KYC360 Weekly Roundup - 20th Jan 2023

Published on Jan 20, 2023

How Corruption Erodes Democracy

Following allegations that Qatar bribed EU officials to win influence, the president of the EU Parliament warned that “European democracy is under attack”. At the time many viewed this as an overreaction, yet following the revelations that Morocco may have been buying influence for decades, the threat is now being taken far more seriously. So, this week we lead with an examination of the growing role of corruption in influencing parliamentary democracies.

Still reeling from recent bankruptcies and staff layoffs, the crypto sector is under further scrutiny following the takedown of the Bitzlato crypto exchange and the arrest of its majority owner who stands accused of operating a high-tech financial hub.

We also report on the introduction of a range of new international rules and policies and accompanying analyses. And we wrap up this week’s Roundup with the latest news on money laundering, together with a selection of other newsworthy items.


Financial_ServicesMoney Laundering, Fraud & Corruption

Belgian MEP failed to declare expenses-paid trip to Qatar

Belgian MEP Marc Tarabella, a suspect in the Qatargate corruption scandal, failed to declare a working trip he made to Qatar in 2020. Tarabella has not been charged but is close to Pier-Antonio Panzeri, an Italian former MEP from whose house €600,000 in cash was seized. Belgian authorities have asked for Mr Tarabella’s immunity to be lifted. Last week another Belgian MEP, Socialist Maria Arena, said she had ‘forgotten’ to declare a similar expenses-paid trip to Qatar last year.

EU Parliament starts process to waive immunity of two more MEPs

The EU Parliament has started formal procedures to lift the immunity of two MEPs who are suspected of wrongdoing in the ongoing corruption scandal. Reports reveal the Marc Tarabella from Belgium and Andrea Cozzolino from Italy are the MEPs under investigation, both of whom deny any involvement.

EU Parliament to present 14-point anti-corruption reform

The EU Parliament is to unveil proposals to crack down on corruption following the scandal over alleged Qatari and Morocco influence peddling. President Roberta Metsola will present an anti-corruption package spanning 14 proposals with the aim of preventing future incidences. Among the key proposals are plans to prevent former MEPs from taking up immediate lobbying jobs in what is known as a cooling off period and the banning of so-called “friendship groups”, which can be used by foreign states as a backdoor entry into lobbying the EU Parliament via friendly MEPs.

Why a European central PEPs registry makes more sense now than ever

As we grapple with the issues of corruption among politicians, author Solene Clement believes it is time to create an official list of PEPs, in the form of a register, consolidated at the European level to deliver an excellent basis for identifying PEPs who are unambiguously so, and at no cost.

Blue-chip firms with Chinese interests pour cash into UK parliament lobbying group

High-profile firms with significant business interests in China are pouring money into a parliamentary lobbying group established to promote closer ties between the two nations. Data shows wealthy donors including HSBC, John Swire & Sons, Arup, and the City of London Corporation have made the China APPG one of the best-funded cross-party groups in parliament.

Can the next UK General Election be protected from dirty money?

Existing electoral law does not do enough to safeguard UK political parties from foreign influence and dirty money, as the 2020 Russia report by the Intelligence and Security Committee (ISC) noted when revealing that Russian elites with close links to Putin had been major donors to UK political parties. With a General Election around the corner, parties will be looking for donations, but until they have policies in place to conduct proper checks on the source, the integrity of the UK’s democratic process will continue to be at risk.

Westminster Accounts: turning transparency into accountability

The Westminster Accounts is a collaborative, public interest driven delve into the financial affairs of our politicians by Sky News and Tortoise Media and shows just how vulnerable UK politics is to those seeking undue influence with their cheque books and how money flows to politicians. It’s crucial that the revelations lead to real reform of UK electoral finance rules, how checks on donations are carried out, and how money buys access to and distorts public decision-making in the UK.

Wealthy countries aren’t necessarily better at fighting corruption

Many people automatically believe that developing nations have a bigger problem with corruption than developed countries such as many EU member states. But the truth becomes clear when you undertake a side-by-side comparison of Italy and Indonesia using the Corruption Risk Forecast’s new Country Comparison tool.

Bangladeshi politician close to prime minister secretly owns $4 million in New York real estate

While working low-paying jobs in New York, Mohammed Abdus Sobhan Miah remained close to Bangladeshi Prime Minister Sheikh Hasina. In 2009, Miah was appointed as Hasina’s “special assistant,” an influential role but one that paid just $1,000 a month. Yet five years later, Miah began acquiring real estate in New York City worth over $4 million, which he did not include in an asset declaration required for his 2018 parliamentary run.

Malaysia’s Prime Minister vows to stop country being smeared by corruption and abuse of power

Prime Minister Datuk Seri Anwar Ibrahim has called on all quarters across the political divide to work together to ensure the country would not be tainted by large scale corruption and power abuse ever again. He also urged civil servants to discard the permissiveness mentality and to uphold democratic accountability values to prevent such a shameful incident from occurring again.

