NEWS ARTICLES

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…

Behind Suex.io: the first sanctioned cryptocurrency exchange

Digital Currencies, Sanctions
This morning, OFAC sanctioned SUEX.io, a concierge cryptocurrency exchanger incorporated in Czechia but operating in Russia. This action comes as OFAC and the US Government writ-large try to tackle the festering problems posed by ransomware, and the criminal syndicates using it to extort billions of dollars out of victims around the world. SUEX filled an essential niche in the ecosystem of underregulated exchanges that, either through willful ignorance or witting cooperation, facilitate the conversion of illicit crypto ransoms into real-world currency. SUEX largely communicated with its clients on the Telegram app and accepted new customers on a system of referrals…

UK Fraud is Big Business at £52bn Each Year Says Financial Crime Guru

Fraud
Financial crime, fraud and hacking soared during the pandemic as criminals took advantage of behavioural changes during three strict lockdowns. In fact, fraud and cybercrime jumped by nearly a third in the last twelve months. Time for City A.M. to catch up with financial crime guru Richard Wood, a former Morgan Stanley fraud manager who became CEO of economic crime solution provider Synectics Solutions in January of last year. For the last 30 years, the company has been working to prevent financial crime, fraud and money laundering and helps clients such as the Cabinet Office, a range of City banks…

IRS chief tells Elizabeth Warren: More transparent bank data can fight tax evasion

Tax Avoidance
The head of the IRS believes more rigorous disclosures from the nation’s banks could help fix a yawning tax gap and recoup billions in owed revenues. In a letter viewed by CNBC, IRS Commissioner Charles Rettig told Sen. Elizabeth Warren, D-Mass., that relying on banks to report basic information about their customers’ deposits and withdrawals could put a big dent in annual tax evasion. A source provided CNBC access to the letter, which is expected to be released Thursday. The source disclosed its contents on condition of anonymity. The IRS chief told Warren in Friday’s letter that years of budget…

Spanish Police Seize Over a Tonne of Cocaine Bound for Europe

Drug Trafficking
Spanish authorities seized more than 1,200 kilograms of cocaine off the coast of the Canary Islands, an archipelago frequently targeted by transnational crime groups as a launch point for European-bound cocaine shipments because of its geographical position. Spain’s National Police, in a joint operation with the country’s Civil Guard and Tax Agency, reported on Sunday that they intercepted a vessel on the morning of September 20th, while it was still some 600 miles west of the islands, in international waters. Upon investigating the ship’s interior, police uncovered the drugs, which originated from South America. It is presumed that the cargo’s…

N26 Fined for Delayed Money-Laundering Reports by German Finance Regulator

Regulatory Fines
Germany’s financial watchdog BaFin has issued a fine to digital bank N26 for delayed reporting of suspicious money-laundering activity, the bank said on Tuesday. BaFin ordered N26 to pay 4.25 million euros ($5.0 million) in June related to the delayed submission of suspicious activity reports “in the area of anti-money laundering,” in 2019 and 2020. The fine, related to fewer than 50 reports, was paid on July 14, Berlin-based N26 said, adding that all proceedings have been closed. In May, the regulator ordered N26 to implement internal safeguards to prevent money laundering and terrorist financing, including by rectify deficiencies in…

Buckland calls for tougher corporate crime laws

Legislation
The lord chancellor has called for stronger laws against companies that facilitate economic crime – but said that firms should not face an ‘undue burden of compliance’. Speaking at the International Symposium of Economic Crime, Robert Buckland said there are concerns that the current law on corporate criminal liability is not fit for purpose, especially when applied to large corporates. ‘Reform may indeed be needed to ensure that organisations of all sizes can be held to account and serious crimes can be punished appropriately,’ he said. ‘At the same time, it is of course important to ensure that any reform…

SEC Issues $114 Million to Two Whistleblowers

Whistleblowing
The U.S. Securities and Exchange Commission awarded about $114 million in total to two whistleblowers, including one who provided independent analysis to the regulator that helped substantially advance investigations, the SEC said. With the latest awards, the SEC whistleblower program has paid out more than $1 billion to 207 whistleblowers since issuing its first award in 2012, the agency said. That marks a milestone for the SEC whistleblower program created by the 2010 Dodd-Frank Act. The SEC announced the awards Wednesday but didn’t name the cases involving two companies that the awards are connected to and didn’t identify the tipsters,…

29 Crypto Exchanges Meet Registration Deadline But Face Challenges

Digital Currencies, Regulation
Twenty-nine of Korea’s 66 cryptocurrency exchanges met a legal deadline to put themselves under regulatory supervision, but they still face challenges, market insiders said Sunday, such as risks from legal breaches and an inability to convert coins into Korean won. The Financial Services Commission said Saturday that 29 exchanges submitted applications to register their businesses by Friday and will process them within three months, legitimizing their status as market players but also subjecting them to regulatory monitoring and supervision. The registration brings them out of local legal blind spots, but the exchanges now have to abide by global rules on…

