KYC360 Weekly Roundup - 17th Feb 2023

Published on Feb 17, 2023

Regulators Pressure Gaming & Gambling Sector

Welcome to this week’s AML Roundup. Last year global regulators fined gaming and gambling operators a total of $127 million, nearly three times the amount levied in 2021. This increased scrutiny of the sector has been driven by multiple factors, most notably the growing problem of identity verification, and it is set to intensify over 2023. This week we lead on the challenges facing the sector and the financial and reputational damage that can ensue when operators fail to adhere to the rules and regulations. 

As we approach the anniversary of Russia’s invasion of Ukraine, the EU has announced a new package of sanctions aimed at curbing Putin’s war machine. Meanwhile, the challenges posed by cryptocurrency sanctions compliance come under the spotlight, along with the very first incidence of sanctions being used against ransomware gangs.

We also report on news from across the crypto sector, deliver the latest legislation, reports, & opinions, and end this week’s Roundup with a broad range of articles covering money laundering, fraud, and corruption.


Financial_ServicesMoney Laundering

Money laundering thrives in Australia because of professionals willing to facilitate it

Australia is failing when it comes to cracking down on money laundering with property has becoming a favoured vehicle for organised crime to hide and transfer illicit money. According to this analysis, lawyers, accountants and real estate agents face little scrutiny and to date there is no action from the government to increase regulation.

Barclays investigated by UK financial regulator over AML systems

Barclays is being investigated by the Financial Conduct Authority (FCA) for suspected persistent failings in its compliance and anti-money laundering systems. The financial watchdog issued a notice in 2022 requiring an independent review of its systems to prevent and detect financial crime after concerns about the number of know-your-customer and AML incidents. While individually the cases had been relatively minor, the volume was creating a pattern.

Anti-money laundering capabilities in Latin America

The latest Basel Institute Anti-Money Laundering (AML) Index starts and ends its Americas’ rankings with two Caribbean islands while leaving the long-standing organised crime havens in the middle of the pack. The 2022 index placed Haiti in the second-worst position across the world, no surprise given how many of its current and former political leaders have faced international sanctions for corruption and financing gangs.

Mexico investigates former presidential legal adviser for alleged corruption and money laundering

Since May 2022 he Office of the Attorney General of the Republic (FGR) has been investigating the real estate assets of Julio Scherer Ibarra, who was the legal adviser to President Andrés Manuel López Obrador. In addition to alleged acts of corruption, prosecutors claim the former official hid ownership of at least seven houses and apartments from the Ministry of Public Administration.

Canadian lawyer accused of laundering $23.5 million

An unidentified lawyer from British Columbia is accused of allowing criminal clients to use their trust account to launder $23.5 million. Four of the clients have already pleaded guilty in the US to money laundering and conspiracy to distribute misbranded prescription drugs. The Law Society has stated that the lawyer should have known that one or more of the clients were being investigated in the US regarding criminal offences.


RequirementsFraud and Corruption

Belgium charges another EU lawmaker with corruption

Belgian prosecutors have charged another European Union lawmaker, Marc Tarabella, with corruption in the cash-for-influence scandal that has shaken the European Parliament. Tarabella, has been charged with corruption, money laundering and membership in a criminal organisation.

Former UK MP guilty of six counts of expenses fraud

The former Labour MP Jared O’Mara has been found guilty of making fraudulent expense claims to fund a “galloping” cocaine habit. O’Mara, 41, was an MP between 2017 and 2019 and was on trial for submitting fake invoices to the Independent Parliamentary Standards Authority (Ipsa) which prosecutors claim was to help fund his addiction.

UK Conservative ministers accused of five-star lifestyle and using public money ‘like a cash machine’

The Labour party is launching a campaign accusing government ministers and officials of spending taxpayer-funded credit cards on luxury travel and hotels. The dossier of findings has been published on the website which states that Prime Minister Rishi Sunak stayed in the five-star Hotel Danieli in Venice when attending the G20 meeting of finance ministers in July 2021 as chancellor, with more than £4,500 spent on accommodation for Sunak and his aides.

