KYC360 Weekly Roundup - 10th Jun 2022

Published on Jun 10, 2022

Russia Sanctions Update

As the conflict in Ukraine grinds into a war of attrition, its effects are increasingly being felt around the world. Most notably, millions of tons of grain are stuck in the Ukrainian port of Odesa due to Russia’s naval blockade, causing global food shortages and driving up prices. Undeterred, and unwilling to lift any sanctions, the EU has finally banned the import of Russian oil into the bloc, thereby cutting a massive source of revenue for the Kremlin. 

The world’s regulatory bodies have been busy. FATF has released updates on the progress of several nations including the UK, while also releasing a new AML/CFT digital strategy to assist law enforcement authorities in the investigation of money laundering and terrorist financing. 

We also report on the latest moves by nation states to combat money laundering through new initiatives and complete this week’s Roundup with a selection of news reports from around the world.

 

Sanctions-1Sanctions 

EU confirms sixth package of sanctions 

The EU’s latest swathe of sanctions includes banning the import of Russian oil, cutting off more Russian banks from the international payment system SWIFT, sanctioning those responsible for the atrocities in Bucha and Mariupol, and banning the perpetrators of disinformation that fuel Russia’s war propaganda.

The US, Canada, and the EU seek ways to seize Russia-related assets within the rule of law 

As the imposition of sanctions on Russia-related assets continues, so does the debate surrounding what to do with these frozen assets. In recent weeks, the US, Canada, and the EU have all presented proposals on how best to legally seize these assets.

Poland seeks to expand the EU’s seventh tranche of Russia sanctions 

Poland has suggested that the EU starts work on a seventh package of sanctions which should include, the complete cessation of imports of Russian gas and petrochemicals, and the disconnection of all Russian and Belarusian banks from the SWIFT system.

German Chancellor opposes lifting Belarus sanctions in exchange for the transit of grain from Ukraine 

As Western countries seek ways to get grain out of Ukraine in order to avoid global food shortages, German Chancellor Olaf Scholz has rejected the idea of lifting of sanctions against Minsk in exchange for its transit through Belarus.

Japan to widen sanctions against Russia 

New sanctions from Japan are set to freeze the assets of the Russian Agricultural Bank, Credits Bank of Moscow, and the Belarusian bank of Development and Reconstruction, and it will only be possible to make payments and transactions with prior permission from Japanese authorities. In addition, all items “contributing to the buildup of industrial infrastructure” will be subject to an export ban. 

As foreign alcohol flows dry up, Russians are turning to locally produced drinks 

100 days after Russia’s invasion of Ukraine foreign alcohol reserves are dwindling, causing Russian beer lovers to turn to domestically produced alternatives. Observers say that Imported alcohol is now 20-50% more expensive, while local beers are slightly cheaper than imported ones were before February 24.

Russian lawmaker used partner’s secret companies to own two yachts and a Seychelles villa 

The Paradise Papers have revealed how billionaire Andrei Skoch purchased luxury assets including the $156 million yacht “Madame Gu” now targeted by U.S. sanctions, while offshore law firm Appleby ignored his alleged ties to Russian criminal groups. 

Russia could copy Iran’s strategy to circumvent EU oil sanctions 

With the EU’s ban on Russian oil imports by sea impacting up to 75% of Russia’s crude oil delivery to the bloc, Russia is looking to skirt sanctions by using a decades-old smuggling route through Iraq, Jordan, and Syria to get oil into Europe. For shipments bound for Asia, it allegedly involves Malaysia and to a lesser degree Indonesia, in order to deliver oil exports to China. 

Treasury blocks US investors from buying Russian debt and stocks 

Updated guidance from the Treasury means that US investors can no longer purchase Russian debt or stocks in secondary markets. While buying newly issued stocks and bonds was already banned, the latest trading restrictions apply to both ruble and non-ruble denominated debt, as well as both corporate and sovereign debt. 

 

Financial_ServicesMoney Laundering, Fraud & Corruption

Calls for NI corporate loophole being exploited by money launderers to be closed 

MPs have called for an end to a Northern Ireland corporate loophole that is being exploited by international money launderers. The use of Northern Ireland Limited Partnerships (NILPs) means secretive companies can be set up in seconds from anywhere in the world and are open to abuse as vehicles for disguising the proceeds of crime. 

Radio series: Exploring Britain’s vital role in the growth of ‘offshore’ money laundering 

A new 5-part series starts 13:45 Monday 30 June on BBC Radio 4, shedding light on the world of dirty money, where it comes from, how it’s infiltrated and permeated society, and why few know or care to look too closely, despite the immeasurable suffering it causes. 

Hong Kong police break up money-laundering syndicate linked to HK$2.5 billion in crime proceeds 

The syndicate is believed to have laundered HK$2.5 billion (US$318.6 million) in suspected crime proceeds through over 130 bank accounts. This is the fourth syndicate to be uncovered in six weeks, with the four groups said to have laundered a total of HK$5.4 billion in illegal proceeds over the last two years. 

