KYC360 Weekly Roundup - 9th Dec 2022

Published on Dec 09, 2022

Focus on Fraud

As the economic outlook around the world steadily worsens, the one area that is guaranteed to see growth is fraud. So, this week we lead on the ever-present threat of frauds and scams from criminal elements who use deception in its many forms to dishonestly make personal gain at the expense of their victims. 

Speaking of fraud, as the crypto and wider financial sectors continue to reel from the collapse of FTX, many people are saying that the demise of the world’s second largest cryptocurrency exchange came as a result of dishonesty rather than mismanagement, despite protestations to the contrary by former CEO Sam Bankman-Fried.

Sanctions were once again in the news, most notably with the G7, EU and Australia imposing a price cap on Russian oil with the aim of depriving Putin’s faltering war machine of much needed funds.

To complete this week’s Roundup, we provide you with updates on the latest legislation, policies, and opinions, and end with reports covering money laundering, bribery, and corruption from around the world. 

Top fraud trends to watch in 2023

In this video interview, Andi McNeal of the Association of Certified Fraud Examiners, shares details on what she is hearing from anti-fraud practitioners and what should be high on every organisations’ list of fraud concerns.

Report: 2023 Financial fraud trends and predictions

The rising popularity of cryptocurrency, advancements in digital identification technology, and regulatory moves over scams and fraud are just some of the issues covered in this report from Javelin Strategy & Research.

What is Fraud? Important definition and examples

The term ‘fraud’ generally covers activities such as theft, corruption, embezzlement, money laundering, bribery, insider trading, and extortion. This blog sets out to define what exactly constitutes fraud and provide examples of the most common types of fraud encountered in this day and age.

Seeking Approval – Acquirers vs. Transaction Fraud

Transaction fraud monitoring lies at the heart of fraud prevention for acquiring banks. But while efforts to reduce fraud rates have advanced, so has the sophistication of fraudsters. While the emergence of AI within fraud solution models has progressed, banks must get to grips with processing and utilising this data to full advantage, in order to inform a robust and futureproof strategy which can both increase approvals and reduce fraud.

EU uncovers €2.2 billion tax fraud scheme

The European Public Prosecutor’s Office (EPPO) has uncovered the largest ever value-added tax (VAT) fraud scheme in the EU, estimated to be worth €2.2 billion (US$2.3 billion) in stolen tax revenue. As part of an 18-month-long investigation that involves 9,000 entities and 600 people around the globe, law enforcement agencies from 14 EU member states simultaneously carried out over 200 searches.

Opinion: Regulatory independence vital in fight against fraud

The UK government is pursuing a policy that would see HM Treasury potentially granted authority to intervene with or overrule the City’s key regulators, including the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). This article argues that regulators must be able to act independently and without government intervention.

Police to contact 70,000 victims following the UKs biggest ever fraud investigation

Following the report last week on Scotland Yard’s cybercrime unit taking down the iSpoof fraud website, the metropolitan police are now actively contacting over 70,000 numbers that have been approached by an identified suspect via iSpoof. Those contacted are being encouraged to visit the Met website to report losses and learn more information.

Which? claims UK banks are leaving customers wide open to spoofing fraud

To make it harder for fraudsters to impersonate them, companies can sign up to regulator Ofcom’s ‘Do Not Originate’ (DNO) list, a shared resource with telecoms providers to help them identify and block calls from numbers that are most likely to be spoofed. Yet Which? has revealed that at least six major banks and building societies have failed to make full use of the DNO list.

Argentine Vice President Cristina Fernández convicted of $1B fraud

Argentina’s Vice President Cristina Fernández has been convicted and sentenced to six years in prison and a lifetime ban from holding public office for a fraud scheme that embezzled $1 billion through public works projects during her presidency.

Wirecard in the spotlight again as Germany’s biggest fraud trial starts

Three former Wirecard executives have finally gone on trial, two years after the collapse of the payments company that resulted in Germany’s biggest post-war fraud scandal and sent shockwaves through the country’s political and financial establishment. Former chief executive Markus Braun and two other high-ranking managers of the now defunct company are facing charges, including fraud and market manipulation.

Financial_ServicesMoney Laundering, Fraud & Corruption

FCA fines Santander UK £108m over money laundering failings

The Financial Conduct Authority (FCA) has fined Santander £107.8m over “serious and persistent gaps” in its anti-money laundering controls which opened the door to “financial crime”. The failings affected the oversight of accounts held by over 560,000 business customers between 31 December 2012 and 18 October 2017, leading to over £298m passing through the bank before it closed accounts.

Ukraine’s 2030 World Cup bid likely over following fraud and money-laundering allegations

Two leading officials in Ukraine’s football association have been arrested over fraud and money-laundering allegations related to the construction of an artificial grass factory. Andriy Pavelko, the president of the Ukraine FA, and Yuri Zapisotsky, the association’s general secretary, are accused of embezzling 26.5m Ukrainian Hryvnia (£600,000).

