Author: gracechurchfcp

Towards a stronger AML/CTF framework in the EU

Money Laundering, Terrorism
The EU framework for the prevention of the use of the financial system for the purposes of money laundering and terrorist financing already has a long history. It is more than 30 years now since the first Anti-money Laundering Directive was published in June 1991. Since then, the framework has undergone many improvements, with the previous – fifth – AML Directive being published in May 2018. The framework grew both in terms of the number and the forms of the regulatory instruments involved, incorporating both regulations and directives, as well as regulatory technical standards and guidelines developed by the European…

Money Laundering via Cryptocurrencies up 30% in 2021

Digital Currencies, Money Laundering
Money laundering via cryptocurrencies increased in 2021 by 30% and is estimated to account for US$8.6 billion, claims a report recently published by blockchain analysis firm Chainalysis. Although only 0.05% of all cryptocurrency transactions worldwide are linked to the laundering of money, Europol says it could get much worse in the future. Criminals are becoming more sophisticated in their use of cryptocurrency transactions and their money laundering schemes are becoming increasingly complex, the European police agency said. The Chainalysis report indicates the origin of money being laundered to stem from darknet sales and potential ransomware attacks. Cryptocurrency transactions are supposed…

DOJ Promises Robust Anti-Bribery Enforcement Despite Dip in Cases

Bribery, Corruption
A senior Justice Department official cautions against reading too much into a decline in the number of corporate Foreign Corrupt Practices Act cases A senior DOJ official said the department has a robust pipeline of cases and he would expect some significant resolutions in the next year. The U.S. Justice Department’s enforcement of a key antibribery law appeared to ebb last year, with prosecutors levying fines against only three companies for violations of the Foreign Corrupt Practices Act. However, a senior Justice Department official is seeking to dispel the notion that prosecutors have taken their foot off the pedal. “I…

EBA Unveils New Central Database for AML and CFT

Money Laundering, Terrorism
The European Banking Authority (EBA) has launched EuReCA, a new central database for anti-money laundering and counter-terrorism financing. According to the EBA, EuReCA will be central to coordinating efforts by competent authorities and the EBA to prevent and counter money laundering and terrorist financing risks in the EU. EuReCA will hold information on material weaknesses in individual financial institutions in the EU that competent authorities have previously identified. Competent authorities will also be reporting the measures they have imposed on financial institutions to rectify those weaknesses. Such weaknesses include the lack of adequate AML/CFT policies and procedures including the absence…

The Contract Factory – Inside Danske Bank Estonia Money Laundering Machine

Money Laundering
Skype user Maxim.Canning was a veritable one-stop-shop for anyone looking to launder illicit funds. For a fee, he would not only sell you a company registered on an offshore paradise island, but also help you to disguise who really owned it. If you needed to transfer suspect money, he could make fake contracts to give it a semblance of legality, or rapidly funnel the cash through dozens of offshore accounts. “Maxim” could even find you proxy directors to add to company paperwork — for a price. “We have for 1000 euros per piece a Kazakh until 2022,” he wrote to…

SEC Says it Won’t Limit Whistleblower Payouts

Whistleblowing
Regulator proposes changes to two amendments adopted during Trump administration that it says could have been used by future commission to reduce awards ‘These amendments, if adopted, would help ensure that whistleblowers are both incentivized and appropriately rewarded for their efforts in reporting potential violations of the law,’ SEC Chairman Gary Gensler said Thursday. The Securities and Exchange Commission said Thursday that it was revising two amendments governing the rules of its whistleblower program to address concerns that they would discourage tipsters from coming forward. The two amendments were adopted in September 2020, during the Trump administration. SEC Chairman Gary…

Ex-Goldman Banker: ‘Bribes’ Made 1MDB Business Possible

Bribery
Former Goldman Sachs banker Tim Leissner, once hailed for bringing the bank lucrative Malaysian business, has told a court that “bribes and kickbacks” made the deals possible. Mr Leissner was testifying in the trial of his former colleague, Roger Ng. Prosecutors say the two men helped divert billions from Malaysia’s 1MDB sovereign wealth fund to be used in bribes for politicians and others. Mr Ng, who is on trial over the matter, has denied wrongdoing. Mr Leissner, the former boss of Goldman’s Southeast Asia unit, told a New York courtroom on Wednesday that Mr Ng was a key banker for…

