The UK's kleptocracy problem
Looks like no one is spared by the latest “The UK’s kleptocracy problem” research paper from Chatham House. Banks, professional enablers, politicians and law enforcement all play their part in maintaining, or rather failing in challenging, London’s status as the global money-laundering capital.
- Greg
Fraud: 'I had £18,000 stolen after my drink was spiked'
Shadow Monday - The international networks of illicit finance
Following the leak of the documents, Europol undertook its own analysis to understand the significance of the Pandora Papers for its own work and for the wider law enforcement sector. This has been collated into a report that contextualises the Pandora Papers amongst similar major leaks of financial data, and details policy recommendations that arose from its analysis.
- Greg
AML penalties hit $2.2 billion in 2020 as regulators crackdown on financial crimes
The findings come from Kroll’s annual Global Enforcement Review 2021, which shows that, globally, 45 fines for AML failures were issued in 2020, the same as in 2019. Moreover, the first half of 2021 seems to be following suit, with 17 fines issued between January and July this year, just under half of 2020’s year-end total
- Lauren
The ultra-violent cult that became a global mafia
A shocking report from Nigeria detailing the convergence of a secret society, violence, fraud and politics. Fraud can often be seen as an almost abstract crime, existing in cyberspace or within a banking system, the only tangible impact to the victim being the loss of funds. But this report highlights not only how organised criminals operating from the very highest levels of government are involved, but also how they use extreme violence and intimidation to support their activities
- Andy
Previously on FINTRAIL 5
Ben Raymond guilty of terror charges
UK authorities continues dismantling structures of National Action which become a proscribed organisation in the UK after its social media channels glorified the murder of the MP Jo Cox by white supremacist terrorist Thomas Mair in 2016. This is the 17th person to be convicted of membership of the white supremacist group.
- Greg
Covid loan anti-fraud checks inadequate
The government failed to put adequate measures in place to prevent fraudsters stealing billions through its Bounce Back Loan scheme to businesses, the National Audit Office (NAO) has said.
- Gemma
Jail for 2 foreign love scammers who tricked Singaporean women into becoming money mules
Love scammers operating out of Malaysia were sentenced to jail terms after being extradited to Singapore in 2019, the first case of overseas love scammers being sent to Singapore for prosecution. The deputy public prosecutor stated criminal enterprise was “fairly sophisticated” and used mules to hand over money or open bank accounts to send the proceeds. This shows how easy it is for these groups to set themselves up and highlights the challenges in bringing them to prosecution.
- Martin
‘Dead man walking’: Italy’s top mafia hunter warns of Australian crime links
Biden administration to target money laundering in US real estate market
The Biden administration has called for public comment on ways to reduce corruption in the US real estate market, as part of a broader effort to stamp out illicit financial activity. The WhiteHouse has proposed a nationwide expansion of reporting requirements that currently apply to all-cash purchases of residential properties valued at $300,000 or more in 12 metropolitan areas.
- Lauren
Looking for a Stolen Idol? Visit the Museum of the Manhattan D.A.
It's not often we hear about arts and antiquities crime, however, this piece from the NYT is a pretty interesting reminder of its existence. You can't have antiquities trafficking without some element of financial crime, and the values these recovered pieces have sold at make it a lucrative proposition for OCGs. As art markets and participants are now regulated (including in the US) we should hopefully have less incidents of this kind of trafficking with mandated provenance checks and customer due diligence.
- Mikey
Miami Professor gets jailed for laundering 'dirty' Venezuela money
The intent is clearly there and obviously should have known better than to engage. Was it greed, or did he think he was doing the right thing? Might have been misguided to start, but doesn’t sound like it was at the end.
- Martin
Kenya FA boss Mwendwa charged with fraud
Financial crime and football are making headlines again. The BBC reported that Nick Mwendwa, the president of Football Kenya Federation (FKF) has been charged with multiple counts of fraud - Mwendwa and others have been accused of taking over $300,000 from FKF between March and May earlier this year.
- Ruth
'Smishing' scam epidemic spreading in the Philippines
The rise of "smishing" in the Philippines is linked to data breaches potentially around contact tracing that were meant to help safeguard and control the virus, this trove of information is being used by unscrupulous scammers to offer jobs, especially with COVID-19 impacting the employment market and in doing so gain access to the victims personal or financial information. This is leading to calls for a a US-style caller identity verification system for enhanced consumer protection, which appears to be much in need. More education is required too for those that would be vulnerable to these "smishing" campaigns.
- Martin
‘Criminals love buy now, pay later’: How fraudsters exploit popular interest-free payment plans
Unsurprising, but good example of why it is important to think about the exploitation avenues when designing a simple customer acceptance flow; remembering the golden rule of “if it’s easy for everyone, it’s also easy for criminals”. Also important to ensure that compliance and marketing are working hand-in-hand to make sure the advertisement doesn’t make you too attractive a prospect for bad actors to take advantage of.
- Mikey
‘Billion Dollar Whale’ Series Adaptation In Works From SK Global & Westward
The original story is so compelling it should be easy to create a great visually compelling story around the 1MDB case. May even re-ignite the search for Jho Low and his money?
- Martin
Crypto adverts on London Tube under investigation
Adverts placed on public transport in London for the Floki Inu cryptocurrency are being investigated by the Advertising Standards Authority (ASA).
- Gemma
Serious Fraud Office outgunned by UK firms
I’m sure no-one is surprised by this, but an interesting article nonetheless. Number of cases they’ve had to drop recently is quite shocking. Turns out you can just throw money at a problem to solve it; even illicit problems.
- Mikey
Delivery phishing scams are already on the rise ahead of Black Friday
As we move towards Black Friday and the noise of lots of deals being snapped up, this becomes a target rich environment for fraudsters hoping to gain your credentials as part of their delivery phishing scams. Double check those emails/texts!
- Martin
Treasury Continues to Counter Ransomware as Part of Whole-of-Government Effort; Sanctions Ransomware Operators and Virtual Currency Exchange
U.S. Treasury designates crypto exchange Chatex for facilitating ransomware payments and published an updated Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments.
Chatex, which claims to have a presence in multiple countries, has facilitated transactions for multiple ransomware variants. Analysis of Chatex’s known transactions indicate that over half are directly traced to illicit or high-risk activities such as darknet markets, high-risk exchanges, and ransomware. Chatex has direct ties with SUEX OTC, S.R.O. (Suex), using Suex’s function as a nested exchange to conduct transactions. Suex was sanctioned on September 21, 2021, for facilitating financial transactions for ransomware actors.
- Greg
Head of money-laundering unit resigns over suspected money-laundering
The head of Mexico’s anti-money-laundering unit has stepped down after $35,000 of undeclared cash was found on a private jet ferrying friends to his wedding in Guatemala.
- Lauren
Hostage-Style Bitcoin Scam Videos Are Spreading Across Instagram
Social media platforms continue to play a crucial part in virtual assets related scams. Vice Magazine describes an emerging trend of hackers forcing Instagram users to film hostage-style videos instructing their followers to participate in fraudulent get-rich-quick Bitcoin schemes.
- Greg
Internet organised crime threat assessment 2021
The latest Europol’s Internet Organised Crime Threat Assessment has been published. It highlights that the accelerated digitalisation related to the pandemic has significantly influenced the development of a number of cyber threats, including: ransomware, mobile malware and online fraud.
- Greg
HSBC managers jailed for siphoning £900k from customers accounts
Two corrupt HSBC managers who siphoned nearly £1 million from wealthy customers’ accounts have been jailed for 12 years and seven months.
- Gemma
This man is the Jeff Bezos of the international drug trade
A really interesting long read on Tse Chi Lop, the head of a $21-billion crime syndicate, described as “the world’s most innovative drug lord”. The way Tse overturned the traditional nature of organised crime and professionalised his operations will be familiar to anyone who has read the brilliant Narconomics, and should inform how law enforcement and regulated entities identify and stop criminal activity and illicit funds.
- Maya
CryptoPunk NFT sold for over $500 million in suspicious sale
At the end of October, a CyberPunk NFT (specifically, CyberPunk 9998) sold for over $500 million. Unsurprisingly, this has generated some speculation amongst the crypto-community, with some positing it could be a ‘flash loan’, and others suggesting money laundering. Either way, this is another example detailing how NFTs can be used to move significant amounts of money with very little friction.
- Tom
Lincolnshire boy had £2m of cryptocurrency seized by police
Could you be sharing your personal details with a teenage computer genius? 12,000 unsuspecting individuals did! Teenager sets up sophisticated fraud from bedroom admits to charges of money laundering.
- JP
EY and Wirecard: anatomy of a flawed audit
Another article about the Wirecard scandal, but this time really breaking apart the audit conducted by EY. The Financial Times takes a look at the entities and individuals involved, as well as the timeframes showing missed opportunities to expose the realities of the Wirecard fraud.
- Jess
China arrests ex-police official days before major party meeting
China continues its crackdown on corruption after arresting a former official who used to be in charge of the country’s secret police. This is one of many arrests in the last month as China has launched a nationwide 'corruption purge' in the country’s law and political system
- Sara
Squid Game crypto token collapses in apparent scam
A digital token inspired by cult Korean tv show Squid Game has been revealed to be a scam. The token, marketed as a ‘play to earn crypto-currency’, saw its value soar over the last few weeks before crashing by 99.99%. Colloquially known as ‘pump and dump’ or ‘rug pulls’, there have been a number of similar scams marketed to investors in the last few years. Targeting new or beginner investors, these scams demonstrate just how important it is to conduct proper due diligence prior to parting with any money.
- Andy
US Treasury calls for urgent legislation on stablecoins
The potential for the increased use of stablecoins as a means of payments raises a range of concerns, the report notes, related to the potential for destabilising runs, disruptions in the payment system, and concentration of economic power.
- Danielle
UK Aims to Seize £15 Million From Family of Azeri Politician
The National Crime Agency (NCA) is looking to seize 15 million pounds in bank accounts that belong to the wife, son, and nephew of Javanshir Feyziyev, an influential Azerbaijani politician. The agency believes the money had been laundered through a vast money transfer system uncovered in 2017 by OCCRP.
- Lauren
Demographics of Cybercrime Report
“The Demographics of Cybercrime” shows that not only do some populations face more types of cybercrime than others, and more frequently, but that some populations feel more emotionally burdened and are more likely to financially suffer. Gender, race, income level, education, and age all play their part making some populations more vulnerable than other.
- Greg
Secretive MoD 'banking' unit helps UK wage economic warfare
Interesting piece from the FT on the intelligence services leveraging private sector finance experience to help combat hostile actors that threaten UK national security. Though the remits and outcomes of this task-force are clandestine by nature, continued cooperation between the public and private sector expertise will bolster our understanding of global security threats and how to combat them off the battlefield
- Mikey
'Friday fraud' costs homebuyers millions
This week The Times have reported on a typology targeted specifically at those buying new homes, known as 'Friday fraud'. They report on a recent rise in this kind of fraud, where those about to become home-owners are targeted by criminals masking as solicitors in an attempt to redirect the transfer of funds intended for a house purchase
- Ruth
Organisations feel risk of financial crime and cyberattacks increased due to remote working
A new survey has revealed that 66% of organisations feel the risk of financial crime and cyberattack has increased as a result of remote working. Overall, the results reveal firms need to remain vigilant when it comes to IT infrastructure, cybersecurity and their digital management strategy. Just 26% of those surveyed said financial crime and the risk of an attack did not become a greater consideration to their organisation since some of the workforce were redeployed to work from home.
- Lauren
FATF adds Turkey to AML/CFT watchlist
Turkey, Jordan, and Mali were added as part of an Oct. 21 update acknowledging jurisdictions working with the FATF to improve the countering of money laundering, terrorist financing, and proliferation financing. Overall, 23 jurisdictions currently comprise the FATF’s list. Turkey becomes the largest economy to be represented on the list.
- Gemma
UK taxman seizes £26.5m furlough finds from 'entrepreneur'
HMRC have seized over £26m from an obscure entrepreneur who created companies and fabricated employees in order to claim state funds made available via the furlough scheme.
The UK furlough scheme saw £70b made available to support businesses through the COVID pandemic, something that did not go unnoticed by criminals. It is likely we will see many more reports like this as law enforcement turn their attention to those who fraudulently claimed funds they were not entitled to, and it is paramount that financial institutions comply with their legal obligations, such as transaction monitoring, to make sure that companies and individuals who bank with are not engaged in financial crime.
- Andy
Estonia's new anti-money laundering chief wants to revoke all crypto licenses
A quite bold statement from the new head of FIU about revoking all existing crypto licenses. However, before we jump to any conclusions, it should be noted that he mainly alluded to crypto businesses not contributing to Estonian economy, rather than insinuating that they are involved in any illicit activities.
- Greg
Bank robbers used Deepfake voice for $35 million heist
Sophisticated deepfake technology is becoming easier and cheaper to access. Earlier this year, the FBI shared their assessment on deepfake technology. They noted that it will likely be utilised by malicious actors in the near future. This is not the first time deepfake voice technology has been used to commit fraud; in 2019, it was reported that a criminal was successful in a similar type of scam, allegedly deepfaking the voice of a company’s CEO resulting in a €220,000 scam.
- Tom
US Treasury said it tied $5.2 billion in BTC transactions to ransomware payments
Analysis conducted by the US Treasury Department and FinCEN has identified over $5.2 billion of Bitcoin transfers as being potentially linked to ransomware attacks over the last decade with $590m in ransomware payments made in the first half of 2021 alone. These figures point to an unequivocal ramp up in ransomware activities over the last year and demonstrate the huge losses associated with this type of fraud.
- Andy
After Pandora Papers, EU says it plans new rules against tax avoidance
FINTRAIL have been considering tax evasion a lot recently (see our recent Tax Evasion bootcamp with EFI) so we’re monitoring the fall-out from the Pandora Papers with interest. The European Parliament has slammed the EU’s recent removal of countries from its blacklist of tax havens as wrong and “grotesque”. Will these plans address the criticisms of EU loopholes?
- Maya
NatWest faces £340m fine after admitting 'money-laundering' failings
NatWest pleaded guilty to failing to prevent the laundering of nearly £400 million and faces a heavy fine after becoming the first bank in Britain to admit to a criminal offence of this sort. The bank had failed to properly monitor £365 million deposited into the account of a Bradford jeweller over five years (when the expected annual turnover of the jeweller was only £15 million). £264 million was deposited in cash.
- Jess
Financial Crime: analysis of firms' 2017-2020 REP-CRIM data
The previous report was released back in 2018. This publication covers analysis of the data we received for the annual financial crime data return (REP-CRIM) for reporting periods 2017/18, 2018/19 and 2019/20.
- Greg
Star Entertainment: Shares fall on money laundering claim
Shares in Australian gambling giant Star Entertainment have slumped after allegations that it enabled illegal activity at its casinos for years. According to a report by the Sydney Morning Herald, between 2014 and 2021 the firm wooed high-rolling gamblers who were allegedly linked to criminal or foreign-influence activities.
- Lauren
Offshore havens and hidden riches of world leaders and billionaires exposed in unprecedented leak
The biggest ever leak of offshore data exposes the financial secrets of more than 100 billionaires, 30 world leaders and 300 public officials. Yet another leak sadly reminds us of the need for reform, including the implementation of transparent beneficial ownership registers for offshore jurisdictions.
- Jess
The Global Organized Crime Index
Last week the Global Organised Crime Index was launched by Global Initiative Against Transnational Organised Crime. This project draws upon a two-year effort to develop the tool to evaluate levels of crime and resilience in all 193 UN member states.
- Greg
Actor pleads guilty to running $650 million Hollywood Ponzi scheme
Horwitz admits he swindled at least five investors out of $230 million. In one example included in his plea agreement, Horwitz says he duped an Illinois investor into sending him more than $1.4 million in December 2018 with the bogus pledge that the money was buying certain international distribution rights to Active Measures, a (real) documentary exploring alleged collusion between the Trump campaign and Russia.
- Gemma
Trafficked slaves in Ireland are worth €150k to criminal gangs
Two Nigerian women recently became the first people in Ireland to be convicted of human trafficking for the prostitution ring they ran out of the midlands. A human rights activist says a trafficked woman is worth €150,000 to criminal gangs, as two women are found guilty of two counts of trafficking women around Ireland.
- Lauren
Surge in UK fraud a national security threat, warn banks
Reuters overview of a UK Finance report stating that a surge in fraud is a national security threat (echoing a RUSI report from January 2021). Couple headline figures in the piece:
- Fraud up 30% the first 6 months of 2021 on the same period as last year
- APP fraud up 71% on same period
- increase (NFD) on online ads targeting people as young as 14 to become money mules
- Andy
A crypto guru goes on trial for allegedly advising North Korea
Virgil Griffith, a crypto expert, is charged with conspiring to violate a federal law prohibiting U.S. citizens from exporting technology to North Korea
- Gemma
Lithuania says throw away Chinese phones due to censorship concerns
How does North Korea evade sanctions?
RAND published an interesting report on North Korean sanctions evasion techniques. The report picks out four types of sanctions evasion, with four types of entities involved: North Korean government officials accredited to North Korea's embassies, North Korean overseas workers, front and shell companies, and trusted third-party intermediaries. North Korea's principal sanctions evasion activities take place in Africa, particularly the DRC, Libya, Mali and Mozambique.
