KYC360 Weekly Roundup - 7th Oct 2022

Published on Oct 07, 2022

Spotlight on Money Laundering

Welcome to this week’s AML Roundup. While money laundering isn’t the only risk faced by the world’s business community, it has one of the highest profiles. And while there was a time when financial institutions were the sole focus for policing and regulatory authorities, today there are few businesses that are spared. Trusts and Corporate Service Providers, Payment Service Providers, Insurance, Legal Services, Asset Management, Luxury Goods, and Crypto firms are now all under the watchful eye of the regulatory and enforcement authorities and as a result must become ever more vigilant.

Following the sham referendums and subsequent annexation of the Ukrainian regions of Donetsk, Luhansk, Kherson and Zaporizhzhia, the US, EU, and UK governments have all responded with further sanctions aimed at halting Putin’s war machine.

We also report on the latest developments in the crypto sector, update you on recent legislation and reports, and wrap up this week’s Roundup with a selection of corruption, bribery, fraud, and other news.


Financial_ServicesMoney Laundering, Fraud & Corruption

Basel AML Index 2022: Slow progress on tackling money laundering 

Progress in tackling money laundering and terrorist financing risks remains static in many countries, according to the release of the Basel AML Index 2022. This independent ranking assesses a country’s money laundering and terrorist financing risks and ability to counter them and draws on 18 indicators in five domains in order to measure the different factors that contribute to high risk.

“Progress matters because AML/CFT is about more than just fighting financial crime – it is about protecting people and the planet. Weaknesses allow criminals to launder the proceeds of their corrupt deals, of fraud schemes, or of their illegal business trafficking in drugs, humans and wildlife.”
The Basel Insitute, October 2022

FINRA spells out penalties for anti-money-laundering violations

The US Financial Industry Regulatory Authority (FINRA) has for the very first time given guidance to its member broker-dealers on the penalties it could potentially impose for violating anti-money laundering rules. Under the new guidelines, FINRA could impose a fine ranging from $10,000 to $310,000 for small firms, while fines that could be imposed on medium sized and large firms could start at $50,000 with no upper limit.

Learning lessons from the top 5 high-profile money laundering cases

Some $5.6 billion in penalties were paid out to regulators and enforcement authorities in 2020 related to financial crimes, the vast majority of which were paid by financial institutions. This article lays out the most high-profile money laundering cases due to failure or significant room for improvement relating to compliance with applicable AML laws and regulations.

Event: 11th international AML and compliance conference

At this hybrid event to be held on the 9th of December 2022 in Budapest, one of the main goals is to emphasise the importance of co-operation on a national and global level in fighting financial crime and strengthening the financial system’s overall stability.

Event: The Institute of Money Laundering Prevention Officers Annual Conference

To be held on 11-12 October 2022, at the Grand Hotel Birmingham. The Institute Annual Conference will focus on ‘Innovation and Technology for AML and Financial Crime Prevention’. See the Agenda here, Register here.

Germany organises rally in bid to host the EU’s new Anti-Money Laundering Authority (AMLA)

With the location of the new EU AML Authority yet to be determined, the competition between countries seeking to host the body is heating up. Germany’s financial metropolis Frankfurt has broken ranks by staging an audacious political rally in support of hosting AMLA.

Australia’s largest casino groups have faced serious allegations, yet no-one has been charged

The Bergin inquiry found that Crown Resorts has facilitated money laundering and partnered with operators that had links to organised crime. In another inquiry, Star Entertainment was found to have let patrons use credit cards to move money for gambling out of China. Yet, to date, no single staff member, executive or board director of either Crown Resorts or Star Entertainment has faced a civil or criminal sanctions.

Latvia busts major money laundering ring that exploited money mules

Latvian police have busted a criminal organisation that used over 90 money mules to launder its illicit proceeds. The country’s State Police Department of Cyber Crimes launched criminal proceedings against the organisation, after a credit institution noted fraudulent activity relating to its clients’ accounts.

Dutch police seize large amounts of cash in Jumbo CEO money laundering case

The money laundering case in which Jumbo CEO Frits van Eerd is a suspect, it has been reported that Dutch police have seized millions of euros in cash and confiscated vehicles and properties, following raids on homes and buildings across the country.

Hong Kong fines Cathay United Bank HK$11M (€1.4M) for AML breaches

The Hong Kong Monetary Authority (HKMA) has fined the Hong Kong branch of Cathay United Bank HK$11M (€1.4M) for significant breaches under its Anti-Money Laundering (AML) and Counter-Terrorist Financing Ordinance (AMLO) regulations.


