KYC360 Weekly Roundup - 21st Oct 2022

Published on Oct 21, 2022

Spotlight on Modern Slavery

Welcome to this week’s AML Roundup. Almost 50 million people are currently trapped in slavery, so this week we turn the spotlight on this most pernicious and pervasive of crimes against humanity. While certain commercial organisations must publish an annual statement setting out the steps they take to prevent modern slavery in their business and their supply chains, the question remains, how many convert their words into actions?

With sanctions in mind, nine non-EU countries have all aligned themselves with the EU’s 8th package of Russia sanctions, while the EU has joined the US and the UK in imposing fresh sanctions on Iran for human rights violations. Meanwhile the US has also stated that Iran’s supply of explosive drones to Russia violates UN Security Council Resolution 2231 which bars Iranian transfers of military technologies. 

Crypto and ESG also feature in this edition, together with updates on the latest global legislation and reports. Finally, we wrap up this week’s Roundup with news of anti-money laundering initiatives & prosecutions and complete the line up with the latest articles covering corruption, bribery, and fraud. 

RequirementsModern Slavery

What is modern slavery?

Anti-Slavery International defines modern slavery as when an individual is exploited by others, for personal or commercial gain. This includes but is not limited to human trafficking, forced labour, debt bondage, descent-based slavery, child slavery, forced and early marriage, and domestic servitude.

Office of National Statistics: The prevalence of modern slavery in the UK

The hidden nature of modern slavery makes producing an accurate figure difficult. This article explores the issue and brings together data sources linked to modern slavery from a range of organisations.

EU targets labour exploitation in the fields 

Between 14 – 21 September 2022, Europol and the European Labour Authority supported Europe-wide coordinated action days against human trafficking for labour exploitation in the agricultural sector. Over 6,000 officers from national authorities took part in operational activities on the ground and identified 874 workers affected by labour violation or exploitation. 

How to spot possible human trafficking red flags using AML measures 

Criminals involved in human trafficking need to hide the true source of their money and as a result it can be considered a money laundering predicate offence. Consequently, following money laundering can often lead investigators to the source of extremely detrimental crimes such as human trafficking.

Council of Europe states Ireland must step up fight against human trafficking

Ireland must step up its efforts to fight human trafficking, a group of experts at the Council of Europe has said, after a report expressing concern about the number of prosecutions and convictions relating to the issue. The Group of Experts on Action against Trafficking in Human Beings (Greta) found the number of presumed trafficking victims in Ireland fell from 103 in 2017 to 44 in 2021. 

How traffickers force victims into cyberscamming 

ProPublica reveals how tens of thousands of people from across Asia are coerced into defrauding people around the world out of millions of dollars; those who resist face beatings, food deprivation, or worse. 

Nigerian authorities raid cybercrime training centres

According to the Nigeria’s Economic and Financial Crimes Commission (EFCC), operatives have raided several schools which specialise in teaching internet fraud and as a result have arrested two owners and seven students.

“If they call, I have to go” – the horrific story of a trafficked woman in the UK 

Record numbers of children and young people are being registered with the National Referral Mechanism as suspected victims of modern slavery, but a recent investigation has revealed that the system is failing far too many.


Financial_ServicesMoney Laundering, Fraud & Corruption

FCA fines Gatehouse Bank £1.5 million over poor anti-money laundering checks 

The UK’s Financial Conduct Authority (FCA) has fined Gatehouse Bank Plc £1,584,100 for significant weakness in its financial crime systems and controls. The financial watchdog stated that between June 2014 and July 2017 Gatehouse failed to conduct sufficient checks on its customers based in countries with a higher risk of money laundering and terrorist financing. In addition, the bank failed to undertake the correct checks when some customers were identified as being politically exposed persons (PEPs). 

ING subsidiary suspect in money laundering case 

Payvision, a subsidiary of the bank ING, is suspected of money laundering in a criminal investigation following a raid on its Amsterdam office earlier this year. The company, an online payment service provider, is believed to have violated the Financial Supervision Act. This is the second time that ING has been connected to a money laundering case. 

Challenger bank wins AML case against Dutch Central Bank 

Dutch challenger bank Bunq has won a landmark verdict over its use of artificial intelligence (AI) for anti-money laundering processes. The Dutch Central Bank (DNB) had prohibited Bunq’s use of AI and machine learning to conduct AML monitoring, leading Bunq to sue the central bank, with the court finding in favour of Bunq. 

