KYC360 Weekly Roundup - 16th Sep 2022

Published on Sep 16, 2022

Spotlight on Web3

Welcome to this week’s AML Roundup.  With an eye on future trends, this week we lead by exploring Web3, the catch-all term for the vision of a new internet which at its core uses blockchains, cryptocurrencies, and NFTs to give power back to the users in the form of ownership. For some it represents a transition from big corporations controlling and monetising content on the internet to individuals sharing content and interacting through decentralised networks. But for others, the notion of a decentralised internet presents many challenges, especially how to identify, prosecute, and prevent financial crime on the blockchain.

Cryptocurrencies and cryptoassets are inextricably linked to the concept of Web3, so we also deliver the latest news surrounding the world of virtual currencies and renewed efforts by authorities to detect and prevent crime in the sector.

In addition, we feature updates on global sanctions, cover the growing focus on Environmental, Social, and Governance (ESG) standards, present you with the most recent reports, legislation & guides, and finally wrap up this week’s Roundup by reviewing the latest news from the world of money laundering.

What exactly is Web3?

Web3 isn’t yet fully in existence, so nobody knows exactly how it will work. But most concepts involve the blockchain, an unchangeable ledger system used by cryptocurrencies to keep track of transactions.  Some believe that Web3 is little more than a rebranding exercise for crypto, others believe it’s a dystopian vision of a pay-to-play internet, in which every activity and social interaction can be bought and sold.

Can a blockchain-based decentralised internet change the world?

The appeal of the blockchain for Web3 supporters is that it logs everything in a way that is transparent and impossible to edit or falsify; each new transaction creates a “block” in the ledger anyone can see. The main issue of the blockchain is the same as its supposed benefit, as nobody can edit the ledger, and anyone can create as many crypto accounts as they want, it’s hard to address and protect against fraud.

Webinar: Experts Take on FinCrime: Web3 and Digital Assets

While Web3 and digital assets have the potential to benefit society, cryptocurrencies and decentralised finance (DeFi) protocols are a central tool in the arsenal of cybercriminals. At this upcoming webinar (Wednesday, September 21st, 2022 @ 9:30 am BST) experts from law enforcement and technology vendors will discuss the digital asset ecosystem as it relates to financial crime.

Helium: an example of Web3 in action today

Helium is a crowdsourced wireless network that rewards users with cryptocurrency for sharing their home network connections. This effectively creates a large network of hotspots that users can access, while the owners of those hotspots can receive compensation in the form of crypto tokens.

Crawley Town Football club: The “transformative sports success story of Web 3.0”

While traditional finance was used in the initial purchase of Crawley Town football club, its owners are now harnessing digital currencies to build a remote community of fans. In July, Crawley launched their own NFT and for the price of 0.35 Ether (worth £353 at the time of publication) buyers received ‘a virtual season ticket’. 


Financial_ServicesMoney Laundering, Fraud & Corruption

Malta-based bank fined for anti-money laundering breaches 

A Malta-based bank owned by a Dutch billionaire has been fined by the Financial Intelligence Analysis Unit (FIAU) for some major shortcomings in its anti-money laundering processes. Novum Bank, owned by Dutch entrepreneur Marcel Boekhoorn, was hit with an €89,000 fine and ordered to tighten up its checks on clients. 

Opinion: call for a European centre of excellence for regulatory compliance and anti-financial crime 

The increasing complexity of EU financial and anti-financial crime regulation has made it increasingly difficult for compliance officers and money laundering reporting officers (MLROs) to keep up with regulatory developments. This has led to growing calls for the establishment of a European centre of excellence for regulatory compliance and anti-financial crime to provide training and guidance, especially for small and medium-sized businesses.

Report: The biggest money laundering risks must be given top priority 

De Nederlandsche Bank has published a report on preventing and combating financial crime. Entitled ‘From recovery to balance’, it argues for more risk-based customer due diligence and recommends focussing on the high-risk customer categories.  

Money laundering through Payment Gateways and Buy Now Pay Later schemes 

The Covid-19 pandemic threw India’s economy into chaos and Chinese scammers took advantage by flooding the market with legitimate-looking micro-loan and betting apps, which they turned out to be scandalous and robbed thousands of users of their money. Many companies are now facing scrutiny as their due-diligence methods failed to prevent transactions with fraudulent merchants.  