Barclays Freezes £22m Worth of Bonus for Ex-Boss Staley amid Epstein Inquiry

Human Trafficking
Barclays has announced record profits and raised its bonus pool to nearly £2bn, in a high pay bonanza that the bank said was spurred by a battle for talented staff. The London-headquartered lender increased the bonus pool for its existing staff by more than 17% to £1.3bn, after annual profits more than doubled thanks to the release of cash originally put aside to cushion the blow of the Covid crisis. Including deferred bonuses, the total bonus pot grew 23% to £1.9bn. Barclays said it had 700 bankers on its payroll who were paid more than €1m a year (£834,365), 33…

$97.8m Worth of Fake Sports Memorabilia Seized in Run-Up To Super Bowl

Fraud
Thousands of counterfeit Super Bowl-related merchandise seized from vendors from all over Southern California is worth an estimated $97.8 million, federal authorities said Thursday. Operation Team Player – an effort involving several federal agencies, the Los Angeles County Sheriff’s Department, and the NFL – has been cracking down all year on the illegal importation of counterfeit sports apparel and merchandise. The joint task force has been scouring online marketplaces, local flea markets such as the Santa Fe Springs Swap Meet, and Santee Alley in Downtown L.A.’s Fashion District, looking for fake jerseys, hats, rings, T-shirts, jackets, tickets, souvenirs, and other…

Highlights of the FCA’s New Approach in 2021

FCA
The Financial Conduct Authority’s (FCA) mission is to protect consumers from harm, enhance the integrity of the UK’s financial system and promote competition. The regulator is continuing to pursue these objectives while also working to become a more innovative, adaptive and assertive regulator. This approach will enable the FCA to meet the challenges of the increasingly data-driven financial services sector in the UK, the shift to a net-zero economy, the continuing effects of the pandemic, and help build a new regulatory regime after Brexit. Protecting consumersIn January, the Supreme Court delivered its judgment in a case brought by the FCA…

FCA Fined U.K. Financial Organisations £568m in 2021

FCA, Regulatory Fines
The Financial Conduct Authority (FCA) has fined financial organisations in the UK for a total of £568m in 2021. This total is made up by fines against major banks and action against individuals for insider dealing, non-financial misconduct and carrying-out activities without authorisation. Experts believe the emergence of new forms of financial crime during the pandemic explain the high quantity of financial penalties. Encompass Corporation leading regulation expert Dr Henry Balani says: “The pandemic has provided criminals with the opportunity to defraud, launder and perpetrate other forms of financial crime with more efficiency than ever before. “Lockdown, and the resulting…

First U.K. Annual Sanctions Report

Sanctions
The UK’s Annual Sanctions Report for 2021 details, for the first time, the full extent of its new autonomous sanctions since exiting the European Union. the Foreign, Commonwealth & Development Office Sanctions Annual Report for 2021 has been published, which shows that, in its first full year since leaving the EU, the UK has imposed sanctions against 160 individuals and entities individuals and entities sanctioned for, among other activities, corruption and human rights abuses, are from a number of countries, including Myanmar, China, Belarus, Pakistan and Venezuela the report shows that since leaving the EU, the UK is more agile…

Will 2022 be a Year of Action on Illicit Finance?

Bribery, Corruption, Fraud, Money Laundering
The US Strategy on Countering Corruption promises a step change in its response to illicit finance. Can the UK government step up too? There was a time in the not so distant past when the UK was genuinely a leader in the global response to illicit finance. Yes, the country has been a magnet for dirty money and its beneficiaries for decades as a result of policy decisions (for example, investor visas) and neglect (such as underinvestment in the policing response, the national Financial Intelligence Unit and suspicious activity reporting system). But awareness of the challenges posed by illicit finance…

French Private Equity Company Agrees to Buy U.S. Based ACAMS for $500M

Training
A French private equity company has agreed to purchase ACAMS, the financial training company, for $500M, it’s been announced. Paris-based Wendel said it has entered into an agreement alongside Colibri Group to purchase the Financial Services segment of ACAMS parent Adtalem Global Education. As part of the deal Wendel will acquire the Association of Certified Anti-Money Laundering Specialists (ACAMS), with ACAMS President and Managing Director, Scott D. Liles will now take the reins as CEO of the Chicago based training company. The deal worth $500M, will include an equity investment from Wendel of $355M, for a 99% stake in ACAMS,…