UK watchdog fines Al Rayan bank over money laundering control failures

The Financial Conduct Authority (FCA) has fined Al Rayan Bank plc 4 million pounds ($4.85 million) for failing to implement adequate controls to prevent money laundering. According to the UK financial watchdog, between April 1, 2015, and Nov. 30, 2017, Al Rayan allowed money to pass through the bank and be used within the UK without carrying out appropriate checks.

“Al Rayan was aware of these weaknesses and failed to implement effective changes to fix them, despite the FCA raising concerns about the inadequacies of their systems.”
Statement from the FCA

Malta BNF Bank fined €190,000 for anti-money laundering shortcomings

BNF Bank has been fined €190,000 and reprimanded by the Financial Intelligence Analysis Unit (FIAU) for major shortcomings in its anti-money laundering processes. The bank allowed a customer to withdraw a total of €4 million in one year without requiring information about the purpose of the large withdrawals, failed to flag 19 large transfers ranging from €50,000 to €1 million, took on customers without carrying out a customer risk assessment at the onboarding stage, and employed an inadequate system of assigning a risk rating to customers.

Global anti-money laundering fines surge 50%

Global fines for failing to prevent money laundering and other financial crimes surged by over 50% last year, fuelling warnings that such penalties are not curbing criminals’ ability to channel money through the global financial system.

Money launderers targeted football club owner

Five men have been convicted of money laundering, with almost £1.5m of dirty money being channelled through a law firm in Paisley. This included nearly £1m from the account of the unnamed multi-millionaire football boss.

Former UK Chancellor Nadhim Zahawi to pay millions to settle tax row

Former Conservative chancellor Nadhim Zahawi is said to have agreed to pay several million pounds in tax following an investigation into his financial affairs. According to reports, the current chair of the Conservative party will pay a seven-figure sum to HM Revenue and Customs (HMRC) to settle a tax dispute.

Italy’s most-wanted Mafia boss Matteo Messina Denaro arrested after 30 years on the run

Italy’s most-wanted Mafia boss has been arrested in Sicily after 30 years hiding from authorities. He is alleged to be a boss of the notorious Cosa Nostra Mafia and he was tried and sentenced to life in jail in absentia in 2002 over numerous murders.

Nicola Gratteri: The man on the hit list of Italy’s powerful mafia

Nicola Gratteri, the prosecutor leading the country’s fight against organised crime is Italy’s highest-profile mafia target. He is currently overseeing the biggest trial of its kind since the 1980s, in which over 330 suspects have been testifying and 70 have already been convicted.


RequirementsLegislation, Regulation and Sustainability

European parliament votes to expand proposed rules targeting shell companies

The European Parliament has voted to widen the scope of proposed regulation designed to prevent the misuse of shell companies, and fight tax evasion and avoidance across the bloc. The parliament adopted a report by its Committee on Economic and Monetary Affairs that suggested amendments to “Unshell,” a proposed directive that introduces new criteria to identify entities in the European Union that are solely used to obtain tax advantages.

European authorities set out good practices for financial education

European Supervisory Authorities have compiled a report offering good practice guidance for financial education initiatives on scams, fraud, and cybersecurity. The report from the EBA, EIOPA, and ESMA, is designed to help national authorities and public entities when designing and implementing their financial education initiatives.

Transparency International urges tougher Swiss action over money-laundering

The Swiss branch of Transparency International has stated that Swiss prosecutors need to do more to enforce laws against money-laundering more effectively as the country remains a soft touch for corporate financial corruption. The ethics group said there had been only 10 documented convictions for money laundering and related corruption carried out in the context of companies’ business transactions, under laws that came into effect in 2003.

Human trafficking conviction data updated

This post is supplemental to a previous post published on 28th October 2022: Human Trafficking Cases – Prosecutions & Convictions Analysed by FCN. Following the publication of the data for the previous post, FCN has carried out further research to look more deeply at the Human Trafficking conviction numbers and to control for population and threat.

HMRC heightens focus on professional enablers of tax fraud

Simon York, HMRC’s outgoing head of serious fraud, told the Financial Times that the UK tax authority is stepping up efforts in its pursuit of professional enablers of tax fraud. The warning comes following “dramatic changes” to the increasingly cross-border crime, with tax evasion becoming “much more complex, more sophisticated, more international and more digitally enabled”.

FATF reforms will improve fight against money laundering and terrorism financing

The Financial Action Task Force is to carry out assessments of jurisdictions every six years instead of every decade and will present key recommended action roadmaps to countries which do not get onto its greylist. These are two of the important reforms made by Marcus Pleyer, who headed the FATF between 2020 and 2022 and reported in this article.