Webinar: Money Laundering through the Real Estate sector

This FATF webinar (which takes place on 14 December 2022 from 12:00-13:00 UTC + 1) will explore how criminals launder the proceeds of crime through the real estate sector and what authorities and the private sector can do to detect and disrupt these financial flows.

AUSTRAC moves against Star Entertainment for non-compliance with AML/CFT laws

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has commenced civil penalty proceedings in the Federal Court against The Star Pty Limited and The Star Entertainment QLD Limited. The action follows alleged serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.

Australia’s civil anti-money laundering enforcer to take legal action against SkyCity

SkyCity Entertainment Group’s Adelaide casino is the latest gambling company to face legal action over alleged non-compliance with AML/CFT laws. It joins Star’s Sydney, Brisbane and Gold Coast casinos, and Crown’s Melbourne and Perth casinos in facing legal action from AUSTRAC (Australian Transaction Reports and Analysis Centre).

Swiss-based global technology company settles bribery charges in three different countries

ABB Ltd has agreed to pay more than $315 million to resolve an investigation into violations of the Foreign Corrupt Practices Act (FCPA) stemming from the bribery of a high-ranking official at South Africa’s state-owned energy company.

Former NGO heads plead guilty to conspiring to bribe Marshall Islands officials

Two Marshallese nationals pleaded guilty to conspiring to pay bribes to elected officials of the Republic of the Marshall Islands (RMI) in exchange for passing certain legislation. The former heads of a New York-based NGO allegedly bribed the officials in an attempt to create a semi-autonomous region with lower tax rates.

International waste management company to pay over $84 m to resolve foreign bribery resolution

Stericycle Inc. has agreed to pay more than $84 million for corrupt business practices in paying millions of dollars in bribes to foreign officials in multiple countries. The company maintained false books and records to conceal corrupt and improper payments made by its subsidiaries in Brazil, Mexico, and Argentina.

Key plaintiff in landmark corporate transparency case owned companies in notorious tax havens

According to the 2021 Pandora Papers investigation, a business executive in Luxembourg behind a successful effort to roll back corporate transparency in Europe owned companies in high-profile tax havens. Patrick Hansen was one of two plaintiffs who persuaded the highest court in Europe to rule that making public the names of company owners violates personal privacy and the right to the protection of personal data.

Airbus to pay additional €16m fine to resolve second foreign bribery probe

A French court has approved a corporate settlement to resolve an investigation into bribes paid in Libya and Kazakhstan over a decade ago. The French prosecution agency said it couldn’t include the Libyan and Kazakh bribery matters in the company’s record-breaking settlement in 2020 because the investigating magistrate handling the cases hadn’t formally charged Airbus at the time.

FCA fines Julius Baer £18m over ‘corrupt’ relationship with Russian oil conglomerate

The UK’s Financial Conduct Authority (FCA) has fined Julius Baer International Limited (JBI), an investment advisory and wealth management firm, £18m ($21.4m) for failing to conduct its business with integrity, failing to take reasonable care to organise and control its affairs, and failing to be open and cooperative with the FCA.

RequirementsLegislation, Regulation and Sustainability

Democrats push DOJ to publish database of Corporate Lawbreaking

Three congressional Democrats have unveiled the Corporate Crime Database Act, which would direct the US Department of Justice to make information about corporate wrongdoing and efforts to curb it publicly available.

Dutch Finance Minister rejects calls to report suspicious rather than unusual transactions to FIU

Dutch Finance Minister Sigrid Kaag has rejected calls from the country’s Central Bank to focus on “suspicious transactions” rather than “unusual” ones. However, she has indicated that she would like to “enter into a discussion” with DNB to hear more about the background to the suggestion but stressed that the country’s AML/CFT regime has been assessed as “robust”.

Opinion: “It’s about time we took tackling dirty money seriously”

What is the EU and the wider Western world doing to tackle financial crime? And can financial tools be used to curb hostile regimes such as the one in Russia? These are some of the questions being explored by the Centre for Financial Crime and Security Studies (CFCS), a part of Britain’s leading security think tank – the Royal United Services Institute (RUSI).

“What we don’t really have is a system that’s sitting there thinking: ‘How can money, which may seem clean, be used for bad in our countries’.” 
Tom Keatinge, Founder and director of CFCS

Opinion: “Doesn’t anybody do due diligence anymore?”

The collapse of Theranos and FTX demonstrates a broad failure by investors to ask questions before handing over cash. Due diligence once meant sending bankers to check that a mining company really had a working gold mine and hiring accountants to scour the books. These days, the boring yet crucial process of checking that potential investments can live up to their promises seems to have fallen completely by the wayside.

Opinion: Is long-awaited reform of the UK’s outdated corporate prosecution rules coming one step closer? 