Over £5.5bn of Covid Support Funds Lost to Fraud or Error

Fraud
HMRC says nearly 9% of furlough scheme was fraudulently claimed or otherwise wrongly paid out last year More than £5.5bn of taxpayer money from the government’s coronavirus assistance schemes including furlough, self-employed support and “eat out to help out” was paid out to fraudsters or given out incorrectly. It emerged on Thursday that £5.2bn paid out by the government under the coronavirus job retention scheme, widely known as furlough, ended up in the hands of fraudsters or was paid in error. HM Revenue and Customs acknowledged in its annual report that about 8.7% of the £60bn it paid out under…

A ‘Gift’ For Scammers: the True Cost of Furlough Fraud

Fraud
With “Partygate” still dominating the headlines it was always going to be a tough start of the working week for Boris Johnson. The prime minister’s Monday, however, got even worse when his counter-fraud minister quit over the government’s decision to write off £4.3bn in fraudulent Covid loans. At the dispatch box in the House of Lords yesterday, Theodore Agnew “staged a dramatic public resignation”, The Guardian said. Lord Agnew, who was a Treasury and Cabinet Office minister, said his decision was not an attack on the PM, but the row will leave Johnson “fighting Conservative anger on yet another front”,…

Judge Demands Investigation After Crime Gang Successfully Applied for £145,000 in Covid Bounce Back Loans

Fraud
A judge has demanded an investigation after two members of an organised crime gang were able to successfully apply for £145,000 in Covid ‘bounce back’ loans. Asif Hussain, the ringleader of an international ‘chop shop’ ring, which exported stolen Range Rovers and other expensive cars to Dubai, was able to secure £50,000 in funding offered by the Government to help businesses struggling during the pandemic. Another gang member, Ibraaz Shafique, was able to receive two huge loans, firstly for £50,000 then for £45,000. The maximum loan available was £50,000. Both men had previous criminal convictions. A judge said ‘the most…

Competition for Compliance Officers Intensifies Amid Regulatory Pressures

Compliance, Financial Crime
A labor-market squeeze and evolving regulatory pressures are driving demand for compliance officers. Competition for such talent has heated up in recent months as companies fear they will be short-staffed at a time of rapid growth and increasing regulatory scrutiny, and businesses are luring compliance staff with salary increases, remote-working opportunities and company equity. “It’s all hands on deck for corporations to attract the talent,” said Paul C. McDonald, a senior executive director at human resources consulting firm Robert Half International Inc. “They are looking to pay the most they can, and with benefits and in perks the best they…

FinCEN Analysis Reveals Upward Trend of SARs Related to Wildlife Trafficking

Wildlife Trafficking
WASHINGTON — The Financial Crimes Enforcement Network (FinCEN) today released a Financial Threat Analysis on wildlife trafficking threat patterns and trend information identified in Bank Secrecy Act (BSA) data. The report aims to further inform efforts to combat wildlife trafficking and the associated movement of illicit proceeds, which are estimated to be between $7 and $23 billion per year and account for a quarter of all wildlife trade. Wildlife trafficking is a major transnational organized crime that fuels corruption, threatens biodiversity, damages fragile ecosystems, and can have a significant negative impact on public health and the economy. It involves the…

How the Kazakh Elite Put its Wealth Into U.K. Property

Corruption, Money Laundering, Unexplained Wealth Orders
Ministers face claims they have allowed the ruling elite of Kazakhstan to secretly invest vast chunks of the country’s wealth in the London property market after failing to introduce promised new transparency laws. Former prime minister David Cameron pledged at an anti-corruption summit in London in 2016 that the UK would end the secret offshore ownership of property. More than five years later, a proposed register of foreign owners of UK property has still not been introduced. The uprisings in Kazakhstan last week reflected widespread anger at former president Nursultan Nazarbayev’s three decades of rule and the vast fortunes amassed…

