Posted in Financial Crime Money Laundering

Future of Financial Information Sharing (FFIS)

In late 2017, the FFIS programme published the first international comparative study of public-private financial information-sharing partnerships and their impact in tackling economic crime, drawing insights from the early experiences of such partnerships in the UK, the U.S., Australia, Hong Kong, Singapore and Canada.

The 2019 FFIS study, titled, “Expanding the Capability of Financial Information Sharing Partnerships,” identifies development challenges and opportunities which stem primarily from 22 FFIS research events, held across 13 jurisdictions between October 2017 and October 2018, during which public and private leaders involved in “partnerships” shared their insights and perspectives. According to the report, whilst these partnerships work and are beneficial their impact is so far limited, largely due to the operational bandwidth available to scale these partnerships, also being limited.

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Posted in Financial Crime Money Laundering

Does the EU need a new AML Authority?

In the wake of a number of recent high profile money laundering scandals, that involved EU based Banks, the EU is proposing to extend powers to the European Banking Authority enabling the EBA (which is moving from London to Paris after Brexit) to be able to directly force individual banks to take measures against ML “as a last resort” if national authorities do not act. However, the changes do not create a dedicated agency to counter ML at the EU level, as proposed by some, such as the European Central Bank. If approved, the EBA will have powers to, among others, request national AML supervisors to investigate potential material breaches and to request them to consider targeted actions such as sanctions and address decisions directly to individual financial sector operators if national authorities do not act.

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Posted in Financial Crime Money Laundering

US INCSR 2019 Published

The US Department of State published its 33rd annual report (INCSR for 2018) in March 2019 listing 81 Countries which are considered “Major Money Laundering Jurisdictions,” down from 91 just a year before. Countries no longer designated are: Cambodia, Egypt, Guinea-Bissau, Kyrgyz Republic, Lebanon, Portugal, S Africa, Switzerland, Turkmenistan & Uruguay.

Countries on the INCSR 2018 (published in 2019) list with a match to the FATF high risk and other monitored jurisdictions list are: Bahamas, Ghana, Iran, Pakistan, Serbia & Trinidad & Tobago.

Being included on the INCSR  list is not an indication that a jurisdiction is not making strong efforts to combat money laundering and therefore “is not a blacklist” nor are there Sanctions that apply. To put this into context however, advanced economies, such as the US, UK and Canada are also included on this list.

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Posted in Financial Crime Money Laundering

Book Review – The Sarawak Report by Clare Rewcastle Brown

The Sarawak Report (available here) by eco journalist Clare Rewcastle Brown (CRB) describes her investigations to uncover the 1MDB scandal which has been described as the theft of the century. If you think House of Cards is about US politics, a number of episodes could have been informed by the antics from Malaysia, described in detail in The Serawak Report. Many will be familiar with Malaysian former Prime Minister Najib’s scheme to skim billions from a development fund set up in 2009 with the intent ostensibly to promote development in Malaysia, which blew up with Najib eventually kicked out of office by the electorate in May 2018, then arrested and facing trial on corruption charges.

What is not so widely reported though are the following which is contained in The Sarawak Report:

  • a whistleblower who provided an email cache to CRB was a Swiss National, Xavier Justo who as a former director of the first vehicle to enable the start of the fraud, namely Petro-Saudi (PS) but who left PS with grievances and that he shared with CRB.
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Posted in FATF Financial Crime Money Laundering

FATF – Country Evaluation Results – Part 1

 &With results on more than 70 Countries published and updated relating to technical compliance with the FATF 40 Recommendations as well as on effectiveness based on 11 so called “immediate outcomes,” some interesting findings emerge. (Based on a simple scoring model (3,2,1 & 0 for each Recommendation and Objective).

According to FATF, “The extent to which a country implements the technical requirements…..of each of the [40] recommendations is important….but this is not sufficient” as “each country must enforce those measures and ensure that the operational law-enforcement and legal components of an AML/CFT System works together effectively …to deliver results.” With that in mind here are some observations.

