NEWS ARTICLES

Joint Taskforce Relaunched to Protect Against Rise in Fraud Crime

Fraud
The Home Secretary Priti Patel announced the relaunch of the Joint Fraud Taskforce on 21 October 2021. In light of the 24% rise in fraud during coronavirus (COVID-19), the Home Secretary Priti Patel announced the relaunch of the Joint Fraud Taskforce on 21 October 2021, which will play a vital role in countering fraud through public-private sector partnerships. A crime that leaves devastating financial and emotional effects on victims will now be tackled jointly in a first-of-its-kind agreement between private sector companies and the government to protect people’s hard earned cash. To coincide with the first meeting of the relaunched…

How Governments Around the World Regulate Cryptocurrency

Digital Currencies, Regulation
In the early days of blockchain technology, cryptocurrencies operated in a gray area of the economy, their applications as unique as they were unregulated. But since then, as financial institutions have entered the industry and adoption has soared, the risk calculus has changed for regulators. While governments around the world have taken major steps to combat cybercrime and protect the users of cryptocurrencies, many believe the work is far from over. For this reason, it’s critical for investors, businesses, and institutions in the industry to understand both how governments regulate cryptocurrencies and how industry leaders can push the conversation forward.…

Credit Suisse Fined £147m and Undertakes to Forgive US$200m of Mozambican Debt

Bribery, Regulatory Fines
The Financial Conduct Authority has fined Credit Suisse over £147 million for serious financial crime due diligence failings related to loans worth over $1.3 billion, which the bank arranged for the Republic of Mozambique. These loans, and a bond exchange, were tainted by corruption. Credit Suisse has also agreed with the FCA to forgive US$200 million of debt owed by the Republic of Mozambique as a result of these tainted loans. Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: ‘The FCA’s fine reflects the impact of these tainted transactions which included a debt crisis and…

Chinese Tech Giant Huawei had Secret Offshore Contracts With Men Linked to Serbian State Telecom Company

Bribery, Corruption
Amid a Chinese push to gain influence in Serbia, Huawei appears to have paid large sums to a former Serbian state telecom executive through an offshore shell company. Key Findings A former executive at state telecom company Telekom Srbija likely received over $1 million through an offshore firm in the British Virgin Islands that had contracts with Chinese technology giant Huawei. The payments were linked to contracts with Huawei, some for consulting services that included introducing Huawei to government officials and arranging meetings for the Chinese company. In 2016, Huawei inked a major agreement with Telekom Srbija to overhaul Serbia’s…

‘Tick box’ AML Regime Isn’t Working, Society Tells Treasury

Money Laundering, Terrorism
Current money laundering regulations disproportionately affect small firms and promote ‘tick box compliance’, the Law Society has told the Treasury. Responding to a consultation about the effectiveness of the UK’s anti-money laundering regime, the Society warned that the current regime ‘undermines the effectiveness and proportionality of the measures’ and drives up costs for legal services consumers. Law Society president I.Stephanie Boyce said: ‘At its centre, the UK AML regime should be effective at reducing money laundering and terrorist financing. It must be built on an evidenced-based assessment of the risks and what works to mitigate those risks. ‘A risk-based approach…

FATF Releases Updated Guidance on Virtual Assets

Digital Currencies, FATF
The FATF has issued its finalized guidelines providing clarifications on its previous crypto regulation recommendations. Key Takeaways Today FATF issued updated regulatory guidance on virtual assets and virtual asset service providers. It clarifies that NFTs or crypto-collectibles generally fall outside its virtual asset definition but may be considered such if used for payment or investment purposes. Developers, owners, and operators that “maintain control or sufficient influence” over DeFi protocols could be regulated as VASPs. VASPs are subject to various KYC, AML/CFT, licensing, and transaction reporting requirements depending on the jurisdiction. Today the global Financial Action Task Force (FATF), an independent…

Pandora Papers: 4 Takeaways From Massive Leak of World Leaders’ Finances

Tax Evasion
A massive leak revealing the secret assets of some of the world’s most powerful figures is putting new pressure on global leaders to crack down on shadowy finances. The so-called Pandora Papers consist of millions of leaked financial documents that were reviewed and analyzed for two years by more than a hundred news outlets, including The Washington Post and the BBC, that are part of the International Consortium of Investigative Journalists (ICIJ). The trove illustrates the secretive practices that world leaders and wealthy individuals have employed to keep their assets hidden in dozens of countries, including the United States. Here…

