KYC360 Weekly Roundup

Published on Jun 17, 2022

FATF Plenary 2022

The 2022 FATF Plenary was held in Berlin this week, with several countries anxiously awaiting to discover if they will be taken off the grey list. High on the agenda were discussions on how to help the real estate sector better tackle money laundering, but most notable was new FATF President Raja Kumar impassioned argument that digital transformation is now an imperative in the fight against organised crime.  

According to data service Statista, Russia is now officially the most sanctioned country in the world. There is little doubt that they are having an effect and it is forecasted that the Russian economy will face harsh times this coming winter. But rising energy prices and food shortages signal that the sanctions are also affecting the global economy and observers fear a world-wide recession is on the horizon. 

Some of the fears of a global economic downturn have already been reflected by the collapse of Bitcoin this week, a sign of how the markets are becoming increasingly risk adverse. Meanwhile the Metaverse has been in the news with many observers questioning what safeguards are in place to prevent financial and other crimes.

To complete this week’s Roundup, we report on the latest money laundering news, together with global reports on fraud, and corruption.

The Financial Action Task Force 2022 Plenary takes place in Berlin

At the June 2022 Plenary, delegates met virtually and in person for four days of meetings to discuss topics including, how to help the real estate sector better tackle money laundering, the use of technology to make the detection of money laundering quicker, as well as decisions on countries identified as not doing enough to tackle their risks.

The FATF has become the 45th member of the UN Global Counter-Terrorism Coordination Compact

Following the Eighth Meeting of the Global Counter-Terrorism Coordination Compact Committee, FATF was officially welcomed as the 45th member of the Global Counter-Terrorism Coordination Compact. FATF’s inclusion will help to strengthen the global coordinated response to terrorist threats, their financing, and the spread of violent extremism.

Incoming FATF President stresses the importance of digital transformation in tackling organised crime

As over 100 financial crime, data protection & technology experts gathered for a conference in Berlin to discuss the issues, the new FATF President Raja Kumar says digital transformation is imperative in the fight against organised crime.

Malta removed from FATF grey list

Malta was taken off the FATF grey list this week, one year after being labelled an untrustworthy financial jurisdiction by the global watchdog. The island nation implemented a long list of changes to the way it combats tax evasion, collects information on ultimate beneficial ownership, and the way it shares information with local and international authorities.

Pakistan’s diplomatic drive to be taken off FATF grey list

Pakistan launched a huge diplomatic drive to be taken off FATF’s grey list. The country needs the votes of Turkey, China, and Malaysia to get off the list, and all three countries have assured the Pakistani authorities of their support, leading to hopes that its removal will be announced this week.

FATF Guide: How the public and private sectors can prevent environmental crime 

Environmental crimes generate up to US$281 billion a year, with the gangs involved often engaging in crimes such as corruption, tax fraud and human trafficking. This short FATF guide for the public and private sectors has details on how to stop it 

 

Financial_ServicesMoney Laundering, Fraud & Extortion

Consultation outcome: Amendments to the UK’s Money Laundering Regulations

The UK government invited views and evidence on the steps the government proposed to take to amend the Money Laundering Regulations (MLRs). The response to the consultation summarises views and sets out the findings and decisions the government has taken as a result. Many of these changes will be implemented through the Money Laundering and Terrorist Financing (Amendment) (No.2) Regulations 2022 Statutory Instrument. 

Opinion: Corruption blights the developing world, but the US and Europe are accomplices

The hard truth is that corruption is growing across the world, aided by the west which helps to launder and hide the money stolen by kleptocrats. This is the view of Mo Ibrahim, the Sudanese-British telecoms billionaire and passionate campaigner for good governance and better leadership.

Nordic Banks ignored money laundering red flags for years 

Leaked audits show how DNB and Nordea ignored risks and red flags and moved billions in suspicious transfers at their Baltic branches. An initial report found 3.9 billion euros in problematic transfers, including unexplained wire activity, while a further 17.3 billion euros warranted more investigation. 

Germany to fight money laundering by stopping property deals in cash

Germany is to step up its efforts to fight money laundering and other financial crimes by introducing legislation that will prohibit cash transactions in the real-estate market

Report: Dutch holiday parks being used as fronts for money laundering 

Following an investigation into organised crime, a confidential report has revealed that holiday homes are being increasingly targeted as vehicles for large-scale money laundering operations by criminal gangs.

UK’s most wanted woman jailed over fraud and money laundering 

Sarah Panitzke, a fraudster who fled to Spain while on trial for fraud and money laundering has been jailed for eight years at Kingston Crown Court in London. She went missing in 2013 while on trial for her part in a £1bn mobile phone tax scam and spent nine years on the run before being arrested in February and extradited back to the UK.  

