KYC360 Weekly Roundup - 13th Jan 2023

Published on Jan 13, 2023

Crypto Sector Turmoil

Welcome to this week’s AML Roundup. Rarely out of the news these days, the crypto sector is facing a sustained period of upheaval and instability. The demise of FTX, BlockFi and other crypto related businesses is having a knock-on effect, not just in the crypto industry, but in wider financial markets. Bankruptcies, takeovers, and staff layoffs are increasing, while regulators and financial authorities are stepping up their efforts to monitor and constrain some of the sector’s excesses. 

Still reeling from the recent corruption allegations, the EU Commission has proposed the establishment of a sanctions framework targeting corruption in the second quarter of 2023. Meanwhile, attempts to circumvent sanctions continue to increase, along with reports of violations. 

We wrap up this week’s Roundup with the latest legislation, reports, & analyses, news covering money laundering, corruption, & bribery, along with other relevant items from around the world. 


Crypto-1Crypto & Virtual Assets

Crypto sector endures more turbulence and increasing staff layoffs 

The headwinds hitting the crypto sector continue to build up speed: an SEC filing revealed that Coinbase is to shrink its workforce by a quarter with the loss of 950 staff; Silvergate, the crypto-focused bank that acquired the assets of Facebook’s private digital currency Diem, has written of the $196 million price it paid for the business and plans to shed 40% of its workforce; and after laying off 30% of its staff earlier this month, crypto lender Genesis is reported to owe creditors $3bn and is considering selling some of the assets in its venture portfolio to raise money.

US investigators subpoena Hedge Funds over Binance money-laundering

According to a recent report, US Federal prosecutors are examining the relationship between Binance and US-based hedge funds, as part of a broader investigation into potential violations of money-laundering rules at one of the world’s leading crypto companies. 

US regulators warn banks on crypto risks including ‘fraud and scams’ following FTX collapse

As previously reported, US banking regulators have warned financial institutions that dealing with cryptocurrency exposes them to an array of risks. The regulators said the risks include: “fraud and scams among crypto-asset sector participants” and “contagion risk within the crypto-asset sector resulting from interconnections among certain crypto-asset participants.” The Federal Reserve, Federal Deposit Insurance Corp (FDIC) and the Office of the Comptroller of the Currency are now stepping up the oversight of banks with business interests in crypto assets.

UK associations form crypto industry body 

Five UK industry bodies have formed an alliance to help guide the nation’s digital currency future. The City of London Corporation, Digital Pound Foundation, The Payments Association, TheCityUK and UK Finance aim is to develop better policies, practice and regulation around digital currencies. 

Opinion: ECB executive says gambling rules should be applied to curb crypto speculation 

An ECB board member has claimed that trading in unbacked digital assets should be treated by regulators like gambling. In a blog post, Panetta went on to describe crypto investments as a gamble disguised as an investment asset and Vulnerable consumers should be protected through principles similar to those recommended by the European Commission for online gambling. 

“They do not perform any socially or economically useful function. They are rarely used for payments and do not fund consumption or investment. As a form of investment, unbacked cryptos lack any intrinsic value, too. They are speculative assets.” 
Fabio Panneta, ECB board member

Non-Fungible Token (NFT) developer charged in $multi-million international fraud scheme  

A criminal complaint was unsealed in federal court in Brooklyn charging Aurelien Michel, a French national residing in the United Arab Emirates (UAE), with defrauding purchasers of Mutant Ape Planet NFTs, a type of digital asset, of more than $2.9 million in cryptocurrency.

Coinbase insider trader sentenced to 10-month’s imprisonment

The brother of a former Coinbase product manager has been given a ten-month prison sentence in what is believed to be the first ever insider trading case involving cryptocurrency markets.

Celsius founder Mashinsky sued over alleged fraud 

New York’s attorney general has filed a civil lawsuit against Alex Mashinsky, founder of bankrupt Celsius Network, alleging that he defrauded hundreds of thousands of investors out of $billions worth of cryptocurrency.


Financial_ServicesMoney Laundering, Fraud & Corruption

UK financial watchdog fines Guaranty Trust bank over money-laundering controls 

The Financial Conduct Authority (FCA) has fined the UK subsidiary of Nigeria’s Guaranty Trust Bank £7.6 million ($9.3 million) for further failures in its anti-money laundering systems and controls. The financial watchdog said it found “serious weaknesses” in systems aimed at preventing money laundering between October 2014 and July 2019. 

Colombia’s biggest money laundering case of 2022

Colombia has seized assets worth almost $246 million (COP1.2 trillion) from an alleged money laundering ring with ties to the international drug trade in the United States and Asia. The money laundering was allegedly conducted by the “Holy Land Stores,” a major company that allegedly had used the imports and sales of clothes for trade-based money laundering (TBML) since 2009. 

