24 Feb 2017
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Security Council to vote on Syria sanctions

The United Nations Security Council will likely vote on a resolution sanctioning Syrian officials over chemical weapons attacks as early as next week, a diplomat told Reuters on Thursday.

The resolution, if it passes, would blacklist 11 Syrian military commanders and officials.

The draft resolution also seeks to ban the sale or supply of helicopters to the Syrian government and to blacklist 10 government and related entities involved in the development and production of chemical weapons and the missiles to deliver them.

It calls for an asset freeze and travel ban for the individuals and entities across all UN member states.

24 Feb 2017
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Austria calls for Russian sanctions rethink to bring progress

Austrian Chancellor Christian Kern called for a rethink on sanctions imposed on Russia, saying that the regime of penalties over Kremlin-backed incursions in Ukraine has failed to yield enough progress.

Speaking in an interview in Vienna on Thursday, Kern said that the European Union may need to consider new ways to put leverage on President Vladimir Putin to bring more success and be less economically damaging to Europe. At the same time, he said it was important that Europe remains united in its stance.

Asked if he favoured a partial lifting of penalties in exchange for progress in adhering to the so-called Minsk peace process, Kern said “absolutely.”

24 Feb 2017
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Former IMF chief gets four years in jail for embezzlement in Spain

The former International Monetary Fund chief Rodrigo Rato has been sentenced to four-and-a-half years in prison for misusing corporate credit cards while in charge of two leading Spanish banks at the height of the country’s financial crisis.

Rato, also a former a Spanish economy minister and deputy prime minister, was found guilty on Thursday of embezzlement, at the end of a five-month trial at Spain’s national court.

He had been on trial with 64 other former executives and board members at Caja Madrid and Bankia banks, whose near collapse sparked an EU bailout of Spain’s financial sector.

24 Feb 2017
Published in News

A map of corruption in France

Corruption is as invisible as it is pervasive. Public trust is easily professed on public forums, and just as easily betrayed in back rooms. Money and favours influence decisions without leaving a trace. Pecunia non olet.

Yet corruption is not a victimless crime. Cutting corners on good governance costs money, endangers lives and erodes the public trust that oils the machinery of state in modern democracies.

So how to fight it? Corruption feeds off apathy and thrives in the shadows. It abhors the full glare of public attention. It is not a coincidence that the global organisation dedicated to its demise is called Transparency International.

24 Feb 2017
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US, UK must target law firms facilitating African corruption

A few weeks ago one of the world’s richest men was arrested for interrogation in Tel Aviv following an investigation in which the Israeli police drew on the support of criminal justice authorities in the U.S., France and Switzerland. The Republic of Guinea was proud to have played its own part in supporting Israel’s investigation.

While we should never forget a criminal defendant’s presumption of innocence in a case, this case highlights the complexity and global nature of modern corruption investigations. The police action in Israel was only made possible by the painstaking investigation and cooperation of law enforcement agencies around the world. It provided an example of how the anti-corruption mechanism of the OECD convention is supposed to work, but only rarely does.

23 Feb 2017
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US: Big risks in the hasty rollback of financial regulation

Many business people think it is wonderful that we now have an Administration filled with people from business backgrounds. To a point, I relate. People who have worked primarily in the private sector bring an awareness that others sometimes lack of maintaining business confidence, which as I have often said is the cheapest form of stimulus. And for some government tasks, management experience is much more important than policy experience. That is why Bob Rubin and I worked to install a (Republican) business leader as commissioner of the IRS given its vast IT problems.

23 Feb 2017
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Poland’s financial ombudsman calls for bitcoin exchange regulation

Poland’s Financial Ombudsman has called on the country’s Ministry of Finance to regulate the local cryptocurrency industry.

The official, Aleksandra Wiktorow, told local radio broadcaster Polskie Radio that her office has filed an official letter to the ministry in which it said that Poland’s cryptocurrency market is experiencing rapid growth and should be subject to regulations that would protect customers of cryptocurrency exchanges.

Wiktorow pointed out that, currently, the sector is not subject to any regulations in Poland. The finance ministry should evaluate and compare the best practices from those countries that have regulated cryptocurrencies, and implement the best instruments, she said.