Wirecard boss denies charges in massive fraud trial

Markus Braun, the former CEO of Wirecard has denied all wrongdoing over the collapse of the payments company as he took to the stand in Germany’s biggest post-war fraud trial. He expressed his “deepest regret” over the company’s demise but said he had no knowledge of any forgery or embezzlement and accused other managers of scheming behind his back.


Gambling_GamingGaming and Gambling

UK regulator hits gambling operator ITG with £6.1 million fine for repeat offenses

In 2019, the UK Gambling Commission (UKGC) presented ITG with a settlement of £2.2 million (US$2.72 million) for violating anti-money laundering (AML) and social responsibility rules. In 2021, the operator received another penalty worth £3.4 million (US$4.2 million) for similar reasons. Now, after reviewing the company’s various operations last year, the UKGC determined that ITG had, once again, failed to uphold its standards and as a result has received another fine of £6.1 million (US$7.5 million).

“We are seeing the same companies committing the same offences for second or even third times. It’s a recidivist behaviour, and I have a concern that those operators are starting to see fines as a compliance measure, that is something that we are not prepared to tolerate.”
Andrew Rhodes, Chief Executive Officer, UK Gambling Commission

Online gambling firm fined nearly £500,000 for only checking winners’ credentials

The Gambling Commission has fined TonyBet, which is based in Estonia but has a licence to operate in the UK, £442,750 for imposing unfair terms on payouts, anti-money laundering failures, and failure to check for vulnerable customers. The firm demanded ID from winning punters before it would give them the cash, while failing to carry out similar checks on potentially vulnerable people depositing money.

“Not only does this case illustrate our drive to clamp down on anti-money laundering and social responsibility failures, but it also highlights action we will take against gambling businesses who fail to be fair and open with customers.”
Kay Roberts, Executive Director of Operations, UK Gambling Commission
“Not only does this case illustrate our drive to clamp down on anti-money laundering and social responsibility failures, but it also highlights action we will take against gambling businesses who fail to be fair and open with customers.” 

Star Entertainment anticipates losses of up to $1.11 billion due to AML malpractice and taxation changes 

Australian casino operator Star Entertainment estimates the results of legal cases being filed against it for alleged anti-money laundering malpractice, as well as changes to the New South Wales casino act and tax rates, could result in a non-cash impairment charge of between AU$400 million ($276.57 million) and AU$1.6 billion ($1.11 billion).

Federal judge slams AUSTRAC over delay in prosecuting Crown Resorts over AML breaches

A Federal Court judge has criticised the Australian Securities and Investments Commission (AUSTRAC) over the length of time it has taken to prosecute casino giant Crown Resorts. Justice Michael Lee questioned whether the financial crimes watchdog was serious about punishing the company for breaches of anti-money laundering laws and ordered solicitors to proceed with their prosecution.

Online betting group 888 removes CEO over money laundering failures

Online betting group 888 has removed its chief executive and suspended VIP customer accounts in the Middle East amid an internal investigation into a failure to follow anti-money laundering procedures. As shares in the Gibraltar-headquartered group plunged by more than a quarter, the company admitted that certain “best practices have not been followed” in relation to “know your client” and anti-money laundering regulations.

Macau prosecutors seek to increase Alvin Chau’s prison sentence for money laundering

Macau authorities want to increase the prison sentence for former Suncity boss Alvin Chau by 3.5 years, after Chau decided to appeal the 18-year prison sentence he was handed in January for 162 crimes including fraud, criminal association and tax evasion. The Public Prosecutions Office wants to increase the penalty to 21.5 years, most notably because Chau was absolved of the alleged crime of money laundering.

46 suspects now held in macau888 gambling case

Thailand’s Cyber Crime Investigation Bureau has revealed that police have now arrested 46 suspects and seized a large amount of assets in their investigation of the macau888 online gambling network. It was one of six online gambling websites operated by the same group and had about 5.5 billion baht in bets in circulation during the short investigation period. All the suspects face charges of illegally organising gambling and laundering money.


