KYC360 Weekly Roundup - 3rd Feb 2023

Published on Feb 03, 2023

Regulators Target Crypto Sector

The collapse of multiple firms accompanied by increasing levels of financial crime has provided the catalyst for many of the world’s governments to seek greater regulation of the crypto sector. This week we lead on new moves by the US and UK to impose more robust crypto regulations in an attempt to curb the sector’s vulnerability to financial crime and bring it in line with other more established sectors. 

The recent announcement by the UK government that it intends to make the failure to prevent fraud a criminal offence has brought this ever-present menace into sharp focus. Prison sentences for fraud have been making the headlines, while a new report has revealed how the Wirecard fraud was flagged up by a whistleblower some four years before the firm’s demise, but the warning went unheeded. 

To complete this week’s Roundup, we provide you with updates on global sanctions, the latest legislation, policies, and opinions, deliver reports covering money laundering, and end with other select news items from around the world.   


Financial_ServicesMoney Laundering

Online betting group 888 removes CEO over money laundering failures

Online betting group 888 has removed its chief executive and suspended VIP customer accounts in the Middle East amid an internal investigation into a failure to follow anti-money laundering procedures. As shares in the Gibraltar-headquartered group plunged by more than a quarter, the company admitted that certain “best practices have not been followed” in relation to “know your client” and anti-money laundering regulations. 

Malta: Corporate Service Provider fined $34,900 for AML/CFT violations 

A Maltese Corporate Service Provider has been fined USD 34,900, by the Financial Intelligence Analysis Unit (FIAU) for violation of the Prevention of Money Laundering and Funding of Terrorism Regulations (PMFLTR). 

Five face conspiracy charges for alleged insider dealing and money laundering 

The FCA has started criminal proceedings against five individuals for conspiracy to commit insider dealing and money laundering. The FCA alleges they used confidential inside information to enable timely and profitable trading in 49 companies through accounts held by co-conspirators. All five are also charged with money laundering offences relating to over 170 cash deposits totalling £200,000.

UAE: The Executive Office encourages public-private partnerships 

The Executive Office for Anti-Money Laundering and Combating the Financing of Terrorism (EML/CFT), in partnership with the RUSI Institute, recently organised a roundtable on public-private partnerships to discuss ways to enhance cooperation to combat financial crimes. Over 30 compliance and risk professionals representing financial institutions and designated non-financial businesses and professions in the UAE participated in a wide range of topics including best practices to share views, experiences and lessons learned in the development of public-private partnerships.



Regulators Target Crypto Sector

Senior US Senator calls for crackdown on crypto money laundering 

Senator Elizabeth Warren has called on Congress to ensure that US regulators, such as the Securities and Exchange Commission (SEC), have the tools to regulate the crypto sector and get tough on crypto money laundering activities. She went on to stress that cracking down on money laundering activities is her “main focus” in terms of crypto-related legislation and confirmed that she will reintroduce her bill titled “Digital Asset Anti-Money Laundering Act of 2022.” 

“This is not about inventing any new form of anti-money laundering rules. This is about applying exactly the same set of rules that apply across every other financial industry.” 
Elizabeth Warren senior United States senator from Massachusetts

UK Government to impose robust crypto regulation 

The UK Government is set to reveal “ambitious plans to protect consumers” from the risks of crypto. Ministers are aiming to bring the sector closer in line with the regulation that governs how traditional financial institutions work. In a statement, the Treasury said that its new “robust approach” in regulating the sector will mitigate “the most significant risks”, while allowing the UK to tap into the advantages of crypto technologies. The government consultation on its proposals will close on 30 April 2023, after which any responses will be considered by ministers.

FCA: 85% of crypto firms fail to meet minimum standards 

According to the Financial Conduct Authority (FCA) 85% of crypto firms were unable to demonstrate that they could meet the minimum standards required for registration under the FCA’s anti-money laundering and counter-terrorist financing regime. Following an evidence session with senior individuals from the FCA, MPs flagged up the issue as part of the in the Treasury Select Committee’s inquiry into the crypto-asset industry. 