23 Feb 2017
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US: First-in-nation state-mandated cybersecurity regulation takes effect March 1

The nation’s first state-mandated cybersecurity regulations regarding banking and financial services companies are scheduled to go into effect in New York state on March 1.

The rules are intended to set up protections for financial institutions as well as consumers.

“This regulation helps guarantee the financial services industry upholds its obligation to protect consumers and ensure that its systems are sufficiently constructed to prevent cyberattacks to the fullest extent possible,” Governor Andrew Cuomo stated in September when proposing the “first-in-the-nation cybersecurity regulation.”

23 Feb 2017
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U.S. crackdown on money laundering in luxury real estate set to end

Federal regulations meant to catch illicit money flooding into luxury real estate are set to expire on Thursday, leaving the future of the so-far successful initiative in limbo.

The federal government launched the program a year ago in two municipalities—Manhattan and Miami-Dade County, luxury real estate hubs where all-cash buyers of multimillion-dollar homes commonly hide their identities behind obscure limited liability companies, known as “shell companies.” But the pilot program ends this week, and the federal government has given no indication of whether it will be continued, replaced or scrapped despite comments from top officials in the past about its effectiveness.

23 Feb 2017
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US: West Virginia lawmakers want to make Bitcoin money laundering a felony

Legislators in West Virginia want to make it a felony to launder money with bitcoin and other cryptocurrencies.

West Virginia House Bill 2585, introduced yesterday, updates the state’s money laundering statutes in several ways, including the addition of a definition for “cryptocurrency”, which it then includes in the state’s definition of a “monetary instrument”.

While stopping short of deeming it money, the inclusion is a notable one given the recent push among state legislatures to draft new laws around the technology.

23 Feb 2017
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Are sanctions against North Korea working?

It is no secret that North Korea is one of the most isolated countries in the world, but this week, it has become even more so.

China has announced that it is banning all coal imports from North Korea until the end of the year as part of an international effort to get the country to stop missile its tests.

North Korea’s ties with Malaysia have also been worsening after the death of a man Malaysia says is Kim Jong-un’s half brother, Kim Jong-nam, in Kuala Lumpur last week.

23 Feb 2017
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UK: FCA signs innovation co-operation agreement with Canadian regulator

The Financial Conduct Authority (FCA) has entered into a co-operation agreement with Candian regulator Ontario Securities Commission (OSC) in an effort to boost innovation.

The two bodies have committed to sharing information on emerging trends and regulatory issues relating to innovation in financial services. The agreement follows the creation of the FCA’s Innovation Hub in 2014.

“The authorities intend to provide the fullest possible mutual assistance to one another within the terms of this co-operation agreement,” the agreement noted. It also said the framework of the agreement centred on a “referal mechanism” that allows each regulator to refer innovative businesses to their foreign counterpart.

23 Feb 2017
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Romania, the endless anti-corruption race

Two weeks ago, hundreds of thousands of Romanians took to the streets to protest against their government, which, with virtually no public debate, had amended the country’s anti-corruption legislation. Many believe that the proposed legislation was intended to serve a few important politicians who had pending criminal investigations with the judiciary.

The government held its position, despite being challenged with a motion in parliament. The only damage done was the forced dismissal of justice minister Florin Iordache and a repeal of the ordinance on Tuesday (21 February). All of this was a reaction to protesters on the street.

22 Feb 2017
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Video – Interview with Sam Thampapillai of Eversheds Sutherland on financial crime & Blockchain

Tom Devlin interviews Sam Thampapillai, associate in the financial services disputes and investigations group at Eversheds Sutherland. Sam has focused his recent work on developing technologies and financial crime. In this video he focuses on Blockchain, offering an introduction to how the technology works and insight into the particular financial crime risks that it, and associated phenomena such as crypto currencies, present.

22 Feb 2017
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UK: Fined network boss defends approach to regulator

The former director of the Financial Limited network, Charlie Palmer, who is attempting to challenge a Financial Conduct Authority (FCA) decision to fine him, said he knew better than the regulator how to run a business.

Palmer was director of the Financial Ltd network, a subsidiary of Financial Group.

