KYC360 Weekly Roundup - 3rd Mar 2023

Published on Mar 03, 2023

FATF Week February 2023 Outcomes

Welcome to this week’s AML Roundup. This week we lead by reporting on the Financial Action Task Force Plenary which took place on 22-24 February and concluded FATF Week.

Most notable, was the suspension of the membership of the Russian Federation from the global watchdog due to its ongoing invasion of Ukraine. Delegates also discussed a number of key issues, including how to prevent shell companies and other opaque structures from being used to launder illicit funds. South Africa and Nigeria were placed on the ‘grey list’ of jurisdictions under increased monitoring, while Cambodia and Morocco proved they have done enough to be taken off the list. Meanwhile, Jamaica and other Caribbean territories were given a deadline of June 2023 to demonstrate significant progress or risk being placed on the ‘black’ list alongside Myanmar, Iran and North Korea.

With legislation in mind, we report on the introduction of a range of new international rules, policies, and accompanying analyses. We also deliver the latest news on sanctions and the crypto sector, and wrap up this week’s Roundup with a selection of items from around the world covering money laundering, bribery, fraud, & corruption. 

The full official outcomes of the FATF Plenary, 22-24 February 2023

Delegates from over 200 jurisdictions of the Global Network participated in these discussions at the FATF headquarters in Paris. On conclusion of the meeting, the official outcomes were published on the FATF website and can be seen here.

Statement on the suspension of the Russian Federation’s membership of the FATF

The FATF strongly condemned the Russian Federation’s war of aggression against Ukraine; its actions unacceptably run counter to the FATF core principles aimed at promoting security, safety, and the integrity of the global financial system. As a result, the FAT decided to suspend the membership of the Russian Federation but stated that it remains accountable for its obligation to implement the FATF Standards and must continue to meet its financial obligations.

Jurisdictions under Increased Monitoring as of 24 February 2023

Often referred to as the ‘grey list’, jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. This publication displays the most up-to-date list of the jurisdictions currently on the ‘grey list’.

G20 Chair’s Summary and Outcome Document  

The first G20 Finance Ministers and Central Bank Governors meeting was held in Bengaluru on February 24-25, 2023. It reaffirmed G20 members’ commitment to deliver on the strategic priorities of the FATF and its FATF Style Regional Bodies. G20 members welcomed FATF’s work on strengthening the FATF Standard on beneficial ownership and the guidance on the transparency of beneficial ownership of legal persons, finalised at last week’s FATF Plenary. G20 members committed to the widest possible range of international cooperation in relation to basic and beneficial ownership information, supported the FATF’s work on strengthening asset recovery, and to speed up implementation internationally of FATF Standards on virtual assets. Read the full G20 Chair’s summary and outcomes here. 

Africa’s economic powerhouses South Africa and Nigeria placed on the grey list 

decision was made to place both South Africa and Nigeria on the global financial watchdog’s ‘grey’ list. South Africa’s Finance Minister Enoch Godongwana said that the government recognises that addressing its shortcomings is in South Africa’s interests and is consistent with its existing commitment to fighting crime. Meanwhile, there was no immediate reaction from the government in Nigeria, which has been holding elections.

Cambodia and Morocco taken off the ‘grey list’ 

Cambodia and Morocco have been officially removed from the ‘grey list’ thanks to their efforts in combating money laundering, terrorism financing and weapons proliferation financing. Both nations have been actively working with the FATF to address strategic deficiencies in their regimes and have been rewarded for their hard work and cooperation.

Jamaica and Caribbean territories given June deadline to make progress or be put on ‘black list’ 

The FATF has given Jamaica and several other Caribbean territories a deadline of June 2023 to demonstrate significant progress in completing their action plans. Failure to do so could result in being placed on the ‘black’ list alongside Myanmar, Iran and the Democratic Republic of Korea (North Korea).

“The FATF strongly urges Jamaica to swiftly demonstrate significant progress in completing its action plan by June 2023 or the FATF will consider next steps, which could include calling on its members and urging all jurisdictions to apply enhanced due diligence to business relations and transactions with Jamaica.” 
FATF’s plenary and working group meetings, February, 2023


Financial_ServicesMoney Laundering, Fraud & Corruption

Glencore to pay $700 million in US after bribery guilty plea  

Glencore Plc has been ordered to pay $700 million in connection with its guilty plea over a decade-long scheme to bribe foreign officials across several countries. The sentence handed down by a federal court consisted of a $428.5 million fine and $272 million in forfeiture, in line with the plea deal reached in May 2022 between the mining and commodity trading giant and federal prosecutors in Manhattan.