“We are in the middle of an inquiry into crypto regulation and these statistics have not disabused us of the impression that parts of this industry are a ‘Wild West’.” 
Harriett Baldwin, UK Treasury Committee Chair and MP

Dutch central bank fines Coinbase 3.3 million 

The Dutch central bank (DNB) has fined the US cryptocurrency exchange Coinbase 3.3 million euros ($3.6 million) for failing to obtain the correct registration in the Netherlands before offering its services. The fine mirrors one handed out to Coinbase rival Binance in July 2022. 

2022 biggest year ever for crypto hacking with $3.8 billion stolen 

2022 saw the biggest hacking activity ever experienced, with October seeing a huge spike that resulted in the biggest single month ever for cryptocurrency hacking, with $775.7 million being stolen in 32 separate attacks. This article explores what kinds of platforms were most affected and examines the role of North Korea-linked hackers, who were behind of the crypto hacking activity.

Four exchange deposit addresses received over $1 billion in illicit funds in 2022

This article from Chainalysis examines the rise of underground money laundering services that exist separately from the crypto businesses most of us are familiar with and analyses funds still held by crypto criminals on the blockchain.

Moody’s preps scoring system for crypto stablecoins

According to Bloomberg, Moody’s is working on the establishment of a scoring system for stablecoins the crypto sector’s most traded tokens, as the asset class grows and comes under increased scrutiny from regulators and investors. Sources have stated that the proposed system will include an analysis of up to 20 stablecoins based on the quality of attestations on the reserves backing them.

Saudi Central Bank engages with fintechs and banks on CBDC

The Saudi Central Bank is carrying out tests on a domestic wholesale digital currency in collaboration with banks and fintechs. As part of the Saudi Arabian Monetary Agency’s (SAMA) ongoing research and experimentation on CBDC, the project will explore CBDC economic impact, market readiness, and potential robust and fast applications of a CBDC-based payment system. Furthermore, the central bank will focus on policy, legal and regulatory considerations before moving to the next phase.


RequirementsLegislation, Regulation and Sustainability

Deadline for foreign companies to declare beneficial owners on UK Register of Overseas Entities passes 

Under the anti-money laundering measures introduced by the UK government to crackdown on corruption, overseas companies owning UK land must register their beneficial owners with Companies House or face penalties such as sale restrictions and fines. Foreign companies were required to declare their beneficial owners on the Register of Overseas Entities by Tuesday 31 January, under world leading new anti-money laundering measures introduced by the government to flush out corrupt elites.

FATF Annual Report 2021-2022 

The FATF Annual Report 2021-2022 has been published. It sets out the achievements of the FATF under the 2nd year of the German Presidency, and covers a wide range of subjects including: Beneficial Ownership; Digital Transformation; Environmental Crimes; and Migrant Smuggling: There is also new and updated guidance for the Real Estate sector; the landmark report on the state of effectiveness and global compliance with the FATF Standards; a new rulebook for the next round of mutual evaluations; and the strategic priorities for the FATF 2022-2024. Download the FATF Report 2021-2022 here. 

Europe’s new AML Authority will need 500 staff and a budget of at least €400 million p.a. 

A recent report has revealed that Europe’s new AML Authority (AMLA) will require around 500 staff, which is double the original estimate, while its annual budget will also increase to around €400 million. The increases reflect the European Council’s decision to raise the number of institutions directly supervised from around 12-15 to up to 40. European governments have also asked that AMLA supervise crypto transactions which will require extra resources. It is also reported that the new regulatory watchdog may not now be fully operational until 2027 because of delays in negotiations and at the European Parliament. 