Danish police arrest 135 people in large money laundering case 

Danish police have arrested 135 people in a large-scale operation on suspicion of laundering money defrauded from elderly people, who were scammed into transferring money from their bank accounts or provide personal banking information. Those arrested were not the organisers of the scam, but the “mules” who allowed their bank accounts to be used to launder the cash. 

Former Italy soccer star investigated for money laundering 

Francesco Totti, the former Roma and Italy soccer legend, is accused of the crime after allegedly taking an interest free €80,000 loan from the daughter of an employee in the Italian Ministry of Sports and Health. He is being investigated for supposed money laundering over suspicious transactions linked to casinos in Las Vegas, Monte Carlo and London and investigators have “significant doubts over the money’s true destination”.

Peelchain: a blockchain money laundering technique 

A Peelchain is as a spending transaction pattern in a blockchain. It is considered a pattern because a wallet owner repeatedly transfers chunks of his wallet’s funds to a service provider at irregular intervals. The use of Peelchain techniques is widespread among financial criminals as they can attempt to launder their illicit proceeds by tricking their service provider or financial institutions by regularly depositing small amounts to avoid raising suspicions or red flags.

24 rescuers who saved migrants in Med charged with money laundering and assisting criminal activity 

A group of 24 volunteers have gone on trial on the Greek island of Lesbos four years after they were arrested for carrying out migrant rescue missions off Greece. The volunteers were initially detained in 2018 for several months on suspicion of human trafficking, but the charges facing the group involve espionage, illegal access to state communications, money laundering, and assisting criminal activity.

EU corruption probe explores Morocco links 

Pier Antonio Panzeri, the former MEP emerged as a central figure in the Qatar corruption probe when Belgian police seized more than €1.5mn in cash at Panzeri and two other suspects’ houses. But it is believed that he was not new to the game: investigators suspect he had been receiving bribes and gifts from Moroccan officials for over a decade in return for influencing EU policy. 

EU corruption scandal: How the European Parliament is trying to tackle sleaze within its ranks 

Last month’s corruption allegations that rocked the EU parliament and led to the arrest of one of its highest-profile MEPs was initially blamed on “malign actors” linked to autocracies. However, the defence of the parliament’s virtue in the face of alleged foreign agents is looking shaky as officials move to address what is perhaps the root cause of the scandal: the ease with which MEPs can be corrupted by outsiders. With the investigation continuing to throw up new leads, the focus now is on cleaning up the Parliament, seen as the EU’s weakest link when it comes to ethics and integrity.

Former Bolivian Minister of Government sentenced for corruption 

Arturo Carlos Murillo Prijic, the former Bolivian Minister of Government has been sentenced to nearly six years in prison for conspiracy to launder bribes he received in exchange for corruptly helping a US company win a lucrative contract from the Bolivian government.

Belarus legalises digital piracy against ‘unfriendly countries’ 

According to the new law, signed by Belarusian dictator Alyaksandr Lukashenka on January 3, importing goods without the sanction of the copyright owner is not considered a crime and it is enough for the goods to be included in the list of “essential” for the domestic market.

Opinion: 5 predictions for Fintech in 2023 

After last year’s dismal market backdrop and the regulatory and consumer protection pressures in this space, Arvin Abraham, who leads McDermott Will & Emery’s UK Fintech practice delivers his top 5 predictions for the fintech market in 2023

JPMorgan must face Ray-Ban lawsuit over cyber theft 

A New York judge has ruled that JPMorgan Chase must face a lawsuit from the French manufacturer of Ray-Ban glasses, which argues that the bank failed to stop suspicious transactions after cybercriminals looted $272 million from its account. The suit claims that JPMorgan should have detected, reported and blocked suspicious payments that occurred in the last few months of 2019, but ignored the numerous red flags that should have been raised from the unusual pattern of transactions. 


RequirementsLegislation, Regulation and Sustainability

Threshold amount specified in the UK Proceeds of Crime Act has increased to £1,000 

From January 05, 2023, the £250 threshold amount specified in section 339A of the Proceeds of Crime Act has increased to £1,000. The threshold amount is the value of criminal property below which a bank or similar firm (a deposit-taking body, electronic money or payment institution) can carry out a transaction, in operating an account for a customer, without committing one of the main money laundering offences in sections 327 to 329 of POCA. Further guidance on the current threshold, and submitting better quality SARs more generally, can be found here

SEC Philippines increases penalties for non-disclosure of UBOs 

The penalties for failing to properly report company ownership have been increased by the Philippines Securities and Exchange Commission (SEC) as many firms continue to ignore rules introduced in 2019. In addition to the hike in penalties for companies, directors, trustees, and officers can also be fined personally and barred for five years for failure to ensure compliance with beneficial ownership disclosure requirements.