- Jess
Anti-laundering unit goes off-grid, fraying Afghan ties to global finance
One thing most FinCrime professionals never have to face is fearing for their lives because of their work. This news story from Afghanistan is harrowing, and should also remind us of courageous professionals facing similar risks in kleptocracies, narco states and other countries around the world where criminal and terrorist elements have captured the political sphere.
- Maya
Vessel identity laundering: an emerging threat to maritime trade
According to Global Trade Review, criminals are fraudulently obtaining registration numbers of cargo ships in a bid to evade sanctions on maritime trade. The process - known as ‘identity laundering’ - can involve physically painting over the ship’s International Maritime Organisation (IMO) number, as well as submitting fraudulent registration documentation. This new typology is reported to be a departure from the more tried and tested methods of maritime deception, which have in the past involved manipulation of a ships automatic identification system (AIS), and obfuscation of the vessels physical appearance to spoof detection technology.
- Tom
Aukus: UK, US and Australia launch pact to counter China
Surely see a whole slew of new sanctions (and attempts to evade them) imposed on senior figures in the CCP in the near term following this announcement.
- Andy
FCA - The risks of token regulation
Unmasked: Commonwealth’s top lawyer guilty of £600,000 fraud
A high-flying lawyer swindled the Commonwealth and a top international legal firm out of more than £600,000 in a series of frauds. These frauds were enabled by lax security and fraud checks at the Commonwealth Office.
- Gemma
South Korea crypto crackdown to wipe $2.6bn from ‘kimchi coins’
It's been a while coming but as the deadline approaches and companies don't meet the regulatory requirement (current estimate 40 out of 60-Paywall) more of Korea's crypto scene will be hit.
- Martin
Politeness leaving people at the mercy of fraudsters
Politeness might be the achilles heel of the UK public when it comes to becoming victims of mass fraud campaigns. This article cites research by UK Finance, reporting that 92% of individuals surveyed admitted to taking suspicious calls or responding to messages, on account of not wanting to appear rude. This is a worrying statistic especially considering the recent hike in impersonation fraud rates.
- Ruth
German finance ministry raided in money laundering probe
“Germany is a gangster’s paradise” (Paywall)- not words you hear every day. Germany is conducting not just an investigation into the effectiveness of the FIU but a criminal investigation. Although is the timing politically motivated? 🤔
- Maya
The risks of token regulation
It will take a great deal of careful thought to craft a regulatory regime which will be effective in the decentralised world of digital tokens. And it’s clear that legislators need to consider 3 issues: how to make it harder for digital tokens to be used for financial crime; how to support useful innovation; and the extent to which consumers should be free to buy unregulated, purely speculative tokens and to take the responsibility for their decisions to do so.
- Greg
Financial crime fighting has lost its way
Good article from Tom Keatinge in the FT, arguing that the expectations on banks to identify financial crime has crossed over into activities that should be conducted by law enforcement. Whilst banks need to report on suspicious activity, it is not up to banks to go beyond - we need to ensure law enforcement has proper resources to meet these challenges.
- Jess
U.S. allows personal remittances to flow to Afghanistan
It’s all very well the US government saying financial institutions can continue to process remittances to Afghanistan. But without more guidance on what constitutes appropriate compliance measures, and reassurance that regulators will work with firms trying to do the right thing and not go after them, most are still likely to cut off this service.
- Maya
Watchdog warns UK banks of Afghanistan financial crime risks
Last week, the Financial Conduct Authority issued a warning to banks regarding a potential uptick financial crime associated with the resurgent terrorist activity in Afghanistan. Whilst outflows of funds from the UK to high risk jurisdictions, such as Afghanistan, should be kept a close eye on over the coming weeks and months, financial activity that could be linked with domestic terror activity should also be a key consideration. In recent days there have been calls in the media to raise the UK’s terror threat level to severe, following the UK’s withdrawal from Afghanistan.
- Tom
Singapore and Malaysia police bust transnational job scam syndicate in a joint operation
A simple scam with a little hook to entice those involved. In the world of remote working, it could be easy to get caught in this WFH and earn quick cash scam adverts, mostly circulated across social media. The police cautioned against “dubious job offers that offer lucrative returns for minimal effort”.
- Martin
“I spent £10,000 while manic, my bank wrote off the debt.”
This article highlights how your mental health can effect your finances, and how there may be some ways that financial institutions can help those in need. In particular, this article shows how patterns of transactional behaviours may be an indicator that the customer needs some additional help and support.
- Danielle
Taliban’s frozen assets hinge on safe passage, says Boris Johnson
Rather than imposing comprehensive sanctions, this article indicates a more targeted approach by the UK government in Afghanistan - specific actions by the Taliban linked to access to funds. This kind of approach has been found to produce more concrete political results - let’s see what kind of leverage Western governments can manage.
- Maya
UK contactless limit to rise to £100 in October
Brits will be able to make contactless payments of up to £100 from 15 October, UK Finance has confirmed. At the time of the budget, there were reports that some major banks sounded the alarm bell over the proposed new ceiling, preferring a more cautious staggered increase to curb the risk of fraud. Luke Massie, CEO of VibePay says that while the move to increase the limit “makes complete sense”, the size of the rise means that “consumers will see a rise in ‘card not present’ fraud”.
- Lauren
BBC Panorama - The influencers promoting criminal scams
I’m surprised it’s taken Panorama so long to report on this: calling these influencers “new” isn’t exactly accurate. On social media, there's a new type of influencer. But instead of promoting clothing lines and lifestyle products, they promote fraud.
- Gemma
Antinalysis - Criminals check the cleanliness of their coins on the Darknet
Any technology is a double-edged sword and it turns out that blockchain analytics is no exception. A new service has launched on the darknet offering criminals a way to check how “clean” their digital coins are. Still early days, but watch this space…
- Greg
Husband and Wife scam Singapore SkillsFuture of $39.9million
Another scam in Singapore that sees the use of shell companies, 9 in this case, to execute a SGD39.9 million scam using the Singapore SkillsFuture initiative. This is normally used to subsidise training and upskilling of workers, in this case the husband and wife team forged attendance and employment records to claim the subsidy.
- Martin
How a convicted criminal can buy a famous English football club
Truly horrifying: How a convicted criminal can buy a famous English football club
Al Jazeera goes undercover to show how English football clubs can become vehicles to launder the proceeds of crime.
- Gemma
AML: is the UK art market complying?
An interesting article reviewing the new AML rules for art market participants. It notes that - on the whole - sellers have approached the changes responsibly, with some investing in Regtechs to fulfil their updated verification requirements. However, the author fears that in some instances the new legislation is being treated as a ‘tick-box exercise’, rather than employing a risk-based approach. Furthermore, the author notes that some processes are being rushed to avoid deals falling through – which are perhaps the deals that pose the highest money laundering risk.
- Tom
Lauren Goodger foreign exchange Instagram advert banned
Lauren Goodger didn’t make it known that she was being paid by a company to promote their forex business so her post was banned. I think something similar happened to Katie Price last week and people lost grands and then she fled to the Caribbean with her family. Anyway, I think this is a good step because it shows that Instagram particularly is finally acting and shutting down these “influencers”.
- Ishima
Money Laundering Resulting from the Human Trafficking and Migrant Smuggling Crimes
An important report from MENAFATF on Money Laundering Resulting from the Human Trafficking and Migrant Smuggling Crimes. The main objective of the report is to help countries to better understand the methods and techniques used to launder the proceeds generated from the human trafficking and migrant smuggling crimes in the Middle East and North Africa region.
- Greg
6 men charged for alleged involvement in GST fraud involving S$114 million of fictitious sales
In the first prosecution of its kind in Singapore, six men were charged with Missing Trader or Carousel Fraud, which also involved the use of a shell company to help issue and receive fictitious orders. With claims in GST refunds amounted to nearly SGD88 million, it is likely not the only case in Singapore.
- Martin
How a little-known G7 task force unwittingly helps governments target critics
SFO probes Gavin Woodhouse over suspected care home fraud
The Serious Fraud Office has launched a major fraud investigation into care home entrepreneur Gavin Woodhouse. An investigation by The Guardian and ITV News into the scheme in 2019 revealed that many of Mr Woodhouse's projects were incomplete, while the businessman's firms had a multimillion-pound black hole.
- Lauren
Action Fraud scrapped after Times exposé
The police’s national fraud reporting service is being scrapped after damning failings were exposed by a Times investigation.
Action Fraud, which has had complaints from thousands of victims of crime, will be replaced with “an improved national fraud and cybercrime reporting system”, the government said. A new force dedicated to fighting cybercrime will also be set up within the National Crime Agency to investigate the most complex and serious cases.
- Gemma
UK’s search for trade with developing countries raises TBML alarm
Concerning findings that trade based money laundering may rise post-Brexit, as the UK plans to introduce a “Developing Countries Trading Scheme”. The Treasury estimates that hundreds of billions of pounds are already laundered through TBML in the UK each year, and pushing for greater trade with countries already vulnerable to TBML, without considering the consequences for banks and law enforcement, is very short-sighted.
- Maya
FinCEN’s new digital currency advisor says crypto’s ‘just another means of payment’
Cars, funerals and home improvements: EU to crack down on large cash payments
An interesting piece from the Irish Independent on the end of large cash payments in the EU in three year’s time. This chimes with what I’ve been hearing from several senior law enforcement officials in EU member states about the future - or lack of future - of cash payments. We do seem to be looking towards a future of largely digital fiat money, which many central bankers prefer because of the level of control and surveillance it gives them over the money supply. Whisper it quietly too - they also see it as an attractive alternative to keep people away from crypto.
- Matthew
Binance ordered to halt operations in Malaysia by mid-August
Malaysia’s securities commission has ordered Binance to halt its operations by mid-August for illegally operating a digital asset exchange. This serves as a reminder that all digital asset exchanges must be registered and operating under a license. Malaysia is not the first country to clamp down on Binance with other regulators in Hong Kong, Thailand and Japan issuing warnings.
- Sara
The YouTubers who blew the whistle on the anti-vax plot
Will finances associated with disinformation campaigns (inc state-sponsored) soon become subject to scrutiny?
- Rob
UK financial watchdog warns consumers over CoinBurp crypto launch
Coinburp are today launching their $BURP token in the UK today, although only operating under temporary registration from the FCA while the firm's application for a licence is processed. The FCA have issued a statement to make the point to potential customers that the personnel of the firm have not yet passed the 'fit and proper’ test, and AML/CTF framework has not so far been approved. What's the lesson for VASPs from this? Difficult to say so far, and it very much depends on the outcome of the licence application. If the FCA agrees it, then this could be seen as an example of a firm that moved quickly and took some calculated regulatory risks in order to get to market quickly. On the other, if their status is not confirmed, they will be in a tricky position commercially and reputationally. Worth the risk? I'm not sure I would say so without a high level of confidence about my proposed policies, procedures and controls
- Matthew
The young and the cashless
Not a new problem, but the article highlights some of the dangers of frictionless digital payments, which I think if you also combine with BNPL programs could easily get someone into a degree of debt very quickly and then find it hard to get out of it. The article includes some sage advice on money management (and some SG apps to help).
- Martin
Danske's customer flight exposes long-term cost of a scandal
We often talk about the reputational risk of not meeting financial crime obligations but it’s sometimes viewed as a secondary rather than a key consideration. This Danske Bank story is a really good example of the real-life consequences. It shows reputational concerns aren’t vague and intangible but can cost firms real business and real money.
- Maya
Met police seize nearly £180m of bitcoin in money laundering investigation
The Met police have seized another huge amount of bitcoin following their £114m haul in June. In relation to a money laundering investigation £180m bitcoin was seized. The Met notes that whilst cash is still king, crypto seizures of this size appear to be on the rise.
- Danielle
When sanctions violate human rights
An interesting report from the Atlantic Council on when sanctions violate human rights. You cannot escape geopolitical issues when discussing the topic but the report has developed a methodology based on clear standards for designations, provisions of evidence for designations, etc. It also looks at overlap between different sanctions regimes.
- Greg
Prosecutors have obtained damning information allegedly implicating Trump
Interesting developments in the investigation into the Trump Organization, and the indictment of his CFO Allen Weisselberg. Newly obtained information appears to show an off-the-books scheme between Trump and top executives to evade income and corporate taxes. Definitely, one to watch as the Manhattan district attorney pursues the indictment
- Mikey
Crown Resorts' Melbourne casino should lose licence over illegal conduct
We have seen Australia’s casino industry in the spotlight recently due to many of its casinos being linked to organised crime networks and being used to facilitate money laundering. The latest inquiry into Crown Resorts’ Melbourne has revealed that the casino should lose its licence over illegal conduct as it has 'failed woefully to adequately address key risks of money laundering.' This serves as a reminder of the importance of implementing adequate AML controls not only within the financial services sector but also across the gaming/gambling sector.
- Sara
UK Financial Watchdog ticks off retail banks for anti-money laundering failings
The FCA pointed out that the consequences of poor financial crime controls in a high-risk sector such as retail banking are significant. It can lead to criminals abusing the financial system to launder the proceeds of crime, supporting further criminal activity and damaging the integrity of the UK financial market.
- Lauren
Sales consultant guilty of Bitcoin Islamic state terrorism funding
Interesting terror financing related prosecution involving Bitcoin as the fundraising method:
“Counter Terrorism Policing North East said he raised thousands of pounds and converted it to Bitcoin, which he used to send IS money to free supporters of the group from detention camps in Syria. Choudhary's claims his funding had a "humanitarian purpose" were described as "a smokescreen".
- Mikey
Hamas-linked wallets have received $7.7 million in Cryptoassets
Dogecoin started as a joke and… ended up a terrorist asset. Both Elliptic and Chainalysis recently reported on Israel’s National Bureau for Counter Terror Financing’ seizure of cryptocurrency held by several wallets associated with donation campaigns carried out by Hamas. The seized virtual assets included not just Bitcoin, but also Ether, XRP, Tether, and others
- Greg
Misleading crypto ads to be targeted by UK watchdog
The UK’s Advertising Standards Authority (ASA) is set to issue a crackdown on misleading cryptocurrency advertisements. One target for the watchdog are various social media accounts that push crypto ventures without declaring the financial risks around investment
- Lauren
EU to create anti-money laundering agency
The European Commission are about to propose a new, standalone AML/CFT agency (the Anti-Money Laundering Agency, or AMLA) to supervise AML/CFT regulation, supervision and enforcement across the EU from 2026. Combined with the development of a single rule book (as opposed to the current approach which requires member states to meet certain minimum standards), this suggests a much stronger, tougher and proactive approach to financial crime than before
- Matthew
British MPs are fighting for hedgehogs to receive greater legal protection
Apparently, hedgehog trafficking is a thing! There’s a new bill going before parliament to give them extra protection against this activity after shocking reports found the wild animals are being pinched from private gardens and sold as pets online
- Gemma
FATF Says Majority of Countries Still Haven’t Implemented Watchdog’s Crypto Guidance
FATF has reported that the majority of its members have still not yet implemented AML/CFT controls for VASPs - two years after the guidelines were agreed by the group. It's a pretty unimpressive performance by governments, but what does it mean for businesses? It is easy to be tempted by the idea that the absence of regulation creates permission for VASPs to do what they wish, but that's a short-sighted view. Even though the process is slow, these regulations will eventually be implemented in most jurisdictions, and VASPs will need to take action. Arguably, a healthier approach for VASPs is not to wait for governments and regulators to put rules in place, but get on with creating sensible financial crime risk management processes from the get-go.
- Matthew
EU watchdog takes deep dive into banks' use of tech
The EBA discussing how to encourage RegTech adoption and the possibility of creating a centralised EU database of RegTech solutions or certification of RegTech
- Maya
Special Report: EU efforts to fight money laundering in the banking sector are fragmented and implementation is insufficient
It is difficult not to agree with findings from the European Court of Auditors on EU efforts to fight money laundering. The Special Report highlights institutional fragmentation and poor co-ordination at EU level when it came to actions to prevent money laundering and take action where risk was identified.
- Greg
Albanian lessons for regulators nervously eyeing the crypto world
The FT drawing interesting comparisons between the Albanian pyramid scheme debacle in the 1990s and the risks of regulators sitting back in today's crypto explosion. Some of the comparisons are a bit of a stretch, but the conclusion is fair - that more regulation should be welcomed and the risks of regulatory disengagement or paralysis with crypto (i.e. not knowing what to do!) are high
- Jess
How hackers are using gamers to become crypto-rich
If your computer is overheating you may be mining cryptocurrencies without knowing it…
- Greg
Sotheby's diamond auction marks another bitcoin milestone
A rare pear-shaped diamond that is expected to fetch up to US$15 million can be bought at auction next month using cryptocurrencies, Sotheby’s announced on Monday
- Gemma
A fake ID and no bank checks: how I bought bitcoin in one minute
Amid concerns that cryptocurrency is being used to hide money stolen by fraudsters, David Byers looks at how easy it is to trade
- Jess
Organised crime is going uninvestigated by police who are “hiding behind the veil” of the Action Fraud
Between 2019 and 2020, over 800,000 people reported being a victim of fraud, with £2.3billion finding its way into criminal hands. Professor Button’s damning report cites countless reviews and investigations over the past 20 years which have consistently highlighted the low priority given to the investigation of financial crimes in England and Wales.