RequirementsLegislation, Regulation and Sustainability

FATF Report: Finland’s progress in strengthening measures to tackle money laundering and terrorist financing

Since the 2019 assessment of Finland’s measures to tackle money laundering and terrorist financing, the country has taken a number of actions to strengthen its framework. To reflect Finland’s progress, the FATF has re-rated the country on Recommendation 24 – Transparency and beneficial ownership of legal persons – originally rated Partially Compliant, to Largely Compliant. The country remains on enhanced follow-up and will report back to the Plenary on the remaining deficiencies in October 2023.

Italy: Firms liable even when they benefit only slightly from a crime

The Italian Supreme Court has confirmed that corporate liability could be attributed to businesses even when the benefit that they gain from their involvement in the criminal activity is minimal. This decision of the court offers the chance to reflect beyond the Italian legal system on the difference between compliance on paper and compliance in action.

Australia: New risk assessments and threat update

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released three new risk assessments to help remittance service providers and bullion dealers understand the money laundering and terrorism financing threats and vulnerabilities they face.

Former FBI agent guilty of accepting bribes from lawyer linked to Armenian organised crime figure

A former FBI special agent has been found guilty of conspiring to accept at least $150,000 in cash bribes and other items of value in exchange for providing sensitive law enforcement information to a corrupt lawyer with ties to an Armenian organised crime gang.

Harlequin resorts boss jailed for 12 years over £226 million fraud

David Ames fraudulently abused his position as Chairman of the Harlequin business and exposed over 8,000 investors to massive losses between 2010 and 2015. Victims parted with pensions and life savings, believing that their money would be invested in holiday properties, but almost no properties were ever constructed and 99 percent of those who invested lost their money.

Documentary: Blackmore Bond – The Billion Pound Savings Scandal

When the £46 million fund they had invested in collapsed, a group of ordinary British savers discovered offshore money, huge fees, suspicious payments and a phantom head of the KGB. This documentary follows investors as they attempt to unravel the truth about the Blackmore Bond, a Manchester-based scheme, and challenge the regulators they believe failed them.

Embarrassing revelations about compliance culture at Commerzbank

A Senior Compliance Officer (SCC) at Commerzbank’s London office has won her second case against the financial institution after claiming she was subjected to a “degrading” and “humiliating” work environment. The employment tribunal found the SCC was discriminated against for a senior role, after her manager labelled her as “divisive”, and had an “unhealthy obsession with work.”

Petfre (Gibraltar) Limited to pay £2.87m penalty for social responsibility and anti-money laundering failures

In addition to the £2.87 million fine for social responsibility and anti-money laundering failures, the operator which runs and, will also receive an official warning for failures at the business.

“We expect this gambling business and all other licensees to review this case and look closely to see if they need to make further improvements to demonstrate active compliance. Where standards do not improve, tougher enforcement will follow.”
Leanne Oxley, Gambling Commission Director of Enforcement and Intelligence

€22 billion worth of Dutch property is currently held by offshore firms

The value of Dutch property in the hands of offshore companies is reported to have risen almost six-fold in the past nine years. In total, these entities currently own or finance nearly €22 billion worth of Dutch property, compared with €3.8 billion in 2013, with Luxemburg, the Virgin Islands, and Jersey are among the popular locations where Dutch real estate is held.


Crypto-1Crypto & Virtual Assets

EU implements full ban on provision of crypto services to Russian persons

The Council of the EU has agreed to implement a full ban on the provision of crypto services to Russian persons and residents. The move comes amid the bloc’s eighth sanctions package intended to reinforce pressure on the Russian government and its economy following the recent escalation of actions in Ukraine.

“The existing prohibitions on crypto assets have been tightened by banning all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet."
Council of the European Union

Cryptocurrency and anti-money laundering enforcement in the US

A review of recent enforcement actions, as well as regulators’ statements and formal guidance, has sharpened the focus of regulatory intent in the cryptocurrency industry. Furthermore, the increasing number of methods and technologies developed to conduct know your customer (KYC) and transaction monitoring help clarify and improve best practices for participants in the industry.

US says NFTs should fall under anti-money laundering law

US Attorney General Merrick Garland wants to expand the Bank Secrecy Act to cover non-fungible tokens (NFTs) in order to deter money laundering. The US Justice Department warned that NFT players could be using the digital assets for illicit financing, through self-laundering, whereby criminals purchase an NFT with illicit funds and then resell to a purchaser who pays with clean funds.