Pandora Papers: Dirty Money, Bribery and the U.K. High Street

Bribery
Money from a corrupt company at the centre of a global bribery scandal has been invested in the UK High Street. Documents from the Pandora Papers leak reveal how £7.5m ($10.2m) in earnings from Unaoil – a business which paid bribes to secure oil and gas contracts – was funnelled offshore. The money from Ata Ahsani, the British Iranian founder of Unaoil, was paid into large funds used to invest in UK property including a cinema complex in Sunderland and a business park near Hull. Ata Ahsani’s lawyers say he has not been convicted of anything and there is no…

Pandora Papers: Tax Avoidance Revelations Prompt Outraged Denials

Tax Evasion
International reaction to offshore data leak ranges from pledges to clamp down to anger and cries of old news. The Pandora papers’ revelations prompted an avalanche of international reaction on Monday, ranging from solemn government pledges to clamp down on tax avoidance to outraged denials and a few cries of “old news”. The leak published on Sunday by the Guardian and other global media partners revealed the leading role played by the US in the offshore industry, including in the state of South Dakota. It also showcased the use of offshore secrecy jurisdictions by world leaders past and present, as…

NBG Bank Fined €337,422 by FIAU For Money Laundering Breaches

Money Laundering, Regulatory Fines
A Malta-based bank has been fined €337,422 for a series of money laundering regulations breaches, including weak oversight over a “very well-known” businessman’s multi-million US Dollar transactions. In an announcement made on October 19, the Financial Intelligence Analysis Unit said that NBG Bank Malta had breached several anti-money laundering rules. NBG Bank Malta, formerly Finansbank Malta, was established in 2005 and is a subsidiary of NBG Group based in Greece. It services high-net-worth clients and corporations. In one of the files reviewed by the FIAU, it turned out that although a customer had been subject to adverse media reports in…

Hacking Humans: Social Engineering in Financial Fraud

Fraud
The phrase ‘social engineering’ may sound like something out of a behavioural psychology textbook, yet it represents a real and present threat facing citizens and financial institutions around the world. In fact, social engineering is a leading cause of financial crime today, wherein criminals dupe their victims through the use of psychological manipulation in order to commit financial fraud, such as disclosing confidential information and eliciting payments. And it’s on the rise. Fourthline recently gathered data pertaining to millions of bank account openings throughout Europe in the past year and found a 37% increase in social engineering attempts by fraudsters…

Everything You Need to Know About OFAC’s New Sanctions Guidance for Cryptocurrency Businesses

Digital Currencies, Sanctions
On October 15, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) released Sanctions Compliance Guidance for the Virtual Currency Industry. This guidance follows the recent designation of Russia-based cryptocurrency Over The Counter (OTC) broker Suex, as well as an updated Advisory on ransomware payments, which we wrote about in our blog. The newly-released brochure reiterates OFAC’s previous guidance and outlines best practices in one comprehensive document. Specifically, OFAC’s guidance covers: Sanctions-related compliance requirements for cryptocurrency businesses Consequences for non-compliance and examples of how timely reporting can mitigate those consequences Best practices for building a risk-based compliance…

Cultural Property Crime Thrives Throughout Lockdown Pandemic

Financial Crime
Cultural property crime has continued unabated throughout the global COVID-19 pandemic and in some cases even surged to new heights, INTERPOL’s 2020 Assessing Crimes Against Cultural Property survey finds. The first such report compiled since the onset of the pandemic – and the first made publicly available – the survey leverages information supplied by 72 INTERPOL member countries on cultural property crimes, arrests and trafficking routes in 2020. The consolidated intelligence allows INTERPOL to analyze and compare emerging trends around the world. In total, 854,742 cultural property objects were seized globally in 2020, including numismatic items (coins, money or medals),…