“No country in the world can afford to ignore where the money comes from. Money – which includes dirty money – flows to those parts of the world where the legal regimes are weak or the legal regimes are applied ineffectively. Because money can enter the financial system through these loopholes, even small jurisdictions can provide a gateway.”
Marcus Pleyer, Former FATF President

FCA fines show focus remains on AML compliance

The recent fines totalling more than £11.5 million imposed on Guaranty Trust Bank (UK) Limited and Al Rayan Bank PLC for AML failings, highlights the Financial Conduct Authority’s continued focus on driving compliance with anti-money laundering (AML) requirements in UK financial services.


Crypto-1Crypto & Virtual Assets

Bitzlato crypto exchange seized and founder charged with $700m financial crimes

The US Department of Justice’s new cryptocurrency task force (DOJ) has announced its largest enforcement action to date with the takedown of Bitzlato, a Hong Kong-based crypto exchange. Majority owner Anatoly Legkodymov has been arrested and stands accused of operating a “high-tech financial hub that, in his own words, catered to “known crooks” and was used to launder hundreds of millions of dollars in criminal proceeds from the darknet.

SEC charges Gemini and Genesis with selling unregistered securities

The US Securities and Exchange Commission (SEC) has charged digital asset trading firms, Genesis and Gemini, with offering and selling unregistered securities. The SEC’s filed complaint alleges that the crypto asset lending program, Gemini Earn, facilitated the offer and sale of unregistered securities to retail investors, allowing both firms to raise billions of dollars’ worth of crypto assets.

Crypto police swamped as crime hits all-time high of $20bn

As digital assets crime spiralled to a record high last year, current and former UK police detectives have stated that policing crypto cops is an uphill struggle due to a lack of funding and resources. Mark Jervis, a former cybercrime investigator with the Metropolitan Police, said there was “too much work” for law enforcement agencies and the role does not pay officers enough to stop them moving to more lucrative private work.

Crypto bank Silvergate posts $1bn loss

Crypto-focused bank Silvergate has posted a $1 billion loss and confirmed that it has laid off 200 staff. Silvergate held deposits for FTX businesses and Almeda Research, so when the exchange collapsed, it was forced to sell $5.2 billion in assets at a loss to cover the cost and remain liquid, resulting in the loss.

Bulgarian crypto lender Nexo investigated over alleged money laundering and tax violations

Crypto lending bank Nexo is being investigated by Bulgarian authorities on suspicion of money laundering, tax offences, banking without a license, and computer fraud. According to reports, the Bulgarian Prosecutor’s Office is conducting an investigation to ‘neutralize the criminal activity’ of Nexo with over 300 people involved in the operation. Nexo has said it will sue the Bulgarian state for as much as it can get after police raided their offices.

EU finance ministers sees digital euro as complement to cash

The Eurogroup, a body comprising the finance ministers of EU countries, insists that the new currency should be seen as a complement to cash with full legal tender status and a high degree of privacy. Furthermore, it considers that the introduction of a digital euro as well as its main features and design choices requires political decisions that should be discussed and taken at the political level.

Analysing CBDC infrastructure in 2023

In 2023, central bank digital currencies (CBDCs) are likely to remain an important trend to monitor as the results of experiments and pilots from central banks around the world emerge. The second Finextra Digital Asset Series webinar focused on the topic of CBDCs and the practicalities that must be considered. This article highlights some of the most crucial points that were raised. slashes 20% of global workforce will cut its global headcount by 20%, in efforts to navigate ongoing economic headwinds and unforeseeable industry events. The announcement published on the company site reads that despite the company growing to over 70 million users globally, the confluence of negative economic developments, ambitious growth, and the recent collapse of FTX have led to the decision to reduce employee numbers. CEO and co-founder, Kris Marszalek, noted the FTX collapse “significantly damaged trust in the industry.”



Opinion: Failure to expand the allied sanctions coalition must be addressed

Tom Keatinge, founding director of the Center for Financial Crime and Security Studies, claims the existing sanctions regime faces two major challenges, both related to implementation. In this article for Politico, he calls for the EU to prioritise implementation by individual member states and for the closure of third-country loopholes.

Searching for the money of Russian oligarchs in Cyprus

Locating the fixed assets of sanctioned Russian oligarchs is relatively easy. Finding the billions of dollars oligarchs have stashed around the world is proving to be more difficult. The question of how to hide that much money from an international community, led investigators to Cyprus – a tiny Mediterranean island at the crossroads of Europe, Asia and the Middle East – which is now the epicentre of an international game of hide and seek.

Keep up to date with major sanctions developments with this weekly tracker

The continuing growth in the number of sanctions being implemented can make it difficult to keep track of new legislation. Not only does the Sanctions Expert website provide you with everything you need to know about sanctions, it also delivers a summary of the major developments in sanctions on a weekly basis.

UK and EU set to designate Iran’s revolutionary guards as terrorists

The UK and the European Union are expected to coordinate moves to brand the Islamic Revolutionary Guards Corps (IRGC) as a terrorist organisation after the execution of Alireza Akbari, a British-Iranian dual national who was lured back to Iran by the security services three years ago.


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