- Lauren
Banks told to clamp down on toxic culture
The Head of the Basel Committee for Banking Supervision, Carolyn Richards, has pointed out how 'toxic cultures' based on risk-taking, long hours and machismo lead banks to make major mistakes, manage risks poorly, and sometimes overlook wrongdoing. As she notes, this is consistently leading not only to commercial failure but regulatory censure and fines. She notes that it is not therefore enough for banks to 'comply' with the rules, but ensure they have a healthier culture, and one that takes in a diversity of backgrounds and views - something which we too at FINTRAIL see as vital to getting the management of financial risks right.
- Matthew
The new breed of criminals: Bank staff probed over links to cyber fraud
“Planting” individuals by criminals into jobs that give them access to confidential customer data may sound like a plot from Line of Duty. However, as quoted in this recent article this is what may be happening in Ireland, where Garda suspect a pattern is emerging after three separate cases of junior employees working for different financial institutions linked to crime gangs have been identified.
- Greg
China's new anti-foreign sanctions law sends a chill through the business community
Over the last three years, the U.S. and the European Union have imposed a series of sanctions on Chinese officials and companies. Now China has created a new legal tool to hit back as summarised in this article.
- Gemma
Buying luxury flats with bitcoin opens door to criminals
The report suggests that the NCA are beginning to see casework where there are good indications that cryptocurrency has been used in the final stages of laundering to integrate funds into the system, and that those involved in the sales of high value goods need to be aware and take the right measures in response. If property developers and others are going to accept crypto as well as fiat currencies, they need to take exactly the same risk-based approach to due diligence. As Nick Leary of the NCA says, this might be a relatively small issue now, but if people don't think about the financial crime risks, it will become much bigger in the future.
- Matthew
UK regulator warn Google about accepting scam adverts
FCA is warning Google and other social media companies about accepting scam adverts. These adverts may advertise financial services and in many cases are not screened or approved by the FCA, despite appearing to advertise legitimate services. This is part of the FCAs wider move to combat online criminals.
- Danielle
Sydney casinos to ban cash after money laundering scandal
Australia’s casino industry has been in the spotlight recently, with many of its casinos being linked to organised crime networks and used to facilitate money laundering. In an effort to stamp out this illicit behavior, Sydney’s casinos are going cashless. By doing this, casinos are requiring gamblers to use cards linked to their identity and a bank or other financial institution.
- Sara
The future of RegTech - what do firms really want?
Interesting blog post from the FCA on the future of RegTech. Financial services firms seem to be happy with the RegTech space, but want more integrated end-to-end solutions (as opposed to the current patch work of solutions). Will be interesting to see if this leads to market concentration with ‘holistic’ services offered by a relatively small number of companies. The blog post also highlights the desire for some kind of regulatory certification for RegTech offerings.
- Jess
Israel-Gaza conflict spurs Bitcoin donations to Hamas
An unsurprising development, given Hamas has been receiving Bitcoin donations since at least 2019. However, as terrorist groups and donors come to realise cryptocurrencies are not as anonymous as they seem and can be tracked by law enforcement, this is unlikely to replace other funding methods as Hamas’ primary revenue stream.
- Maya
US recovers million in cryptocurrency paid to Colonial Pipeline ransomware hackers
By looking for holes in the hackers’ operational or personal security, and specifically monitoring for any leads that might have emerged out of the way they moved their money, US officials were able to recover millions in cryptocurrency paid to the Colonial Pipeline ransomware hackers. They have linked the Colonial attack to a criminal hacking group known as Darkside believed to be based in Russia.
- Ishima
SEC plans to go after market manipulation on social media
Securities and Exchange Commission Chairman Gary Gensler said Monday that his agency is focused on adopting new rules to guard against company executives using private information to opportunistically sell shares of companies they oversee, while acknowledging that the SEC must come up with new strategies to guard against market manipulation on social media.
- Gemma
Santander pushes back at Which? over APP scam reimbursement rates
Security threats to be blocked according to UK proposal
This is good news and aligns with the notion that serious and organised crime should be treated as a national security issue: “The UK is set to unveil stricter rules for companies going public on the London Stock Exchange, allowing the listing of companies to be blocked on national security grounds, the treasury department said on Tuesday.
- Gemma
Bank transfer scammers steal £700,000 a day from UK victims
In case we weren’t already convinced fraud is an epidemic, these numbers from the latest Which? research really shows the true scale of the problem. Not just in terms of the volume lost, but on how unlikely it is that a victim will be reimbursed. The more firms can roll out robust confirmation of payee controls the better, but they’re not the only tool in the anti APP fraud toolbox for firms to implement to help save victims’ money.
- Meredith
UK banks block payments to crypto exchanges
Another one about UK banks blocking payments to crypto exchanges because of the perceived financial crime risks. What I find puzzling is that we also have analyses from firms like Chainanalysis saying that proportionately, the scale of crypto-related crime is small, both in absolute and relative terms, and probably less problematic than for fiat currencies. I suppose stories like this drive home the need for the virtual assets sector to 'get onboard' with fin-crime risk management if they are going to prosper. They will have take the right measures, and be seen to take the right measures.
- Matthew
Are EU public registers in place & really public?
The EU regulations forcing all member states to establish public beneficial ownership registers look good on paper and set a high standard on the global stage. However, this Transparency International report highlights the lack of progress to date and the loopholes many EU states are exploiting. More than a year after the deadline, nine EU countries still don’t have public registers, and others impose geographic access restrictions, in clear breach of EU rules, or use barriers such as paywalls. (Shout out to Denmark and Latvia, the only two states with publicly accessible registers available as structured data, which can be meaningfully used for anti-financial crime purposes.)
- Maya
FCA warns UK FinTechs against comparing themselves to banks
The FCA warned UK fintechs this week about comparing themselves to banks and failing to warn customers about the risks of signing up to e-money services. The regulatory landscape for e-money licences is very complex and, whilst Jess was not sure that most consumers would fully understand the risks of e-money versus full banking licences, more clarity for customers and direction from the FCA is always welcome.
- Jess
EU explores Belarus sanctions after 'hijacking' of Ryanair flight
Further possible Belarus sanctions on the horizon after Lukashenko's fascinating act of contemporary piracy last night in diverting a RyanAir flight (including an armed fighter escort) to arrest a political activist and journalist who opposed Lukashenko's questionable reelection in 2020
- Mikey
Eight arrests in Royal Mail text scam investigation
Much like the Europol Money Mule Action Week, the Dedicated Card and Payment Crime Unit have a week of action against scam messages. They have arrested 8 men in connection to the Royal Mail scam where smishing text messages are sent to people in order to obtain their personal and bank details by getting them to follow a link to a fake version of a trusted website.
- Ishima
US pot sellers stash cash as banks leave them high and dry
Interesting piece on the legal marijuana industry. “A spotlight on the problems facing very high-risk sectors being shut out of financial services. We’re currently looking at this at FINTRAIL, working with a client to design policies for gambling and adult entertainment companies. It’s understandable when individual institutions don’t have the appetite to bank these sectors, but it’s a real problem when no institutions will.”
- Maya
N26 Bank GmBH: Order to prevent money laundering and terrorist financing
I think the more aggressive approach we are seeing from BaFin in Germany in the Wirecard Scandal is interesting - they've recently extended their supervision of DB and told them to do more on AML/CFT, and they have now criticised N26 for lax controls. I think what we're seeing here is further evidence of the European 'wake up' call on financial crime that's going get further impetus from the arrival of the single AML/CFT rulebook and the EU-level regulator.
- Matthew
Banks with more women on their boards commit less fraud
Banks with more women on their boards commit less fraud. More evidence that enhancing diversity makes the world a better place and saves money! The study finds that banks with more female directors faced lower and less-frequent fines for misconduct, saving those institutions $7.84 million a year, on average.
- JP
Serious Fraud Office launches investigation into Gupta's GFG
The Financial Times documentary on Greensill was better than any Saturday night drama on Netflix this week. The story of Greensill Capital has everything: investment banks, false technology hype, opaque finance, private jets, trophy mansions and the biggest British lobbying scandal in a generation, involving former prime minister David Cameron. Unfortunately, the very real outcome on steelworkers is still to play out.
- Jess
Which? calls on banks to come clean about APP fraud refunds
UK consumer group Which? is calling on banks and building societies to publish figures on the proportion of customers they refund for authorised push payment (APP) fraud. Barclays has become the first to publish figures, revealing that it reimbursed 74% of customers who fell victim to APP fraud in the first two months of this year. TSB is not signed up to the code but says it refunds 99% of victims.
- Lauren
SEC enforcement actions cost crypto firms and individuals $1.7B in penalties
Cyprus files first prosecution in passports scandal
In November of last year, Cyprus stopped offering its "Golden Passport" over corruption allegations. Now the first criminal prosecution associated with the scheme has been filed. It shows that criticism of this controversial scheme is not baseless. Currently, there's action against 5 individuals with a total of 37 charges, little more information is given due to the "sensitivity details" involved.
- Danielle
Bank seek Biden's aid after Trump's 1000 Sanctions-a-Year pace
Mark your calendars - Deputy Secretary of the US Treasury, Wally Adeyemo’s review of the US’s sanctions programs is expected this summer. As part of this review, Adeyemo has been speaking to US FIs and foreign counterparts. FIs have been advocating for 1) more clarification around increasingly complex sanctions regimes; 2) greater support on the implementation of the 50% rules; and 3) more emphasis on high value transactions rather than low value transactions for sanctions screening. We’ll have to keep our eye on how any or all of these points are addressed when the review is published.
- Meredith
The rising threat of Chinese Underground Banking
Here is another typology for financial institutions and FinTechs to be aware of - there has been a rise in underground money shops in China and across the world to facilitate the movement of cash out of China due to strict control laws. Many of the high street banks have seen a number of 'mule accounts' set up to carry out these transactions with criminal groups targeting Chinese students in the UK.
- Sara
Europol just took down now of the world's largest dark web child porn sites
Last week Europol took down one of the largest online child pornography sites as part of a global law enforcement effort spanning across the US, EU, and Australia. Whilst this is a predominantly cyber-enabled crime area, I think it's important to bear in mind that financial flows are crucial in investigating the perpetrators of these crimes, and in obtaining evidence of their participation in order to secure prosecution. Definitely, something for FIUs to bear in mind when investigating suspicious activity.
- Mikey
Coalition urges UK government to add scams to Online Safety Bill
The bill aims to force firms - through the threat of massive fines - to improve internet safety in areas such as terrorist content, child sex abuse, hate crimes, cyber-bullying and the dissemination of fake news. However, financial fraud has not been included in the bill, prompting 17 organisations representing civil society and business to write to Home Secretary Priti Patel and Digital Secretary Oliver Dowden.
- Lauren
What do Turkey's cryptocurrency regulations mean for the industry?
Turkey has expanded the scope of its AML and terrorism financing regulations to cover cryptocurrency firms, and banned crypto payments. Crypto is extremely popular in Turkey (this article says it has one of the highest exposures worldwide), given the state of the Turkish economy and the collapse of the lira, and many critics had predicted it would become subject to tighter controls. Last month, two Turkish crypto exchanges were shut down and employees were jailed following investigations into missing customer funds, which has helped the government make its case that tough action is needed.
- Maya
Bequia is becoming the world's first Bitcoin community
Once again, new risks arising due to derisking. In the past, people denied access to international banking services often turned to informal service providers (e.g. hawala), now it’s crypto. Small island nations in the Caribbean are embracing crypto as it becomes more difficult for them to send and receive money internationally. So now you can buy luxury villas in Bequia entirely in Bitcoin, shifting the risks elsewhere.
- Maya
Will ‘Global Britain’ clamp down on money laundering?
Interesting article from Tom Burgis (author of 'Kleptocracy'). Nothing surprising to those in the financial crime space in terms of the UK's attractiveness for money laundering, but it's an interesting assessment on what the UK's position will be like after Brexit. It also picks up on the role of enablers, such as lawyers, accountants and estate agents - which is often overlooked.
- Jess
UK to come under scrutiny in Italy's largest mafia trial in decades
It was only a question of time before the City of London would come under scrutiny during Italy’s largest mafia trial in decades. The ’Ndrangheta is often considered archaic, but in reality, this is the most successful and powerful Italian mafia at the moment.
- Greg
Germany's Merkel to be quizzed over Wirecard lobbying in public inquiry
OFAC announces a settlement with MoneyGram Payment Systems, Inc.
An interesting OFAC settlement with MoneyGram. Between March 2013 and April 2016, MoneyGram provided money transfer services to the DoJ’s Federal Bureau of Prisons (BOP), which allowed inmates to send and receive funds into and out of their personal commissary accounts. In connection with these service, MoneyGram did not screen the inmates against the OFAC. MoneyGram knew that some of the inmates for whom it was processing transactions could be on the SDN List, but it erroneously believed that such screening of inmates in federal prison was not expected under the BOP program.
- Greg
COVID-19 has transformed Somaliland's remittance lifeline
A really interesting article on how COVID has changed remittances in Somaliland, which is highly relevant for other developing countries too. It is great news for the country that the remittances business has evolved to survive the pandemic, and for fighting financial crime, with a shift away from cash-based hawalas to official digital money transfers. Globally, this could be an important shift. Good luck to the burgeoning Somaliland FinTech scene!
Everything we want costs energy, including bitcoin
Interesting article looking at the environmental cost of bitcoin and the energy used in mining. The article tries to situate the discussion in the wider context of clean energy initiatives within the crypto community, comparisons to traditional banking and companies such as Amazon, and the broad political benefits of decentralised cryptocurrency.
- Jess
FCA to introduce a 'regulatory nursery' for newly-licenced firms
An interesting concept from the FCA that if done properly could be really useful BUT if not done properly could actually stifle in my opinion. I think this could be a positive development if it is genuinely about nurturing the innovation and guiding rather than forcing companies into pigeon holes or stifling any innovation.
- Rob
Man arrested for defrauding his 35 girlfriends
Another case of a widespread romance scam seen this year involving a man defrauding a large number of victims by establishing fake relationships and taking advantage of their vulnerability and loneliness in order to receive gifts for his fictitious birthdays. The sum of the gifts have amounted to the value of 100,000 yen.
- Sara
Singapore’ Grab to go public in world’s biggest $40 billion SPAC merger
In the first of what will be a series of SPAC related deals, Grab secured a merger on Tuesday with special-purpose acquisition company Altimeter Growth Corp securing a valuation of nearly $40 billion and paving the way for a U.S. listing. The funds will be used to double down on the last-mile delivery network and to bulk up its financial services business, such as digital bank and mobile payments
- Gemma
The importance of purposeful anti-money laundering controls
County lines gang ‘recruited teen in 80 minutes via Snapchat’
Another article showing the role social media platforms play in organised crime. Teenagers are being recruited via adverts offering “cash-in-hand” work on Snapchat. The gang leaders get the teenagers to hide drugs in their body knowing the police are unable to strip search those who are underage.
- Ishima
Organised crime in Europe is thriving, says Europol
Another piece in the Economist highlighting the increasing OCG threats in Europe. Discusses organised crime as being “largely clandestine”, and that a parallel underground criminal financing system has been established by professional money launderers... but doesn’t link the material organised crime and financial crime side together.
- Mikey
The war against money-laundering is being lost
A highly critical summary of the fight against financial crime by The Economist. The conclusions are not surprising, but some of the figures are - compliance costs could be over 100x higher than global illicit funds Ultimately it is governments, not financial institutions, that can make meaningful change, but this requires real political will.
- Maya
Serious and Organised Crime Threat Assessment 2021
Europol has just published its Serious and Organised Crime Threat Assessment 2021. One of the biggest takeaway for me is a claim that more than 80% of the criminal networks active in the EU use legal business structures for their criminal activities. I don’t remember so much emphasis to be placed on use and abuse of legal business structures in previous SOCTA reports.
- Greg
Denmark charged 3 Americans & 3 Britons in tax fraud scandal
The Danish prosecutor has charged three US, and three UK nationals with fraud as part of the Europe-wide investigation into the the German cum-ex trading scandal.
It’s good to see some material development in this case, and that the Danish authorities are pursuing the maximum sentences if found guilty which sends a strong message that Denmark is not open for criminal business..
- Mikey
HK: Changes reduce corporate transparency
Changes to who can access Hong Kong’s Companies Registry will limit the ability of journalists and public interest bodies to understand corporate ownership. Officials will still be able to retain access but they will also be likely limited in what they can do with the information. It will be interesting to see what impact this may have on the financial crime landscape.
- Martin
Financial crime compliance costs increased 20.6% across APAC
This story is a little older, but worth a read, and suggests that the costs of compliance in APAC are rising, not falling. As the report indicates, firms in the region that allocated more spend to technology were able to keep costs lower than those who didn’t, highlighting the importance of staying up-to-date with the latest compliance technology trends
- Gemma
Whilst crypto scams may increase, numbers still remain low
It seems there are daily reports of the newest scam involving cryptocurrency. However, a new report states that crypto scams make up under 1% of all fraud cases. Whilst it’s important to continue to highlight cryptocurrency scams for consumers, it’s also important to understand the scale and proportions of these scams within the wider fraud picture.
- Danielle
Italian Mafia Boss Brought Down by His Own Cooking Vlog
I found this pretty amusing, but also quite insightful. This Mafia boss has undoubtedly gone to a lot of effort to evade authorities, only to be brought down by his online presence which I’ll bet he thought could never be linked back to him. This underpins the value of using online and digital identities in investigations to detect and disrupt criminal actors.