Cartels and Crypto

Digital Currencies, Organised Crime
If the massive spike in traffic across the U.S.-Mexico border continues at its current pace, total border arrests in 2021 will be the highest since 2000, when nearly 1.7 million illegal border crossers were apprehended by U.S. authorities. Down in Texas’ 23rd District, which encompasses 40 percent of the total southern border, residents are no strangers to the dangers that come with illegal border crossings, specifically those connected to cartel activity. A worrisome new technological development has arisen that can potentially lay the groundwork for these criminal elements to increase their drug and human smuggling operations exponentially. Latin American cartels…

International City Businesses Hand Over €34m Proceeds of Crime in the UK’s Largest Account Forfeiture

Money Laundering
The City of London Police, Crown Prosecution Service (CPS) and the private sector have worked together, using specialist powers, to achieve the largest ever proceeds of crime forfeiture in the UK. Du Toit & Co LLP (a South African law firm operating from UK offices) and Xiperias Ltd (a Cypriot registered company, which claimed ownership of the bulk of the funds) both agreed to forfeit €34m, to settle litigation alleging that the funds in two bank accounts were from unlawful conduct. Temporary Commander Clinton Blackburn, from the City of London Police, said: “Money laundering, the process of legitimising money gained…

The Netherlands Has Twice as Many Compliance Officers as Community Police

Compliance, Financial Crime
Every day, 20% of all bank staff in the Netherlands is engaged in detecting financial crime. This is a direct consequence of the anti-money laundering and terrorist financing legislation introduced since 2001. Detection efforts are mostly manual and therefore very inefficient: 95% of all alerts generated by transaction monitoring systems are false positives. These are the findings of regulatory technology specialist Hyarchis in its new Regulatory Technology on the Rise report, published recently. In the Netherlands, more than 8,000 bank employees search for suspicious transactions every day. This is twice the number of community police officers in the Netherlands, according…

Scammers Tricked Dating App Users Into Investing $1.4m in Fake Crypto Apps

Digital Currencies, Fraud
Despite tough App Store moderation, scam apps can still make their way onto iOS. But it requires a lot of social engineering work. It’s said that love makes people do illogical things. Apparently, those things include investing money into shady cryptocurrency apps that then steal your money, as that’s what scammers reportedly were able to do to victims on dating apps including Tinder and Bumble. Cybersecurity firm Sophos released a report recently documenting “CryptoRom,” a scam that led to $1.4 million being stolen from victims across the United States and Europe. Cryptocurrency-related scams are on the rise as more people…

U.S. Sanctions Two Lebanese Businessmen and a Member of Parliament

Sanctions
The U.S. Treasury has imposed sanctions on two top Lebanese contractors and a lawmaker close to the Hezbollah movement over alleged large-scale corruption that undermined the rule of law in Lebanon. Businessmen Jihad al-Arab and Dany Khoury, close to former Lebanese Prime Minister Saad al-Hariri and Christian politician Gebran Bassil respectively, were sanctioned on Thursday for alleged corruption related to state contracts. Lawmaker Jamil Sayyed was sanctioned for allegedly seeking to “skirt domestic banking policies and regulations” and transfer $120 million abroad, “presumably to enrich himself and his associates,” a Treasury statement said. The allegations come amid an unprecedented economic…

Solicitors Regulation Authority Visits 85 Firms in a Year as Part of AML Crackdown

Money Laundering
Regulators went to an average of seven law firms a month in the past year following up concerns about a lack of anti-money laundering policies. In its first report as a professional supervisor, the Solicitors Regulation Authority said it made a total of 85 visits in the period and carried out a further 168 desk-based reviews. The most common reason for non-compliance with anti-money laundering regulations was not having a proper risk assessment in place, poor client due diligence and insufficient checks on the source of funds. Other reasons for rule breaches were a failure of staff to follow procedures,…

Wells Fargo Pays $72.6m to Resolve Justice Department Claims it Defrauded Currency Customers

Fraud, Regulatory Fines
Wells Fargo paid $72.6 million to settle a government lawsuit accusing the bank of defrauding hundreds of commercial customers. The bank admitted to overcharging 771 businesses on foreign exchange transactions from 2010 through 2017, according to the Justice Department lawsuit filed Monday. Wells Fargo told the commercial customers they were being charged certain fixed rates, but then incentivized salespeople to “overcharge FX customers,” according to the lawsuit. The bank then concealed the overcharges and gave “false explanations” for the inflated prices, the government said. “We all put trust in our banking institutions to deal with us honestly, fairly, and transparently…