In 2015 the FCA said it intended to ban and fine Palmer £89,000 over risk management failings. It said Palmer failed to implement an effective risk management framework between February 2010 and December 2012, when he was chief executive of Financial Ltd parent Standard Financial Group and majority shareholder in Financial Limited.

22 Feb 2017
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Canada’s Joint Serious Offences Team makes first arrest in fight against financial crime

JSOT is an enforcement partnership between the ASC, the RCMP Federal Policing’s Financial Integrity Program and Alberta Crown Prosecution Service. JSOT investigates and prosecutes quasi-criminal cases under the Securities Act and certain securities-related criminal offences under the Criminal Code. In particular, JSOT targets repeat offenders, serious frauds and breaches of ASC or court orders and bans. The primary objective is to protect investors and further enhance confidence in the Alberta capital market through collaborative investigations and prosecutions of serious violations of the law using the provisions of the Securities Act (Alberta) or the Criminal Code.

22 Feb 2017
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Russia drafts new sanctions against North Korea after latest ballistic missile test

Russia has drafted new sanctions against North Korea banning the sale of helicopters and ships to the reclusive Communist state.

The crackdown comes after Pyongyang’s latest ballistic missile test earlier this month when it launched a Musudan-type projectile into the sea, flouting UN Security Council resolutions again.

China, the North’s biggest backer due to its strategic “buffer-zone” location, reacted by banning imports of coal until the end of 2017, dealing a major financial blow to the Kim regime.

A draft presidential decree would see Russia halt the sale of ships and helicopters to North Korea, as well as ban the importation of copper, zinc, nickel and silver.

22 Feb 2017
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US working with Trinidad and Tobago to fight money laundering and terrorism financing

The United States is providing Trinidad and Tobago with assistance in combating money laundering and terrorism financing, the US Embassy here announced Tuesday.

It said that John Murphy, an economic crime advisor from U.S. Treasury, is here assisting the government as part of Washington’s ongoing partnership with the government building capacity in the security sector.

“This technical assistance is based on an agreement signed between the United States and Trinidad and Tobago in August 2016. The U.S. Department of Treasury Office of Technical Assistance Economic Crimes Team, funded by the Department of State Bureau of International Narcotics and Law Enforcement under the Caribbean Basin Security Initiative, provides capacity and technical assistance in anti-money laundering and counter financing of terrorism in various countries.”

22 Feb 2017
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UK: HSBC faces FCA probe into anti-money laundering controls as profits plunge

HSBC is being investigated by the City watchdog over concerns about its anti-money laundering controls, Europe’s biggest bank revealed as it posted a shock plunge in profits that sent its shares tumbling.

The Financial Conduct Authority (FCA) commissioned a skilled person review – a so-called “166 report” – into the lender during the final quarter of last year, a type of enforcement action that could result in the bank being hit with a fine. The investigation was launched after the monitor installed by US authorities to oversee improvements in HSBC’s financial crime measures flagged worries about its progress.

22 Feb 2017
Published in News

New Zealand: Sentences handed down in Auckland roading corruption case

An Auckland contractor and public official have been jailed for corruption worth more than $1 million relating to roading contracts.

Stephen James Borlase and Murray John Noone stood trial over eight weeks last year, after pleading not guilty to bribery and corruption charges brought against them by the Serious Fraud Office.

Borlase, a former director of Projenz which undertook contract work for Auckland Transport (AT), was found guilty of eight charges of corruption or bribery of an official but not guilty of four charges of obtaining a document for pecuniary advantage.

22 Feb 2017
Published in News

Can board games tackle corruption in Indonesia?

Makassar, South Sulawesi – At the Al-Ashiri junior high school in Makassar, 40 youngsters, split evenly into groups of boys and girls, pour over scenarios that put their scruples to the test.

“Arun is using the school’s only computer and there is no wi-fi, but he won’t share,” reads one boy into a microphone – unperturbed by the occasional ear splitting feedback. “What value is he lacking?”

The children are playing Semai – the name of a board game that telescopes into one the Indonesian words for “nine” and “values”.

22 Feb 2017
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Former Hong Kong leader Donald Tsang jailed for corruption

The former Hong Kong leader Donald Tsang has been sentenced to 20 months in jail for misconduct in public office, making him the most senior city official to be imprisoned in a ruling some said reaffirmed the territory’s vaunted rule of law.

