, leading to the hefty penalty. The administrative penalty, imposed on November 3, follows a compliance examination conducted by Fintrac in 2022. Despite…

Council and Parliament reach political agreement to criminalise violation of EU sanctions

Regulation, Sanctions
The Spanish presidency of the Council and the European Parliament concluded their negotiations for an EU law which introduces criminal offences and penalties for the violation of EU sanctions. This directive ensures that those who violate or circumvent EU sanctions will be prosecuted. This gains particular importance in the context of the Russian war of aggression against Ukraine. The law lays down that member states will need to define certain actions as criminal offences. These include: helping persons subject to EU restrictive measures to bypass a travel bantrading sanctioned goods and running transactions with states or entities which are hit…

Bipartisan Anti-Crypto Terror Financing Bill Heads to U.S. Senate

Counter Terrorist Financing, Regulation
A bipartisan group of U.S. senators including Mitt Romney (R-UT) introduced legislation that expands sanctions to foreign entities supporting all U.S.-designated terrorist groups, including through crypto transactions, giving law enforcement an additional toolkit to tackle terror financing.“The Terrorist Financing Prevention Act of 2023, introduced by the Senators, aims to prevent Foreign Terrorist Organizations and their financial enablers, including those using digital assets, from accessing U.S. financial institutions, imposing sanctions and strict regulations to counteract these activities,” the bill reads.The proposed act broadens current sanctions, initially focused on Hezbollah, to include all U.S.-designated foreign terrorist organizations and their supporting foreign entities.…

Landmark Agreement: EU Nears Establishment of Robust Anti-Money Laundering Authority

Regulation
In a historic move, the European Union’s Council and Parliament have provisionally agreed to forge ahead with the creation of a groundbreaking European authority focused on combating money laundering and the financing of terrorism – the Anti-Money Laundering Authority (AMLA). This breakthrough represents a cornerstone in the broader anti-money laundering package, designed to fortify the EU’s financial system and protect the interests of its citizens. Under the terms of the provisional agreement, AMLA is set to wield both direct and indirect supervisory powers over high-risk entities within the financial sector. Notably, the agreement leaves the question of the authority’s seat…

Commodity Futures Trading Commission Imposes $91 Million Penalty on Freepoint Commodities for Fraudulent Conduct

Fraud, Prosecutions
The Commodity Futures Trading Commission (CFTC) has issued an order while simultaneously filing and settling misappropriation-based fraud charges against Freepoint Commodities LLC, a commodities merchant headquartered in Stamford, Connecticut. The fraudulent activities, spanning from 2012 to 2018, involved deceptive conduct aimed at obtaining material non-public information from a South American state-owned enterprise (SOE) concerning the purchase and sale of fuel oil. The CFTC’s order mandates Freepoint to pay more than $91 million in civil monetary penalties and disgorgement. The order reveals that Freepoint’s fraudulent conduct included the improper acquisition and trading on the SOE’s material non-public information, constituting a breach…

Former Special Agent in charge of the New York FBI Counterintelligence Division sentenced to 50 Months for conspiring to violate U.S. Sanctions on Russia

Prosecutions, Sanctions
A former Special Agent in Charge (SAC) of the FBI Counterintelligence Division in New York, was sentenced to 50 months in prison and ordered to pay a $40,000 fine for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and to commit money laundering in connection with his 2021 agreement to provide services to Oleg Deripaska, a sanctioned Russian oligarch. According to court documents and statements made in court proceedings, Charles McGonigal, 55, of New York, New York, pleaded guilty in August. “Charles McGonigal helped advance the interests of a sanctioned Russian oligarch, breaking his oath to safeguard our…

Vatican court convicts cardinal Angelo Becciu of embezzlement

Fraud, Prosecutions
A Vatican court on Saturday sentenced a once powerful Italian cardinal to five years and six months in jail for financial crimes at the end of a historic trial. Angelo Becciu, 75, a former adviser to Pope Francis who was once considered a papal contender himself, is the most senior clergyman in the Catholic church to face a Vatican criminal court. He and nine other defendants, including financiers, lawyers and ex-Vatican employees, were on trial over accusations of financial crimes focused on an opaque London property deal. Court president Giuseppe Pignatone read out the verdict on Saturday, with Becciu accused…