- Mikey
Poachers in Malaysia face RM1mil fine under proposed amendments
Chinese impose counter sanctions
VISA to settle transactons in USDC
I was interested to read about Visa expanding its digital currency capabilities; of course, this is significant for Visa - which already moves billions across 200 markets in 160 currencies - as it can now do so in any currency form factor. But Visa is also looking to tap into Central Bank Digital Currencies (CBDC), as they become available. The more CBDCs are integrated into the payment ecosystem, the easier the monitoring of illicit activity on the whole transaction value chain becomes.
- Gemma
TRAFFIC release report on wildlife crime
FCA launches campaign against investment scams
Having recently discussed investments scams with members of the FinTech FinCrime Exchange at the EMEA meet-up, the FCA have now launched a campaign to prevent investment harm, using online advertising. Please raise awareness by checking out the five questions people should ask themselves before investing their money.
- JP
Further insight into the Congolese whistleblowers
Like most people, I was horrified to read about the Congolese whistleblowers sentenced to death for revealing Dan Gertler’s money laundering network in the DRC. Banks with business in the DRC are being called on to write to the President stating they will withdraw all services if they follow through with the sentence.
- Maya
FCA start criminal proceedings against NatWest Plc
“I found it really interesting that the FCA is launching criminal (not civil) proceedings against NatWest for AML breaches, but also that no individuals are being charged. It is alleged that NatWest’s systems and controls failed to monitor or scrutinise around £365 million being paid into a customer’s accounts, of which around £264 million was in cash.”
- Gemma
Taskforce report on Anti-money laundering in the EU
“It is good to see the Global Coalition to Fight Financial Crime publish the CEPS-ECRI Task Force report on anti-money laundering in the EU. It looks at how to reform the AML agenda in Europe and makes some practical recommendations.
The report is based on discussions of a Task Force which included Europol, Refinitiv and RUSI.”
- Jess
ATM withdrawals drop by £37bn during year of Covid
Colonialism, tax havens, and African Development
“This is a very powerful piece and highlights where restorative justice and financial crime really overlap. In a special edition of Tax Justice Focus, the Tax Justice Network looks at how tax havens and illicit financial flows have thwarted African development in the decades since many states won their independence from European empires.”
- Maya
Financial flows and payment mechanisms in wildlife crime
Traffic, a leading NGO specialising in the wildlife trade, has published a major global analysis of the means by which money from the illegal wildlife trade flow around the world. It sadly highlights how criminals routinely use common financial mechanisms and basic fraud to profit from illicit animal and plant products. The report argues that much more needs to be done to stop it.”
- Jess
Egmont Group receives allegation that FIUs are abusing ML/TF powers.
I highlighted the deeply concerning allegations reported to the Egmont Group that FIUs have been allegedly misusing their powers to combat ML and TF. The Egmont Group Chair issued a statement condemning any abuse of power and urged countries to protect their FIUs’ operational independence and autonomy.
- Jess
Art dealers exploiting legislation loophole to avoid applying client due diligence measures
I totally agree with the idea that exploiting these kind of loopholes will backfire. This is a classic example of “compliance” trumping actually putting in the work to disrupt financial criminals and the damage financial crime does to our economy and society. Unfortunately I think we’ll need to see some pretty heavy fines coming out in this space before any change is seen in the art market approach to anti-financial crime practices”
- Mikey
Swiss prosecutor probes $100mil gifted to Spanish royals from the Saudi ruling family.
I found this a highly unusual glimpse into a case involving the secretive jurisdiction of Switzerland AND two royal families. There’s been a big shift in recent years with ruling families in the Gulf no longer exempt from standard KYC requirements and expected to engage with banks’ and regulators’ questions. Will prosecutors be convinced by the official explanation that this $100m payment is a thank you gift?
- Maya
Yorgen Fenech identified to be in collusion with Malta Gaming Authority to hide AML Failings
“I found this to be a really interesting read. Not only is the case a fascinating development in the wider story around the assassination of anti-corruption journalist Daphne Caruana Galizia, but it also highlights some of the AML shortfalls that we’ve seen throughout the gambling industry - little ongoing monitoring, lack of information on source of wealth/source of funds and limited AML knowledge by compliance officers.”
- Meredith
FATF release series of risk indicators to help firm identify trade-based money laundering
“FATF, in collaboration with the Egmont Group, have published a list of 35 risk indicators for trade-based money laundering across structure, trade activity, trade documentation and transactional behaviour. I think this will be very useful for combatting a common type of ML that can be difficult to design controls around.”
- Meredith
John McAfee charged with fraud over cryptocurrency
John McAfee has been charged in the US with conspiracy to commit fraud and money laundering. Gemma highlighted that he has been accused of promoting cryptocurrencies to inflate prices.
The ‘cult-like’ beauty businesses in your DMs
Josie noted further instagram fraud scams that are getting people into debt by requesting they sign up to sell beauty and health-related products for the multi-level marketing company Arbonne. One individual spent approximately £600 buying products during her time at the company, and only made £12 back!
Hushpuppi accused of helping North Korean hackers
Greg noted a development in the Hushpuppi case this week, whereby the Nigerian social media influencer may have helped North Korean hackers launder money through a Maltese bank. Unusually, the complaint filed against him also included Instagram pictures as evidence.
Tax abuse and money laundering not a victimless crime
Google outlines fight against scams
Sarkozy found guilty of corruption
Gemma has been following the Sarkozy case closely, and the big news this week is that the French ex-president has been found guilty of corruption, and has been sentenced to jail. The conviction is in relation to trying to bribe a judge in 2014 (after he had left office).
NGO brands Swiss corporate crime laws as "weak"
NGO Transparency International has branded Swiss corporate crime laws as "weak", claiming that the fines are too low, and the process within courts too opaque. Maya found this article particularly interesting, with recent charges within this space related to commodities traders linked to bribery and corruption within the Republic of Congo and Ivory coast.
Investigation Underway into CityBee Data Leak
Lithuanian police are investigating, following the leak of personal information held by CityBee, a car-sharing service. Partial details of more than 110,000 people were published, with the hacker offering full hacked data in return for payment in Bitcoin. An interesting case of partial data leaks being used to advertise for full data leaks, and something for companies with customers in Lithuania to be aware of.
Bank of Queensland Unfair Dismissal Case Highlights Fraud Risks to Employees
Colombian Cartels Finding Gold ‘More Attractive Than Cocaine’
Meredith flagged that gold is apparently even more lucrative to Colombian gangs than narcotics. Why? Its portability and the ease with which you can mingle licit and illicit gold. Kate rightly flagged that illicit mining is a huge component of environmental crime that we need to be aware of as an industry.
Hong Kong Proposes New Rules on Licensing Virtual Money Platforms
Payal noted that Hong Kong’s proposed rules on licensing virtual money platforms could encourage financial crime, according to Global Digital Finance. If retail investors were banned from trading in cryptocurrencies, as is proposed, then they may turn to unregulated platforms. The proposed rules also cover enhancements to due diligence for politically exposed persons (PEPs), to cover officials in mainland China.
China’s ‘e-yuan’ May Increase the Ability to Detect Financial Crime, at a Cost to Privacy
Jess shared an interesting piece (paywall) on China’s ‘e-yuan,’ which unlike traditional cryptocurrencies, would be centrally issued and regulated. While the ability to track individual transactions could make it easier to crack down on money laundering and corruption, concerns have been raised about the level of surveillance that would be applied to the general public.
Romance scams on the rise
Lauren highlights that sadly bank transfer fraud linked to romance scams has increased by 20% in 2020, according to UK finance.
Billions laundered through Hong Kong
Danielle noted that more than HK$8.33 billion (US$1.07 billion) conned from the victims of online, phone and investment scams was laundered through thousands of Hong Kong bank accounts last year
270 addresses are responsible for 55% of all cryptocurrency money laundering
Chainalysis reported that just a small group of 270 blockchain addresses have laundered around 55% of cryptocurrency associated with criminal activity. The study looked at a broad spectrum of illegal activity including online scams, ransomware attacks, terrorist funding, hacks so it is surprising that only a small number of addresses are used, James noted.
SFO stymied in investigating foreign companies
The UK Supreme Court has ruled the Serious Fraud Officer cannot demand evidence from companies with no ties to the UK, described as a “serious blow” to the SFO’s powers to investigate foreign companies. Greg highlighted the serious implications of this ruling, the international, cross-border nature of so much financial crime.
Queen lobbied to conceal her wealth
Ishima drew attention to an expose in the Guardian that revealed the Queen lobbied for changes to UK laws to conceal details of her private wealth. The royal family’s assets remain undisclosed and the provision in question is still in place today, exempting companies used by heads of state from corporate transparency provisions.
Nigeria bans crypto accounts
The Nigerian Central Bank has banned cryptocurrency-related transactions and accounts, claiming crypto is used for money laundering and terrorism. The NCB said the move was nothing new, and it was simply reminding banks of existing prohibitions against servicing crypto providers. Maya notes this stance is as odds with growing interest in cryptocurrency in Nigeria and Africa as a whole.
Angola goes after Dos Santos-linked assets
In a new development following the Luanda Leaks in January last year, Angola has moved to seize assets linked to Isabel Dos Santos in a Dutch court, as noted by Mikey. It has asked the court to hand over a half-billion-dollar stake in the Portuguese oil company Galp, which it says was acquired through embezzlement and money laundering.
Facebook hires its first Chief Compliance Officer
Danielle highlighted that Facebook has hired its first Compliance Officer, as the company faces increasing pressure from regulators and policy makers around the world. Some commentators have expressed surprise that a company of Facebook’s size did not have a CCO already, and wonder how much authority the position will ultimately wield.
Global Risk Report
The World Economic Forum’s Global Risks Report drew Martin’s attention last week. It highlights the 4th industrial revolution and how the focus on digitisation (accelerated through COVID-19) creates a global divide and further exacerbates digital inequalities we have already identified around the unbanked population and access to basic services.
Greg highlighted that it wasn’t a surprise how long the new President-elect took to call for a review of the U.S sanctions policy.
OFSI Change Notice published
Greg flagged that the Office for Financial Sanctions Implementation (OFSI) published a Change Notice summarising changes to the UK sanctions regime. Of note, 113 people/entities are designated under EU sanctions regulations but are not listed in the UK’s regulations and are therefore not subject to UK sanctions. The majority of these are listed on the EU’s “misappropriation of state funds” regimes.
US designates Houthi movement as foreign terrorist group
In its final days, the Trump administration imposes more sanctions on Iran and seeks to designate the Houthi movement in Yemen as a foreign terrorist group - a move the UN and others say will hinder aid and possible peace talks. Maya noted that this is an example of the potential harm caused by sanctions outweighing the possibility of meaningful political change.
FinCEN extends crypto rule comment period
Meredith highlighted that FinCEN is extending its comment period for a controversial surveillance rule that had the crypto industry up in arms. The proposals would require exchanges to store name and address information and file currency transaction reports (CTRs) for certain customers. Critics of the rule said it would be technically impossible for some projects to comply because smart contracts and author-decentralized tools do not have name or address information to provide.
Alt-Right Groups, Bitcoin and the Capitol Building Riot
Danielle found an interesting article detailing how alt-right groups involved in the riots on the U.S. Capitol Building received over $500k in bitcoin from a French donor one month prior. Whilst it is unclear to what degree the attack was planned in advance, the article details large transactions from a now-deceased computer programmer in France – showing interactions in advance and the influence of international extremist networks.
Pardons in Trumps Final Days
In the final days of the Trump administration, a lucrative market for pardons is coming to a head. Trump allies have been collecting fees from wealthy felons or their associates to lobby the White House for clemency. Mikey noted that, whilst there is nothing illegal about Trump associates being paid to lobby for clemency, it is concerning that ‘bribery’ is only mentioned once in the article – although the NYT correctly notes that any explicit offers of payment to the president could be investigated as possible violations of bribery laws.
US banks blast rule that would force lending to high risk industries.
Meredith found this article that indicates the Office of the Comptroller of the Currency (OCC), a key US regulator, is looking to impose a “fair access” rule that would force US banks to do business with energy and firearm companies. Whilst this could be seen as good practice in terms of financial inclusion, it could potentially limit a firm’s ability to set their own risk appetite to not offer services to higher risk industries that may subject them to public scorn.
Satabank KYC failures
The Maltese Financial Intelligence Analysis Unit has released a report citing that Satabank took on a portfolio of clients from another financial institution without conducting efficient KYC on the portfolio. Greg highlighted the importance of always undertaking robust KYC measures to ensure that gaps in your portfolio do not create unnecessary risk that could come back to haunt you during audits or regulatory scrutiny.
Unregulated art market crackdown in the US
The US has passed the National Defense Authorization Act 2021 this month via a senate override of outgoing President Trump’s veto on the act. The new bill includes legislation that now requires US art and antiquity dealers to comply with anti-money laundering provisions set out in the Bank Secrecy Act. This is a welcome move from the US Government in the crackdown on money laundering and other illegal practices in previously unregulated industries.
Singapore releases 2020 Terrorist Financing National Risk Assessment
MAS (Monetary Authority of Singapore) released Singapore’s Terrorism Financing National Risk Assessment for 2020, outlining key TF threats and vulnerabilities. The Assessment found that Singapore continues to be exposed to threats posed by terrorist groups both regionally and internationally, in particular, the propensity for individuals in Singapore to be radicalised and influenced to carry out TF activities. The money remittance sector poses the highest risk of being exploited for TF, due to its high volume of cross-border flows to countries that are more exposed to terrorism / TF risks, coupled with varying levels of capability to detect TF across the sector.
Covid-19: Fake NHS Vaccine Scam
Ishima highlighted this worrying article detailing a new scam surrounding the Covid 19 vaccine rollout in the UK. Criminal actors have been sending text messages containing links to a fake NHS website where potential victims are asked to submit their personal details (including bank details) in order to receive a Covid-19 vaccine. The scam is intended to target the elderly and vulnerable who are expecting to receive a legitimate vaccination in the coming year.
Money Laundering Watchdog Turns Focus to Digital Tools, Extremism:
Greg was very much in agreement with these words expressed by the FATF President, taken from his recent interview with WSJ 'You cannot make AML more effective by using digital tools only — you need trained people. (…) You need them in compliance, you need them with the supervisors, you need them with the financial Intelligence units, you need them with law enforcement.
BitGo are the first crypto company to receive a OFAC fine:
Danielle summarised that BitGo tracked IP's, "however, did not use this IP address information for sanctions compliance purposes. As a result, users located in Crimea, Cuba, Iran, Sudan, and Syria were able to create and use digital currency wallets on BitGo’s platform and engage in digital currency transactions, despite BitGo’s ability to identify the location of these users.
Central Bank of Ireland have issued a 'Dear CEO' letter about failures in AML.
The examination identified a number of failings including:
Board Oversight and Governance - failure to demonstrate Boards had taken responsibility for the implementation and ongoing oversight of AML/CFT . In many instances, AML/CFT was only included on the Board’s agenda following notification from the Central Bank of the upcoming supervisory engagement exercise.
Money Laundering/Terrorist Financing Risk Assessment - lack of ongoing and comprehensive assessment and documentation of ML/TF risks that are specific to each firm’s consumers and business activities. In a number of instances, this was exacerbated by reliance on ‘off the shelf’ risk assessment frameworks.
Anti-Money Laundering/Counter Financing of Terrorism Policies and Procedures - failure to put in place and implement firm-specific AML/CFT policies and procedures, and failure to review and update these on an ongoing basis.
Biden Expected to Put the World’s Kleptocrats on Notice
U.S. President-elect Joe Biden is expected to make a crackdown on illicit finance both at home in the United States and abroad a centerpiece of his administration, a move that could have profound implications for anti-corruption efforts around the globe.
Burner Phones and Banking Apps
Maya highlighted this really interesting read on Chinese money brokers playing an increasing role in laundering money for Mexican drug trafficking organisations, including the Sinaloa cartel - described as “the most sophisticated form of money laundering that’s ever existed”.
UEFA and Money Laundering
Josie brought to our attention eight recommendations that were made in a 2018 UEFA commissioned report. One of which compiled by the Centre for Sports Studies (Cies) asserts that the opaque nature of the transfer market provides a lack of transparency in the payment of agent commissions, allows for money-laundering alongside tax evasion schemes.
US Shell Company Ban
Last week, the Corporate Transparency Act was passed by Congress. Ishima identified that this would require corporations and limited liability companies established in the United States to disclose their real owners to the Treasury Department; thereby making it more difficult for criminals to anonymously launder money and evade tax.
Global money muling ring arrested
The European Banking Federation (EBF), FinTech FinCrime Exchange (FFE), INTERPOL and Western Union were all involved in an investigation that identified 4 031 money mules alongside 227 money mule recruiters, and 422 individuals were arrested worldwide.
FATF Questionnaire
Maya highlighted a questionnaire launched by FATF to seek feedback from the private sector about challenges on cross-border payments and how to address them without compromising AML/CTF safeguards. This includes banks, FinTechs, PSPs, money transfer services providers, etc.
Full digital license awarded to Grab-Singtel and Sea
The Monetary Authority of Singapore (MAS) awarded digital full bank licences to the Grab-Singtel consortium and tech giant Sea, on Friday. Payal notes that this was anticipated and is hopeful it will open up the financial industry.
