KYC360 Weekly Roundup - 27 Jan 2023

Published on Jan 27, 2023

Real Estate Sector Under Pressure

Welcome to this week’s AML Roundup.  Real Estate remains one of the fastest growing targets for money launderers, a trend which is expected to continue in 2023. It’s attractive to criminal elements for a variety of reasons, most notably as many businesses that operate in the sector have notoriously poor structures which prioritise faster transactions over compliance. So, this week we take a closer look at how regulatory authorities across the world are turning up the pressure on the Real Estate sector.

We also report on a broad range of compliance-related regulations, reports, and analyses to help keep you up to date with industry trends. There are updates from the world of sanctions and crypto, the very latest reports covering money laundering and corruption, and we wrap up this week’s Roundup with a selection of other newsworthy items from around the world.

RequirementsReal Estate

UK estate agency AML fines start to rise

The average Anti-Money Laundering (AML) fine issued to estate agents for non-compliance by HMRC has started to rise, reversing the downward trend seen during the pandemic. Total fines in the first quarter of the financial year hit £304,023, which equates to 44% of the total fines in the previous financial year. Despite moves by the sector to clamp down, estate agents still account for the largest number of AML fines issued by HMRC since the introduction of AML supervision, accounting for nearly half (45.4%) of all fines.

Opinion: Why it’s time for UK estate agents to play by the rules

In October last year, HM Revenue and Customs (HMRC) added 68 estate agents to the list of named businesses not complying with money-laundering regulations, further cement public opinion that agents are not to be trusted. Under existing rules, estate agents are able to trade with no overarching regulation, meaning anyone can start a business letting and selling homes. And while the way property transactions take place are strictly governed by anti-money laundering and client due diligence checks controlled by HMRC, far more needs to be done to regulate the sector.

2023 AML trends predict tougher regulations for the US Real Estate sector

Until recently, there were only a few anti-money laundering (AML) regulations that specifically targeted the Real Estate sector. However, in recent years many jurisdictions have strengthened their AML enforcement and regulations. In the US alone, regulators have taken several steps to curb this flow of dirty money with a swathe of new regulations that have the potential to transform how AML compliance is handled.

US Treasury drafts new rule to crack down on money laundering through Real Estate

Real Estate transactions are still the preferred way for criminals to launder money within the US, as few existing AML regulations cover the sector with the same diligence that is applied to banking and other sectors. As a part of the rollout of the Administration’s Strategy on Countering Corruption, the US Treasury Department has announced its intention to release a draft rule targeting money laundering through US Real Estate markets this April.

US watchdog warns banks to watch for Russian Oligarchs investing in commercial Real Estate

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has told banks to be on the alert for Russian oligarchs attempting to circumvent sanctions by investing in commercial real estate. Wealthy Russians may attempt to evade economic sanctions by moving money into the commercial Real Estate sector by using complex financing methods and opaque ownership structures to help them hide their actions.

FATF webinar: Money Laundering through the Real Estate sector 

The Financial Action Task Force (FATF) has assessed that the Real Estate sector and their supervisors often have poor understanding of the money laundering risks they face and regularly fail to mitigate them. In this FATF webinar, a panel of experts share their perspective and experience on just 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. 

FATF risk-based approach guidance for the Real Estate sector 

In 2022, the Financial Action Task Force (FATF) held a public consultation on its draft Risk-Based Approach Guidance for the Real Estate Sector. Stakeholders were invited to provide comments and additional input to this draft as needed in line with their expertise and professional insights. The feedback provided broadly supported the draft and its content with no major issues being raised regarding the scope of the Guidance, its objectives or drafting style. 


Financial_ServicesMoney Laundering, Fraud & Corruption

What does the FCA expect from anti-money laundering compliance in 2023? 

The FCA embarked on its 2023 focus on anti-money laundering (AML) with fines against two banks for AML compliance failures, following enforcement action against six further regulated firms or individuals in 2022 for failures related to AML systems and controls. With AML compliance at the top of the FCA’s enforcement agenda for the coming year, this article takes a look at the root causes of AML failings in recent enforcement cases and highlights five key takeaways that businesses should consider. 