Joint action in Germany and Italy against money laundering via rental of luxury cars

Money Laundering
Eurojust has assisted the German and Italian authorities in a coordinated action against large-scale money laundering through the fake long-term rental of mainly luxury cars. Seven suspects were arrested across the two countries for using a car hire agency to launder the proceeds of drug trafficking, extortion and illegal betting for other criminals. The enterprise has been seized in addition to a real estate complex and nearly one hundred mainly luxury vehicles.The criminal network primarily used a German-registered car rental agency, which rented out over 150 vehicles for periods of three to four years to customers in Italy. Via fake…

Key findings from Phase 2 of Travers Smith review

PEPs
NatWest Group (NWG) has today published the key findings and recommendations from Phase 2 of the Travers Smith independent review – commissioned by the Board in July – relating to account closures at Coutts over the 24-month period prior to 28 July 2023. The key findings and recommendations report (the report) published today was compiled by Travers Smith. The Phase 2 review analysed 84 customer account closures – including all relevant PEP cases exited over the relevant period – building a total sample of around 10% of relevant account closures in the period. The report confirms that decision-making was consistent…

Treatment of Politically Exposed Persons under the Money Laundering Regulations

Legislation, PEPs
My Noble Friend the Treasury Lords Minister (Baroness Vere of Norbiton) has today made the following Writen Ministerial Statement. Today the Government has laid The Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (SI 2023/1371) a Statutory Instrument to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the Regulations) in relation to the treatment of Politically Exposed Persons (PEPs) who are entrusted with prominent public functions by the UK (known as ‘domestic PEPs’). The amendment makes clear that under the Regulations the starting point for banks and other regulated firms in their…

New strategy to tackle organised crime

Organised Crime
A new strategy aimed at tackling the growing threat of serious and organised crime has been announced by the Home Secretary as the government steps up action to clamp down on criminal gangs operating in and against the UK. The National Crime Agency (NCA) estimate that there are at least 59,000 people in the UK involved in serious and organised crime and that it costs the UK at least £47 billion each year, equating to the cost of building around 450 new hospitals or supplying around 730,000 more affordable homes outside of London. The new strategy, which builds on the…

UK to remain global centre of ‘dirty money’ without offshore registers, MPs say

Money Laundering
Britain will remain the global centre of “dirty money” unless ministers revive stalled plans for public registers of who owns companies based in offshore havens such as the British Virgin Islands (BVIs) and Jersey, campaigners and senior MPs have said. The veteran anti-corruption campaigner Dame Margaret Hodge MP said it was a matter of national security to do away with the secrecy offered by the 10 inhabited overseas territories and three crown dependencies. In 2020, the government gave the overseas territories, which include the BVIs, Cayman Islands and Bermuda, a deadline of December 2023 to introduce public registers of corporate…

Ladbrokes and Coral owner to pay £585m to settle HMRC bribery inquiry

Bribery, Corruption
The owner of Ladbrokes and Coral has agreed to pay almost £600m to settle an investigation into alleged bribery at a business it owned in Turkey. Entain said it had reached an agreement with HM Revenue and Customs which will make the gambling giant pay a total of £585m in the form of a financial penalty and a “disgorgement of profits”. Under the terms of the agreement, the penalty, which includes an extra £20m charitable donation and a contribution of £10m towards the costs incurred by HMRC and the Crown Prosecution Service (CPS), will be paid in instalments over four…

SFO recovers £250,000 tennis club debenture from convicted fraudster

Asset Seizure
Today at Southwark Crown Court, the Serious Fraud Office (SFO) confiscated £250,000 from Achilleas Kallakis, one of the convicted fraudsters behind the UK’s largest ever mortgage fraud, held at the prestigious West London sports club, The Queen’s Club. SFO investigators identified the £250,000 debenture by tracing the funds through a complex chain of offshore accounts, including a purported family trust, to his £740 million fraud. Mr Kallakis’s name was displayed prominently alongside other notable members on the Debenture Board in the club’s reception in return for the debenture that he purchased in 2007. He also received club membership and access…