Ponzi scheme crackdown
Payal was intrigued by the massive PlusToken Ponzi scheme crackdown where crypto assets worth more than $4.2 billion have been seized by Chinese police
FCA probes Airbnb
Rob highlighted that the FCA is investigating Airbnb’s money laundering and counter-terrorist financing controls after alerts have been raised concerning the UK division.
Google removes five rogue digital lending apps
Data-sharing in Belgium
Jess welcomed Belgium’s biggest banks proposed system to share suspected money laundering information. However, it begs the question why it takes so long for countries to appreciate the benefits of data-sharing when it comes to fighting financial crime?
Malicious uses of AI
UK’s annual SARs report
The UK FIU’s Annual SARs Report was published last week and the team was discussing reasons behind a sharp rise in SARs filed by challenger banks and other fintech firms with Kate wondering to what extend it was impacted by low value transactions SARs, which could be avoided if the 250 GBP exemption was expanded beyond deposit-taking institutions.
The state of tax justice
Countries are losing over $427 billion in tax each year to international corporate tax abuse and private tax evasion, according to “The State of Tax Justice 2020" report published by the Tax Justice Network, highlighted by Maya. It also provides an annual snapshot of countries’ rankings on the Tax Justice Network’s Corporate Tax Haven Index and Financial Secrecy Index and their vulnerability to illicit financial flows as tracked by the Tax Justice Network’s vulnerability tracker.
Tracing Monero
Danielle was intrigued by a report that crypto analytics firm CipherTrace had filed two patents for technology capable of tracing transactions for privacy coin Monero (XMR). While Bitcoin is still the preferred medium of exchange for many darknet market users, there has been increasing acceptance for privacy coins like XMR. Capabilities for CipherTrace’s tracing tools have not yet been confirmed so watch this space.
Gemma shared that the brother of the deceased Colombian drug lord and a Kalashnikov-wielding Swedish executive known as “El Silencio” are suing Klarna, Europe’s most valuable fintech company, in the US for unfairly withholding €400,000 in cash owed for Escobar branded mobiles phones sold via the Klarna platform.
ING-owned Payvision branded as the “Netherlands Wirecard” by EFRI
Lauren spotted this article highlighting the Austrian not-for-profit European Funds Recovery Initiative (EFRI) is seeking €7 million in restitution for victims of boiler room scams processed by ING-owned Payvision, a company EFRI describes as the “Netherlands Wirecard” and a “huge payment service provider for the scamming industry”.
22 Hongkongers arrested in crackdown on city’s first FinTech bookmaking and money-laundering racket
African conflict gold being laundered in Dubai
The Sentry, an investigative and policy center which traces dirty money connected to African warlords, has published a report on how the UAE has become the foremost launderer of gold from conflict zones in Africa. All companies buying gold from Dubai are urged to increase their due diligence to prevent conflict gold entering mainstream supply chains which caught Payal’s attention.
Singapore Consultation Paper on Notice on Identity Verification
Payal also shared with us that The Monetary Authority of Singapore has issued a consultation paper on the types of information required for non-face-to-face verification of an individual’s identity. These proposed requirements come against the backdrop of rising impersonation scam cases, and seek to address the risks arising from theft and misuse of an individual’s personal ID.
Hong Kong police officer suspected of money-laundering
Payal flagged that a 23-year old Hong Kong police officer was among 11 people arrested on Thursday on suspicion of running a money-laundering syndicate involving more than HK$200 million (US$25.8
million) since last year. Transactions ranging from HK$5 million to HK$70 million were recorded in every bank account tied to the case.
Goldman Sachs leaving Top Executives on the hook
As part of the settlement with U.S. authorities for the 1MDB scandal, Goldman decided not only to claw back compensation from past senior leaders but also to penalize the compensation of current executives. Jess noted that it was good to see some personal accountability, with Goldman Sachs showing that personal liability for corporate fines may ensure bankers take greater care.
FinCEN wants to clamp down on small payments crime
FinCEN published a proposal with the Federal Reserve to require banks and others to report on potentially suspicious transactions with smaller values. Concerned that money transfers of only a few hundred dollars are helping criminals, Greg noted that the proposed threshold of $250 is much smaller than the current $3,000.
EU sanctions on Belarus leader Lukashenko
The EU added Belarusian leader Alexander Lukashenko and his son Viktor to its sanctions blacklist of Belarus officials. Ishima flagged that 15 were added to the list on Friday, bringing the total to 59, including KGB secret police chief Ivan Tertel and President Lukashenko's chief of staff Igor Sergeenko.
Calls for banks to reimburse victims of computer takeover scams
Consumer group Which? has called on banks to refund victims of computer takeover scams. Action Fraud figures show £16 million was defrauded from consumers using this method last year. Rachel and Lauren found this article interesting and discussed whether Banks should be responsible for reimbursing victims.
Over 2.5 million lost to British cryptocurrency pyramid scheme
Jess spotted this article last week highlighting Lyfecoin, a type of cryptocurrency, to have turned out to be a complex scam. Hundreds of people invested around £2,500,000 into the pyramid scheme scam, encouraging their friends and family members to participate in a similar vein to the OneCoin scandal. A stark reminder that if it look too good to be true, it probably is…
Financial Crime Country Lists in a Fragmenting World Order
RUSI’s Tom Keatinge produced this highly interesting paper discussing how popular naming and shaming countries with poor financial crime standards is. Tom goes on to say that those promoting these lists must work harder to exclude politics and prove their integrity and value.
Singapore stops issuing S$1,000 notes next year.
Payal shared that The Monetary Authority of Singapore (MAS) will discontinue the issuance of the S$1,000 note from Jan 1, 2021. This is a pre-emptive measure to mitigate the higher money-laundering and terrorism-financing risks associated with large denomination notes. Large-denomination notes allow individuals to carry large values of money anonymously, and thus can facilitate illicit activities.
Art Market Sanction Risk
The US Department of Treasury has released an advisory notice stating they’re concerned that the art market has particular vulnerabilities to sanction evasion. Mikey notes that it’s good to see markets that have considerable financial crime nexuses being addressed by the US Treasury and hopes more controls are brought in to help tackle this issue.
Mysterious 'Robin Hood' hackers donating stolen money
A hacking group is donating stolen money to charity in what is seen as a mysterious first for cyber-crime. Posting on the dark web, the hackers allegedly want to ‘make the world a better place’ and published receipts for $10,000 in Bitcoin donations to two charities. Rachel found this story intriguing and puzzling, both morally and legally. Rachel also found it interesting that charities can receive donations through bitcoin.
Berkshire Hathaway to pay $4.14 million to settle violations
JP flagged another violation of US sanctions with Berkshire Hathaway agreeing to pay $4.14 million to settle allegations that a Turkish subsidiary, Iscar Turkey, violated sanctions against Iran. The Turkish entity allegedly sold shipments to two Turkish distributers, knowing that the goods would be shipped to a distributer in Iran for resale – including to the Iranian government.
EU imposes sanctions for cyber-attack on German Parliament
The EU imposed targeted sanctions on two Russian GRU officers and the GRU’s military intelligence unit 26165 – codenamed APT28 and Fancy Bear – for their involvement in a cyber-attack against the German Parliament in 2015. Jess thought it interesting that the UK will also enforce these targeted sanctions, confirming alignment with the EU on their approach to Russian sanctions post-Brexit.
FCA and PRA slap Goldman Sachs with £97m fine
The FCA and PRA awarded Goldman Sachs a £97million fine for their involvement in the 1MDB scandal. Mikey noted that it was good to see a global enforcement approach with the FCA/PRA fine being part of a total $2.9billion settlement involving the UK regulators, the US Dept. of Justice, and the Monetary Authority of Singapore.
'Golden passports': EU launches legal action against Cyprus and Malta
This story caught Maya’s attention following last week’s news of an undercover sting operation in Cyprus and the subsequent scrapping of the ‘golden passport’ scheme. Maya noted that the EU is now launching legal action against Cyprus and Malta, claiming that the passport schemes were illegal and undermined EU citizenship.
Cyprus scraps “Golden Passport”
Cyprus has scrapped its golden passport scheme after an undercover operation catches officials offering support to applications from fictitious investors with criminal records. Danielle found this story particularly interesting as golden passports have been an area of concern for many for a number of years now, and it appears that Cyprus has unfortunately learnt this the hard way.
Textile money laundering ring with fast-fashion links
Fast fashion has been under the spot light a lot recently, which is why this story caught Maya's attention. A group of textile companies, all based in Leicester, have been involved in money laundering and VAT fraud. Some of the companies have large firms such as BooHoo within their customer base. Maya raised a good point here in that this could be used as a good example of why geographical risk is important when it comes to customer risk assessments.
Marina Bay Sands (MBS) have hired a law firm to investigate suspicious transfers
Payal noted this story as one of many involving gambling firms within the region. Over $1bn in transfers are being investigated, as gamblers money had been moved to third parties without their knowledge. No comment has been made yet as it is an ongoing investigation, but it seems to be one to watch.
Vatican fraud
The Vatican has been involved in an accusation of embezzlement and fraud. Ishima notes there are a number of rumours mixed with facts within this story, but it appears an individual who was wanted under an Interpol warrant, has been arrested after she was demoted due to embezzlement claims. The claims were related to a payment of 500,000 euro to the individual, from a cardinal. Both parties claim no wrong doing.
New sanctions for Russian poison suspects
The EU has imposed sanctions on six senior Russian officials, and a chemical research centre, over the poisoning of anti-Putin campaigner Alexei Navalny. Rob has been following this story, and noted it's always good to highlight these stories to ensure that companies sanctions lists are up to date. The Kremlin have denied any involvement in the poisoning.
Unexplained Wealth Order in action
Maya celebrated the use of a UWO which saw a suspected money launderer giving up £10m worth of property.
DoJ enforcement framework for cryptocurrency
Mikey highlighted how it is nice to see that the DOJ have acknowledged it's a promising technology and the risks need to be better understood by firms in order to properly manage them.
Cayman Islands removed from EU Tax Haven Blacklist
With the Cayman Islands only being listed in February this year, Greg raised an interesting point as to whether this was due to the list is so effectual that blacklisted countries take immediate actions to be remove from it, or the whole mechanism is broken and ineffective.
Eat Out to Help Out Fraud
Ishima found how a Papa John’s franchisee instructed staff to process thousands of fake meals under the eat out to help out scheme where £250,000 of taxpayer cash was fraudulently claimed in non-existent meals.
Majority of regulated firms breaching fifth money laundering directive
Jersey National Money Laundering Risk Assessment
Greg drew our attention to the publication of Jersey’s National Risk Assessment of Money Laundering, which highlights that the threat of financial crime in Jersey by overseas criminals is “significant.” This report is the first public report of its kind in Jersey.
BVI Ownership Register
FinCEN Advisory on Sanctions Evasion and Ransomware
The FINTRAIL team has also spent some time reviewing the latest FinCEN advisory on the potential sanctions risks involved in facilitating ransomware payments. It highlights OFAC’s designations of malicious cyber actors and those who facilitate ransomware transactions under its cyber-related programme. Most importantly, it highlights that facilitating ransomware payments on behalf of a victim may indeed violate OFAC regulations.
Money Mule Numbers on the Rise
Given our work on money mule awareness, we were interested to see The Telegraph reporting that record numbers of students were being targeted to become money mules. In our previous posts related to COVID-19, we projected that money mule rates were likely to rise alongside economic uncertainty, and it looks as though that is beginning to prove true.
FinCEN Files Confirm the Elephant in the Room
The discussion around the FinCEN files continues; Jess enjoyed this article by former U.S. Federal Agent Robert Mazur, who spent years as an undercover money launderer. He believes the current anti-money laundering system is a “failure” but ends on a positive note that hopefully the leaks will encourage a proper review.
Westpac settles AUSTRAC money laundering case with $1.3 billion fine
Following up on a case previously highlighted by Lauren, the Australian regulator AUSTRAC has imposed a record $1.3 billion penalty on Westpac in relation to more than 23 million alleged breaches of anti-money laundering laws, involving possible child exploitation. Observers have criticised the fact no charges have been brought against Westpac’s senior management and directors, meaning no one has been held personally responsible for the failings.
‘My name was used to steal a government Covid Loan’
A BBC investigation has found criminals are setting up fake businesses on an “industrial scale” in order to take out loans they don’t intend to repay through the Bounce Back Loan Scheme. Maya was astonished that the banks hadn’t identified these were brand new businesses with no trading history, which should have been uncovered through the most basic KYC checks.
EU proposes first set of rules for crypto assets
The European Commission has proposed a new regulatory framework for cryptocurrencies, acknowledging cryptocurrencies as financial instruments. Receiving approval from any one national regulators will allow a crypto-assets service provider to operate across the EU, turning the EU into the largest and most significant regulated market worldwide.
Sim-swap fraud is on the rise!
With an increased number of financial products requiring mobile devices, sim-swap fraud continues to pose a serious risk to financial institutions as well as customers. Greg notes how important it is that the public is continuously reminded about the risk and steps they may take to mitigate it.
Streamlining the licensing requirements for money transmitters.
A common issue for US payments firms: the burden of multiple state examinations. Megan found this announcement from the Conference of State Bank Supervisors promising.
The FCA scraps half of its ML criminal probes.
Kate highlighted a freedom of information request which showed that the FCA has closed seven of its 14 criminal investigations, further reducing the likelihood of an inaugural criminal prosecution.
Biometric Bribery.
This is an interesting investigation from the OCCRP into alleged bribery and corruption against a Belgian passport and identity card maker. Mikey is unsurprised that they’ve targeted countries with already high corruption rates and unstable regimes to make profit.
Transliteration: a weapon allowing the creation of multiple identities.
An insightful quick-read that Lauren found which talks about how transliteration of non-standard English names, e.g. Cyrillic names, can be weaponised to create multiple identities which can create issues with ascertaining true customer identity, and the associated risks.
Treasury and Delaware Sign Pact to Boost Sanctions Enforcement
Meredith highlighted this recently signed memorandum of understanding between the OFAC and the Delaware Department of Justice. Given Delaware’s history/reputation, this is a really interesting development that will lead to more aggressive sanctions enforcement against companies with concealed ownership.
Police and banks to extend fraud prevention scheme to online and telephone banking
The Banking Protocol is an initiative between the police, banking institutions & Trading Standards aiming to identify vulnerable victims who are in the process of being defrauded and to intervene to prevent these crimes. Rob was wondering how its planned extension to cover online and telephone banking may affect FinTechs anti-financial crime functions.
Cyber-related Designations; Foreign Interference in U.S. Election Designations
Fake driving licences offered online for £600
Follow The Money
What happens to funds stolen during large scale cyber heists? Greg suggested the “Follow The Money” report commissioned by SWIFT as worth a read. It explores different techniques used by criminals to launder funds (whether it is cash from attacks against ATM systems or electronic funds from attacks against high-value payment systems).
UAE makes it mandatory for hawala service providers to register
Greg posted this progression in the UAE where they have made it a requirement for hawala payments to register. He raised the question as to whether this would reduce this channel being used to move illicit funds?
Head of New York Medical Clinics Sentenced to 156 Months in Prison for Money Laundering and Health Care Kickbacks Scheme
Gemma Rogers, FINTRAIL founder, spotted this recent money laundering scheme where this senior professional in the health care market stole millions of dollars for nearly a decade.
Whilst not directly a FinCrime topic, we all found this update from Ishima interesting. Does new technology mean new opportunity for criminals?
Up to £3.5bn furlough claims fraudulent or paid in error
Rob identified this depressing article that I am sure lots of people have seen already. Not surprising that this scheme suffered from some sort of abuse but the numbers are a lot higher than we would have anticipated. What went wrong?
Hong Kong financial firms step up compliance hiring amid U.S. sanctions, security law
This article, found by Meredith, highlights some of the challenges firms in this region are facing as they ramp up their hiring.
Organised Crime Groups getting into sport
If you like sport and you like corruption this EUROPOL report shared by James is for you. Whilst fraudulent betting and involvement of organised crime groups in sports corruption are not new developments, corruption is increasing in the EU. Rachel also noted that this links to the collapse of Wigan earlier this year
Crown Resorts scrutinised for AML failures
Danielle shared this story on Crown Resorts in Australia who continue to be scrutinised for their lack of anti-money laundering controls, as their chief legal officer has stated their AML teams did not monitor two company accounts suspected to be used to clean dirty money. The NSW Independent Liquor and Gaming Authority’s probity inquiry into Crown had earlier heard that the ANZ and Commonwealth banks shut down the accounts after Crown patrons used them to make a string of suspicious cash transactions totalling hundreds of thousands of dollars.
Fraud continues to be rife
HMRC have paid a total of £473,000 to informants who have helped identify tax evaders within a 12 month period up to April 2020. They are also currently investigating 8,300 cases of furlough fraud
North Korean ATM Cash-out Threat
Corruption in Angola
The son of Angola's former president has been jailed for five years for fraud after $500m (£378m) was transferred from the National Bank of Angola to an account in the UK. Mikey shared this article reminding us that sometimes the SAR regime is effective (if you're dealing in 500 million dollars worth of fraud).
Trumps advisor arrested for fraud
Meredith shared this breaking story with the team. It revealed that Steve Bannon has been charged with fraud over his fundraising campaign to #buildthewall.
A good reminder that PEPs can also pose other FC risks outside of just B&C.
Barclays declare huge rise in scams
FinCEN release report on US PEP compliance.