India issues new KYC/AML/CFT guidelines 

On January 23, the Pension Fund Regulatory and Development Authority (PFRDA) issued guidelines on Know Your Customer/Anti-Money Laundering/Combatting Financing of Terrorism (AML/KYC/CFT) by exercising the power conferred under the Pension Fund Regulatory and Development Authority Act, 2013 (PFRDA Act) and the Prevention of Money Laundering Act (PML) Rules. The new guidelines will be effective from the date of its issuance and provisions for Knowing existing subscribers of re-KYC will be effective from April 01, 2023.

Opinion: Why 2023 is time for us to tackle financial crime properly 

When it comes to total financial crime, the scale is so large that even the government can’t quantify how much it actually costs us every year. This article examines the problem and discusses why it’s time for us to stop eulogising and take steps to confront the issue. 

Opinion: As money laundering goes global, it can’t go on unabated 

Money laundering is a trickle-down force multiplier, critical to the effective operation of virtually every form of transnational organised crime. This article explores the problem and how this major cause of societal dysfunction which enables drug traffickers, smugglers, and other criminals to control communities must be confronted.



UK to make ‘failure to prevent fraud’ a criminal offence 

A new hard-hitting regime for corporate criminal liability seems likely to be expedited by the UK government, following calls for the failure to prevent fraud to form part of the Economic Crime and Corporate Transparency Bill 2022. The proposed amendments will be aimed principally at professionals such as lawyers, accountants, and other intermediaries that do not have reasonable measures in place to prevent money laundering, fraud and false accounting. 

Whistleblower warned EY of Wirecard fraud four years before its eventual collapse 

In 2016, one of EY’s own employees warned the firm that senior managers at Wirecard may have committed fraud and one had attempted to bribe an auditor. The revelation that a whistleblower identified suspicious activity four years before the payments group imploded in Germany’s biggest postwar corporate fraud increases the pressure on the accounting firm, which audited Wirecard for over a decade and provided unqualified audits until 2018. 

Founder of My Big Coin cryptocurrency firm receives 8-year jail term for fraud 

The founder of the now defunct cryptocurrency firm has been jailed for defrauding investors and customers out of millions of dollars by marketing a virtual currency called My Big Coin with lies and half-truths. The Commodity Futures Trading Commission’s 2018 lawsuit against Crater and his failed company, My Big Coin Inc, led to one of the first court rulings holding that a virtual currency could be considered a commodity within the regulator’s jurisdiction. 

Family members of former St. Clair Housing Commission director sentenced in fraud case 

3 family members of a former St. Clair Housing Commission director have been sentenced to prison for their involvement in defrauding the US Department of Housing and Urban Development Section 8 program. According to the Justice Department, Lorena Loren, who has since died, previously pleaded guilty and was sentenced to 37 months in prison. Her husband, Brian Loren was sentenced to nine months, while her son, Ryan Loren and daughter-in-law, Kayla Loren were sentenced to 11 months. 

Former UK MP accused of fraud faces court

Jared O’Mara, who represented Sheffield Hallam from 2017 to 2019, is accused of submitting fraudulent expenses claims totalling nearly £30,000. The court heard that the former had taken out £7,000 in cash in a single month, which was around double the amount coming in through his salary and that his cocaine use was an “open secret”. 

Hindenburg: Fraud cannot be obfuscated by nationalism in India 

In retaliation to the Adani Group’s comments in which it likened Hindenburg Research’s allegations to a “calculated attack on India”, the US-based firm stated that “fraud cannot be obfuscated by nationalism”. It added that the conglomerate is leading the focus away from substantive issues by stoking a nationalist narrative.



Russia sanctions: a global timeline and analysis as of 1 February 2023

Lexology has published an update of the key sanctions imposed as a result of Russia’s military activity in Ukraine, including asset freezes, export controls, and Putin’s ban on Russian oil sales under contracts that comply with the G7 US$60 price cap.