Star casino: Record fine for Australian operator over money laundering

The record penalties were announced in response to a damning inquiry in New South Wales (NSW) earlier this year. It heard the Star had allowed money laundering and organised crime to infiltrate their Sydney casino, taking a ‘cavalier’ approach to governance and making deliberate moves to cover its tracks. 

Blog: As global AML efforts stall, it’s time for businesses to step up and play their part 

According to the Basel AML Index 2022, progress in addressing global money laundering and terrorist financing risks remains paralysed and is now too important and complex for governments to tackle alone. This blog examines the results of the survey and why businesses must now play their part by embracing technology and implementing a truly risk-based approach to screening. 

Singapore banking regulator gives ex-banker 10-year ban for not reporting 1MDBs suspicious transactions 

The Monetary Authority of Singapore (MAS) has given a former senior official of a Swiss private bank a 10-year prohibition order for his role in the 1Malaysia Development Berhad (1MDB) scandal. Billions of dollars were misappropriated from the Malaysian state fund and date back to the government of former Malaysian prime minister Najib Razak, which set up 1MDB in 2009. 

Deutsche Bank HQ searched in tax fraud probe 

German authorities have searched the headquarters of Deutsche Bank in relation to an ongoing investigation of the multibillion-euro tax fraud scheme known as ‘cum-ex’. The country’s largest lender is one of several banks that prosecutors have raided in connection with the tax scheme that thrived over a decade ago. 

Iraq’s Finance Ministry discovers $2.5 billion stolen from government account

An investigation by Iraq’s finance ministry has concluded that US$2.5 billion was effectively stolen from a government tax commission account by 5 companies, in one of the biggest corruption scandals in the countrys history. In total, taxpayer revenue totaling 3.7 trillion Iraqi dinars was embezzled from a government account at the state-owned Rafidain Bank between September 2021 and August 2022.

Credit Suisse to pay $495 million in US to settle ‘deceitful’ securities case 

Credit Suisse will pay US$495 million to settle a case related to the sale of mortgage-backed securities which contributed toward the 2008 financial crisis. According to court documents, the lender made fraudulent and deceitful representations of the risks of the mortgage-backed securities between 2006 – 2007.


RequirementsLegislation, Regulation and Sustainability

FATF Plenary October 2022 

The Financial Action Task Force (FATF) Plenary Week is the first to be held under the Singapore Presidency of Raja Kumar. Delegates are meeting for four days of meetings in Paris to discuss a range of issues, including: Improving corporate transparency; Money laundering linked to the dealing of fentanyl; Countries that present a risk to the global financial system.

Report: Behavioural insights and anti-corruption 

Based on the evidence from Social Norms and Behaviour Change (SNBC) intervention studies, this paper summarises a set of behavioural insights and pitfalls as to why some SNBC approaches have failed, while others have been effective. The aim is to provide practitioners designing SNBC interventions with evidence to help them develop effective programmes and avoid common pitfalls. 

Report: INTERPOL says financial and cybercrimes top global police concerns 

INTERPOL’s first-ever Global Crime Trend report has revealed that over 60% of respondents ranked crimes such as money laundering, ransomware, phishing and online scams as high or very high threats. Furthermore, more than 70% of respondents expect crimes such as ransomware and phishing attacks to increase or significantly increase over the next three to five years 

Report: Helping EU lawyers navigate the Russian sanctions’ package

The European Lawyers Foundation (ELF) and the Council of Bars and Law Societies of Europe (CCBE) has published guidance which sets out views on various issues including deposits, asset recovery, the provision of and payment for legal services.

Report: The second reading of the Financial Services and Markets Bill

The Financial Services and Markets Bill is an important piece of legislation currently before Parliament and is set to usher in the biggest change to financial services in a generation. Chris Holmes lauds its vision to promote competition, innovation and growth, but questions if it goes far enough on financial inclusion, the environment, and the role of the regulators. 

Sibos 2022: The biggest problem with ESG is its complexity

Ahead of his panel session at Sibos 2022, Adrian Whelan of Brown Brothers Harriman, spoke of the challenges facing environmental, social, and governance (ESG). With millennials and generation Z-ers expected to push for an ESG-exclusive market, it is imperative to reduce the complexity of managing ESG risks and controls.