Crypto Giant Binance Kept Weak Money Laundering Checks

Money Laundering
ATTARD, Malta – In the courtyard of a secluded limestone palace, Malta’s political elite welcomed a guest: Changpeng Zhao, chief executive of Binance, the world’s largest cryptocurrency exchange. It was October 2018. Zhao was in Malta to find Binance a new home, having quit mainland China the year before when regulators there began cracking down on cryptocurrencies. Zhao praised Malta for opening its doors to crypto firms. “Binance got really lucky,” Zhao told the audience, in filmed remarks. “Malta came at a time when regulatory clarity was very much needed.” That same month Binance notified Malta’s financial regulator it planned…

Top UK Law Firm Fined Record Sum for Breaching Money Laundering Rules

Money Laundering, Regulatory Fines
Mishcon de Reya, one of the UK’s most prestigious law firms, has been fined a record amount for committing “serious breaches” of money-laundering rules. The London-based firm has agreed to pay a fine of £232,500, plus a further £50,000 towards the costs of the investigation, which was carried out by the Solicitors Regulation Authority (SRA). In its decision, published on Wednesday, the regulator said Mishcon de Reya’s conduct had “potential to cause significant harm by facilitating transactions that gave rise to a risk of facilitating money laundering”. The SRA investigation concerned work the firm carried out for two unnamed individual…

U.S. Sanctions Bosnian Serb Leader over Graft and for Destabilizing Moves

Sanctions
The U.S. sanctioned on Wednesday the leader of the Bosnian Serbs and a TV station believed to be under his control for his “corrupt activities and continued threats to the stability and territorial integrity” of the Balkan country. Milorad Dodik, who is the Serb member of Bosnia and Herzegovina’s tripartite presidency, has frequently called for the dissolution of the country and has recently initiated a process of a gradual transfer of authorities from the state to the Bosnian Serb region called Republika Srpska, which occupies half of Bosnia and Herzegovina. He intends to withdraw the Serbs from the country’s army,…

Failure to Use Technology is Hindering the Fight Against Financial Crime

Fraud
A new survey has highlighted the importance of technology in the efforts of financial institutions to combat financially-motivated criminals. The study, published by Guidehouse & American Banker/Arizent has recommended that tech solutions need to be aligned with broader fraud mitigation programmes in order for organisations to start making ground on bad actors. Ongoing vulnerability & risk assessments, adequate investments and coordination with third parties have also been identified as essential to maximize the benefits of available solutions. Despite a market saturated with advanced technology tools, the truth is that many financial institutions are struggling to effectively deploy and integrate anti-fraud…

EBA Alerts on the Detrimental Impact of Unwarranted De-Risking

Money Laundering, Terrorism
The European Banking Authority (EBA) published today its Opinion on the scale and impact of de-risking in the EU and the steps competent authorities should take to tackle unwarranted de-risking. Providing access to at least basic financial products and services is a prerequisite for the participation in modern economic and social life and de-risking, when unwarranted, can cause the financial exclusion of legitimate customers. It can also affect competition and financial stability. De-risking refers to decisions taken by financial institutions not to provide services to customers in certain risk categories. De-risking can be a legitimate risk management tool but it…

Swedbank ex Chief Charged Over Money Laundering Scandal

Fraud, Money Laundering, Prosecutions
The former chief executive of Swedbank has been charged with fraud, market manipulation and the unauthorised disclosure of inside information, after an investigation into a large-scale money laundering scandal in the Baltics. Birgitte Bonnesen, who was sacked as chief executive two years ago when the scandal came to light, “repeatedly spread misleading information” that the bank did not have any issues with its anti-money laundering (AML) processes in Estonia, according to Sweden’s Economic Crime Authority. Thomas Langrot, the chief prosecutor and head of the investigation, said Bonnesen either intentionally or through gross negligence disseminated misleading information about the state of…

The $30m Embezzlement Scandal Behind Ukraine’s Winter Olympics Hopes

Corruption
Plans to build a new ski resort in Ukraine’s protected Carpathian Mountains lead back to an alleged corruption scheme tied to oligarch Serhiy Lovochkin. Key Findings Between 2012 and 2014, the head of a newly created state agency, Vladyslav Kaskiv, allegedly worked with accomplices to steal $30 million from the Ukrainian state and embezzled it through a network of offshore companies Part of the money was used to buy land in the Carpathian mountains, where Kaskiv knew the government planned to build a winter sports venue. The company that owned the land was secretly controlled by powerful Ukrainian politicians Serhiy…