Veteran economic crime campaigner Margaret Hodge MP has put forward some bold and crucial amendments to the Economic Crime and Corporate Transparency Bill currently going through Parliament. Their aim is to dramatically improve how big companies and senior executives can be held to account for economic crime.


Crypto-1Crypto & Virtual Assets

FTX’s Sam Bankman-Fried ‘one of the greatest fraudsters in history’

Binance CEO Changpeng Zhao has spoken out against disgraced FTX founder Sam Bankman-Fried and his once-$32 billion crypto empire. Branding him “one of the greatest fraudsters in history”, Zhao has stated, “FTX killed themselves (and their users) because they stole billions of dollars of user funds”.

FTX contagion spreads as hedge fund defaults on $36m of debt

According to a report by Bloomberg, Orthogonal Trading has become the latest victim of the fallout from the sudden collapse of crypto exchange FTX and trading house Alameda Research. As a direct result, the cryptocurrency hedge fund has defaulted on $36 million of loans on crypto lending protocol Maple Finance.

Bybit lays of more staff to weather crypto storm

Crypto exchange Bybit is announcing another round of job cuts job cuts as it prepares for a crypto winter. Founder and CEO Ben Zhou stated that “tough times demand tough decisions”, as he announced plans to reduce its workforce as part of an ongoing re-organisation of the business in order to refocus efforts for the deepening bear market. Sources suggest that as many as 30% of staff may be affected. 

Goldman Sachs in market for bargain-basement crypto firms following the collapse of FTX

According to Reuters, the investment bank is looking to spend “tens of millions of dollars” in the crypto ecosystem as they’re seeing low prices and better value following the collapse of FTX.

“FTX’s implosion has heightened the need for more trustworthy, regulated cryptocurrency players, and big banks see an opportunity to pick up business.”
Mathew McDermott, Head of Digital Assets, Goldman Sachs

OECD presents new transparency framework for cryptoassets

The OECD has delivered a new global tax transparency framework to provide for the reporting and exchange of information with respect to cryptoassets. The Crypto-Asset Reporting Framework (CARF) is the response to a G20 request that the OECD develop a framework for the automatic exchange of information between countries on cryptoassets.

France and Luxembourg complete CBDC experiment

The central banks of France and Luxembourg have used an experimental CBDC to settle a €100 million digital native bond. The Venus initiative saw the bond issued by the European Investment Bank under Luxembourg law and settled using a tokenised representation of euro central bank money.

Event: Will CBDCs and digital currencies transform the payments landscape?

Central banks across the world are considering, piloting, and in some cases have even launched CBDCs. Despite this, there is no consensus on what the philosophical purpose of a CBDC is. This insightful event will explore what a country might gain from CBDCs, what role can they play in financial crime, and what area of the economy are they suitable for?



G7, EU and Australia introduce Russian oil price cap

The G7, EU and Australia have imposed a price cap of $60 per barrel on Russian crude oil traded by firms shipping oil to third countries. The provision of certain services relating to the maritime transport of Russian oil will be authorised only where oil is purchased at or below the price cap. Russia has said it will not abide by the measure even if it has to cut production.

Russia assembles a ‘shadow fleet’ of over 100 oil tankers to circumvent sanctions

According to the Financial Times, Russia has assembled a “shadow fleet” of more than 100 oil tankers in a bid to bust western sanctions. Shipping brokers and analysts told the newspaper they estimated Moscow has quietly amassed more tankers this year. 

“We’ve seen quite a number of sales to unnamed buyers in recent months, and a few weeks after the sale many of these tankers pop up in Russia to take their first load of crude.”
Craig Kennedy, Russian oil expert at Harvard’s Davis Center

Russian businessman arrested in UK investigation into oligarchs

A Russian businessman has been arrested by police investigating potential criminal activity by oligarchs. The 58-year-old man was held on suspicion of money laundering, conspiracy to defraud the Home Office and conspiracy to commit perjury. According to the NCA, almost 100 actions that remove or reduce a criminal threat have been carried out against Putin-linked elites and their enablers.

USA/Iran: The lessons learned on sanctions enforcement in the Kraken case

The crypto exchange Kraken has settled a case with OFAC for inadequate systems and controls to prevent client operations in jurisdictions subject to economic sanctions. Kraken maintained an anti-money laundering and sanctions compliance program, which included screening customers’ onboarding and management, as well as a review of IP address information to prevent users in sanctioned jurisdictions from opening accounts. Despite these controls, Kraken processed 826 transactions on behalf of individuals located in Iran at the time of the transactions.

US traders are ignoring sanctions to import conflict teak from Myanmar

This report provides an overview of how the imports of teak into the US have escalated since the 2021 coup in Myanmar, and a rebuttal to the ‘stockpile narrative’ used by US teak traders to justify teak imports into the US which are covered by sanctions. The military is devastating the few remaining teak forests of Myanmar to profit from the demand for Burmese teak and provide desperately needed hard currency for the regime.


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