Russian Money Laundering
It should come as no surprise that Russia is one of the largest exporters of illicit money, and has been so for decades. This is well known. There are many reasons for large financial outflows from Russia but one that remains constant are those that involve the proceeds of financial crimes, which are being laundered internationally. Twenty years ago it was the Bank of New York that was caught up in Russian Money Laundering and whilst there have been others in between its now Danske Bank’s Estonian branch that is being investigated by numerous agencies and will inevitably pay a hefty price for its lax controls.
A few observations though. Firstly whilst there has rightly been a strong negative reaction to the roll played by Danske Bank, calling this a Danske Bank scandal misses the point.
Saudi Arabia – Country Focus
The provisional EU listing of Saudi Arabia (which has since been defeated by EU Governments at least temporarily) ironically comes just after the Saudi government, officially ended the crackdown on corruption ordered by Crown Prince Mohammed bin Salman. Under the campaign launched in November 2017, the government targeted a hit list of Saudi princes, ministers and leading businessmen. The crackdown, according to the Saudi’s has been very effective, with 87 settlements reached, and 63 cases still pending.
The Saudi Finance Minister has claimed that the authorities had collected approx US$13 billion from settlements in 2018 and expected a similar amount in 2019. If this is true and FATF and or the EU produced a list of Countries that had successfully seized assets that had been generated through financial crime, in this case corruption, then paradoxically Saudi Arabia might well sit right at the top. Continue reading
Terrorism/Terrorism Finance – CTF Update on IS/AQ
During a meeting held on 31 January 2019 at the UN Security Council, titled “Preventing and Countering the financing of terrorism,” chaired by the French delegation, it announced it was committed to mobilising the CTF effort and was expecting to bring forward a new CTF resolution in the coming weeks to the UNSC. Delegations attending the meeting were joined by international groups and a few experts, providing an update on the stats of IS and AQ and the CTF response. Following are some of the highlights:
The 1267 Monitoring Team via the analytical support and sanctions monitoring team re IS and AQ reported that they believe that:
• IS retains US$50-300 million making it an enormously wealthy terrorist Group notwithstanding its loss of territory. Continue reading
US Money Laundering Risk Assessment – 2018
With estimates of approximately 2-5% of a global GDP suggested as likely amounts representing the annual With UNODC estimates of approximately 2-5% of global GDP or US$2.1 trillion suggested as likely amounts representing the annual proceeds from financial crime, the US has recently released figures that suggest levels of domestic financial crime (excluding tax evasion) of approximately US$300 billion or approx. 1.5% of its GDP and therefore seemingly much lower than the international average. However, given the size of the US economy, this US$300 billion figure means that one in seven dollars of criminal proceeds are generated in the United States.
According to the December 2018 US National Money Laundering Risk
Assessment, the crimes that generate the bulk of illicit proceeds for laundering in the US are fraud, drug trafficking, human smuggling, human trafficking, organised crime, and corruption. Continue reading
Top 10 Predictions for 2019
As the only thing certain apparently is uncertainly (unless you count death and taxes) only a fool would predict anything. So foolishly here are my top 10 predictions for 2019 – in the fight against financial crime.
- Crime will remain a top 10 global industry and the most profitable of all industries (due to extremely low levels of interdiction) but fall to 2nd in the list of none financial risks of concern to FI Board’s, after Cybersecurity. Depending on your definition of financial crime estimates range from USD2.1 trillion a year, though these likely understate the amount, particularly as they are based on classic financial criminal proceeds, such as drug trafficking and organised crime and date back to 2011. The figures could include corruption (IMF estimate USD1-1.5 trillion), Fraud of which Cyber crime is an ever increasing component, estimated in low single digit trillions and tax evasion, now a predicate offence and again likely estimated in low single digit trillions.
Brexit and the fight on financial crime – Part 3 – SAR Reform plus
Whatever the terms under which Brexit finally is delivered, the UK remains committed to reform in its fight against financial crime. The UK is embarking on an ambitious and in part radical programme of work, but a necessary one. As the UK Chancellor recently stated: “We know more can be done, which is why the home secretary and I are launching the first ever cross-departmental board to prevent more people fom becoming victims of economic crime. By bringing together specialists across the public and private sector, we can use the best of our expertise to maintain our status as a global financial centre.”
Ensuring a joined up whole of government approach to fighting financial crime is a major step and with it, risk based prioritisation of outcomes should follow.
Brexit and the fight on financial crime – Part 2 – Policing
In this Part 2, the focus is on policing, and what the U.K. is set to lose, unless new arrangements replace existing ones, which are due to come to an end after 29th March, 2019, if there is no deal or at the end of the transition period at end 2020. Here are some of the most important tools currently available to U.K. policing and at risk
- The European Arrest Warrant (EAW) was introduced in the UK in 2004 replacing previous separate extradition arrangements between the UK and EU Countries and operates on an EU-wide basis.. The. U.K. Prime Minister has regularly claimed that the EAW helped to “keep the country safe.” Whilst there is a disparity in numbers, the EAW has still been a success.
Brexit and the fight on financial crime – Part 1 – Policy
With the date for Brexit due on the 29th March, 2019 (at 11 pm U.K. time) and still no deal, getting a clear view of the likely impact of Brexit on the fight against financial crime, is important. An exit, particularly with no deal, looks to put the UK in a much worse position, but even with a deal the prospects at least in the short term don’t look good. What is at stake and what are the risks and opportunities? In this Part 1, the focus is more on the Policy aspects of fighting financial crime with a few practical potential consequences. Part 2 focuses on the effects on Policing and Part 3 the opportunity that the U.K must take.
Wildlife Trafficking by Katie Perrott
The illegal wildlife trade is a transnational, commodity-based and highly profitable form of organised crime, until recently carrying little risk of detection and prosecution, particularly for the kingpins at the heart of the trade. However the sentencing of the “Ivory Queen” to a lengthy prison sentence and recent record seizures indicate a growing appetite by authorities to act. Katie Perrott is Group Head, FCC Strategic Intelligence at SCB.
Successful conviction and sentencing of the Ivory Queen
Fuelled by Asian demand for ivory, poaching has devastated Tanzania’s once large elephant population; with numbers falling from 110,000 in 2009 to just 43,000 by 2014. Alleged by prosecutors to be a key figure in the illegal trade of Tanzanian ivory, Yang Feng Glan, a 69 year old Chinese woman, and two Tanzanian accomplices (Salivius Francis Matembo and Manase Julius Philemon) were sentenced in February 2019 to 15 years in prison, after being convicted of smuggling 860 elephant tusks worth over USD 5.5 million between 2000-2014.
Book Review – Red Notice by Bill Browder
This book tells the story of the rise and fall of Hermitage Capital, once the largest foreign investor in post soviet Russia, which made vast fortunes alongside oligarchs and criminals, sharing the spoils from the rigged privatisation of Russian Companies and the crooked markets that developed. As Hermitage made huge profits, the Company, its founder and CEO, Bill Browder, his associates and his Russian lawyers became targets, with Browder having his visa revoked and then his Russian Companies taken. According to Browder, he was taken out by powerful forces on instructions from the highest levels of the the Russian government. Browder tells of his losing battle, uncovering serious criminality by the Russian Interior ministry that took over his Companies, restated their reported profits and collected hundreds of millions of dollars in tax rebates.