Crypto-1Crypto & Virtual Assets

Dubai releases crypto regulations for virtual asset service providers

The Virtual Asset Regulatory Authority (VARA), the regulator in charge of overseeing cryptocurrency laws within Dubai, has issued new guidelines for virtual asset service providers (VASPs) operating within the emirate. Sources state that VARA has issued its “Full Market Product Regulations,” which include four compulsory rulebooks and activity-specific rulebooks that lay down the rules for operating VASPs. The rules only apply to market participants within Dubai, excluding those operating under the Dubai International Financial Centre (DIFC), a free zone with its own regulator.

Interpol seeking how to police metaverse crimes

The International Criminal Police Organization (Interpol) is investigating how it could police crimes in the metaverse. Interpol Secretary General Jurgen Stock has revealed the agency’s intent to oversee criminal activities on the metaverse, however, a top Interpol executive believes there are issues with defining a metaverse crime.

Robinhood to buy back Bankman-Fried’s 7% stake

Robinhood’s board of directors has given the go ahead to a plan to buy FTX founder Sam Bankman-Fried’s 7% stake in the stock trading app. Last May it emerged that Emergent Fidelity Technologies, of which Bankman-Fried is the sole director, took a 7.6% stake (worth about $580 million).

New partnership enables cross-border QR payments

Standard Chartered Bank and Singaporean company Allinpay have joined forces to enable PayNow instant cross-border payments for merchants and businesses in Hong Kong using QR codes. Participating merchants will be able to accept Singapore PayNow payments without infrastructure or operational charges, in addition Singaporeans will not have to pay currency exchange rates or cross-border fees.

PayPal pauses work on stablecoin

According to Bloomberg, PayPal has hit pause on its stablecoin project, just weeks before it had planned to unveil the project. The pause comes as PayPal’s partner on the project, Paxos Trust, faces up to an investigation by the New York State Department of Financial Services.


Sanctions-1Legislation, Reports & Opinions

An examination of the UK’s failure to prevent fraud offence

The UK Government’s intention to put forward a failure to prevent fraud offence in the Economic Crime and Corporate Transparency Bill is intended to further reform and improve the UK’s anti-financial crime legal framework. The Serious Fraud Office (SFO) has described the new offence under the Bill as having the “potential to transform prosecution.” The Bill is currently going through its second reading in the House of Lords and this article explores its implications.

EU MEPs back plans for digital identity framework

Members of the European Parliament’s Industry, Research and Energy Committee have given their support to a new digital identity framework, eID. The framework was proposed in June 2021, and would create an interoperable, EU-wide scheme, allowing all European citizens to use the all-in-one gateway to access public services. As a result, users will be able to identify and authenticate themselves online via a European digital identity wallet without having to go through commercial providers.

The Wolfsberg Group publishes new Correspondent Banking Due Diligence Questionnaire

The Wolfsberg Group has announced the release of version 1.4 of the Correspondent Banking Due Diligence Questionnaire (CBDDQ) and version 1.2 of the Financial Crime Compliance Questionnaire (FCCQ), along with updated supporting Guidance, Glossary and FAQs documents. The CBDDQ updates include a new section on Fraud and additional questions related to Whistleblower Policy, Virtual Bank License, the approval of Sanctions Policy, and other changes designed to improve the logic, usability and flow of the questionnaire.

FCA and police join forces to crack down on crypto ATMs

The Financial Conduct Authority (FCA) has joined forces with the police to shut down illegally operated crypto ATMs in the city of Leeds. In March last year, the FCA ordered the closure of all crypto ATMS in operation across the UK when it was estimated that there were around 100 machines scattered across the country accepting cash for conversion to cryptoassets.

Lloyd’s of London CEO warns UK’s financial reputation is dented

According to John Neal, CEO of Lloyd’s of London, the UK’s long-standing reputation for financial stability was dented by a year of political turmoil. He said that confidence in the UK had been hit by the high turnover of prime ministers and a mini budget which saw the pound drop and mortgage rates soar.

A businessman got Europe’s Corporate Registries shut down. But whose privacy was he protecting?

