KYC360 Weekly Roundup - 28th Oct 2022

Published on Oct 28, 2022

Spotlight on Environmental Crime and ESG – FATF Plenary

Welcome to this week’s AML Roundup. This week we shine the spotlight on environmental crime, which if left unchecked will ultimately affect every single living being on the planet. It has many ugly yet profitable faces such as the wildlife trade, logging, and waste disposal, which combine to make it the third-most lucrative area of global crime after drug trafficking and counterfeit goods. And while the predicted worldwide recession has pushed Environmental, Social, and Governance (ESG) down the agenda of many businesses, there is still a growing number of organisations intent on keeping up the pressure.

The FATF recently held its latest plenary which resulted in few surprises, but some important new initiatives. After a great deal of hard work, Pakistan has been taken off the grey list, along with Nicaragua, Gibraltar deferred its evaluation citing the need for more time, while Myanmar was put on the blacklist.

We complete this week’s Roundup with an update on sanctions, review recent legislation, reports and opinions, and finish with the latest news covering money laundering and corruption. 

RequirementsEnvironmental Crime

The profits from environmental crime higher than the drug trade 

While environmental crime is one of the most profitable criminal businesses in the world, all too often it is treated like petty crime. Activists hope that new European regulations to be enacted next year will greatly tighten compliance with EU environmental laws.

“Too often in Europe, there is no real penalty for environmental crime. Lawbreakers can go unpunished and there are too few incentives to observe the law We want to change that by proposing a new directive on environmental crime that will strengthen the environmental rule of law.” 
Virginijus Sinkevicius, European Environment Commissioner

Corruption and money laundering are destroying the planet 

The global community is starting to realise the role that corruption plays in facilitating environmental crimes. Furthermore, research is highlighting the many ways in which criminals launder the illicit proceeds of environmental crime and help fuel our current environmental catastrophe. 

A united response is required to step up the global fight against wildlife crime 

INTERPOL has joined calls at the United for Wildlife (UfW) global summit for greater collective efforts against the criminal syndicates who are behind wildlife crime and the resulting impact on communities and biodiversity. 

INTERPOL official bemoans lack of resources to fight environmental crime 

According to the international police organisation INTERPOL, criminals generated income of between €70bn and €210bn from environmental crime worldwide last year. However, a major barrier to effective policing is the shortage of personnel and resources at every level of investigation. 

Report: Normalising financial investigations into environmental crimes 

The Basel Institute on Governance has stated that financial investigations into environmental crimes are essential for identifying who pays bribes to whom, enabling investigators to trace, seize and eventually confiscate the proceeds and instrumentalities. They also help identify the high-level actors behind these crimes, while illuminating who finances and who profits from them.

An analytic review of past responses to environmental crime and programming recommendations 

This recent report was commissioned by the European Commission’s Service for Foreign Policy Instruments (FPI). Its aim is to inform its use of EU resources to have the greatest impact in disrupting illicit flows, stopping or diverting actors operating outside the margins of legal and regulatory frameworks, and reducing the harms associated with environmental crime. 

World’s biggest polluters talk up net-zero but have little to show

Despite all the talk, the net zero targets espoused by are often not supported by strategies to deliver them. This is the conclusion drawn up in a new report from the investor alliance Climate Action 100+ which reveals that promises by the major corporate emitters to achieve net-zero targets are “not matched by the development and implementation of credible decarbonization strategies.”

Exxon could have helped stop climate change 30 years ago

A newly reviewed 1993 document labeled ‘proprietary’ written by Exxon’s Canadian subsidiary Imperial Oil, has revealed that if the oil giant had used its political and financial power to push for a national carbon tax to be adopted in all major economies, global emissions might have peaked by now. But the document directed leaders to stress the ‘many uncertainties’ of implementing a national tax, even though it learned that it could cause national emissions to plateau and then shrink without doing significant damage to the economy. 


Financial_ServicesMoney Laundering, Fraud & Corruption

In the fight against money laundering machine learning is a game changer

Recent enhancements in machine learning are helping banks to significantly improve their anti-money-laundering programmes. Furthermore, US regulators are strongly backing these efforts, while US agencies are reducing obstacles from existing regulations, guidance, and examination practices to encourage banks to test and adopt innovative approaches for fighting financial crimes.

Credit Suisse to pay €238 million to settle AML breaches inquiry in France

Credit Suisse has agreed to pay €238 million (USD 234 million) to settle an inquiry into AML breaches in France. It follows a lengthy investigation by French authorities into a scheme in which the lender was accused of breaking money laundering laws by luring wealthy clients to Switzerland.

Hong Kong makes arrests in $446 million money-laundering case

Hong Kong authorities have arrested two men for laundering funds worth HK$3.5 billion ($446 million) by reselling precious metals in one of the city’s largest money-laundering cases. Precious metals can be bought and sold anonymously in Hong Kong and are attractive to criminals because of their high value, small size and ease of transportation.