Wirecard: how the biggest fraud in German history was uncovered 

Before the payments group imploded in Germany’s largest postwar corporate fraud, Wirecard was embraced by the German élite. But a reporter uncovered the truth; behind the façade of innovation were lies and links to Russian intelligence. This article reveals how Jan Marsalek, Wirecard’s COO, who embezzled tens of millions of dollars from the group, rented a secret mansion near the Russian consulate in Munich, where he held meetings with spies and government officials.

Church Minister sentenced to 5 years on federal money laundering charges  

Charles Southall III, a New Orleans pastor who pleaded guilty to defrauding his church, its parishioners and a school of nearly $900,000 for his own personal gain has been sentenced to five years in prison by a US federal judge for money laundering.

Australian accountant jailed over $2.4m tax fraud

A former Queensland accountant and prominent horse racing figure has been jailed for six years over a $2.8 million tax fraud. Craig William Morrissey failed to declare his taxable income between October 2010 and June 2014, by filing eight business activity statements and three business tax returns with false information about sales, purchases and tax due from his company that performed audits on self-managed superannuation funds.

The corruption of massive industry ‘sweeteners’ in foreign arm sales 

Weapons firms are literally paying governments, especially the UAE and Middle Eastern states, to buy their weapons. Typically referred to as “offsets,” these secretive “sweeteners” or investments mask corruption risks and undermines the Biden administration’s efforts to encourage U.S. companies and foreign governments to fight corruption and protect democracies.

9 countries to watch on the 2022 Corruption Perceptions Index 

The 2022 Corruption Perceptions Index (CPI) revealed a world still waiting for action against corruption. There have been countries that have made progress, with 25 out of 180 reducing corruption in their public sectors since 2012, yet even more countries have declined, with 31 significantly dropping down the CPI in the same period. In this report, Transparency International has identified nine countries to keep a very close eye on in 2023.

Ecuador charges former president over alleged hydroelectric dam bribery scheme 

Ecuadorean prosecutors has filed corruption charges against 37 people including former President Lenin Moreno and a former Chinese ambassador over an alleged bribery scheme to win a contract to build a US$2.5 billion hydroelectric dam. According to prosecutors, the investigation “reveals a structure of corruption around the Coca Codo Sinclair hydroelectric project.” 



Legislation, Regulation and Sustainability

AUSTRAC cements partnership with the UK to intensify fight against financial crime 

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has strengthened ties with the UK by signing Memoranda of Understanding (MOU) with two British regulators. The MOU with the UK’s Financial Conduct Authority (FCA) will enable the two agencies to enhance engagement on regulatory issues, including exchanging regulatory information, and improving shared understanding of emerging trends, risks, and the compliance of businesses that operate in both countries. In addition, AUSTRAC entered into a MOU with HMRC in order to generate opportunities through the exchange of regulatory information to strengthen operational collaboration between the agencies. 

US bankers warn that proposed rule would render company registry ‘effectively useless’

The US Treasury Department’s crusade to build a company ownership database in order to battle dirty money has hit another setback, with a key national banking group calling for the agency to withdraw its “fatally flawed” plan. The American Bankers Association claims the Treasury’s latest proposed rule for the registry would so sharply restrict bankers’ access to company ownership data that it would be useless to the country’s sprawling financial sector.

FCA enforcement places ‘inadequacy of staff training’ under the microscope

Recent AML fines issued to two financial firms illustrate that financial crime compliance remains central to the FCA’s enforcement agenda. The fines add weight to the FCA’s mounting purpose to target firms who fail to put adequate governance, systems and controls in place to effectively counter financial crime risks. ‘Inadequacy of training for staff’ was identified as a central theme after being specifically referenced as a recurring weakness in the regulator’s summary of reasons for final notice action in both instances.

Enthusiasm to target kleptocratic assets appear to wane as governments struggle to report on progress 

Transparency International is calling on governments that have pledged to track down sanctioned Russian elites’ wealth to be publicly accountable about the measures they have taken over the past year. As the one-year anniversary of the invasion of Ukraine approached, Transparency International attempted to obtain information on Western governments’ progress in tracing kleptocratic assets. The information it was able to gather so far indicates that governments need to get more serious about targeting illicit wealth stashed within their borders.

What progress has been made two years after the Kalifa fintech review?

Ron Kalifa OBE’s fintech review, released in 2021, outlined a comprehensive plan to bolster the UK sector’s dominance across the world at an inflection point between opportunity and risk for the industry. The review outlined five core recommendations, including policy and regulation; skills and talent; investment; international attractiveness and competitiveness; and national connectivity. Two years on, amid inflation, a sharp decline in investment, and job losses, this article questions how much progress has really been made? 

New whistleblower protection law approved by Spanish Congress

Spanish legislation has a long tradition of creating of reporting channels through which a private entity can be informed, even anonymously, of the commission of acts or conduct that may be contrary to general or sectoral regulations. However, the obligation to set up such reporting systems has not, until now, been accompanied by a centralised and comprehensive regulation that addresses whistleblower protection and establishes minimum standards for reporting channels. Despite a year’s delay, Spain has finally approved the final text of the law.