U.S. Charges 138 Medical Workers for US$1.4 Billion Fraud

Fraud, Prosecutions
The Department of Justice last week announced criminal charges against 138 doctors, nurses and licenced medical professionals for their alleged involvement in fraud schemes worth around US$1.4 billion. Authorities accused 43 suspects from 31 federal districts of causing $1.1 billion of that loss through fraudulent claims in telemedicine — medical services offered online. The rest involved “sober homes”, COVID-19 related fraud and opioid distribution schemes. Court documents show that some telemedicine executives paid doctors and nurses to order unnecessary medical equipment and pain medications often after interacting with patients only briefly over the phone or not at all. The companies…

CLSAP NZ hit with $770,000 fine for anti-money-laundering law breaches over $50m in transactions

Money Laundering, Regulatory Fines
A New Zealand derivatives trading firm and subsidiary of a Hong Kong company has been fined $770,000 for breaching anti-money-laundering laws over nearly $50 million of suspicious transactions. CLSA Premium New Zealand Limited (CLSAP NZ) admitted it was out of line with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act in a High Court settlement with the Financial Markets Authority (FMA) earlier this year. As part of its agreement with the markets watchdog, CLSAP NZ admitted to failing to conduct enhanced customer due diligence over 12 transactions and failing to conduct customer due diligence in relation to one…

How the Taliban is funded: Where the Militant Group Gets Money and Weapons

Drug Trafficking
The Taliban have built a financial empire, but it could be thinly stretched as they become the Afghan government The swift Taliban military onslaught that saw the militant group take over the whole of Afghanistan in a matter of weeks revealed how wealthy it has become since the ousting of its regime in 2001. In the past two decades, the insurgents have run a state-like economy in the areas they controlled. They relied on various fundraising sources, such as drug trafficking and other criminal activities, extortion and taxes, charitable donations and foreign assistance. “The Taliban operates a classic ‘territory controlling’…

Ex-MP Charged With Making Fraudulent Invoices

Fraud, Prosecutions
Rosemary Ainslie, head of Special Crime at the CPS, said: “The Crown Prosecution Service has today authorised police to charge Jared O’Mara, former MP for Sheffield Hallam, with seven counts of fraud by false representation. “The charges relates to an allegation he made fraudulent invoices to the Independent Parliamentary Standards Authority in 2019 jointly with Gareth Arnold, who is also charged with six counts of the same offence. “Jared O’Mara is charged jointly with John Woodliff with a Proceeds of Crime Act offence. The CPS made the decision that the three men should be charged after reviewing a file of…

HM Treasury Consults on Extending SMCR to FMI

Senior Managers & Certification Regime
It is little over six months since the phased roll-out of Senior Managers and Certification Regime (SMCR) reached a climax-of-sorts, with the introduction of the regime for benchmark administrators. The scope of the landmark regime – which is part of the UK regulators’ drive to improve culture, governance and accountability – is, however, set to be further extended, with HM Treasury having launched a consultation on applying the SMCR to financial market infrastructures (FMIs). The consultation proposes a regime for the following Bank of England-supervised entities: central counterparties (CCPs); central securities depositories (CSDs); and recognised payment systems and specified service…

Scrap €10k AML Monthly Rent Limit for Letting Agencies, say Propertymark

Money Laundering
Trade body leader, Mark Hayward, suggests that letting agencies should be treated like their sales counterparts to aid AML and stamp out money laundering via property in the UK. Propertymark has called for the €10,000 euro limit on lettings agents having to comply with anti-money laundering (AML) legislation to be scrapped. The trade body’s remarks follow HM Treasury’s announcement that it has launched two consultations to ensure its anti-money laundering processes and supervisory regimes are up to scratch. The Treasury says this offers the opportunity to ensure the regime responds to the UK’s particular circumstances and risks, is as effective…

Crown Court Clogged by Low Value Fraud Cases

Fraud
The Crown court heard almost double the number of fraud cases in the first half of 2021 than in the same period last year – but a drop in the value of alleged frauds suggests that complex hearings are still being delayed. Research by Big Four firm KPMG found that 151 criminal fraud cases – each worth over £100,000 – were heard in the first six months of 2021, as courts began to recover from the pandemic. Just 180 cases were heard in the whole of 2020. Cases relating to rogue tradesmen more than doubled in volume in the first…

China’s Planned Anti-Sanctions Law for Hong Kong Unsettles Financial Sector

Sanctions
Global banks and other financial institutions in Hong Kong are scrambling to find out details of China’s planned imposition of an anti-sanctions law on the city, and trying to understand how it could impact their operations in the financial hub. Beijing adopted a law in June under which individuals or entities involved in making or implementing discriminatory measures against Chinese citizens or entities could be put on a government anti-sanctions list. Financial firms are closely watching a meeting this week of the National People’s Congress Standing Committee, the highest organ of China’s parliament, for signs on how and when similar…

London Court Orders Binance to Trace Cryptocurrency Hackers

Digital Currencies, Financial Crime
London’s High Court has ordered Binance, one of the world’s largest cryptocurrency exchanges, to identify hackers and freeze their accounts after one user said it was the victim of a $2.6 million hack. In a judgment made public this week, a High Court judge granted requests by artificial intelligence (AI) company Fetch.ai for Binance to take steps to identify the hackers and track and seize the assets. While involving a relatively small sum, the case is one of the first public ones involving Binance and will be a test of the English court system’s ability to tackle fraud on cryptocurrency…