Founders of Crypto ICO Plead Guilty to Tax Evasion After Raising $24m from Investors

Digital Currencies, Prosecutions, Tax Evasion
The owners of a cryptocurrency company have pleaded guilty to tax evasion, announced Acting U.S. Attorney for the Northern District of Texas Chad E. Meacham. Bitqyck founders Bruce Bise, 60, and Samuel Mendez, 65, were charged with tax evasion in August. Mr. Bise pleaded guilty on Sept. 9; Mr. Mendez pleaded guilty this morning. According to plea papers, Mr. Bise and Mr. Mendez admitted that Bitqyck raised approximately $24 million from more than 13,000 investors. Instead of fulfilling their promises to these investors, the defendants used Bitqyck funds on personal expenses, including casino trips, cars, luxury home furnishings, art, and…

Anti-Money Laundering Act is a Wake-up Call for Compliance Officers to Modernise AML Programs

Money Laundering
Earlier this year, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a $390 million penalty against Capital One for “willful” anti-money-laundering (AML) failures that happened during a period between 2008-2014. For compliance operators in the space, the action was a strong signal of rigorous enforcement, and perhaps a sign of increased pressures to come. Anti-Money Laundering May Now be Getting its Time in the Spotlight Looking at the U.S. market, aside from recent enforcement actions, imminent regulatory changes are paving the way for this increased interest in AML compliance. On the very first day of 2021, the U.S.…

Jordan, Mali and Turkey ‘Grey Listed’ by Global Finance Watchdog

Money Laundering
Jordan, Turkey and Mali were categorized last week as “Jurisdictions under Increased Monitoring,” or countries that have to work on removing strategic deficiencies in their systems to counter money laundering, terrorist and proliferation financing, a global finance watchdog said. The Financial Action Task Force’s (FATF) issues black lists and grey lists when a country is deemed to be at high risk of money laundering and terrorism financing. But issuance of the latter means that the country has pledged to work with the FATF to address those issues. Jordan joins Yemen and Syria as the third Arab country on the list,…

Real Estate Developers and Used Car Dealerships Will Soon be Brought Under Jamaica’s Anti-Money Laundering Laws

Money Laundering, Terrorism
Signals are being sent that real estate developers and used car dealerships will soon be brought under Jamaica’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework given their high vulnerability to financial crimes. In fact, the authorities have detailed cases of crimes involving real estate transactions and drug dealers getting involved in real estate acquisitions in Jamaica’s AML/CFT National Risk Assessment report for 2021, which was recently released by the Bank of Jamaica. The report observes that the proceeds of crime have been used by criminals to finance real estate development projects as a means of laundering money in Jamaica.…

An Overview of the Use of Cryptocurrencies in Terrorist Financing

Digital Currencies, Terrorism
By Heidi Wilder, Senior Associate, Coinbase Special Investigations Team Following the fall of the elected Afghan government and rise of the Taliban in its place, many speculated that the group had or may turn to cryptocurrencies as a way to finance its operations. As part of our compliance program, Coinbase tracks these types of transactions and often works with law enforcement agencies around the world on interdiction and enforcement efforts. A quick step back With institutional and consumer interest in crypto at an all-time high, alongside the continued rise of DeFi, 2020 and 2021 have seen cryptocurrency achieve the mainstream…

HMRC Investigates 153 ‘Enablers’ of Tax Evasion

Tax Evasion
HM Revenue & Customs has confirmed it is currently investigating 153 suspected ‘enablers of tax evasion’ including unregulated tax advisers. According to law firm RPC, cracking down on ‘enablers of tax evasion’ has been a key area of focus for HMRC since it established its Fraud Investigation Service in 2015. It said HMRC’s fraud investigation service has been given additional resources to recruit more staff and as a result, the number of investigations into tax fraud enablers is likely to increase. A HMRC spokesperson told FTAdviser: “We are increasingly looking to tackle those professionals who help facilitate tax crime, with…