“The biggest problem is its complexity. Even the concept of ESG and the aggregation of those things, there are three separate things that have been lumped into one.” 
Adrian Whelan, Global Head of Regulatory Intelligence, Brown Brothers Harriman

BA owner pressured UK government to hide emissions data

British Airway’s parent company, International Airlines Group (IAG), sought to conceal the environmental impact of flights by lobbying against a government proposal to require airlines to inform passengers of every trip’s carbon emissions when booking. A Freedom of Information request showed that IAG argued against the proposal when responding to the Department for Transport’s 2021 consultation on its ‘Jet Zero strategy’.

How a big tobacco funded a political campaign of US farmer accused of abusing his workers

A US farmer accused by migrant workers of either failing to pay wages or blacklisting them for joining a union, had his political campaign funded by tobacco giant Reynolds American. This report reveals that while Reynolds claims to support freedom of association within its global supply chain, its political donations say otherwise.


Crypto-1Crypto & Virtual Assets

Bittrex fined $29 million for violations of sanctions obligations and Bank Secrecy Act requirements

The US Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) have fined the virtual currency exchange Bittrex $29 million for violations of “multiple” sanctions obligations and “willful violations” of the Bank Secrecy Act’s AML and SAR reporting requirements. 

INTERPOL to create a dedicated unit to fight crypto crime 

Interpol is forming a dedicated division to combat crimes involving virtual assets. The international criminal police organisation made the announcement at a press conference ahead of its 90th general assembly in Delhi, which is being attended by high-profile police officials from its 195 members.

Insolvency practitioners battle with crypto recovery

Insolvency practitioners (IPs) are encountering an emerging trend of the presence of crypto assets requiring realisation, or being appointed over a business that engaged in crypto trading or market-making. This gives rise to several issues for IPs, such as how to access the private key of a relevant wallet and turn the asset into money that can be returned to creditors. 

UK court bans ‘Britain’s Pablo Escobar’ from bitcoin

Curtis Warren, famously known as the ‘Brit Pablo Escobar’, has been banned by a UK court from ever using bitcoin. The notorious criminal has been on the UK’s radar for a long time and even been the most wanted criminal on Interpol’s list before his arrest in 2009 and sentenced to 13 years fro conspiracy to smuggle cannabis.



Third countries align with EU’s 8th package of Russia sanctions

The EU High Representative has confirmed that third countries have aligned with the EU’s 8th package of Russia sanctions. North Macedonia, Montenegro, Albania, Ukraine, Bosnia and Herzegovina, Georgia, Iceland, Liechtenstein and Norway have all aligned themselves with the EU Council decision.

EU imposes stricter sanctions for Iranian human rights violations

Following moves by the US and UK governments, the EU Council has imposed additional sanctions on Iran in response to the violent suppression of protests following the death of 22-year-old Mahsa Amini. It has added eleven individuals and four entities to the list of those subject to restrictive measures in the context of the existing Iran human rights sanctions regime. 

US says Iranian drones breach sanctions

The US agrees with the French and British assessment that Iran’s supply of the so-called “kamikaze” explosive drones to Russia violates UN Security Council Resolution 2231. That resolution, linked to Iran’s nuclear accord, bars Iranian transfers of certain military technologies. 

A US technology company self-reports indirect sales to Russian arms company

After receiving information from a news outlet, the Us technology company Extreme Networks has uncovered indirect sales of $645,000 to a sanctioned company that builds weapons for the Russia military.

How sanctioned Russian oligarchs are trying to loosen Europes grip on their superyachts  

Sanctioned Russian billionaires are registering their yachts in countries that haven’t imposed sanctions on Russia in an attempt to allow them to sail legally if sanctions are ever lifted. According to Forbes, six yachts owned by sanctioned Russian billionaires have recently changed their country of registration, or ‘reflagged’.

Sanctioned Myanmar tycoons find a safe haven in Singapore

There is no firm estimate of how much Myanmar money is parked in Singapore, but according to corporate registry filings, several tycoons who have been sanctioned by the US have long-term employment passes and business in the city-state.

Puerto Rican bank violated Venezuelan sanctions 

The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has found that Nodus International Bank, an international financial entity located in Puerto Rico, violated sanctions imposed on Venezuela. The bank failed to maintain full and accurate records relating to the handling of blocked property and inaccurate reporting of the blocked property to OFAC. 

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