Money laundering bill would still give Dutch banks too much surveillance power 

The proposed bill would give banks the scope to monitor payment for suspicious transactions traffic on a large scale, and to exchange information among each other. But while it is meant help banks to act more efficiently in the fight against money laundering, the Dutch Data Protection Authority (AP) has stated that it would open the door to the “unprecedented mass surveillance of the Dutch” citizenry at the hands of the banks. Despite “good improvements” in recent revisions the AP remains very critical of a proposed law

The art of laundering money through antiquities 

According to US Immigration and Customs Enforcement, after drugs and weapons, selling illicit relics is the third most profitable wing of the black market due to the levels of secrecy and the large sums involved. This article from corporate data provider and commercial intelligence platform Sayari, examines why art and antiquities smuggling is so attractive to nefarious actors.

Anti-money laundering training videos launched to help UK art dealers stay compliant 

The British Antique Dealers’ Association (Bada), the Society of London Art Dealers (Slad) and the Association of Art and Antiques Dealers (Lapada) have joined forces to commission a series of training videos on AML legislation. Created by the art compliance specialist Rakhi Talwar, the new resources will take into consideration the UK Treasury’s updated guidance on AML obligations, which were issued in June 2022.   

"Many members are small businesses who need to navigate a lot of red tape and are appreciative of accessible support and guidance. We felt that although there are a number of third-party compliance specialists providing training services to the sector, it was part of our role to make training as accessible as possible.” 
Spokesperson for the partnership

Stagecoach co-founder charged with human trafficking offences 

The transport tycoon Dame Ann Gloag, her husband David McCleary and two other family members have been charged with human trafficking offences. Police Scotland confirmed that they have been charged in connection with an investigation into alleged human trafficking and immigration offences. 

JPMorgan claims startup founder used millions of fake customers to dupe it into an acquisition 

JPMorgan Chase is suing Charlie Javice, the founder of Frank, a fintech startup it acquired for $175 million. The financial giant alleges the former CEO lied about its scale and success by creating an enormous list of fake users to entice it to buy the company. 

“When I said Nadhim Zahawi owed the taxman, he set his lawyers on me” 

UK Conservative party chairman, Nadhim Zahawi has faced questions over his business affairs and recently settled a multimillion-pound bill for unpaid taxes. City lawyer turned tax sleuth Dan Neidle explains how he finally got to the bottom of the former chancellor’s finances.

Defence firm part-owned by Johnson’s £1m donor wins £80m MoD contract 

Christopher Harborne, a Thai-based businessman who gave a record £1m donation to Boris Johnson is the largest single shareholder in a UK defence company that recently secured an £80m government contract with the Ministry of Defence (MoD). 


RequirementsLegislation, Regulation and Sustainability

Monaco receives a scathing report on its ability to fight money laundering and terrorist financing

According to a report from the Council of Europe’s MONEYVAL AML/CFT supervisory body, despite its high-profile banks, casinos, and high net worth residents based in Monte Carlo, the European Principality of Monaco has not shown the right requirements to fight financial crime.

2022 SARs Annual Report

The UKFIU has published the 2022 Suspicious Activity Reports (SARs) Annual Report, which features statistics covering the years 2020-21 and 2021-22. SARs are submitted to the NCA by individuals working in regulated sectors such as banking, legal and financial services, where they suspect that transactions are being used to launder money or conceal criminal activity. The latest report reveals another record year with 901,255 SARs received and processed (a 21% increase on the previous year). Also £305.7M denied to suspected criminals as a result of Defence Against Money Laundering (DAML) requests (a 120.6% increase on the £138.6M denied in 2020-21).

Luxembourg enters race to host new EU anti-money laundering watchdog

In a bid to strengthen the capital’s status as a key hub for the bloc’s institutions, Luxembourg has joined Germany, France, Italy, Lithuania, Latvia and Austria in the race to host the planned Anti-Money Laundering Authority (AMLA). The new watchdog will act as a central oversight body for the EU, with powers to directly supervise financial institutions considered to be risky. 