The sentencing on Wednesday brings an ignominious end to what had been a long and stellar career for Tsang before and after the 1997 handover to Chinese control, service that saw him knighted by the outgoing British colonial rulers.

“Never in my judicial career have I seen a man falling from such a height,” said high court justice Andrew Chan in passing sentence.

22 Feb 2017
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Article – Have Deferred Prosecution Agreements come of age?

On 17 January 2017, at Southwark Crown Court, Lord Justice Leveson approved a deferred prosecution agreement (“DPA”) between the Serious Fraud Office (“SFO”), and Rolls-Royce Plc and Rolls-Royce Energy System Inc (“Rolls-Royce”).[1] This, the third DPA agreed by the SFO, has led some to wonder whether DPAs have finally come of age as a weapon the SFO’s enforcement arsenal.

DPAs have been a mainstay of the United States Department of Justice (“DoJ”) since 1992. It agreed nine in 2016 alone. Notable subjects of the DoJ’s DPAs include Deutsche Bank, BP America and UBS.

By contrast, DPAs were introduced in the UK only in February 2014, under the Crime and Courts Act 2013. The Act gives both the SFO and the Crown Prosecution Service the power to agree a DPA. Under a DPA, proceedings brought against a company charged with criminal conduct are suspended. Instead, the company and the prosecuting authority will agree a number of alternative outcomes, including payment of financial penalties and prosecutor’s costs, disgorgement of profits, appointment of a monitor and implementation of a remedial programme.

21 Feb 2017
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Saudi Arabia to focus on transparency to fight corruption

Riyadh Gov. Prince Faisal bin Bandar said here on Monday that Saudi Vision 2030 would ensure transparency and the fight against corruption in its march toward the Kingdom’s development.

The prince was making the inaugural address on behalf of King Salman at the Second International Integrity Conference held at the Hotel Kempinski.

The two-day event, which is designed to benefit from experiences of other countries and international organizations, was attended by about 40 experts to discuss governance, transparency, accountability, international cooperation and restoration of assets.

21 Feb 2017
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Neymar: Barcelona forward to stand trial on corruption charges

Barcelona player Neymar and his club will stand trial on corruption charges over his transfer from Brazilian team Santos, after losing a final appeal.

The case relates to a complaint from Brazilian investment group DIS, which owned 40% of Neymar’s transfer rights.

It claims it received less money than it was entitled to when Neymar joined Barca from Santos for £49m in 2013.

Santos, Neymar’s mother and a company run by the 25-year-old footballer’s parents will also face charges.

21 Feb 2017
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UK: HSBC cuts pay of senior executives after failing to combat potential financial crime

HSBC has cut the pay package of its top executives in 2016 after Britain’s biggest bank failed to meet demands by US regulators that it toughen up its defences against financial crime.

As the bank reported a 62% slump in profits, it revealed it was being investigated in the UK for potential money laundering offences along with a list of other run-ins with regulators around the world.

As a result of a £1.2bn fine from the US in 2012 for poor anti-money laundering controls and flouting US sanctions, a monitor was posted to HSBC’s offices through a so-called deferred prosecution agreement (DPA).

21 Feb 2017
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Trump’s man for the SEC: time to ease regulation

In late November, Jay Clayton was called by a longtime client seeking advice for how the Trump administration should tackle scaling back rules on Wall Street.

Mr. Clayton, a partner at Sullivan & Cromwell LLP who has represented Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc., dashed off an email explaining how government could promote growth by easing what he considered unnecessary regulations on raising capital, according to a person familiar with the matter. The correspondence was shared with Trump advisers, who were impressed and asked if there might be a position that would interest him. Mr. Clayton replied: “SEC chairman.”

Shortly after a late-December meeting with then-President-elect Donald Trump in Mar-a-Lago, Fla., he was offered the job .

Through his memo and subsequent meetings, the person said, Mr. Clayton assured the Trump team he shared their fear that public markets have become much less attractive than private fundraising channels, including mutual funds that pour millions into startups that are far from going public.