Peru’s President accused of heading a corruption ring

Prosecutors in Peru claim that President Pedro Castillo is leading a corruption ring in the Ministry of Transport and Communications. Working together with former minister Juan Silva and other officials and businessmen he is accused of favouring the Puente Tarata consortium and other companies in public bidding.


RequirementsLegislation, Regulation and Sustainability

UK’s financial watchdog to clamp down on greenwashing

The Financial Conduct Authority (FCA) is proposing a raft of new measures to include investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used. The UK’s chief financial watchdog wants to ensure that consumers and businesses can trust that products have the sustainability characteristics they claim to have.

Opinion: A sustainable and equitable financial future

As sustainability and reaching ESG goals climb to the top of businesses’ agendas, in this interview, Simon Paris, the CEO of Finastra, identifies the primary drivers behind these recent changes, and the emerging opportunities that lie ahead.

Video: Towards a single common information architecture for sustainable investing 

Investment capital could be a powerful driver of a sustainable future, but its success will depend on how well investors can rigorously quantify ‘impacts’ alongside ‘ESG’ risks and optimise sustainability decision-making at scale. In this video, Dr Tim Wittig discusses developing a single common information architecture for the quantification of sustainable investing approaches. 

Coal producers are legally obliged to restore damaged land, but some are dodging obligations 

An investigation has discovered that US coal companies have used bankruptcy and asset transfers to move old mines into the hands of new owners. This puts at risk the legal mandates to restore the torn-up land and polluted creeks left behind when mining is done.

Canadian forestry giant has “hidden links to Indonesian deforester accused of destroying habitat”

Four separate environmental watchdogs allege that Paper Excellence and Asia Pulp & Paper have used shell companies to conceal corporate control by Indonesian tycoons accused of clearing more than 2 million hectares of Indonesian rainforest.

Why ESG investing is under attack from the America’ political right

Republicans have identified the popularity of ESG investing as part of a broader narrative about left-wing overreach and wokeness, dubbing it ‘corporate cancel culture’. But behind the rhetoric lie policies designed to sap the momentum of one of Wall Street’s most successful initiatives in recent years and now worth $35 trillion.

Singapore lays down the law for crypto trading and stablecoins

The Monetary Authority of Singapore (MAS) has published two consultation papers that propose strict measures to reduce the risk to consumers from cryptocurrency trading. The Singapore central bank contends that trading in cryptocurrencies is risky but acknowledges that the role they play in supporting the broader digital asset ecosystem, so banning them would not be feasible.

Switzerland to track corporate ownership in attempt to curb money-laundering

In the face of international pressure to throw light on shadowy corporate ownership, the Swiss government is planning to create a central registry to identify the true owners of now-anonymous Swiss-registered companies and partnerships. This would be an incremental but important anti-money laundering reform for the longtime stronghold of financial secrecy. 

Report: SRA anti-money laundering annual review 2021-22

The Solicitors Regulation Authority (SRA) has published a review of the work carried out in 2021/2022. This latest annual report shows how the SRA has dedicated more resources to preventing and detecting money laundering over the last year, enabling it to step up its supervision in AML in order to directly engage with more firms, and ensure the UK’s solicitors understand and comply with their obligations to uphold the financial sanctions regime. 

Exporting corruption 2022: Assessing enforcement of the OECD Anti-Bribery Convention

The bribery of foreign public officials by multinational companies delivers illicit profits and huge costs and consequences for the world. The OECD Anti-Bribery Convention requires all parties to prohibit and enforce actions against foreign bribery. This report assesses the efforts of 47 leading export countries over 2018-2021.

Opinion: reforming the global standard on trust ownership is critical to deter cross-border corruption

As global scrutiny over anonymous companies intensifies, reforming the worldwide standard on trust ownership is critical in order to deter cross-border corruption. With this in mind, Transparency International believes that it’s time to address this highly secretive and complex vehicle that the corrupt favour to cover their tracks.

Video: The changing role of KYC analysts and the need for better UBO data

This discussion covers the changing role of KYC analysts, ultimate beneficial ownership, and how businesses can stay on the right side of regulations and conduct checks as criminals become ever-more sophisticated.

Report: Lack of oversight in the world’s free trade zones facilitates illicit financial flows 

While the key attraction for companies operating in free trade zones (FTZs) is lower import taxes on goods, traders are also drawn to the speed of their streamlined procedures, together with limited customs and regulatory oversight. This report documents how some of the attributes that attract companies to the zones also help facilitate illicit activity by smugglers, money launderers, and organised criminal networks.

SARs Reporter Booklet: October 2022 

The UK Financial Intelligence Unit (UKFIU) has published a booklet to assist reporters of suspicious activity reports (SARS). Produced in line with the NCA’s commitment to share perspectives on the SARS regime, the booklet contains a summary of feedback from law enforcement agencies (LEAs) on their use of SARs and includes information and updates from the UKFIU. 