The EU ruling on ownership transparency and what it means for activists and journalists  

The Fifth Anti-Money Laundering Directive required all EU member states to make beneficial ownership information accessible to “any member of the general public.” Many countries had set up these registries, when the CJEU ruling invalidated the provision requiring public access, arguing that it conflicted with the EU’s right to privacy and personal data protection. This article explores what the repercussions of the decision could mean for anti-corruption activists and journalists. 

What is a Proxy? Using relatives, shell companies, and other stand-ins to hide illicit wealth 

Proxies are a key element of a sophisticated secrecy industry that undermines the global financial system by letting dirty money flow undetected. This article provides all you need to know about how sanctioned oligarchs, crime bosses, and corrupt politicians, often abetted by financial industry professionals, rely on friends, family, and business associates to disguise and protect their interests.

Video: UK Economic Crime – What to Watch in 2023 

In this insightful video, Helena Wood, Senior Research Fellow at RUSI’s Centre for Financial Crime and Security Studies (CFCS), covers the key policies and initiatives to watch out for in the area of UK economic crime in 2023. 

Pandora Papers: The secret offshore holdings of the world’s most powerful political figures 

The most expansive leak of tax haven files in history has revealed the secret offshore holdings of more than 300 politicians and public officials from more than 90 countries and territories. The trove of more than 11.9 million confidential files shows how presidents, prime ministers, royals, elected officials, family members, and close associates hide assets in a covert financial system with the help of firms who establish companies in secrecy jurisdictions.




Ukraine government launches anti-corruption drive 

A top adviser, four deputy ministers, and five regional governors have left their posts as President Zelensky begins a shake-up of personnel across his government. Their departures come as Ukraine launches an anti-corruption drive following reports of officials buying food at inflated prices and one figure accused of living a lavish lifestyle. 

Panama former president and sons barred from US for corruption 

The US State Department has banned former Panamanian President Ricardo Martinelli from ever traveling to the United States, saying that he had participated in “significant corruption”. The ban also applies to two of the former president’s sons, who returned to Panama after completing prison sentences in the United States for laundering millions of dollars in bribes from Brazilian construction giant Odebrecht. 

"Martinelli accepted bribes in exchange for improperly awarding government contracts during his tenure as the president” from 2009 to 2014.”
US State Department statement

Mauritania’s ex-president faces corruption charges in landmark trial 

The trial of Mauritania’s former president Mohamed Ould Abdel Aziz has appeared in court charged with amassing an illicit personal fortune during his 11-year rule. He is charged alongside nine other defendants, including former prime ministers, cabinet ministers and businessmen, with abuse of office, influence peddling, money laundering and illicit enrichment. 


Crypto-1Crypto & Virtual Assets

Dutch central bank fines Coinbase €3.3m

Hot on the heels of its $100 million fine by New York regulators for AML failings, Coinbase has been fined €3.33 million for providing crypto services in the Netherlands without securing registration with the country’s central bank. Cryptocurrency firms have been required to register as money transmitter since May 2020. As a result, Coinbase was not in compliance for nearly two years before registering in September 2022

JPMorgan CEO Jamie Dimon says Bitcoin is a ‘hyped-up fraud

At the recent World Economic Forum in Davos, Switzerland, the CEO of JP Morgan, Jamie Dimon, called Bitcoin a ‘hyped-up fraud’ and the financial equivalent of a ‘pet rock’. However, he did go on to say that the blockchain technology behind Bitcoin had it uses, as this kind of digital ledger is difficult to alter or hack and enables the creation of a public record of transactions. 