Queensland casino money laundering probe focusses on exclusion process 

Australian authorities have stated that their investigations into Queensland casinos now centre on whether anti-money laundering systems were appropriate and if the exclusion process for banned people was implemented correctly. 

‘Tiger King’ star Doc Antle charged with money laundering 

Bhagavan “Doc” Antle who starred in “Tiger King” has been charged with laundering over half a million dollars, said to be the proceeds of smuggling illegal immigrants across the Mexican border into the United States. 

Binance hits back over ‘skewed’ Reuters report claiming it has become a hub for money laundering 

A recent Reuters report claimed that the world’s largest cryptocurrency exchange Binance served as a conduit for the laundering of at least $2.35 billion in illicit funds. Binance immediately hit back, saying that the report was ‘skewed’ as every exchange has exposure to dark net markets. 

HSBC, the Mexican drug cartels and the biggest banking scandal of the century 

While HSBC management was intent on doubling its size through global acquisitions, they failed to introduce money laundering safeguards in a small bank in Mexico. As a result, HSBC facilitated the laundering of $billions of drug money from the Sinaloa cartel headed by the notorious El Chapo. 

 

RequirementsRegulatory Reports & Strategies 

UK strengthens measures to tackle money laundering and terrorist financing

Since FATF’s 2018 assessment the UK has taken a number of actions to strengthen its framework. FATF has now re-rated the country on Recommendation 13 from partially compliant to Compliant. The UK is now compliant on 24 Recommendations and largely compliant on 15. The country remains partially compliant on 1 Recommendation. The country will remain in regular follow up and will continue to inform the FATF of progress achieved on improving the implementation of its AML/CFT measures.

New Zealand has strengthened measures to tackle money laundering and terrorist financing 

Since its 2021 FATF assessment, FATF has re-rated New Zealand on Recommendation 25 (Transparency and beneficial ownership of legal arrangements), from partially compliant to largely compliant. It is now compliant on 8 Recommendations, largely compliant on 21, and remains partially compliant on 11. New Zealand will remain in enhanced follow up and will continue to inform the FATF of progress on improving the implementation of its AML/CFT measures. 

Albania has improved measures to combat money laundering and terrorist financing 

The nation has demonstrated good progress in its level of compliance with the Financial Action Task Force (FATF) standards, the Council of Europe’s anti-money laundering body MONEYVAL revealed in a new follow-up report. 

New FATF AML/CFT digital strategy for law enforcement authorities 

The Financial Action Task Force (FATF) has published a guide on how law enforcement agencies can use technology, including advance analytics, to investigate money laundering and terrorist financing. The aim is to mitigate their risks and securely share information with the public sector and private sector. 

France Financial Crime Dashboard 2022 

According to Financial Crime News, the highest threats in 2022 are tax, social and customs fraud, drug trafficking, scams and theft. Terrorist financing threat is also considered high, followed by human trafficking, corruption, and breaches of probity. 

 

RequirementsOther News 

UK will not impose direct rule on British Virgin Islands  

The UK government will not to impose direct rule on the British Virgin Islands (BVI) but gave the territory’s emergency administration two years to implement reforms to tackle endemic corruption. 

Ex-FIFA officials Blatter and Platini go on trial for corruption 

After over six years of criminal proceedings, the former FIFA officials Sepp Blatter and Michel Platini have gone on trial in Switzerland for alleged corruption and face up to five years in prison if found guilty. 

Gupta brothers arrested in UAE on charges of bribery and corruption in South Africa 

Two brothers from the Gupta family have been arrested in the United Arab Emirates. South Africa authorities have accused Atul and Rajesh Gupta of profiting from their close links with former president Jacob Zuma and paying financial bribes in order to win lucrative state contracts and influence powerful government appointments. 

Investors have lost $1bn in crypto to frauds since 2021 

A new analysis by the U.S. Federal Trade Commission states that cryptocurrency is fast becoming the payment of choice for scammers. As well as cryptocurrencies accounting for 25% of all fraud being paid, consumers lost over $1 billion to fraud involving cryptocurrencies between January 2021 and March 2022.  

Crypto can overcome its reputation as a weak link in financial crime 

Unregulated crypto-asset exchanges continue to serve as a way for state actors to circumvent sanctions and barriers. But recent growth in crypto-asset forensic technology is making it increasingly difficult to cash out criminal funds. 

‘Landmark’ ivory ban has come into force, but critics hit out 

While the new law prohibiting the sale of ivory goods in the UK is a “landmark moment” in the fight to protect elephants, environmental groups say it has taken too long and fails to protect other species. 

Peru’s 70 million hectares of Amazon Forest are being razed at an alarming rate 

The offenders range from illegal gold miners who leave behind pools of poisonous mercury, to poor locals co-opted into harvesting valuable trees, to a complex web of front companies, agribusiness subsidiaries, corrupt officials, and criminal groups.

 

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