21 Feb 2017
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European Supervisory Authorities warn on money laundering and terrorist financing risks affecting the EU financial sector

The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published today a joint Opinion addressed to the European Commission on the risks of money laundering (ML) and terrorist financing (TF) affecting the European Union’s financial sector. This Opinion will contribute to the European Commission’s risk assessment work as well as that of the ESAs of fostering supervisory convergence and a level playing field in the area of anti-money laundering (AML) and countering the financing of terrorism (CFT).
In particular, this Joint Opinion finds that problems exist in relation to firms’ understanding and management of the ML/TF risk they are exposed to. The Opinion also highlights difficulties associated with the lack of timely access to intelligence that might help firms identify and prevent terrorist financing, and considerable differences in the way national competent authorities discharge their functions.

21 Feb 2017
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India: Money laundering case – court grants bail to 2005 Delhi blasts mastermind

Tariq Ahmed Dar, who was convicted in the 2005 Diwali-eve serial blasts in Delhi that claimed 67 lives, was on Monday granted bail by a Delhi court in a related money laundering case.

The court allowed Dar’s bail plea noting that he was in custody in the money laundering case for over five years which was 70 per cent of the maximum sentence of seven years for the offence.

“In these facts and circumstances and keeping in view that Tariq Ahmed Dar as on date has been in custody in the present proceedings for about five years and five months out of a maximum possible sentence of seven years, I admit him to bail subject to him furnishing a personal bond of Rs. 25,000 with one surety of the like amount,” Additional Sessions Judge Reetesh Singh said.

21 Feb 2017
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India: Money laundering – Zakir Naik responds to summons, offers to be quizzed on Skype

Televangelist Dr Zakir Naik has finally responded to the legal proceedings initiated against him in Mumbai and offered to be available through Skype or such other application for questioning by the law enforcement agencies in India.

Though he has not yet returned to India and appear before the Enforcement Directorate (ED), Naik’s lawyers on Monday approached ED stating that Naik can be questioned through Skype or any other such applications.

21 Feb 2017
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US: Slush funds are an invitation to corruption – Bharara

“Slush funds” like the one set up by the City Council nearly a decade ago should set off the alarm bells for all honest elected officials, US Attorney Preet Bharara said Monday.

“The public deserves to see where their money is going and for what purpose. Who puts the money in? Are there subcontractors? Shell companies? Be on top of that. Be wary of slush funds for council members,” Bharara told the Association of Towns of the State of New York at the Marriott Marquis in Midtown.

“We have seen a lot of that going on in New York City in the past and I am sure it is not perfect in all your towns either,” Bharara added.

21 Feb 2017
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Governments ‘must address corruption to defeat IS’, says report

So-called Islamic State (IS) will never be defeated unless the corrupt conditions that help it to thrive are addressed, a new report claims.

Transparency International accuses western governments, including the UK and the US, of ignoring corruption as a major driver towards terrorism, notably in the Middle East.

It calls on them to press far harder for accountability in military budgets.

The report comes as Iraqi forces advance on the IS stronghold of Mosul.

20 Feb 2017
Published in News

The frivolity of Donald Tsang’s corruption case does Hong Kong’s reputation no favour

The old Ottoman Empire had the most direct way of going about these things. When the old sultan died, his successor would seize all his brothers and half-brothers, slit their throats and dump their corpses outside the door of the palace.

If you want to send out the message “I’m boss around here now,” this certainly serves the purpose.

There are less assertive ways of doing it, of course. You don’t always have to kill your rivals, although the weaker your rule, the more it should help you keep the job. Mostly these days you just send them to jail, or threaten to do so if they don’t run away.

20 Feb 2017
Published in News

US: DOJ Fraud Section Unveils Blueprint for Assessing Corporate Compliance Programs

In the year and a half that has transpired since the DOJ’s Fraud Section retained a compliance consultant to assist prosecutors’ evaluation of compliance programs, compliance officers, general counsels and white-collar defense lawyers have called for more visibility into what the Fraud Section’s compliance consultant portends for companies ensnared in DOJ investigations. The Fraud Section appears to have responded.

Last week, the Fraud Section posted on its public website a set of sample topics and questions titled “Evaluation of Corporate Compliance Programs” (available here).