Millions Seized in Gibraltar Money Laundering Operations

Money Laundering
Since 2016, the Gibraltar Money Laundering Investigation Unit has seized almost 2.4 million euros, as well as luxury yachts and apartments, from the proceeds of organised crime. Chief Inspector Tunbridge of the Economic Crimes Unit has attributed a collaborative relationship with Spain to its success, but admits that Brexit has made investigations all the more difficult. A huge amount of drugs is trafficked from Morocco to Spain, and foreign criminal organisations have money laundering through illegal activities in Gibraltar down to a fine art. Mr Tunbridge explained that criminals know very well that if they commit a crime in one…

Chinese Police Make First Arrest For CBDC Money Laundering

Money Laundering
Chinese officials have hunted down a gang suspected of laundering money using the digital yuan. Chinese officials have arrested members of a criminal group charged with alleged money laundering using the country’s CBDC, the digital yuan. The news implies the Chinese government and law enforcement will have greater control and oversight over financial activities in the country with its CBDC. China Records First Illegal Use Case of e-CNY The Xinmi Public Security Department arrested members of a gang, composed of 11 members, in the Fujian Province for allegedly scamming a person for 200,000 yuan ($32,000). Reportedly the victim, named Qu,…

State of Corruption in South Africa

Corruption
How deep corruption stretches into the South African government was revealed last week, after South Africa’s Judicial Commission dropped the first of its three-part report into state capture in the African nation. Deep is the answer. “Approximately 1,438 persons and entities were implicated by evidence led before the Commission,” read the nearly 900 page report produced by the commission that was set up almost four years ago to examine the extent of corruption within the South African State. One of the focal points it assessed were the connections between former South African President Jacob Zuma and the powerful Gupta Family,…

As U.S. Sanctions Loomed, a Tycoon Mopped Up Zimbabwe’s Scarce Dollars

Corruption, Sanctions
As Zimbabweans faced the economic consequences of a crashing currency, well-connected businessman Kudakwashe Tagwirei skirted the rules to convert government-backed securities into scarce U.S. dollars —which he used to acquire shares in a lucrative platinum mine. Key Findings Even after Zimbabwe cut off its citizens from accessing U.S. dollars in mid-2019, the central bank governor allowed Tagwirei’s company to cash out large portions of a treasury bill he held before it matured, and unlawfully convert them into tens of millions of U.S. dollars. Documents indicate Tagwirei’s staff repeatedly used treasury bills as a source of U.S. dollars — which were…

Crypto Scam Revenues Surge as ‘Rug Pulls’ Become ‘Go-To’ for Crooks

Digital Currencies, Fraud
Investment scams involving digital coins have become the biggest source of cryptocurrency-based crime in 2021, according to new data released on Thursday. In a report, Blockchain analytics company Chainalysis found that “rug pulls” has been a key driver behind the $7.7 billion in crypto taken from victims this year. The term describes a new scam in which developers of a crypto project issue what appears to be a legitimate crypto asset, lure in unsuspecting investors — only to run off with the funds, or sell all their holdings at a significantly higher premium. Rug-pulling drew attention recently, as a cryptocurrency…

Strategies Used by Criminal Groups and Terrorists and Federal Efforts to Combat Them

Financial Crime
Fast Facts We reviewed how transnational criminal organizations and terrorist groups traffic goods such as illegal drugs, engage in human trafficking, and launder money. We also looked at the information sharing used to help detect these activities. Responsibility for combating trafficking is spread across multiple federal agencies. Agencies collaborate via task forces that share information and resources with each other, the private sector, and foreign counterparts. The U.S. Treasury Department, for example, shares information with more than 160 international financial intelligence agencies. Criminal groups move heroin and more from Afghanistan to western Europe via the Balkan route. Highlights What GAO…

Should Lawyers, Accountants be Filing More SARs?