Kate brought this report to our attention with some thoughtful takeaways. The report sends mixed messages and does not align with FATF recommendations, for example; the report states “There is no regulatory requirement in the CDD rule, nor is there a supervisory expectation, for banks to have unique, additional due diligence steps for PEPs." It also goes on to say they're not necessarily high risk or subject to EDD, which goes against the FATF guidelines.
Alexei Navalny’s fight against corruption
Meredith flagged an OCCRP report that offers a timely look into the anti-corruption investigations spearheaded by Russian opposition politician, Alexei Navalny, who is still fighting for his life after a suspected poisoning. While not quite the same as fully independent, investigative journalism, Navalny’s anti-corruption videos are still considered to have made important headway in uncovering the true extent of corruption in Russian politics.
Terrorist financing cyber-enabled campaigns
With judicial authorisation, U.S. law enforcement agencies seized the infrastructure of the al-Qassam Brigades website and subsequently covertly operated it. Greg highlighted that during that covert operation, the website received funds from persons seeking to provide material support to the terrorist organisation, however they instead donated the funds to bitcoin wallets controlled by the United States.
Additionally, another website selling COVID-19 protective gear run by an ISIS facilitator was also seized, showing an ongoing nexus between terrorist financing and criminal activities.
Tea at the Ritz
Afternoon tea goers at the Ritz have been facing social engineering scams, with fraudsters pretending to be the hotel and then their bank! This seems to come from a breach in the hotel’s reservation system. Meredith wonders if this will become a more common type of breach as more and more places rely on online booking.
Hezbollah’s global crimes
Maya brought our attention to a newly published in-depth project mapping Hezbollah’s global activities over the last four decades. It illustrates the level of overlap between financial crime types and how unhelpful it is to think of organisations like Hezbollah purely in terms of terrorist activity - they’re involved in drug trafficking, money laundering, arms trading, smuggling, sanctions evasion, corruption, and virtually everything else you can think of.
Fraudsters victimise job seekers
With more people being made redundant, job scams are on the rise and becoming more sophisticated as showed by this example from Canada. Lauren identified that the aim of the scam was to use unsuspecting people as money mules. Victims would receive money from compromised accounts and, thinking that they’re doing legitimate work, convert it into cryptocurrencies.
Purplebricks fined for breaching ML regulations
Danielle noted an interesting perception here by estate agent Purplebricks of AML/CTF controls and ID&V being too clunky. This article alludes to the issue of Purplebricks resorting to collecting lots of documentation rather than using ID&V providers to do verification electronically. However, since this fine, Purplebricks have said they have conducted a full review of their processes and have significantly improved their compliance procedures.
Ever heard of “the emptying blacklist paradox” or the “Seychelles effect”?
This interesting study from ECON Committee tracks the history of ML country blacklisting and discusses different ways countries are being rank today. Greg found this study particularly interesting as it argues that country blacklists often end up as “small island lists” which do not touch upon the bigger problems caused by wealthy countries.
HM Treasury “Anti-money laundering and counter-terrorist financing: Supervision report 2018-19”
AML fines rise in first half of 2020
First reported by the FT, Lauren noted that within the first half of 2020 $706 million in AML monetary penalties were issued in the first six months of 2020, compared to a total $444 million in such fines imposed for all of 2019. The article states that these fines were often caused by the same mistakes being repeated, such as insufficient due diligence on new customers, and poor transaction monitoring.
Charity Challenges Terrorism Designation
Banking charities has been a hot topic for the FINTRAIL team, and Greg flagged an interesting article on Islamic Relief in relation to that conversation. A few years back, Islamic Relief were designated as a terrorist organisation by Israel - the designation being backed by information described as “confidential intelligence.” Six years later, the charity is now challenging this decision in court in order to restart its aid work in the occupied West Bank.
The Wirecard Scandal’s Plot Thickens
Gemma brought our attention to a Kroll investigation into FBME, which exposed problems with its card services division. The investigation was linked to Wirecard via a key client, who was accused of helping to facilitate the alleged payments fraud.
COVID-Relief Funds Used for a Lamborghini
JP pointed us toward the last case of Paycheck Protection Program (PPP) fraud in the US. According to the US Department of Justice, a Florida man has been arrested for fraudulent obtaining $3.9 million in COVID-relief loans applied for on behalf of different companies and using some of the funds to buy himself a 2020 Lamborghini Huracan.
Football Club Scandal
The UK was not lacking in newsworthy fraud cases either! Ishima drew our attention to a Stevenage FC academy recruiter who used his position of trust to divert £15,000 in funds intended for children’s kit into his own bank account. He then gambled away the funds. He managed to do this by giving the parents his own bank details rather than those of the club.
Potential US UBO Reforms
Watch this space! Meredith found amendments buried within the latest US defense authorization bill that would require companies to disclose their true beneficial owners. Although the register wouldn’t be public, it would still be a step in the right direction provided the amendments survive the Senate.
Dear CEO…
Rob commented on the striking differences between the recent FCA’s “Dear CEO” letter and the previous E-Money sector Thematic Review. The letter highlights some serious shortcomings in firms’ systems and controls including a lack of an effective business-wide AML risk assessment or an absence of customer risk assessments.
London Laundromat
The City of London police has recently seized £2 million profit of Italian mafia held in UK bank accounts. Greg was looking at the Companies House filings of some of the businesses involved for potential red flags. The company has published dormant accounts since 2012 but somehow millions were flowing through its bank account.
Tracing The Twitter Hack
Danielle continued to follow the Twitter hack story from the previous week. Our friends at Elliptic have produced some interesting diagrams and analysis of where the cryptocurrency has moved since the initial attack. Their initial findings show that Wasabi wallet has received some portion of the funds.
Finding the discrepancies between the real and fake FCA register
Ishima was on a mission to find discrepancies between the real and fake FCA register, before the latter was taken down.
Jan Marsalek’s double life
Gemma is keenly following the Wirecard story, which continues to develop and take more unexpected twists. Wirecard COO Jan Marsalek has ‘vanished’ with an international warrant issued for his arrest. It has now been revealed that he is a ‘’person of interest’ to three Western intelligence agencies, who are investigating Marsalek’s association with Russia’s military intelligence directorate, the GRU.
UK’s Overseas Territories to help improve global corporate transparency
Greg was pleased to note another small step towards transparency of beneficial ownership with an announcement from the UK’s Foreign & Commonwealth Office that eight British overseas territories are to open their company registers to the public by 2023. The news has been praised by groups like Transparency International, although they note the significant exception to the list is the British Virgin Islands, which is still resisting calls to make its register public.
Taxpayers to lose billions to virus fraud
Also highlighted by Greg, a report by the Policy Exchange think tank has warned that taxpayers could lose billions of pounds to coronavirus fraud, noting government measures were rushed through and were thus vulnerable to scams. A 57-year-old man from Solihull has become the first person to be arrested in connection with an alleged fraud of the government furlough scheme, after fraudulently claiming £495,000.
Review launched to boost UK Fintech sector
Meredith highlighted that an independent review has just been launched to support FinTech growth and to establish priority areas for the industry, policy makers and regulators to further explore. It will be headed by the former CEO of Worldpay. The report is expected to be completed early next year.
Twitter’s massive attack
Twitter has revealed that its own employee tools contributed to last week’s unprecedented hack that resulted in takeovers of numerous high-profile accounts - clearly showing the importance of guarding against social engineering. Danielle has been following reports on how government agencies, private companies and journalists have all been tracking the bitcoins received by the hackers.
The Perfect Art Heist
Gemma posted this cartoon based on a real story called the Perfect Art Heist using the same interception methods. Always challenge a change in beneficiary.
Calls for ‘Loots Boxes’ to be Regulated.
The House of Lords Gambling Committee is calling for ‘loot boxes’ (in-game purchases), which are not currently considered to be gambling, to be regulated urgently in this article from Ishima.
As a side note: as we always try to look at the surrounding socioeconomic factors leading people down a particular path it’s actually quite interesting to note that Jonathan Peniket’s trigger was his mums cancer diagnosis.
Interpol finds weaknesses in African mobile money
Mobile money has proven to be a positive force for financial inclusion and economic development in many African countries. Unfortunately, the rapid pace at which its infrastructure has been developed, has enabled criminals to “exploit weaknesses in regulations and identification systems” and commit mobile money-enabled crimes - states the recent Interpol report pointed out by Greg this week.
Bank of Lithuania imposes fine for violations against financial crime
Interesting to see the Bank of Lithuania flexing their enforcement muscle against an EMI. Rob identified that the key issues were:
- CRA not categorising higher risk customers
- weaknesses in CDD
- weaknesses in ongoing monitoring of relationships and transactions
- weaknesses in PEP controls
UK Imposes Sanctions Against Human Rights Abusers
The Wirecard Scandal
We have all been gripped by the unfolding of the Wirecard story over the last week. Markus Braun, ex-CEO, was arrested early last week, on Thursday Wirecard filed for insolvency, and then on Friday the FCA ordered Wirecard UK to cease all regulated activity. This obviously had, and continues to have, a huge knock on effect to those Fintechs that rely on Wirecard, like Anna Money and Curve to name just two.
The Wirecard Fallout
The number of fintechs relying on partner banks, or Banking as a Service (BaaS) platforms, has increased in recent years. With the news about Wirecard, there are now questions about whether this trend will continue. It is likely that confidence in the fintech sector might weaken, and more fintechs might try to become directly licensed. That said, regulatory scrutiny of BaaS platforms will probably increase.
The collision of Big Tech and Fintech
On the theme of partner banks and BaaS platforms, it is likely we will see more tech companies that have not traditionally been involved in finance starting to play in the space, as demonstrated by the Apple Card. Last week, Payal told us that Brazil’s central bank effectively suspended a newly-launched system allowing users of Facebook Inc’s WhatsApp messaging service to send money via chats. The central bank said in a statement that rolling out the service without previous analysis by the monetary authority could damage the Brazilian payments system in the areas of competition, efficiency and data privacy. As big tech and finance collide, regulators may again start to pay even more attention to who is doing what when it comes to consumer finance.
Organised Criminals
Stepping away from Wirecard, Rob shared this article about fraud across Europe. It is fascinating to read about how organised the criminals are, and how collaboration amongst those trying to stop crime will help. From identity verification, to in-branch services, to transaction monitoring, the closer that these teams can work together, the greater chance there is of noticing and stopping crime.
The impact of tax evasion
And finally this week, Maya explained that, although tax evasion can seem like a ‘dry’ financial crime, the impact on developing economies is huge. The adoption of fintech products could be game-changing: as more people and businesses move from cash to digital products, it becomes harder to conceal and under-report income
Commerzbank faces FCA Fines
Another week and another bank fined for AML failings. This time its Commerzbank AG (London Branch) who have been fined £37,805,400 by the FCA for failing to put adequate AML systems and controls in place between October 2012 and September 2017.
Greg summarised the three particular issues identified by the regulator:
- Failure to conduct timely periodic due diligence on its clients
- Long-standing weaknesses in its automated tool for monitoring ML risk on transactions for clients
- Lack of adequate policies and procedures in place when undertaking customer due diligence on clients
EY misled by Wirecard
We have all been gripped and to be honest quite shocked to watch the Wirecard story unfold. Payal summarised that Wirecard’s Singapore office used forged and backdated contracts to inflate revenue, and that staff appeared to conspire to fraudulently inflate sales and profits at its Dubai and Dublin subsidiaries and potentially mislead EY. Wirecard had claimed that the missing cash flagged by EY was supposed to be held in two Asian banks. But the banks in the Philippines — BDO and BPI — said that Wirecard was not a client and alleged that documents had been falsified.
The emotional toll of financial crime
Watchdog report slams DEA's money-laundering operations
It is not very often we get a glimpse into covert operations of law enforcement agencies. Greg shared this recently published audit from the U.S. Justice Department’s in-house watchdog is a super interesting read. According to the watchdog the Drug Enforcement Administration laundered tens of millions of dollars in the course of drug trafficking investigations over the past decade without complying with laws governing such operations.
People’s Bank of China to Crack Down on Cross-Border Gambling Funds
Payal shared an update from The People’s Bank of China, who announced that it was recently in talks with other Chinese government departments on combating the “cross-border” flow of gambling funds. Deputy governor of the bank, has called for enhanced official efforts on measures to tackle money laundering
Westpac worries deepen on child abuse allegations
Lauren highlights that suspicions have been raised even higher with the Westpac case regarding the links to child abuse transactions by known paedophile networks in the Philippines and Southeast Asia.
CBA targets abusive messages through online banking
Abusers are always on the lookout for any new ways (paywall) to harass their victims, including using messages accompanying peer-to-peer transactions (especially if they have already been blocked by victims on their phones or social media accounts). Greg notes that it is good to see some banks taking a stand and protecting their customers from harassment and intimidation. (non-paywall)
President Trump Backs Sanctions Targeting International Criminal Court
Natasha points out that financial sanctions are meant to be one of the tools for promoting human rights. How can you justify using financial sanctions to target the International Criminal Court? The ICC began its work in 2002 as a “court of last resort” for victims of genocide, war crimes and other atrocities. The U.S. has never been a party to the ICC and often has viewed it as a symbol of unjust interference in American affairs. Trump’s latest threat to impose sanctions really escalates the hostility.
Philippines AMLC enacting measures in an attempt to prevent inclusion on the FATF gray list
Payal spotted an article which states the Philippines’ inclusion in the grey list will result in an additional layer of scrutiny from regulators and financial institutions, thereby increasing the cost of doing business; delaying the processing of transactions; and blocking the country’s road to an “A” credit rating.
Hong Kong Monetary Authority has released the third issue of RegTech Watch
James flagged that the HKMA has released the third issue of RegTech Watch which focuses on the potential application of technology in supporting the effective implementation of Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) measures. It includes a summary of 4 use cases to assist banks to adopt RegTech to enhance risk management and regulatory compliance; Remote Account Opening, Transaction Monitoring, Robotic Process Automation (RPA), Network Identification.
FCA bars Cypriot firms that used unauthorised celebrity endorsements
Highlighted by both Gemma and Greg, the FCA took action against 4 Crypriot investment firms who were offering high risk contracts for difference (CFDs) to UK investors. Their passporting licenses were removed, which is the first move of it's kind in the UK.
Regulators May Punish Deutsche Bank for Its Jeffrey Epstein Ties
The ongoing Jeffery Epstein case enters the world of financial crime as banking regulators have spent months investigating Jeffrey Epstein’s dealings with Deutsche Bank, which lent money to the financier and held dozens of accounts for him until shortly before he died. James points out that whilst Deutsche Bank are the centre of attention at the moment, other bankers and FI's are being scrutinised too.
Singapore’s Marina Bay Sands casino faces money-laundering probe
With a profit margin ranging from 53 per cent to 56 per cent in the three years ending in 2019, Marina Bay Sands is among the most profitable integrated gaming resorts in the world. Payal highlights this article and that they are now being probed by the US Department of Justice over whether anti-money-laundering regulations were breached in the way it handled the accounts of top gamblers. also faces a probe in Singapore by the Casino Regulatory Authority into its money transfer policies.
Non-Resident Banking & AML in Poland
Greg flagged that an investigation has been initiated in Poland in connection with “transactions carried out on bank accounts for selected foreign entities.” This led us to wonder whether, after the decimation of banking services for non-residents in the Baltics, illicit actors were exploring new jurisdictions.
North Korean Sanctions Evasion
Payal brought our attention to the largest ever North Korean sanctions evasion case brought by the US government - 28 North Korean and 5 Chinese individuals were charged with facilitating more than $2.5 billion in illegal payments for the DPRK’s nuclear weapons programme. Funds moved through a complex network involving China, Russia, Libya and Thailand.
Digital Banking is Here to Stay
Exciting news for the FinTech sector in the US! Gemma shared an article showing that there had been a 200% increase in mobile banking applications in the US during the month of April and only 40% of individuals surveyed were expecting to resume using branched-based services post-COVID-19. It looks like the shift to digital banking is here to stay.
1MDB Trials Continue
Greg brought a new court case to our attention that we’ll be closely following over the coming weeks! The money laundering reporting officer from Coutts & Co has been brought to trial in Switzerland in relation to a $700 million transfer from 1 Malaysia Development Berhad (1MDB) to an account controlled by Low Taek Jho, the alleged mastermind behind the 1MDB bribery and corruption scandal.
Nigerian Crime Ring
Rob found this article from the US which highlights how organised criminality is looking to exploit the current Covid-19 crisis. As FINTRAIL have previously mentioned the risk of vulnerable people being drawn in to acting as money mules has increased during Covid-19 and facilitates scams at the scale of this reported fraud.
The ICO has given up
Compare and contrast the Information Commissioner’s Office to the FCA and PRA who Gemma points out are still running, supervising and scrutinising firms, which is particularly vital at a time when risks of financial/prudential (and indeed security) breaches are higher.
First Data to settle with the Federal Trade Commission
Cryptocurrencies and Terrorist Financing
Danielle identified an interesting short fact checking piece on some recent reports linking cryptocurrencies to terrorist financing. Probably too often commentators jump to early conclusions and the media loves sensationalist headlines.
Luxembourg faces Legal action
Meredith highlighted the potentially highly significant story of the EU starting legal action against Luxembourg for allowing firms to cut their tax burden beyond EU standards and for failing to implement 5AMLD ( more than half of EU member states are also facing legal challenges). EU legal action has historically helped push states forward to implementing more robust AML regimes, so it will be interesting to see how this transpires and what it will mean for Luxembourg’s anti-financial crime efforts.