Crypto-1Crypto & Virtual Assets

Bankman-Fried faces new criminal charges relating to political contributions

Four new criminal charges accuse the FTX cryptocurrency exchange founder of conspiring to commit bank fraud and to make unlawful political contributions. According to prosecutors, Bankman-Fried plotted with two former FTX executives to donate tens of millions of dollars in an effort to influence politicians to pass legislation that would help the company. The indictment claims the donations were made through “straw” donors or with corporate funds, helping Bankman-Fried to evade contribution limits.

Crypto firm with links to UK parliamentary groups appears to have vanished 

According to this article, a cryptocurrency investment firm with links to two all-party parliamentary groups (APPGs) appears to have disappeared, leaving some investors fearing they have lost tens of thousands of pounds and raising the prospect of further questions being asked about the role of APPGs in parliament. Phoenix Community Capital established itself in 2022 as a cryptocurrency project and investment scheme, however, the company appears to have vanished in September last year, with its website going offline and the investment portfolios, known as “nests”, becoming inaccessible to an estimated 8,000 investors after that date.

Crypto trade group criticises SEC insider trading case 

A US-based trade association representing crypto firms has called for the dismissal of an insider trading case brought by the Securities and Exchanges Commission (SEC) arguing that the regulator has unfairly labelled crypto assets as securities. The case involves a former product manager at crypto exchange Coinbase and two associates who are accused of insider trading. However, the trade group Chamber of Digital Commerce has called on a federal court to dismiss the case, arguing that it could have wide and negative ramifications for the digital assets sector. At the heart of the association’s concern is the SEC’s apparent labelling of some cryptoassets as securities, as opposed to commodities or currencies.

Bank of England: digital pound “more likely than not”

Bank of England deputy governor Jon Cunlifffe has told a committee of MPs that a digital pound has a better than 50/50 chance of coming to fruition. In remarks before the Treasury Select Committe, Cunliffe said that the creation of a digital pound would open up new frontiers for payments innovation, citing possibilities arising from programmable money and micropayments.

CBDC in the Nordics 

The concept of the central bank digital currency (CBDC) is being explored by central banks across the world, particularly in the Nordics. This article reveals how Sweden, Denmark, Norway, Finland and Iceland have taken the lead on these developments, while others remain more skeptical over how the benefits outweigh the risks.

Mastercard partners Web3 outfit Immersve on crypto payments 

Mastercard has teamed up with Web3 outfit Immersve to allow people in Australia and New Zealand use cryptocurrency directly from their Web3 wallet to make digital, physical and metaverse purchases wherever Mastercard is accepted.

Major banks back ‘Japan Metaverse Economic Zone’ 

Several key Japanese banks and tech firms have combined forces on a metaverse infrastructure project that will provide payments, authentication, and insurance services for users across platforms. The new open metaverse infrastructure, called Ryugukoku, will use the metaverse construction framework Pegasus World Kit, developed by TBT Lab Group-owned JP Games. 



Russian oligarchs can more easily evade EU sanctions following EU court ruling 

Following a decision by the European Court of Justice (ECJ) last November to ban one of the EU’s most powerful anti-money laundering measure, this report reveals that Russian oligarchs can now more easily evade EU sanctions than at the start of the invasion of Ukraine, The court ruled the new transparency measures violate the privacy of a plaintiff who received nearly €100 million in loans from Russian tycoons and has been involved with over 100 companies spread across tax havens.

Webinar: Business schemes that make it easy for Russian oligarchs to hide their assets in the UK 

March 03 14:00 GMT. The swathe of sanctions following Russia’s invasion of Ukraine and the introduction of stricter anti-money laundering laws in 2022 is forcing Russian oligarchs and businesspeople to seek new, more sophisticated schemes to hide assets by exploiting loopholes in British law. In this webinar, three international compliance and risk management experts will gather at a roundtable to analyse this problem and find solutions to keep global markets and businesses safe. 

Russian national charged with supplying US technology to Russia and North Korea

A federal court in Brooklyn, New York has indicted Ilya Balakaev with a variety of charges related to smuggling devices commonly used in counterintelligence operations out of the US to Russia for the benefit of the Federal Security Service of the Russian Federation (FSB) and the Democratic People’s Republic of Korea (DPRK). It is alleged that the defendant smuggled the electronic devices to the FSB and DPRK in direct violation of US Sanctions.

DOJ seizes £60million-worth of property from Russian oligarch

Viktor Vekselberg, a sanctioned Russian oligarch and ally of Vladimir Putin, has had £60million-worth of property in New York and Florida seized by the Department of Justice (DOJ) on the anniversary of Russia’s invasion of Ukraine.

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