Genesis preparing for bankruptcy filing

Following the recent layoff of 30% of its workforce and the stopping of customer withdrawals as it faced up to the FTX fallout, crypto broker Genesis is reported to be laying the groundwork for a bankruptcy filing. The business is believed to owe creditors as much as $3 billion and is currently in confidential negotiations with various creditor groups, with the company warning it could seek bankruptcy protection if it fails to raise capital

ConsenSys cuts workforce by 11% 

Blockchain software engineering firm ConsenSys is laying off 11% of its workforce citing the crypto bear market and wider economic challenges. ConsenSys has been at the forefront of the Web3 revolution, with the task of unlocking the collaborative power of communities by making DAOs, NFTs, and DeFi universally easy to use, access, and build on. 

Monei gets green light to test euro-backed stablecoin 

The Bank of Spain has given the go ahead to payments fintech firm Monei for a pilot run of a euro-backed stablecoin. The euro-pegged digital token, EURM, has emerged from the Bank of Spain’s digital sandbox and facilitates the Europe-wide sending of euros and online payments by creating a token using Ethereum and Polygon Blockchain technology. 

National Australia Bank (NAB) to mint its own stablecoin 

National Australia Bank (NAB) is the second of the big four banks to mint its own stablecoin. Set to be launched in the summer, the AUDN stablecoin is aimed at streamlining cross-border remittances and carbon credit trading 

Are gold-linked digital assets the future? 

Some companies are attempting to adapt the gold standard to tokenisation, combining the old ways with new technology. Rather than buying gold directly, companies are establishing this mechanism within the blockchain, thereby putting a modern twist to an old concept. 

Fraudsters sentenced for multi-million-pound crypto fraud

Four UK nationals have been found guilty of fraudulently obtaining and laundering bitcoin and other cryptocurrency worth tens of millions of pounds from an Australia-based cryptocurrency exchange. The gang was found guilty of fraud, converting and transferring criminal property and sentenced to a total of 15 years imprisonment.



US to designate Wagner Group as a transnational criminal organisation 

The new designation will allow the US government to apply wider sanctions against the paramilitary group, which as well as having some 50,000 mercenaries in Ukraine, it has also operated in Syria, Libya and the Central African Republic, among other hotspots.  

New AML whistleblower law will help enforce Russian sanctions 

The Anti-Money Laundering (AML) Whistleblower Improvement Act will greatly improve the ability of US law enforcement agencies to track down assets held by Russian oligarchs and sanctioned entities. While the Act broadly covers violations of both money laundering and sanctions requirements, the ability to use this law immediately to enforce all the financial restrictions placed on Russia was the main driving force behind its passage.

Iran hits EU and UK with new sanctions in retaliatory move 

The Iranian Foreign Ministry has imposed new sanctions on the EU and the UK for “supporting terrorism and inciting violence and unrest”. The move came as a “tit-for-tat” action, citing their interference in Iran’s internal affairs, dissemination of false information, and participation in cruel sanctions against Iranians. 

Former FBI agent arrested for violating Russia sanctions 

US authorities have arrested a retired FBI agent for providing services to sanctioned Russian oligarch Oleg Deripaska in exchange for secret payments. He has been charged with accepting $225,000 in cash from a former Soviet diplomat while working at the FBI.  

Businessmen charged with hiding Russian oligarch’s ties to yacht 

US prosecutors have accused two businessmen of facilitating sanctions evasion by helping a sanctioned Russian “obfuscate” his ownership of a $90 million motor yacht. According to the Department of Justice (DoJ), the case centres around a sanctioned Russian oligarch’s ownership of a luxury yacht seized in Spain last year by the US government.

UK government helped sanctioned Putin ally sue British journalist

openDemocracy has revealed that the UK government helped Yevgeny Prigozhin, the founder of Russia’s mercenary army Wagner to circumvent its own sanctions and launch a targeted legal attack on a British journalist. Sanctions introduced in the US in 2018 and the UK and Europe in 2020 were supposed to prevent anyone from doing business with Prigozhin. Yet hacked emails shows that, under the leadership of Rishi Sunak, the UK Treasury issued special licences in 2021 to let the oligarch override sanctions and launch an aggressive legal campaign against a journalist in the London courts.

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