Westpac V AUSTRAC
Payal is excited to see how the case between Westpac and AUSTRAC pans out, particularly Westpac’s line of defence in which it claims its deficiencies were technical and IT-related, not systemic compliance failings. The bank is seeking to use subtle deficiencies in Australia’s AML law to fight its corner. A case that could have repercussions for many other financial institutions in the future.
Money Laundering not slowing in the Gambling sector
The UK Gambling Commission has issued a reminder to all its regulated businesses about the potential increased risk of money laundering and terrorist financing during the COVID crisis. As Rob pointed out, this is important as gambling seems to be one sector where sufficient volume has remained (or even increased) to disguise meaningful money laundering activity.
Concerns for UAE financial framework
Transparency International has published a fascinating piece following the Financial Action Task Force (FATF)’s recent report on the UAE. By FATF’s normal standards, TI found the report “damning, to say the least”. As Maya highlighted, this raises serious questions and concerns as the UAE seeks to position itself as the regional hub for fintech, and more work is clearly needed on the country’s overall financial crime framework.
Featurespace Funding
Gemma was pleased to see this story of investment in anti financial crime tooling at this challenging time - Featurespace, a startup that provides AI software to combat fraud and money laundering, has raised £30m in funding to drive its next phase of growth.
FCA set out expectations regarding FinCrime systems and controls during coronavirus situation
The expectations from the FCA that firms should not seek to address operational issues by changing their risk appetite caught Greg’s attention. For example, firms should not change or switch-off, current transaction monitoring triggers/thresholds, or sanctions screening systems, for the sole purpose of reducing the number of alerts generated to address operational issues.
JPMorgan Extends Banking Services to Bitcoin Exchanges
Gemma found this WSJ article (paywall) particularly interesting as JPMorgan were one of the first banks to come out and criticise crypto back in 2017, saying it was a fraud.(non-paywall)
Detecting Criminal Investment in Real Estate
Danielle and Greg were discussing this piece on detecting criminal investment in Real Estate by applying semi-supervised machine learning to property data. Super interesting how you could attempt to identify criminal property without need of looking into financial statements.
EU poised to blacklist Bahamas, Mauritius and Panama for money-laundering
FORM3 and BARCLAYS enables access to the SEPA Instant Payment Scheme for FinTechs, with Ebury as the launch client.
An exciting development for the sector. The delivery of this model allows FinTechs to fully benefit from the advantages of real-time payment processing (such as 24/7 non-stop service and end-to-end processing in under 10 seconds). “Directly connecting to SEPA Instant without the need for a Central Bank brings real-time payments to new banks and payment providers”
Which? Scammers left to run riot on social media
Lauren thought that this recent article on reporting from Which? where they discovered 50 scam profiles, pages and groups across Facebook, Twitter and Instagram with clear evidence of blatant criminal activity echoed the previous FINTRAIL articles on criminals use of social media and that more could be done by the platforms to clamp down on this kind of activity.
FATF publishes COVID-19-related ML/TF risks and policy response
This week, members of the FATF Secretariat published a detailed policy paper focused on the COVID-19-related ML/TF risks and policy responses. Paige (FINTRAIL Solutions) observed that one of the key policy responses recommended in the paper is that jurisdictions need to support electronic and digital payment options. The President of FATF’s annex to the paper further encourages using FinTech, RegTech, and SupTech “to the fullest extent possible” because in-person banking and access to financial services is difficult and “unnecessarily exposes people to the risk of infection.”
Hongkongers conned into ‘spying’ for phone scam fraudsters
A really interesting case showing how the line between fraud victim and perpetrator can blur more than we might think, with two Hongkongers arrested for duping victims out of HK$5.5 million (US$709,000). They were recruited by fraudsters posing as mainland officials to “spy” on people suspected of money laundering. Police reported fraudsters had pocketed HK$53 million through phone scams in the first quarter of 2020.
Ex-C.I.A. Officer Sentenced to 19 Years in Chinese Espionage Conspiracy
A fascinating espionage case, but one where Gemma couldn’t help but think they could have done more with the transactional analysis to help demonstrate that the payments he received were connected to spying and not his business.
Amex avoids fines due to cooperation on OFAC WMD violation
Meredith thought this really shows the importance of being transparent with the regulator in the case of a violation! Amex were found to have violated OFAC WMD sanctions by issuing a prepaid card to an SDN. No fine was issued as it was a one-off violation and Amex fully cooperated, voluntarily disclosed and remediated. Major problems identified included the fact that the timing out of their risk engine caused customers to automatically be approved at onboarding and a front-line analyst failed to detect the individual was a true hit when they reviewed the alert.
OFAC’s Guidance
Meredith found that OFAC has specifically highlighted that coronavirus will be taken into account when weighing issues of sanctions compliance. While this is a relief for many compliance officers, it usually appears that crises like a pandemic just exacerbate or uncover existing compliance issues rather than create them. As such, it’ll be interesting to see what view OFAC takes when the coronavirus defence starts being used.
Ripple Sues YouTube
National Strategic Assessment of Serious and Organised Crime 2020
The NCA has published the National Strategic Assessment of Serious and Organised Crime 2020. Danielle noted that the article states that UK-based criminals continue to identify new ways of using virtual assets, such as cryptocurrencies, to launder their profits, although more traditional methods are still favoured.
The Mafia and COVID-19
Also on the topic of organised crime, Rachel found a timely commentary from Roberto Saviano on a risk of organised crime taking advantage of the current crisis and an ongoing discussion whether giving money to Italy is equivalent to feeding the mafia.
COVID-19 Fraudsters Exposed
Danielle found this highly interesting and detailed INTERPOL case study related to a large fraud ring operating across multiple jurisdictions. The investigation has already led to the arrest of two suspects, with more likely to follow.
Compliance monitoring affected by increased remote work
WSJ states that compliance monitors are being set back by coronavirus, due to restrictions on site visits. Meredith speculates that whilst efforts can be made with video conferencing, it isn’t ideal for seeing the true state of affairs on the ground.
EY held to account
Greg notes that the recent Panorama programme featured Mr Rihan (cited in the article) being interviewed about his whistleblowing experience has now been awarded compensation from EY.
APRA temporarily suspends the issuing of new licences
Payal informed the team that the Australian Prudential Regulation Authority (APRA) has written to applicants for new banking or insurance and superannuation licences to advise that it is temporarily suspending issuing new licenses for at least six months in response to the economic uncertainty created by COVID-19.
Fraudsters likely to target furlough scheme
Greg shared this relevant piece regarding organised crime groups exploiting the furlough scheme and the measures HMRC are taking to try and prevent this.
Covid-19: Struggles Updating Their Digital Game
Gemma highlighted how due to coronavirus, more and more people are relying on digital banking, which has pushed banks to improve their capabilities. The latest online banking outage that hit TSB customers shows there is still room for large banks to improve in their digital offering.
FATF Encourages the Use of FinTech and RegTech
Meredith was pleased to see that the Financial Action Task Force (FATF) responded to the Covid-19 crisis by explicitly encouraging greater use of FinTechs and RegTechs as a way to keep people safe during the pandemic.
Mexico’s Government Has Created an Equally Unequal Field for FinTechs
Rob shared an interesting piece on how regulatory restrictions from the Mexican government have made it more difficult for FinTechs to compete with traditional banks despite their efforts to encourage innovation. However, these restrictions have also given FinTechs a more level playing field - making it easier for local startups to compete against larger regional and international FinTech players.
The FFE Goes Virtual
JP hosted the first Virtual FFE last Tuesday for EMEA, where panelists from FINTRAIL, N26 and MarketFinance spoke on contingency planning in the time of coronavirus. It went off without a hitch, and the team at FINTRAIL is looking forward to the next Virtual FFE, this time for APAC, which will be held on Wednesday.
Patchy Progress setting up Beneficial Ownership Registers in the EU
The 27 countries that make up the EU had more than two years to implement beneficial ownership registers, but according to a recent Global Witness report, highlighted by Rachel, just five have set up publicly available registers of beneficial owners.
The Hidden way Columbia’s Narco Traffickers move their drugs
Thirty-three narco-submarines were intercepted in 2019 (most of them along the Pacific coast). In November, a 22-metre semi-submersible vessel was intercepted on the other side of the Atlantic, off Spain’s Galician coast. Greg spotted this interesting photo-essay about the narco-submarines.
Criminal Adaption and Covid-19
Criminals are adapting their business models to profit from the COVID19 pandemic. John-Paul has alerted us to Europol’s new report on the latest developments of the coronavirus on the criminal landscape in the EU.
UK’s dramatic decline in the use of cash
Cash usage in Britain has halved in just a few days following the Government’s imposition of a nationwide lock-down on freedom of movement according to the figures supplied by UK ATM network Link. This dramatic change in the cash usage made James curious about it’s impact on firms’ transaction monitoring rules.
Covid-19 Condemning Britain's Start-ups
Maya noted an article highlighting a threat to Britain’s thriving startup sector as the economic shock that threatens to dwarf the 2008 crisis is seeing investors withhold their funding. It argues that without a government’ support for startups and scaleups, Britain risks losing its stellar tech reputation, and the jobs and innovations that go with it.
What COVID-19 means for FinTech and FinCrime
Obviously, COVID-19 has been at the forefront of everyone’s minds this week, and there is plenty of discussion on how it affects financial institutions. Rob highlighted an interesting article which considers the implications for the FinTech sector, and Maya looked at what it means for compliance programmes.
Transaction monitoring in turbulent times
An interesting article by ACAMS, spotted by James, considers the implications of the pandemic for transaction monitoring rules. How is it possible for financial institutions to spot unusual behaviour or look at customers’ behavioural patterns at a time when every aspect of our daily lives, including spending patterns, has been radically changed? How many false positives are being triggered, and how many truly high risk behaviours are being missed?
Confirmation of Payee fraud measure delayed
FFE and Best Practices
Greg highlighted that the FFE was mentioned on the FCA Comparison of banking providers’ fraud controls by Starling. Great to hear that members view the FFE as beneficial forum for sharing best practices.
Golden Passports
Meredith rightly expressed her concerns regarding ‘Golden Passports’ and that Romania has been allowing Russian and Ukrainian citizens to purchase Romanian passports.
Coronavirus Conspiracy
Gemma commented on a recent piece of content by RUSI, highlighting the countermeasures being taken against coronavirus conspiracy theories.
Record AML Fines in the Gambling Sector
Ishima posted interally that the Gambling Commission had issued a record penalty of £11.6 million to Betway for AML failings predominantly relating to source of funds and wealth checks.
Islamic finance focussed apps
Sharia compliant financial services to a particular niche that FinTech's are becoming increasingly interested in. This article that Gemma has highlighted provides a real life example of why this is particularly important in geographies such as Indonesia with a significant unbanked population. Indonesia also has the largest Muslim population in the world, with approximately 225 million Muslims.
Good news for crypto
Last week saw two material developments in the crypto space. India reversed its ban on cryptocurrency trading, offering clarity on the official position. Gemma brought to our attention that South Korea also legalised crypto allowing citizens of the country to legally trade and hold digital currencies We might see an increased slew of new trading firms emerge but they will also need to guard against exploitation by illicit actors and ensure they have the right controls in place
FATF provides guidance on Digital ID
Financial Secrecy Index
The Tax Justice Network’s Financial Secrecy Index was published last week. Striking that only two of the top 10 are countries you’d stereotypically define as tax havens (Cayman Islands, BVI) - the rest are all the major financial centres (US, UK, Hong Kong, Singapore etc.). A useful resource when assigning country risk scores, or for an objective list of what counts as a secrecy jurisdiction.
FCA Confidentiality Breach
The FCA admits revealing confidential details of 1,600 consumers. The FCA said it had referred itself to the Information Commissioner’s Office, which regulates the use of data, over the breach.
Oaknorth’s Stingy Strategy
Interesting reading when set against news of Revolut’s funding round - OakNorth’s strategy is to avoid bumper funding rounds entirely. Although we would sound a note of caution about being too aggressive in cutting compliance and FinCrime costs, which can often lead to expensive problems down the line.
BBVA backs UK FinTech targeting the gig-economy as sector heats up
Always inspiring to read about FinTechs that address real financial needs and ensure inclusion, rather than just providing digital versions of traditional bank offerings. The gig economy has well-documented pros and cons and will suit some workers much better than others, but great to use FinTech innovation to address some of the cons.
Illegal metal-detecting at English Heritage sites doubles in two years
Nighthawking is the process of stealing archaeological artefacts from protected sites at night. It may seem like a victimless crime, but in fact we all are being robbed of our past. The public is being urged to help tackle rise in nighthawking blamed on organised crime.
Tax Haven Update
Meredith identified a change in the EU’s tax havens blacklist this week. Time to update those country risk assessments! Four countries including the Cayman Islands and Panama were added to the blacklist. Turkey avoided blacklisting for now, but will be one to watch to see if it succeeds in implementing tax data sharing with European jurisdictions. The EU has been criticised for being too lenient and avoiding tax havens with which it has close links; the new list has been cautiously welcomed but reformers are pushing for further expansion.
M.Y. Safra Failing Its Crypto Compliance
It seems every week there’s a new development in the crypto compliance space - this week, it’s not so positive. The private US bank M.Y. Safra has been censured by the Office of the Comptroller of the Currency (OCC) for failing to fully vet cryptocurrency customers and transactions in high-risk jurisdictions for more than two years. No monetary penalties were imposed but it will have to implement a number of measures to bring its compliance up to standard.
EPayments Suspended by FCA
Rob commented on the Epayments suspension following lapses in AML procedures. The payments space is evolving quickly and with that comes a change in financial crime risk. We need to be super careful that as an industry we evolve to meet that change. But even more importantly, we can’t allow this to become a systemic problem that undermines the future of FinTech, where trust with stakeholders is hard to win, yet very easy to lose.
Cleaning Up the Art World
Gemma notes how the newly regulated art industry is finding the shift somewhat bumpy. It’s thought that at least 50% of all art transactions are entirely private and handshake deals are still common. This means the industry will need a real shake up to get in line with the new anti-money laundering legislation.
The EU Commission issue warnings over 5MLD implementation
Greg spotted that the Commission has sent letters of formal notice to 8 member states for not having notified any implementation measures for the 5th Anti-Money Laundering Directive.
FinCEN preparing to unveil new regulations around cryptocurrencies.
Danielle discovered this developing story around new regulations for cryptocurrencies in the US.
Cash is still king
Greg highlighted whilst so much is being said and written about ML risks related to new methods of payments, cash is still king with small Money Service Businesses being the weakest link.
Fintechs vs Money Laundering
JP shared with the team the LexisNexis report which looks at the biggest risks and opportunities for AML professionals in the finch industry.
Latest JMLSG Guidance
Greg looked into the latest update to the JMLSG Guidance, which was released 03 February in response to the transposition of the Fifth Anti-Money Laundering Directive (5AMLD). One of the key takeaways related to discrepancies between registration information gathered from new corporate clients and information available on Companies House. Material discrepancies must be reported to Companies House and should be factored into the CDD process.
Financial Crime Backlash to Coronavirus
Payal shared the latest advisory from the Monetary Authority of Singapore (MAS), which warned about scammers taking advantage of the coronavirus outbreak. In addition to phishing and ransomware attacks, fraudsters have begun impersonating Ministry of Health officials tasked with tracing the virus, in order to convince potential victims to give up their financial details.
Familial Links Behind the Financing of the Manchester Attack
Gemma highlighted to the team the importance and power of financial intelligence in counter terror efforts following a BBC report that the Manchester Arena bomber and his brother had purchased bomb parts for the attack using their mum’s card. After leaving the UK, the mum attested, her account was used to purchase items from B&Q and a specialist shop that allowed the brothers to build the bomb used during the 2017 attack.
ACAMS Cyprus Symposium
FINTRAIL’s own Danielle Jukes had her moment in the spotlight during the ACAMS Cyprus Symposium, where she joined fellow panellists Kayla Izenman from RUSI and Peter Oakes, former Director of the Central Bank of Ireland, to discuss best practice approaches for mitigating financial crime risks in the Virtual Asset Service Provider (VASP) industry.
Stockholm FinTech Week
This Monday and Tuesday, Greg and JP are in Stockholm for Sthlm FinTech Week 2020. Greg is joining a panel discussion to debate “How to bridge the silos of knowledge between the Police and Fintech.” JP is moderating two panels on fraud waves and the challenges of implementing RegTech solutions.
US Efforts to Combat Trade-Based Money Laundering
Meredith has flagged this interesting report from the US GAO on the difficulties in spotting Trade-Based Money Laundering (TBML), in particular due to the predominance of open-account trading, where transactions are not financed by a bank and are automatically processed (giving financial institutions limited visibility).
FCA no prosecutions under their new Anti-Money Laundering powers
Greg was intrigued by this short article from CityAM. According to a freedom of information request by law firm Hickman & Rose, the FCA has not brought a single prosecution under new tougher criminal powers to combat money laundering that were introduced in 2017.
Singapore Announces New AML Rules for Crypto Businesses
Danielle has highlighted the Monetary Authority of Singapore (MAS) is updating its regulatory framework for digital payments. The Payment Services Act 2019 (PSA) brings so-called Digital Payment Token (DPT) services – effectively covering all crypto businesses and exchanges based in Singapore – under current AML and CTF rules.