Regulator details “Frankly shocking” AML breaches at Sydney casino 

Star Entertainment Group, Australia’s second biggest operator, has been found unfit to hold a casino licence in Sydney. An inquiry by Australia’s New South Wales state gambling regulator into alleged breaches of anti-money laundering laws and criminal infiltration, identified “systemic governance, risk and cultural failures”.

Webinar: Money laundering through the property sector: Headline cases in review 

While the property sector has faced increasingly stringent anti-money laundering regulations across the globe, often these regulations are poorly enforced. Public records can go a long way toward flagging and investigating suspicious real estate transactions, particularly when records are centralised, networked, and searchable. Join this webinar on September 28 at 1pm ET for a discussion on money laundering in the real estate market and examples of how to trace nefarious actors’ real estate assets in Sayari Graph. 


RequirementsLegislation, Regulation and Sustainability

Report: FATF and INTERPOL intensify global asset recovery 

The Financial Action Task Force (FATF) and INTERPOL have launched a joint initiative to increase global efforts to recover illicit assets. While asset recovery is key to combating money laundering and terrorist financing, it is estimated that countries intercept and recover less than one per cent of global illicit financial flows. 

FATF Report: Japan strengthens measures to tackle money laundering and terrorist financing 

Since the 2021 assessment, Japan has taken several actions to strengthen its framework. As a result, the FATF has re-rated the country on Recommendation 2 from Partially Compliant to Largely Compliant. Japan is now compliant on 4 Recommendations, largely compliant on 25, and partially compliant on 9 Recommendations. Japan will remain in enhanced follow up and will continue to inform the FATF of its progress. 

Foreign Affairs Committee inquiry on illicit finance – evidence deadline 27 September 

The deadline for submissions of initial written evidence to the House of Commons Foreign Affairs Committee’s ‘Responding to illicit and emerging finance’ inquiry has been extended to Tuesday 27 Sept 2022. The inquiry, announced on 1 Feb 2022, will assess the effectiveness of the UK’s response to the challenge of cross-border illicit finance and builds on the “Moscow’s Gold” report.

FCA calls on the financial industries to ‘embed’ the use of data and technology 

An executive director of the Financial Conduct Authority (FCA) has called on the financial industries to ‘embed’ the use of data and technology in order to ward off financial crime. Speaking at The Financial Crime Summit, Sarah Pritchard warned that financial crime would worsen in light of the cost-of-living crisis and advised firms to plan how they will respond to the increased risks.

“My message to all firms is this: embed your financial crime checks in your systems from day one, but keep evolving as the threats evolve,” she said. “Use the power of data and tech, and stay alert for situations in which you may need to recalibrate your defences and alerts.” 
Sarah Pritchard, Executive Director, Markets, FCA

Quick Guide: Money laundering through the gambling industry 

The Basel Institute on Governance has published a quick guide which sets out how criminals abuse the gambling industry to launder illicit funds. It includes case studies to illustrate the different ways criminals launder money in casinos, online gambling websites, bars and clubs, as well as physical and online sports betting services. The guide also explores what gambling businesses and public authorities can do to better prevent and detect money laundering in this sector. 

Dekleptification guide: Seizing windows of opportunity to dismantle kleptocracy 

This guide was created as a resource for USAID staff working in countries mired in severe corruption, particularly those whose courageous citizens open windows of opportunity for reform. It also aims to set the agenda for the broader community of donors, implementing partners, scholars, and other experts who are focussed on countering kleptocracy and corruption. 

OCCRP publishes a ‘Follow the Money’ handbook in Spanish 

OCCRP has released “¡Sigan el dinero!” (Follow the Money). This free Spanish-language handbook is available here and contains tools, instructions, and tips on how to find records and databases in 19 Latin American countries, as well as in the US, Belize, and the British Virgin Islands, which are prime havens for stolen money. 

Singapore: Strengthening AML/CFT practices for external asset managers 

The Monetary Authority of Singapore (MAS) has published an information paper which sets out supervisory expectations for effective AML/CFT frameworks and controls, together with good practices and illustrative examples observed. 

Video: A whistleblower’s greenwashing allegations and their impact 

Desiree Fixler was fired from her position as head of sustainability at German asset manager DWS. Her dismissal came after she warned the company it was overstating its sustainable investment credentials. While DWS has always denied Fixler’s allegations, her public statements have sparked official investigations on both sides of the Atlantic. 