New FinCEN analysis reveals trends on the financial activity of Russian oligarchs

The Financial Crimes Enforcement Network (FinCEN) has issued a Financial Trend Analysis on the financial activity of Russian oligarchs. The report focuses on trends seen in Bank Secrecy Act (BSA) reports filed between March 2022 and October 2022 involving Russian oligarchs, high-ranking officials, and sanctioned individuals.

Exclusive: FATF spared large economies from pressure over AML gaps

The International Co-operation Review Group is a panel that supervises the use of FATF’s most powerful tool: the naming and shaming of countries with systemic gaps in their AML regimes. Yet it rejected a proposal to lower the threshold at which countries fall under deeper global scrutiny for not tackling illicit finance, potentially sparing major economies from ending up on the “grey list” of nations with porous defences against financial crime. 

South Africa to meet FATF in Morocco in bid to avoid greylisting 

South Africa is sending a senior delegation to meet the Financial Action Task Force (FATF) in Morocco as the country scrambles to avoid being added to a greylist of countries deemed to have inadequate measures to combat financial crime. The National Treasury announced that SA authorities will have a face-to-face meeting with the FATF’s Joint Group to report on progress made in addressing deficiencies in its ability to combat illicit financial activity.

4 priorities for beefing up the Serious Fraud Office in 2023

Following top KC Clare Montgomery’s call for the UK’s top fraud fighting body to be merged into the Crown Prosecution Service (CPS), this blog lays out why the SFO needs to be beefed up and given a chance rather than facing yet more uncertainty about its future.

The long arm of OFAC: Secondary Sanctions, Facilitations, and Causing a Violation 

This article explores the role of US Department of the Treasury’s Office of Foreign Assets Control (OFAC). And how sanctions are crucial for the smooth running of business and financial activities. It provides more detail on how these laws and sanctions work, and what are their effects on various financial institutions and businesses. 

Nigerian Financial Intelligence Unit: NIRA report 

The Nigerian Financial Intelligence Unit (NFIU) is the national agency responsible for the receipt of disclosures from reporting organisations, the analysis of these disclosures and the production of intelligence for dissemination to competent authorities. This latest National Inherent Risk Assessment (NIRA) report covers money laundering, terrorist financing, proliferation financing, legal persons & legal arrangements and money laundering & terrorist financing in the extractive sector. 

AUSTRAC: Risk assessments must be alive to emerging threats 

National Manager Regulatory Operations Brad Brown discusses AUSTRAC’s continued release of guidance materials, key takeaways from its enforcement actions, the ongoing work to upgrade its reporting system, and efforts to further advance Australia’s AML/CTF system.



European Commission to introduce corruption sanctions in 2023 

In addition to reaffirming its commitment to its Russia sanctions regime, the European Commission’s 2023 work programme has stated that the EU will update its sanctions toolbox to include corruption and will set a sanctions framework targeting corruption in the second quarter of 2023. 

Why gold is so attractive to would-be sanctions busters 

Gold bullion can be traded more easily beyond US oversight than dollars and extends the potential role of gold for national reserves and for transactions where no questions need be asked. As a result, investors are worried that Russian gold could be used for sanctions busting, leading to the London Bullion Market Association registering it all. 

Sanctioned countries operating cryptocurrency exchanges 

Many people are aware that sanctioned countries hack crypto exchanges, launder crypto through various crypto platforms, and are the home of some crypto exchanges. But you might not be aware of the fact that comprehensively sanctioned countries are actually operating their own crypto exchanges

A single Iranian attack drone found to contain parts from over a dozen US and Western companies 

According to a Ukrainian intelligence assessment, parts made by more than a dozen US and Western companies were found inside a single Iranian drone downed in Ukraine. The assessment, which was shared with US government officials, illustrates the extent of the problem facing the Biden administration, which has vowed to shut down Iran’s production of drones that Russia is launching into Ukraine.

US man to forfeit $2.9 million for violating Iran sanctions  

Behrouz Mokhtari pleaded guilty to two separate conspiracies which violated sanctions imposed by the US on Iran. According to his guilty plea, from March 2018 to September 2020, Mokhtari conspired to evade Iranian sanctions by engaging in business activities on behalf of Iranian entities without first obtaining the required licenses from the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). 

Cruise lines ordered to pay $450 million for using Cuban port

Four cruise lines have been sentenced by a US judge to pay a total of nearly $450 million for having used a Havana port nationalised by the Cuban government in 1960. The ruling requires the Carnival, MSC SA, Royal Caribbean and Norwegian lines to pay $109 million each, plus court costs, to Havana Docks, an American company that held the concession to use that facility. 

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