£3m compensation packages to be offered to victims of one of UK’s biggest banking frauds 

Victims of one of Britain’s biggest banking frauds will each be offered £3m compensation packagesHalifax Bank of Scotland (HBOS), which is now part of the Lloyds Banking Group was involved in a major fraud at its Reading branch in the early 2000s. A court found that a group of its bankers ran a corrupt scheme that left hundreds of small business owners “cheated, defeated and penniless”.  

Report: Extortion or transformation? The construction mafia in South Africa 

New report reveals how criminal groups, widely referred to as the construction mafia, operate through systemic extortion, and what will be the long-term implications for the construction industry in South Africa. 

Iosif Galea case: a wake-up call for the gaming sector to conduct greater due diligence when employing consultants

Nearly three dozen gaming applications linked to the Iosif Galea leaked information scandal have been halted by the Malta Gaming Authority.

Perhaps the most important lesson that gambling and gaming companies must draw from this saga, is the importance of conducting ongoing due diligence including automated adverse media screening on all third-party suppliers as well as customers. 

The gaming sector is already under the microscope of countless governmental and independent organisations intent on curtailing its scope and activities. So, it simply cannot afford to become embroiled in scandals involving consultants, or indeed any third parties with which it contracts. 

 

Crypto-1Crypto & Virtual Assets

Crypto ‘Bloodbath’ stokes fears of more selling pressure on stocks 

The price of Bitcoin fell 17% to below $23,000 this week, after crypto lending company Celsius suspended withdrawals due to “extreme market conditions.” Several large exchanges either halted sales or announced layoffs, and experts warn that the ongoing “bloodbath” will only result in more selling pressure on stocks. The crypto collapse is another sign of the risk-averse sentiment in markets, as investors look to safer bets amid rising rates and fears of a recession. 

Luxury brands are entering the metaverse

Previously wary of entering the virtual market, luxury brands are now becoming enthusiastic adopters of Web3 tech and the metaverse. Luxury brands are determined not to be left behind by the latest online developments, despite the challenges presented by the metaverse, cryptocurrency, and NFTs.

Opinion: Why we need a ‘metacode of conduct’ to protect metaverse users

A ‘metacode of conduct’ would provide real-world controls to protect users from abuse, fraud, and loss. But regulation takes time and is difficult to apply globally, so the builders of the metaverse should take proactive steps to create their own “metacode” of conduct to ensure the safety of its users.

Virtually a Reality: Financial Crime in the Metaverse

Dev Odedra takes a journey into the Metaverse to explore whether virtual financial and other crimes are set to become a reality. 

In anti-money laundering (AML) and law enforcement circles they say, “follow the money,” so if there is money being invested or spent in the metaverse, illicit funds are most likely to follow. 

 

Sanctions-1Russia Sanctions

Opinion: The West needs to be wary of permanently seizing Russian assets

While some in the EU and G7 believe seized Russian assets should be used to pay for the reconstruction of Ukraine, others are more hesitant. While the idea is appealing and popular, the whole point of sanctioning Russia is to try to change its course of action and limit its ability to wage war. A policy of permanent seizure would only be justifiable if any new policy is compatible with the rule of law and there a clear strategic pay-off. 

Russia’s economy heading for stagnation as sanctions bite

As yet, Russia hasn’t experienced an economic crisis, but it is moving into a period of economic attrition. Toward the end of 2022, observers believe the nation will face a starker reality, especially when Europe’s ban on importing Russian oil and oil products kicks in and the government has to scale back spending, which is believed will lead to a long-term stagnant economy. 

Assets worth millions belong to Moscow political clan with ties to Russian Defense Minister Shoigu

The Vorobyev family has close ties to Sergei Shoigu, Russia’s defense minister. But while Andrei Vorobyev holds a high-level political role, his younger brother Maxim is as an international businessman and has made investments around the world. His wife also owns a high-end children’s toy and furniture store in London, while the couple bought a 12-million-euro apartment in a historic building in Paris. 

Sanctions evasion: The proxy owner of Putin’s $500 million yacht

Eduard Khudainatov, the ex-CEO of state-owned oil giant Rosneft has a multibillion dollar thanks to his ties to the Kremlin’s inner circle. According to the U.S. Department of Justice he also acts as the “straw owner” of three superyachts, one of which belongs to Vladimir Putin. But his days as a proxy owner of the yachts are likely numbered as the EU sanctioned Khudainatov on June 3. 

Top UK journalists barred from Russia 

Russia has barred a number of top UK-based journalists in response to UK sanctions on Russian public figures. Journalists working for the BBC, the Sunday Times, the Daily Mail, the Independent, Daily Telegraph, Sky News and several other outlets have also been banned. In addition, the editors-in-chief of the Times, Daily Telegraph, Daily Mail and Independent were also listed. 

 

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