FATF Plenary

FATF Plenary October 2022 summary

The global watchdog, the Financial Action Task Force (FATF), held its latest plenary meeting. This blog provides a summary of the key outcomes, such as jurisdictions that have been taken off or added to the grey list, new strategic initiatives, and moves to counter the illicit trade in synthetic opioids.

The full outcomes of the FATF Plenary 20-21 October 2022

The first Plenary of the FATF under the Presidency of T. Raja Kumar of Singapore has concluded, with delegates from over 200 jurisdictions of the global network participating in discussions at the FATF headquarters in Paris. Read the full outcomes of the plenary here.

The jurisdictions now under increased monitoring 

When the FATF places a jurisdiction under increased monitoring, it means the country has committed to quickly resolve the identified strategic deficiencies within agreed timescales. In the meantime, it is subject to increased monitoring and put on what is widely referred to as the grey list. You can access the latest updated list of jurisdictions under increased monitoring here.

Pakistan taken off the FATF grey list for terrorism financing

Pakistan has been taken off the FATF grey list that warrants increased surveillance for terrorism financing and provides a much-needed boost to the reputation of the South Asian nation.

“Pakistan exiting the FATF grey list is a vindication of our determined and sustained efforts over the years.” 
Shehbaz Sharif, Pakistan Prime Minister

The Philippines fails to exit FATF grey list

The Philippines remains on the FATF grey list after failing to address strategic deficiencies to counter money laundering, terrorist financing and proliferation financing. This is despite a high-level political commitment to strengthen the effectiveness of its AML/CFT regime when it was placed in the grey list in June 2021. 

Myanmar blacklisted by the FATF for terrorism and financial crime

In another setback to its military government, the FATF has placed Myanmar on its blacklist for terrorism financing alongside Iran and North Korea. The FATF recommended that Myanmar be blacklisted immediately and be subject to enhanced due diligence by all member states.

Gibraltar defers reporting as the FATF calls for tougher fines

Gibraltar’s government has decided to defer reporting its progress to get the jurisdiction off the FATF grey list. The British overseas territory was added to the list following the June FATF plenary. At the time, the body noted that the gambling sector was a major reason for Gibraltar’s presence on the list and said that authorities were not applying sufficient fines for anti-money laundering failings. 

“Gibraltar needs to increase the dissuasiveness of its penalties, in particular fines related to the gambling industry and the legal sector that serves these companies.”
T. Raja Kumar, FATF President



How do Sanctions work?

The primary aim of sanctions is to deter bad behaviour by imposing economic punishment on the targeted country and are most effective when coordinated and implemented multilaterally with allies. Poor design and implementation of sanctions policies frequently leads to them failing to achieve the desired results.

The tactics that Russians are using to avoid sanctions 

Because sanctions prohibit Russian businesses from making international settlements in US dollars, companies and individuals alike are turning to crypto as an alternative. As a result, cryptocurrency activity in both Russia and Ukraine has spiked since Russian forces invaded Ukraine.

US State Department on the impact of Russia sanctions and export controls 

The US State Department has published a factsheet that summarises the impact of sanctions and export controls imposed on Russia since February 2022. These include: Supply shortages for Russian forces in Ukraine; Difficulties importing semiconductors and other key components; The near cessation of Russian hypersonic ballistic missile production due to the lack of semiconductors; Cutting off Russia’s military aviation program from resupply.

US charges individuals and companies for shipping military tech to Russia

US prosecutors have charged five Russian nationals for sanctions evasion and other violations for shipping military technologies purchased from US manufacturers to Russian buyers, some of which ended up on the battlefield in Ukraine.

US firm to pay $140,000 over export violations in shipments to Russia and Ukraine

Intertech Trading Corp. has been sentenced to pay $140,000 after it pleaded guilty to 14 charges of failure to file export information about equipment it shipped to Russia and Ukraine between 2015 – 2019. According to court documents, Intertech exported laboratory equipment falsely describing the nature and value of the exported items on commercial invoices and shipping forms. 

Advance your CPD minutes for this content,
by signing up and using the CPD Wallet

Get started

Catch up on previous KYC360 Roundups

Your latest weekly update from the worlds of money laundering, legislation and regulation, sustainability, gaming and gambling, crypto and sanctions.

KYC360 Weekly Roundup - 12th July 2024  

KYC360 Weekly Roundup - 12th July 2024

Top stories this week: Citigroup fined $136m for failure to fix compliance issues | ANZ calls for standardisation of processes for banks
Jul 12, 2024
KYC360 Weekly Roundup - 5th July 2024  

KYC360 Weekly Roundup - 5th July 2024

Top stories this week: Crypto bank Silvergate agrees to $63 million settlement over regulatory failings | Singapore targets money launderers with new legislation
Jul 05, 2024