When Patrick Hansen, who runs a private aircraft company, became a central figure in rolling back corporate transparency across the continent, many observers questioned why. The Organised Crime and Corruption Reporting Project (OCCRP) has revealed that the Luxembourg businessman has secrets of his own, which includes multiple ties to wealthy Russian business figures.




EU to hit Russia with more sanctions worth €11 billion 

The EU is set to hit Russia with trade bans and technology export controls worth €11bn as the bloc seeks to weaken the Kremlin’s ability to maintain its “war machine”. The latest EU measures will restrict exports of electronic components used in Russian systems including drones, missiles and helicopters and clamp down on supplies of Iranian drones to Russia. The proposals will also add certain rare-earth compounds, integrated circuits and cameras to the list of barred products, extend restrictions on media outlets linked to the Kremlin. They will form part of the EU’s tenth package of sanctions as the first anniversary of the Russian invasion of Ukraine looms on February 24.

“With nine packages of sanctions in place, the Russian economy is going backwards. To keep up this strong pressure, we are proposing a tenth package of sanctions, with new trade bans and technology export controls to Russia.” 
Ursula von der Leyen, President of the European Commission

EU considers sanctions on Dubai shipper suspected of running Russian tanker fleet

The EU is discussing whether to sanction Dubai-based shipping company SUN Ship Management Ltd, suspected of helping Russia circumvent restrictions on its oil exports. Three diplomats who wish to remain anonymous said the company was believed to have come into possession of a fleet of Russian oil tankers that were no longer allowed to ship oil because of EU and international sanctions on Russian-owned entities. Yet, under SUN’s ownership, the tankers have been able to continue to operate.

Iran smuggled drones into Russia using boats and state airline

Sources have revealed that Iran has used boats and a state-owned airline to smuggle new types of advanced long-range armed drones to Russia for use in its war on Ukraine. At least 18 of the drones were delivered to the navy after Russian officers and technicians visited Tehran late last year, where they were given a demonstration of the full range of Iran’s technologies.

How US lawyers and bankers aided powerful Haitian tycoons sanctioned over corruption 

Two Haitian millionaires accused by Canada of corruption and enabling murderous gangs to run rampant across the island nation were helped for years by US lawyers and bankers to buy offshore companies and luxuries such as a multimillion-dollar ocean-view home in Florida.

Why grey schemes of sanctioned goods resale to Russia could harm Kazakhstan

According to sources, from January-October 2022, trading companies of Kazakhstan sold electronics and mobile phones to its neighbour for over $575 million, 18 times more than that in the same period of 2021. As a result, the US Financial Crimes Enforcement Network (FinCEN) has included Kazakhstan on the list of the so-called transhipment points, which are used for restricted exports to pass before reaching destinations in Russia. This could lead to the cooling of relations between Kazakhstan and western countries which are the main buyers of Kazakh oil, which has promised not to violate sanctions against Russia.

Challenges and opportunities in cryptocurrency sanctions compliance

Managing sanctions presents unique challenges for various operators, including traditional financial institutions (TradFi), money service businesses (MSBs), and virtual asset service providers (VASPs). For those in the cryptocurrency space, the pressure to have a comprehensive sanctions compliance programme in place has never been greater. This blog breaks down the fundamental elements of crypto sanctions compliance.

Seven Russians sanctioned by the UK and US over ransomware cyber-crime

Seven Russian men have been sanctioned by both the UK and US for having links to recent ransomware attacks. The US has accused them of being members of loosely defined Russian-based hacking network Trickbot, allegedly responsible for ransomware strains Conti and Ryuk that extorted at least £27m in ransoms from 149 British victims. As a result, the UK’s Foreign Office, together with US authorities, has released pictures of the men, frozen their assets and imposed travel restrictions.

“This is a hugely significant moment for the UK and our collaborative efforts with the US to disrupt international cyber-criminals. The sanctions are the first of their kind for the UK and signal the continuing campaign targeting those responsible for some of the most sophisticated and damaging ransomware that has impacted the UK and our allies.”
Graeme Biggar, Director General, National Crime Agency
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