Central banks to explore CBDC for international retail payments

The central banks of Israel, Norway and Sweden are working together with the Bank for International Settlements to explore how CBDCs could be used for international retail and remittance payments. The project will run until the end of 2022 in order to develop a “hub” to which participating central banks will connect their domestic proof-of-concept CBDC systems.

Digital euro will not be available until at least 2026

The ECB says several steps will need to be taken before a digital euro can be introduced, including an analysis of how financial intermediaries could provide front-end services, how the currency would be distributed to users, and how payments would be settled.

Sector pushes back again on Basel Committee crypto plans

A group of industry associations has pushed back against a second Basel Committee on Banking Supervision consultation on the rules on investments in crypto assets by financial institutions, calling for a host of changes. Despite the Basel committee agreeing to revisit its proposed punitive rules, a group of eight trade associations have once again raised objections.

Kim Kardashian agrees to pay $1.26 million to settle SEC crypto charge

The reality television star and influencer failed to disclose that she was paid $250,000 to publish a post about EMAX tokens, the crypto asset security being offered by EthereumMax, on her Instagram account. Under US law, people who promote a certain stock or crypto security must disclose not only that they are getting paid, but also the amount, the source, and the nature of those payments.



EU agrees 8th package of sanctions against Russia following the annexation of Ukraine regions

EU members have agreed to impose a price cap on Russian oil and other new sanctions following the Kremlin’s illegal annexation of four regions in Ukraine. Diplomats struck the deal that also includes curbs on EU exports of aircraft components to Russia and limits on steel imports from the country. The bloc will impose a ban on transporting Russian oil by sea to other countries above the price cap, but a specific price for the future cap has yet to be defined.

UK announces new tranche of sanctions in response to Putins illegal annexation of Ukrainian regions

The UK Foreign Secretary, James Cleverly, has announced new services and goods export bans targeting vulnerable sectors of the Russian economy. Furthermore, the announcement included the imposition of an asset freeze on the Governor of the Central Bank of the Russian Federation (CBR), together with measures to suspend the process by which actions taken to manage the orderly failure of Russian banks are recognised under UK laws.

US imposes new Russia sanctions in response to illegal annexation of four Ukrainian regions

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated 14 persons in Russia’s military-industrial complex. The list includes two international suppliers, three leaders of its financial infrastructure, immediate family members of some senior Russian officials, together with 278 members of Russia’s legislature. Furthermore, OFAC has issued new guidance that warns of the heightened sanctions risk that international actors outside of Russia would face for providing political or economic support to Russia over illegal attempts to change the status of Ukrainian territory.

US to ease Venezuela sanctions to boost oil supply

The Biden administration is preparing to scale down sanctions on Venezuela to allow Chevron to resume oil drilling and pave the way for a potential reopening of US and European markets to oil exports from Venezuela. In exchange, the government of Venezuelan President Nicolás Maduro would resume talks with the country’s opposition to discuss conditions needed to hold free and fair presidential elections in 2024.

UK orders crypto exchanges to report sanctions breaches and freeze the assets involved

The Office of Financial Sanctions Implementation (OFSI) has updated its guidance to include crypto exchanges over fears that crypto currencies are being used to circumvent sanctions. According to the new guidance, crypto firms must immediately report any breach of the rules and freeze the assets involved or face financial penalties or even criminal charges.

Blog: What FIUs can learn from the Russia sanctions regime

Last month, a panel of experts weighed in on the challenges faced by financial intelligence units due to global Russian sanctions. In Sayari’s latest blog, learn three of their top takeaways and how FIUs can apply this knowledge in the future.

FINRA issues new sanctions guidelines

The US Financial Industry Regulatory Authority (FINRA) that oversees US broker-dealers has issued new sanctions guidelines so that members, associated persons and their counsel understand the types of disciplinary sanctions that may be applicable to various violations. FINRA staff and respondents may also use these guidelines in drawing up settlements, as settled cases usually result in lower sanctions than fully litigated cases in order to provide incentives to settle.

Event: Practical guidance to staying compliant with multiple regimes

The London Forum on Global Economic Sanctions, 15–16 November 2022, at the Millennium Gloucester Hotel, London. Widely regarded as the largest sanctions gathering in Europe, the 2022 program will deliver up-to-date developments in Economic Sanctions from leading financial services organisations as well as global exporters.

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