The Increasing Regulatory Requirement of Supply Chain Due Diligence Compliance

Due Diligence
The requirement for businesses to do supply chain due diligence in order to comply with modern slavery and other environmental, social and corporate governance (ESG) rules has steadily increased in the past few years. The pace of change has increased with individual countries introducing their own homemade rules, EU legislation is on its way, and potential litigation is looming in at least one European country. The fact that many of these local rules have extra-territorial effect provides for a complex and fragmented compliance framework where international businesses operating across a number of jurisdictions will need to adhere to a range…

Ethereum Researcher Virgil Griffith Pleads Guilty to Helping North Korea Dodge US Sanctions

Sanctions
Virgil Griffith, an Ethereum Foundation researcher, pleaded guilty to aiding North Korea in sidestepping US sanctions using blockchain technology, according to a Bloomberg report. Griffith was arrested in 2019 after he attended a Pyongyang blockchain conference. US authorities alleged that he helped the North Koreans deploy blockchain tech to let the country sidestep strict international sanctions. Prosecutors say his presentation was tantamount to giving services to North Korea and his trip was not approved by America, according to the Wall Street Journal. Griffith’s lawyers countered that he gave out simple information available easily online. The trial was set to begin…

Serious Fraud Office Probing O2 Bribery Allegations

Bribery
Telecoms giant O2 is being investigated Serious Fraud Office reportedly over allegations of bribery involving the company’s executives. The company revealed in a financial statement that it is cooperating with the SFO, following its merger with Virgin Media. O2’s recent £31bn merger with Virgin Media makes the new company the UK’s largest network, ahead of BT and EE. The investigation disclosure, first revealed by the Sunday Telegraph, comes after years of rumours that the firm is being investigated by the watchdog. Industry insiders told the Telegraph that the probe concerns allegations that former O2 executives were involved with the payment…

Why Cryptocurrency Matters in the AML World

Digital Currencies, Money Laundering
Since Bitcoin’s launch in 2009, cryptocurrency has driven new markets, spurred advancements in financial infrastructure and driven innovative thinking in how to meet the world’s economic needs. However, many stakeholders, including regulators, compliance professionals and law enforcement, still do not understand cryptocurrency or its anti-money laundering (AML) impact. That needs to change as cryptocurrency adoption continues to grow. While research indicates that the vast majority1 of cryptocurrency transactions are for legitimate purposes, cryptocurrency’s place outside the traditional financial system gives it a special appeal to cybercriminals and other bad actors. As such, it is essential for those in the AML…

Solicitor Sanctioned for Ignoring Anti Money Laundering Duties

Money Laundering, Regulatory Fines
A law firm owner who ignored anti-money laundering (AML) responsibilities – and even overrode a negative due diligence check – has been banned from holding compliance roles. Silas Ogbonna also failed to undertake a simple internet search that would have told him that one of his clients was a politically exposed person (PEP), triggering extra obligations. The Solicitors Disciplinary Tribunal (SDT) ruled that he cannot hold the roles of compliance officer for legal practice, compliance officer for finance and administration, money laundering reporting officer or money laundering compliance officer for three years. He was also fined £25,000, which was then…

OCC to Hold Hearing on Charges Against Former Wells Fargo Bank, N.A. Executives

Prosecutions
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today announced a public hearing before an Administrative Law Judge beginning Monday, September 13, 2021, in Sioux Falls, S.D. The OCC will litigate enforcement actions against Claudia Russ Anderson, former Community Bank Group Risk Officer, David Julian, former Chief Auditor, and Paul McLinko, former Executive Audit Director of Wells Fargo Bank, N.A., Sioux Falls, S.D. This hearing represents the culmination of the OCC’s longstanding efforts to hold these individuals accountable for material failures in risk management and for consumer harm. The OCC’s notice of charges alleges Ms. Russ Anderson, Mr. Julian,…

Human Trafficking a Serious Money Laundering Concern For Financial Institutions

Human Trafficking
BAE Systems data reveals human trafficking is one of the top 5 biggest financial concerns for banks and insurers Money laundering techniques are now harder to spot and stop Financial compliance professionals blame ‘stagnant’ rules and regulations for hindering efforts to tackle money laundering LONDON–(BUSINESS WIRE)–#AML–Human trafficking is now one of the biggest concerns for compliance professionals across the globe, according to the latest annual anti-money laundering study from BAE Systems: The State of Anti-Money Laundering 2021. According to the latest data, over three quarters (77 per cent) of compliance professionals admit they are not confident that money laundering crimes…