  • whilst FATF do not publicly aggregate results, and no longer identify Recommendations as more important than others, it is likely, not least in the listing of Countries with material discrepancies that some are indeed more important.
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Posted in Financial Crime Money Laundering

EU Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance

The EU Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3 Committee) concluded a 12 month study and presented recommendations to overhaul current systems in the EU for dealing with financial crimes, tax evasion and tax avoidance, notably by improving cooperation in all areas between the large number of authorities involved, to setting up new bodies at the EU and at International level. The TAX3 Committee report also registered “great concern about member states’ general lack of political will in EU Council to tackle tax evasion/avoidance and financial crime.”

The Committee was established on 1 March 2018, by the European Parliament and was in response to concerns raised and revelations such as from the Panama and Paradise Papers and numerous AML cases.

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Posted in FATF Financial Crime Money Laundering

EU Country Designations Rejected

In February, 2019 the EU Commission published a list of 23 Countries, which it believes have strategic deficiencies in their AML/CTF regimes and as such warns EU based Banks dealing with FI’s or customers from these Countries.

The newly named Countries were Saudi Arabia plus Panama, Nigeria, Libya, Botswana, Ghana, Samoa, the Bahamas and the 4 US territories of American Samoa, US Virgin Is, Puerto Rico and Guam. From the existing list of 16 Countries, Iran, Iraq, Syria, Afghanistan, N Korea, Ethiopia, Pakistan, Sri Lanka, Trinidad & Tobago, Tunisia and Yemen – remain with Laos Uganda, Bosnia, Guyana and Vanuatu being removed.

The EU list goes further than the FATF list but uses information from FATF mutual evaluations, including criteria that targets Countries that do not provide sufficient information on ownership of companies, or if their rules on reporting suspicious transactions or monitoring customers activities are limited. Continue reading

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Posted in Financial Crime Money Laundering

Nine US Bank Trade Bodies submit comment letter on US AML Reform

With US money-laundering laws, dating back to the 1970s, some appear out of date, which according to Senator Elizabeth Warren, “makes it hard for law enforcement trying to stop money laundering and bad for financial institutions trying to comply with these laws.” US proposed legislation, the Counter Terrorism and Illicit Finance Act (CTIFA), is currently being debated, not least as a result of strong Industry advocacy. Nine leading domestic Industry Groups submitted a proposal in March 2019 to Congress, which critiqued the existing system and advocated for 4 overreaching reforms.

The joint trade letter states that: “The current regime is nearly 50 years old, and has not fundamentally changed since its adoption in 1970. It is still operated as an individual, bilateral reporting system despite advances in technology that could improve its efficiency and effectiveness. Continue reading

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Posted in Financial Crime Money Laundering Sanctions

FinCEN Director Speaks at SIFMA AML Conference

FinCEN Director, Ken Blanca’s presented remarks to the SIFMA AML conference in Feb 2019, were of particular interest in that they focussed on regulatory reform and a recognition that more needed to be done to modernise the fight against financial crime and that innovative and new ways of working would be encouraged and they were being discussed.

On regulatory reform, 5 areas were mentioned, though few concrete details provided. These were:

• reviewing ways in which financial institutions can take innovative and proactive approaches to identify, detect, and report financial crime and meet BSA/AML regulatory obligations;

• reviewing the risk-based approach to the examination process;

• reviewing the agencies’ approach to BSA/AML supervision and enforcement;

• Identifying better ways to communicate priorities and feedback to financial institutions, regulators, and law enforcement; and

• Identifying concrete ways to understand and quantify the value and use of financial institution reporting. Continue reading

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Posted in Financial Crime Money Laundering

The United for Wildlife’s Financial Taskforce

The Royal Foundation’s United for Wildlife’s Financial Taskforce was launched in Q4 2019 in order to help target organised crime and the proceeds of the illegal wildlife trade, and if successful will make a difference to the survival of many endangered animals. By supporting
the aims of the financial task force, members that have also signed up
to the “Declaration” understand the terrible plight of endangered wildlife today and have committed to act to hinder organised criminal gangs, which would otherwise continue to make handsome profits to reinvest in their other business lines, such as drugs, arms and human trafficking. By signing up FI’s will benefit from reusable materials, a video to raise awareness, financial crime prevention training materials, regular intelligence, and access to an unrivalled network of experts and resources. Continue reading

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