Brexit to Add Sanctions Compliance Complexity
FINTRAIL team has been discussing to what extent Brexit is likely to add even more complexity to the murky landscape of sanctions compliance. We could see proposals for a new human rights related sanctions regime as early as March.
The Suspicious Transaction Report - Episode 10: Leaks, Links and Brexit
Gemma joined the panel on the Royal United Services Institute, podcast: The Suspicious Transaction Report. Together with Isabella Chase, Nick Parfitt and Helena Wood they discussed the most recent money laundering leaks, UK-linked financial crime cases, and the impact that Brexit will have on the financial crime landscape.
New Transparency International Corruption Perceptions Index (CPI)
Meredith examined the key trends in the latest CPI just released by Transparency International. Biggest takeaway? Even the top-scoring countries are struggling with corruption; the UK has fallen three points in its CPI score since 2018. This can likely be explained by some of the wider trends seen in Western Europe around poor corruption enforcement and levels of money laundering and private sector corruption.
Continued fallout from Luanda Leaks
Rob has highlighted further ripples from the Luanda Leaks this week, with Isabel dos Santos formally placed under investigation in Angola, PwC coming under fire for its relationship with her, and a senior PwC executive leaving the company. Food for thought for consultancies like FINTRAIL, who should carefully consider who they want to do business with.
Visa invests in Currencycloud
Rob flagged this report that Currencycloud had secured $80 million in a funding round co-led by Silicon Valley venture capital firm Sapphire Ventures and Visa. The company’s largest market is currently Europe, and it is now looking to expand into Asia to capitalise on the growing use of FinTechs there.
Lithuania to become largest FinTech centre in the EU
As FINTRAIL considers where 2020 may take it, we learn that Lithuania is set to become the largest centre in the EU for regulated FinTech firms following Brexit. However, this poses serious financial crime questions, given recent money laundering scandals in the Baltics.
UK Economic Crime Action Plan
Helena Wood of the Royal United Services Institute (RUSI) spoke at the UK FinTech FinCrime Exchange last week about the government’s Economic Crime Plan, questioning the current government’s commitment to it, and warning that it will lack teeth without a dedicated policing budget. In addition, the continuing lack of scrutinising powers at Companies House means “UK companies have become the money launderer’s vehicle of choice.”
FATF Keynote:
10 Dec 2019
Reflecting on an interesting quote from the FATF Executive Secretary from last year. This certainly resonated with the FINTRAIL team, our approach to client projects and how we get our clients to understand their risk.
“It means supervisors, as well as banks, need to take a risk-based approach. It does not mean a zero tolerance approach. It does not mean a risk-free approach.”
Sanctions Evasion: Bitcoin
Danielle picked out this article on crypto getting (more) political with Bitcoin being used for sanctions evasion.
Paxos - Role of a Project Manager
Rob circulated this post by FFE members Paxos on the role of a Product Manager. It was a breath of fresh air to hear them talk about considering the regulatory pipeline in product strategy planning and we couldn’t agree more.
Beneficial Owner Discrepancies
One of the FFE members shared the new reporting mechanisms in the UK for reporting beneficial owner discrepancy. I think we will all be interested in how this process will work operationally.
New FINTRAIL member
We would like to welcome the newest member to the FINTRAIL family, Maya Braine. She joins FINTRAIL as a senior consultant and, she has extensive MENA experience and is excited to bring her skills and experience to bear in the fight against financial crime.
Gemma found this simple BBC animation about how money laundering works really interesting: it’s crucial that we get these kinds of simple, graphical representations out there to raise awareness of money laundering in general, but, also its impact.
Russian Kleptocracy And The Rule Of Law
How often money laundering is hidden in plain sight? Greg highlighted the latest Henry Jackson Society report which identified cases brought by Russian entities that are nothing more than elaborate ruses in which both parties conspire to game the UK courts in a money laundering exercise.
Sextortion ring - money mules
Rob found the article around ‘sextortion’ highlighting how one offence can often lead to other types of financial crime facilitation with the crime gang involved in this case using money mules to help launder their funds. For more information around ‘sextortion’ see this FINTRAIL blog.
Wolfsberg Group
Maybe lost in the Christmas rush, but James thought the Woflsberg Group’s - Statement on Effectiveness was great as they call out the difference between AML Compliance and actually preventing an FI being used for FinCrime as a way of judging the effectiveness of a good AFC framework.
The Group believes that jurisdictions should adopt the FATF’s focus on effective outcomes and therefore, that an FI’s AML/CTF programme should have three key elements:
1. Comply with AML/CTF laws and regulations
2. Provide highly useful information to relevant government agencies in defined priority areas
3. Establish a reasonable and risk-based set of controls to mitigate the risks of an FI being used to facilitate illicit activity.
New Year, New FEE Meetings
FINTRAIL are ready to kick start the New Year with FinTech FinCrime Exchange meet-ups in London, Singapore and San Francisco. If you are a Financial Crime professional working for a FinTech in Europe, the Asia region or the US and are interested in joining a global community of FinCrime professionals sharing best practice and working together in the fight against financial crime visit our FFE page or email: ffe_admin@fintrail.co.uk.
FINTRAIL Family
Looking back on this past year we have been excited to have introduced six more members to the FINTRAIL Family. This means FINTRAIL has expanded the team not only in numbers, but in skillsets and depth of knowledge that we can bring to bear for the benefit of all our clients. If you wish to know more about our newer members please click here.
Expansion
We were lucky enough to expand FINTRAIL into Asia this year, covering this truly vibrant and engaging region from our base in Singapore. With Payal leading the charge we have high hopes for the region.
Over the last 12 months, we have successfully completed over 45 projects for 40 different companies spanning 14 different countries.
FFECON19
Another highlight for us was successfully hosting the FFECON19 with over 250+ FinCrime specialist in attendance from over 100+ FinTechs. The event discussed key themes within the FinCrime community and drew together public and private partners to further the debate around Financial Crime.
FFE Community
We continued our work with the FFE this year by growing the community globally with over 500 members representing over 200 global FinTechs.
The LinkedIn community has now grown to over 3000 followers!
British Bank Awards
Finally, we are so pleased to be nominated for the British Bank Awards! We’re so glad to be included with such a great variety of companies for the partner award 2020. Voting is now open if you think we deserve your vote please click here!
Asia’s First “Numberless Card”
Grab’s quest for regional domination continues with the official launch of the GrabPay Card, Asia’s first so-called “numberless card” where the card details are stored within the app, not displayed on the physical card. The GrabPay Card is a prepaid Mastercard debit card that is funded by your GrabPay balance. It allows you to spend your GrabPay balance anywhere Mastercard is accepted. the numberless feature in theory should make the card more secure.
App Life
Its hard to imagine the prevalence of superapps like Alipay and WeChat in China unless you've actually been there and experienced it first hand ( something Martin is all too familiar with). If you've got China on your bucket-list for 2019 check this article out. Almost all payments are done via mobile phones, and even getting into the office building requires scanning a QR code on WeChat.
Funding for Chime
Exciting times for Chime who closed another round of funding. US digital bank Chime has boosted its valuation from $1.5bn to $5.8bn in just nine months, according to CNBC. The new valuation comes via a $500m Series E funding round led by DST Global, which will be used to boost growth and double headcount. Founded in 2013, Chime currently offers a fee-less digital checking account, enabling customers to deposit and make everyday purchases, and it also operates a peer-to-peer lending system without fees.
“No Fixed Abode” Accounts
We were not familiar with 'No Fixed Abode' accounts until Danielle shared this article which includes a summary of how the accounts work, and some success stories. I think this is a super interesting concept especially because of much of our welfare system relies on having a bank account (e.g. receiving benefits). This seems like a great initiative and shows how banking can make a difference.
Christmas Time!
The countdown for Christmas begins! The FINTRAIL team spent some quality time together with a meal and bowling, safe to say our competitive sides came out. With James turning out to be quite a player! Lastly, we have decked the halls of the FINTRAIL office to truly get into the Christmas spirit.
Phoenix Thoroughbreds founder accused of stealing €100m
Like everyone we've been huge fans of 'The Missing Cryptoqueen' podcast and Rob got us talking about it all over again when he shared this article about Crypto (OneCoin) and horse racing. It shows how loopholes can be exploited to potentially launder large sums. Phoenix Thoroughbreds founder Amer Abdulaziz Salman has been named as a key figure in a major money-laundering operation for an international cryptocurrency fraud from which he allegedly stole €100 million before launching his global racehorse ownership enterprise.
Afterpay share prices increases 10% after audit despite breaching AML laws
In case there are any questions around how important getting accurate AML advice is - check out this illustration shared by Rob. Afterpay breached anti-money laundering laws because it initially received incorrect legal advice about how to comply.
NatWest 1st UK bank to unveil a biometric credit card
Lauren got us all thinking about biometric data with Natwest issuing the first biometric fingerprint card in the UK. The card is powered through the card terminal and when a customer presents a card, a green light on the card indicates that the fingerprint has been matched successfully. Once a digital fingerprint is locked onto a card, it cannot be changed. The user’s biometric data never leaves the card, is never shared with the merchant or bank, and no fingerprints are stored in a cloud. This ensures that biometric data cannot be accessed or used outside the card.
NatWest launches new youth-focused digital bank Bó
Speaking of Natwest - there have been no shortage of reviews of its recently launched app-based bank; Bo. The Times reports that around 30% of applications since the product went live two weeks ago have been fraudulent.
FFECON19: Mindful Financial Crime Prevention in a Digitally Enabled World
The highlight of last week for FINTRAIL (which is why we skipped the FINTRAIL 5) was without a doubt the gathering of over 260+ Financial Crime professionals at FFECON19. Check out the FinTech FinCrime Exchange (FFE) LinkedIn pages for more details of what was discussed. At FFECON19, RDC the FFE sponsor and FINTRAIL pledged donations in support of Unseen UK to continue its work aiding victims of modern slavery.
Why Monzo and Revolut have nothing to fear from Google's march into banking
Gemma shared this great write up (paywall) on all the noise about Google moving into the FinTech space. Google will rely on its bank partners to hold and manage customers’ accounts. Though there are concerns around what Google may do with the data. Another good article in the New York Times.
Toucan announced as a finalist in Nesta’s Open Up Challenge 2020
FINTRAIL wanted to pass on our congratulations to the team at Toucan on their selection as finalists in the Nesta Open Up Challenge 2020 but also for achieving an additional bonus for their commitment to financial inclusion. Go Toucan!
Race for Singapore Virtual Bank Licenses
Payal is still seeing lots of uncertainty around who will eventually apply and get those digital banking licenses in Singapore, with Revolut and now the giant of Ant Financial vying for a licence. With the potential for only 4 or 5 to be issued next year and the steep capital requirements, this is more likely to favour the incumbents than FinTechs.
One more for the Podcast list
We continue to up our podcast game and have added this to our list, a real story with a headline that tantalises, brought together The Age and the Sydney Morning Herald, the story of the Pong Su. A North Korean dictator, bags of heroin, drug lords, spooks, sailors, Australian cops and a web of lies.
Singapore FinTech Festival 2019
Payal was one of 70,000 that attended the Singapore FinTech Festival. It was great to meet so many of our FinTech friends and be a part of such an exciting event. With so many in attendance it is a must visit event and just shows how vibrant the FinTech scene is in Asia, looking forward to next year’s event.
NCA: SAR Annual Report
Greg shared the SAR Annual Report produced by the National Crime Agency. Of particular note: “The pattern of reporting is changing. While the number of reports from lawyers and accountants remains low. We are now seeing increased reporting from challenger banks and FinTech companies. Over 2019/20 we are working to develop our understanding of these sectors and undertake targeted outreach.”
Virtual Asset Approach
Payal took an interest in the new regulatory approach for virtual assets issued by the SFC in Hong Kong. These look similar to forthcoming provisions and requirements under the EU’s 5AMLD.
Apple’s Algorithms
We were all more than a little disappointed here at FINTRAIL to read this article about algorithms and sexism taking women’s credit back to a 1970s models.
ID Theft and Bitcoin
Gemma shared this piece on a new type of fraud being committed in the crypto world: identity theft to steal computing power to mine bitcoin.
One for the Playlist
We are excited that our friends at ComplyAdvantage have started a podcast and we will be adding it to our playlist to learn more about corruption and what action can and should be taken to address the issue.
Following the Drug Money
The FINTRAIL team have been catching up with some TV viewing with BBC Panorama: Following the Drug Money showing how easy drug money from the UK is moved around the world and into the financial system. An interesting look at the role of the whistleblower and a reminder of how high value assets can be used for money laundering.
Home Office - Serious and Organised Crime review
Rachel shared an announcement of a Home Office review on how they would enhance their response to serious and organised crime, with plans to increase funding by £90 million to deal with the results of crime in an attempt to make our streets safer. Good news, but more emphasis should be placed on tackling the root causes of crime, not just the effects.
Card data for sale on the dark web
A FinExtra article caught Lauren’s attention, with news of a data breach of mostly Indian Credit card details for sale on the dark web. It was the sheer scale of the breach that was shocking, with over 1.3 million credit and debit cards up for sale at a cost of US$100 each, with potential for each to be cloned and cashed out.
US - Ukraine probe ‘Fraud Guarantee’
Meredith highlighted this WSJ article about Lev Parnas, who is involved in the Trump impeachment scandal and has been indicted for fraudulent campaign donations/money laundering. He apparently chose the name “Fraud Guarantee” for one of his businesses to reduce negative news/adverse media searches of his name + fraud.
Congratulations to JP, Shaima and their new arrival
Congratulations are in order as we welcome a new member of the FINTRAIL family. On Sun 3 Nov, JP’s wife Shaima gave birth to a lovely healthy daughter 👶. They are all doing well and we are super pleased for them. The FINTRAIL team wish them all the best.
Storyville
Thanks to Greg, our TV viewing for the next few weeks has been sorted with a series of international documentaries by Storyville on the BBC. The next two weeks will focus on financial crime related topics.
The Laundromat
Speaking of TV viewing, Rob found some time to watch the much hyped The Laundromat film on Netflix. This could have been a great reference film to connect the wider public in the battle against financial crime but it unfortunately missed the mark. It still raises the issue but from a more light-hearted hollywood gloss perspective.
FFECON19
FinTech FinCrime Exchange events were held in London on 23 Oct and New York on 24 Oct. Discussions focussed on HMRC scams, OCG activity, invoice verification and how FinTechs work with partner banks. The FFE meetings now pause until the new year to allow for FFECON19 to be held on 27 Nov at 30 Euston Square.
'Sex work paid my student bills. Now I regret it'
Gemma shared this BBC article which talks about the challenges students are facing in managing their finances, and the lengths they go to in order to make ends meet. Weirdly, it doesn’t mention financial crime, but we think it should as this is a classic reason why students would be tempted by money muling.
Risk Revealed
Rachel and JP attended the Risk Revealed 2019 event held by Refinitiv. Key takeaways were:
• The scale of global financial crime and the metrics that should be considered to evaluate the effectiveness of financial crime programmes.
• The development of the National Economic Crime Centre and Economic Crime Plan is a positive step from the Government and is hopefully the start of their commitment to combating economic crime.
• The importance of understanding the UBO of a company and the detailed EDD investigation which may be required to discover this.
Digital Identity
JP also attended a breakfast event at Revolut on Digital Identity. An interesting panel discussion was held covering:
• Protecting the customer and identifying misuse.
• Developing a feedback loop to constantly verify identity.
• The power of collaboration when tackling big challenges.
• User experience and financial inclusion.
Risk Based Approach
Meredith shared this article from the Netherlands which really emphasises why taking a risk-based approach to remediation activities is preferable. While it’s good to see ABN AMRO working to be more compliant, this is an example of when the tick-box approach leads to using a sledgehammer when you might need a scalpel.
YEAH BABY!!
And finally, on his way back from Singapore, Martin managed to go via Beijing to squeeze in the British Ball and ended up winning best dressed male with his Union Jack flavoured Austin Powers outfit, his wife Niki and Canadian friends, Rich and Holly, made up the rest of the Dr Evil/FemBots team, yeah baby!
IOCTA
Rachel watched a Europol presentation of their Internet Organised Crime Threat Assessment. We all found some really interesting points of the current and future threats they are seeing and how they could be relevant to FinTech's in particular.
Libra Ecosystem
Gemma got us all talking about Facebook’s Libra again and how it may start to lose initial backers amid regulatory pressure. We discussed how this demonstrates the regulatory scrutiny that crypto is under and why having appropriate AML controls will be key for the backing partners if Libra. The Libra Council now consists of 21 members, down from the 28 backers who initially said they would join.
Revolut Revenue
Rob shared this FT article about Revolut and discussed how it shows a company can transition rapid growth into meaningful revenue and also that their previous compliance issues may have not held them back due to their robust response and action taken since.
FFE Asia
We held our second FFE meeting in Asia. It was a packed session and we were very lucky to have Darren Jolly from the Serious & Organised Crime Network as Illicit Finance Policy Lead talk through the social impact of financial crime. Danny Chua, an FFE member from Optal, also provided invaluable insights into localised fraud typologies.
Asian Delight, Fish Skin
Martin headed to Singapore to sample the culture and for some quality time in our Asia office with Payal as we continue our growth in the region. Notable items were the indulgence in Salted Egg Fish Skin, enjoyed by the FFE, meeting up with some great potential new joiners for FINTRAIL and catching the dazzling Japan vs Scotland World Rugby Cup match in the bustling Boat Quay area.