“This whole saga culminating in this police raid, is the wake-up call for the ESG market. A sustainability officer is not a marketing officer, a sustainability officer should be considered a compliance officer.” 
Desiree Fixler, former DWS Sustainability Officer

New Royal warrants will require proof of commitment to sustainability and the environment 

Cadbury and Heinz are among around 800 firms who will have to re-apply for a Royal Warrant after the prestigious label became void following the death of Queen Elizabeth II and will be required to demonstrate that they have an appropriate environmental and sustainability policy and action plan.

ESG policies should take note of the consequences of illegal wildlife trade and poaching 

The Illegal wildlife trade has far-reaching consequences and impacts society not just through loss of biodiversity, but the emergence of new virus diseases, economic decline, and leads to violence and other criminal activities.


Crypto-1Crypto & Virtual Assets

Into the Metaverse: Risks and Rewards 

Financial services firms are increasingly exploring how they can use the metaverse to provide new products and services to customers. As with the adoption of any new technology, this presents a series of risks and challenges. There is also a connection between the metaverse and Web3 as various items inside the metaverse could be NFTs, such as an avatar or virtual real estate.

Why cryptocurrencies remain of interest to criminals 

In recent times cryptocurrencies such as Bitcoin have become easier to trace, major darknet platforms have been taken down by law enforcement, and internal financial crime investigation units have upgraded their technological financial crime prevention solutions. Yet the amount that is connected to illicit activity still accounts for more than the authorities would like. 

Europol sees the tools to tackle crime in cryptocurrency and blockchain technologies 

Europol has acknowledged that while abuse increases with use in the case of cryptocurrency, it also noted that blockchain technologies offer authorities a new opportunity to fight crime by helping to investigate money laundering networks.

Podcast: Banking’s future in the Crypto-sphere

This podcast explores the impact of crypto on the banking sector, its potential to undermine or even replace fiat currencies, and the way lines are blurring between banks and crypto. Most importantly, it sheds light on how crypto impacts financial crime compliance, and the tools and training needed to combat illicit activity.

Australian Federal Police unveils new unit to target crypto criminals 

The Australian Federal Police has launched a new specialised unit dedicated to tracing and seizing cryptocurrencies related to illicit activities, such as money laundering and offshoring. While the Criminal Assets Confiscation Taskforce has been seizing dirty crypto since 2018, the new unit will be able to trace cryptocurrency transactions across the blockchain



EU Chief: “Russia sanctions here to stay”

During her annual State of the Union speech, EU commission president Ursula von der Leyen has reaffirmed that the EU sanctions imposed on Russia for its invasion of Ukraine are here to stay.

“I want to make it very clear, the sanctions are here to stay. This is the time for us to show resolve, not appeasement,”
Ursula von der Leyen, EU commission president

OFSI annual frozen assets review – deadline November 11, 2022 

The Office of Financial Sanctions Implementation (OFSI) has requested that all persons that hold or control funds or economic resources belonging to, owned, held, or controlled by a designated person/entity (subject to UK sanctions), report the details of these assets to OFSI by Friday 11 November 2022. Full details here.

US obtains warrant to seize $45 million LUKOIL jet 

The United States has obtained a warrant to seize a jet aircraft owned by PJSC LUKOIL, a Russian multinational oil and gas corporation. According to court documents, the Boeing 737-7EM flew into and out of Russia in violation of the Department of Commerce’s sanctions.

Opinion: Russian business leaders face difficult decisions

As Western sanctions ensnare increasing numbers of Russian business leaders (some of whom believe they are being unfairly targeted), how can those in the private sector reduce the risk of being designated? This article explores the difficult choices they must make; balancing obligations to employees, owners, suppliers, and customers, with loyalty to the Kremlin. 

US considers China sanctions to Deter Taiwan action, while Taiwan presses EU 

The United States is considering a sanctions package against China in order to deter it from invading Taiwan, while the EU is coming under diplomatic pressure from Taipei to do the same. 

US imposes fresh sanctions on Iranian individuals and entities 

The US has imposed sanctions on a number of individuals and entities believed to be linked to Iran’s Revolutionary Guard for what it called Tehran’s “malicious” cyber and ransomware activity. 

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