Over 100 Arrested in Spain and Italy in Major Money Laundering Sting

Money Laundering
More than 100 people have been arrested in Spain and Italy following a joint investigation into money laundering. The sting targeted an Italian mafia gang on the Spanish island of Tenerife, who are accused of laundering more than €10 million. The group is alleged to have made its money through a number of online scams in several European countries. The police operation — supported by Europol — led to the arrests of 106 people, authorities said on Monday. Most of the suspects were Italian nationals who were detained in the Canary Islands, Europol said in a statement. Those arrested have…

Chinese Regulators Unite Forces to Crack Down on Crypto

Digital Currencies, Regulation
The Chinese central bank is setting up a “coordination mechanism” with state agencies to continue battling crypto. The Chinese government is getting more serious about cracking down on the cryptocurrency industry as state authorities are bringing forces to combat crypto operations in the country. The People’s Bank of China (PBoC) officially announced on Friday a set of new measures to fight against crypto adoption in China, including promoting stronger inter-departmental coordination in cracking down crypto activity. 10 Chinese state authorities, including the PBoC, the Cyberspace Administration of China and the Ministry of Public Security, have established a “coordination mechanism” to…

Kroll Finds AML Enforcement is Not Slowed by Covid-19

Prosecutions
Kroll, a provider of services and digital products related to valuation, governance, risk and transparency, has published new data showing that the COVID-19 pandemic has not stunted global enforcement action for anti-money laundering (AML) failings.The findings come from the company’s annual Global Enforcement Review 2021 , which shows that, globally, 45 fines for AML failures were issued in 2020, the same as in 2019. Moreover, the first half of 2021 seems to be following suit, with 17 fines issued between January and July this year, just under half of 2020’s year-end total. Despite the consistency in the volume of fines…

Law Firms Set to be Captured by New £100m Economic Crime Levy

Legislation
The government is seeking views on legislation to raise money to fight economic crime, which could impose tax bills of up to £250,000 on very large companies, such as City law firms. HM Treasury has opened a ‘technical consultation’ on draft legislation for a levy that aims to raise £100m per year, ahead of its inclusion in the 2021-22 Finance Bill. The tax will be paid by all groups that are subject to UK money laundering regulations, including legal practices, banks and accountancy firms. AML-regulated entities with over £10.2m in UK revenue will be liable to pay the levy, which…

No Need to Disclose Investment Source Raises Money Laundering Risk

Money Laundering
Even though intent of not seeking source of investment may be good, it can have consequences, officials say A new provision in the Financial Act for this fiscal year that it would not seek source of income from investors if they are investing in infrastructure projects and businesses has raised a question of policy reversal and concerns have also grown if it could aid money laundering. “The government will not seek sources for investments made in the areas of nationally important hydropower projects, international airports, infrastructure projects like underground highways, cement factories, steel factories, agriculture-based businesses, tourism, businesses that create…

US Returns to Equatorial Guinea Millions Seized from its Corrupt VP

Corruption
The U.S. will return US$25.6 million in assets purchased with the proceeds of corruption and seized from the Vice President of Equatorial Guinea to the African nation in form of COVID-19 vaccines and other medical equipment, the U.S. Department of Justice announced in a statement Monday. Teodorin Nguema Obiang Mangue, who is also the son of the African nation’s president Teodoro Obiang, has been tried in several countries for corruption and money laundering. He has made headlines for his lavish lifestyle that includes the purchase of several yachts worth more than $100,000,000 a $1.3 million car, and a $677,000 weekend…

U.S. Sanction Crypto Exchange over Ransomware Attacks

Digital Currencies, Sanctions
For the first time ever, U.S. authorities imposed sanctions against a virtual currency exchange for its role in facilitating financial transactions for ransomware actors, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), said in a statement Tuesday. “All property and interests in property of the designated target that are subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them,” read the statement. OFAC claims that SUEX OTC enabled transactions involving at least eight ransomware variants’ illegal proceeds, and that a study revealed that illicit actors were involved in more…