Financial Crime
Suspicious activity reports (SARs) are a vital part of the fight against money laundering and financial crime. They alert law enforcement to potential criminal activity, providing critical evidence in any investigation. The U.K. National Crime Agency (NCA) reported a record number of SARs received and processed (573,085—a 20 percent increase on the previous period) in 2019/20. The majority of reports were submitted by credit institutions, such as banks and building societies. Few SARs were submitted from the service sector, such as accountants, lawyers, and estate agents. Banks’ systems focus on the financial transactions they administer, highlighting those that either breach…

U.K. Hands Down Largest Sentences for Money Laundering

Money Laundering, Prosecutions
A U.K. court sent two men behind bars for a total of 33 years for laundering the equivalent of nearly US$95 million and fraudulently claimed $13.44 million in COVID-19 Bounce Back Loans for their fake companies, the National Crime Agency reported. Artem Terzyan, 38, from Russia was sentenced to 17 and Deivis Grochiatskij, 44, from Lithuania to 16 years in prison after a seven-weeks-long trial in September. Their sentences are believed to be one of the largest ever handed down in the U.K. for money laundering, the NCA said. The investigation started in October 2017 when the police noticed another…

NatWest Fined £264.8 Million Over Anti-Money Laundering ‘Failures’

Money Laundering, Prosecutions
NatWest received a £264.8 million fine after failing to comply with account-monitoring requirements, becoming the first bank to be criminally convicted under the UK’s anti-money laundering regulations. The fine relates to NatWest’s failure to properly monitor its business relationship with jewellery firm Fowler Oldfield. Over a period of less than four years, the Fowler Oldfield deposited around £365 million—mostly in cash—despite having an estimated annual turnover of just £15 million In sentencing remarks published on Monday, Mrs Justice Cockerill accused NatWest of “failing to comply” with its legal obligations, but without “any deliberate flouting of the rules or any criminal…

FCA Fines HSBC £64m for Failings in its AML Processes

FCA, Money Laundering, Regulatory Fines
Banking giant HSBC has been fined £63.9 million by the UK’s Financial Conduct Authority (FCA) for failings in its anti-money laundering (AML) processes. The FCA claims HSBC’s transaction monitoring systems showed “serious weaknesses” over a period of eight years from March 2010 to March 2018. The regulator says HSBC did not dispute its findings and agreed to settle “at the earliest possible opportunity”. As a result, the bank’s total fine was discounted by 30% from £91,352,600 down to £63,946,800. In particular, the FCA says HSBC failed to “consider whether the scenarios used to identify indicators of money laundering or terrorist…

Former Petrofac Executive Ordered to Pay £140,000 Over Bribery Case

Bribery, Prosecutions
A former Petrofac executive has been ordered to pay £140,000 over bribery offences in the Middle East. The Serious Fraud Office (SFO) secured a confiscation order during a hearing today at the Southwark Crown Court against former head of sales at Petrofac, David Lufkin. In October, Mr Lufkin was handed a two-year sentence, suspended for 18 months, for making bribery payments to win oil and gas contracts for Petrofac in Iraq, Saudi Arabia and the United Arab Emirates. He had previously pleaded guilty to 14 counts of bribery and admitted to making corrupt payments between 2011 and 2018. A confiscation…

FCA Fines Sunrise Brokers LLP £642,400 for Serious Financial Crime Control Failings

FCA, Money Laundering, Regulatory Fines
Sunrise Brokers LLP has been fined over £600,000 for deficient anti money laundering systems and controls. This is the second case brought by the FCA in relation to cum-ex trading, dividend arbitrage and withholding tax (WHT) reclaim schemes. The first FCA case relating to cum-ex trading concluded in May 2021. The FCA found that Sunrise had deficient systems and controls to identify and mitigate the risk of facilitating fraudulent trading and money laundering in relation to business introduced by the Solo Group, between 17 February 2015 and 4 November 2015. On review it was found that the Solo trading throughout…

Gambling Commission Orders Greentube to Pay £685,000 for AML and Safer Gambling Failings

Money Laundering, Regulatory Fines
The GB Gambling Commission has ordered Novomatic subsidiary Greentube Alderney to pay £685,000 (€805,448/$912,304) over social responsibility and money laundering failings. A review of the business’ activities, launched in December 2020, uncovered failings in the anti-money laundering (AML) policies and safer gambling protocols across Greentube’s Admiralcasino.co.uk and Bellfruitcasino.com sites. This amounted to breaches of licence condition 12.1.1, 12.1.2, 15.2.1 of the Licence Conditions and Codes of Practice (LCCP), and provision 3.4.1 of the Social Responsibility Code. The condition 12.1.1 breaches related to Greentube Alderney’s AML processes, with the review finding deficiencies in its record keeping and evaluation of the assessments…