EU prolongs economic sanctions over Russia’s military aggression against Ukraine 

The Council of the EU is to prolong the restrictive measures targeting specific sectors of the economy of the Russian Federation, by six months until 31 July 2023. These sanctions, first introduced in 2014 in response to Russia’s actions destabilising the situation in Ukraine, were then significantly expanded since February 2022, following Russia’s invasion of Ukraine.

UK NCA looks to squeeze out the enablers of Russia sanctions evasion 

According to a senior official at the UK’s National Crime Agency (NCA) the agency is ramping up pressure on businesses and individuals that are aiding the growing problem of Russia sanctions evasion. 

US, UK, Canada, and Australia mark anniversary of Myanmar coup with more sanctions 

On January 31st, Myanmar was hit with further sanctions by the US, UK, Canada, and Australia to mark the two-year anniversary of a military coup with curbs on energy officials and junta members, among others. Myanmar’s top generals led a coup in February 2021 after five years of power-sharing under a quasi-civilian political system that was created by the military. 

Credit Suisse banked Abramovich fortune held in secret offshore companies 

According to the Organised Crime and Corruption Reporting Project (OCCRP), Credit Suisse loaned hundreds of millions of dollars to Abramovich’s offshore companies, which used US stocks as collateral. The secretly owned firms loaned each other massive sums that were mysteriously returned or written off, in what is alleged to be a scheme to obscure the origin of the funds. 

Iran and Russia take key step to link banks to evade Western sanctions 

The Iranian state-run IRNA news agency has announced that Iran and Russia have taken a major step forward toward linking their banking systems and boost their cooperation in the face of Western sanctions. At a signing ceremony, Mohsen Karami, the deputy central bank governor of Iran, said banks in the two countries have now connected their messaging networks following agreements reached over the past year. 

How Iran is boosting oil exports despite stringent US sanctions 

Iran’s crude oil exports have been increasing in recent months through higher shipments to countries such as China, according to data from companies that track the flows. The surge comes despite strict US sanctions, prompting energy market analysts to speculate that Washington is not enforcing the restrictions to keep global crude prices in check. 


Financial_ServicesOther News

Real-time collaborative crime-fighting platform raises further €4m 

Salv Bridge, a real-time collaborative crime-fighting platform that uses the collective power of its network to minimise non-compliance and financial crime, has raised €4 million in a seed round extension. The GDPR-compliant platform enables collaborative investigations between financial institutions allowing them to exchange and enrich data on potential threats. The platform helps network members solve fraud cases in minutes and to date, financial services firms on the network have prevented between €6 million and €7 million from reaching criminal-controlled accounts.

“The funds allow us to add further functionality to our modular AML toolset and expand to new markets, helping more companies greatly improve their crime-fighting measures and thereby protect their end-customers.”
Taavi Tamkivi, CEO, Salv

Nadhim Zahawi played secret role in offshore-linked lender 

New evidence suggests that Nadhim Zahawi is more closely connected to an offshore-linked company at the centre of a tax row than has been publicly admitted. The Conservative minister registered internet domain names for Crowd2Fund Limited shortly after Gibraltar-based Balshore Investments took a 50% stake in 2014. Zahawi has denied being the beneficiary of Balshore, but internet registration records reveal that he played an active role in the business it co-owned, registering over a dozen domain names and continued to own one of them after he was made a minister. 

Robert Mazur: Go after employees, not just banks who laundered al-Qaida and the Taliban’s dirty money

While serving in Afghanistan, Army Capt. Ryan Timoney was severely wounded by Taliban and al-Qaida suicide bombers, two of many groups designated by the U.S. government as terrorist organizations. Under the Anti-Terrorism Act, anyone who knowingly provides substantial assistance to such a group can be sued and forced to pay significant damages. This in-depth and revelatory blog by Robert Mazur, the former federal agent and best-selling author of ‘The Infiltrator, reveals how Capt. Timoney is one of hundreds of U.S. personnel who are now seeking financial damages from Danske Bank, two other banks, and two currency exchange businesses.

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