Improving Country Money Laundering Risk Assessments
Country AML Risk Assessments are the foundation for the risk based approach. Whilst many countries have improved in their latest published reported, improvements are still needed. Many countries use the WB model which is a great start, but the model and the outputs from it can be further improved. See below:
Country National AML Risk Assessments – 11 Improvements (Based on the WB Model)
1. World Bank ML Risk Assessment Model – The model is a very useful tool for countries to assess ML threats and vulnerabilities, but it can still be improved, as well as used more effectively. For more details see call outs on this slide.
2. Predicate Offence Crimes & ML – Better research into Proceeds and Prevalence is required as well as how these are laundered in order to validate high threat crimes.
Punishing Putin – A Book Review
Punishing Putin by Stephanie Baker is well worth a read and is a well documented reminder of what the last 2 and half years of western sanctions against the Russian regime for its unlawful invasion of Ukraine has meant which has involved targeting finance, oil and gas, elites, oligarchs, defence, electronics, to name the most important at unprecedented levels. Whilst the costs to Russia from these unprecedented sanctions are real, and are likely to have long term consequences for Russia’s future the initial optimism that sanctions could quickly “kneecap” Putin’s war machine has proved premature.
Stephanie Baker reminds us of the description of Russia quoting former US Senator John McCain as “a gas station masquerading as a country” which is unfair but has a ring to it.
TD Bank USA AML Fines & Penalties – A Deep Dive
TD is the 2nd largest Bank in Canada, the 6th largest in North America and 10th largest in the USA, with globally 28 million customers, and total assets of US$1.52 trillion. TD employs around 90,000 people and is present in many financial centres around the world with retail businesses in Canada and the USA. RBC is the 5th largest in North America, with Scotiabank 9th and Bank of Montreal 10th.
On 10th October, US authorities announced fines and penalties against TD in the USA. For a full copy of the Deep Dive Review and Summary of the TD US AML Fine and Penalty see HERE: TD Fine & Penalties Deep Dive 2024
Below is an extract.
1. Charges: The US DOJ has brought 2 criminal cases.
EU/EEA Payment Fraud – The Good the Bad and the Ugly
Two Reports have been published recently on Payment Fraud across the EU/EEA with data for 29 countries from the ECB & EBA. They provide key insights and also can be used to compare where EU/EEA countries are compared with some other important third countries, like Australia, the UK & USA.
They also help provide estimates as to which countries can be considered payment fraud hotspots and to suggest what action can be taken to improve the response including mandatory fraud information sharing.
Both these reports show the importance of identifying, collecting, analysing and reporting on relevant data for probably the most common and over the last decade the fastest growing financial crime, which allows for evidence led judgements and necessary targeted recommendations and actions from policy makers and for those in the private sector tackling payment fraud.
Jersey Financial Crime Country Dashboard and FATF/Moneyval Assessment
Today, the island of Jersey, A UK Crown dependency, together with FATF’s Moneyval published the AML/CTF Country Assessment for the Country. The report running to 350 plus pages is one of the last in this fourth round of evaluations and follows the last report published over 8 years ago.
The report presents a positive assessment with some improvements still needed, in line with some better in class peer international financial centres and FATF member countries. Actions have been taken, improvements have been made, and with only one sub standard rating (1 PC rating out of 40) and mostly positive effectiveness ratings, Jersey has achieved a lot and has avoided being considered for the damaging grey list by a country mile.
Information Sharing – Comparative Summary – Key Countries/Blocs
With an information sharing gateway to exchanging information to combat AML/CTF recently announced via Article 75 of the EU AML Regulation 2024, the choices and compromises are revealed between the blocs anti financial crime policy makers and the EU’s data protection leadership. This compromise has consequences with TMNL (Transaction Monitoring Netherlands) a flagship information sharing initiative announcing support for clarity but also announcing it will need to adapt and will wind down operations that are not supported by the new regulations, and which have cost those involved substantial amounts, which were supported at the time by the Dutch Government.
The EU gateway is nevertheless a potential game changer and can be compared to gateways elsewhere in the USA, the UK and Singapore which all now have legal gateways.
EU Article 75 – Pan EU information sharing is coming, but will it be enough?
The new EU AML package passed in April by the European Parliament marks almost the end of “so whats next” to 2030 in the EU’s response to improving the bloc’s approach to fighting financial crime targeting money laundering and terrorism finance, with effectiveness the key challenge.
In passing the AML package, which is subject to a nod through by the EU Council, the headlines have gone to the establishment of the new AML Authority to be established after a contest in Frankfurt to protect the bloc from weak supervision and by extension improve the response from the blocs regulated entities, focussed on the large regional banks, and FIUs, to the establishment of a common EU AML rule book to ensure minimum standards, and new elements which include more restrictions on purchases of high value goods and transactions, and even possible regulation on football clubs.
Thailand Country Financial Crime Dashboard 2024 by FCN
Today Financial Crime News is publishing a Financial Crime Country Dashboard for Thailand after the Editor spent a few days last week in Bangkok. Many thanks to all the Thai financial crime fighters in the public and private sector who met with the Editor and in a number of ways influenced this post.
Whilst there is no official estimate of the value of proceeds generated annually by predicate crimes committed in Thailand, or foreign proceeds entering Thailand, the amount is likely to be high. The size, nature and location of the Thai economy and its position with a border of 5,656 KM with Malaysia, Myanmar, Laos and Cambodia and a long coastline of 3,151 KM facilitates the movement of people, goods, cross-border trade, and funds into and out of the country as well as being a leading tourist destination.
UAE continues to make progress in combatting ML/TF
UAE Progress Update
As FATF week starts in Paris, a topic of interest is the grey listing status of the UAE. Financial Crime News published a post which also included a detailed 28 page progress report in October, 2023 and a 2 page summary Country Financial Crime Dashboard, and has now today published updates to both. For the 2024 Dashboard see HERE: FCN UAE Dash Feb2024 and for the Progress Report see HERE: UAE Update 18 Feb 2024
Whilst improving technical compliance is the first task for a country it’s how these elements translate into effectiveness the key and from the data, the UAE has been able to demonstrate both, so lifting it from the grey list I expect. Improvements – ML/TF/PF Risk understanding is much better for both public and private, sophisticated and not so sophisticated, national and international co operation is much improved not just for TF but also ML and other crimes, with some big names still to be delivered/extradited (Kinahan/Gupta), supervision is more effective and clearer on what is expected and the private sector is expected to deliver to expectations or face sanctions, even licenses are at stake, the FIU has been completely revamped from its under resourced, bureaucratic, reactive state body into a much more proactive active and PPP supporting institution reaching out domestically and internationally, and law enforcement now prioritising ML and related investigations prosecutions & convictions & asset confiscations with judicial time understanding & support.
Seat of the new AML Authority – EU Public Hearings
Today, a joint hearing organised by the EU Parliament and the Council was held, with each of the remaining 9 bidding countries, each having 1 hour each to present, with 10 minutes for opening remarks, followed by a Q&A and 3 minutes to conclude.
This is the first time a public hearing has been used to determine the seat of an EU Agency, courtesy of a decision by the European Court of Justice. Nine Agencies submitted formal applications. The final decision will be taken on the 22nd February 2024
JF Lopez Aguilar Co Chair of the session and Spanish MEP and Former Spanish Minister of Justice opened the session reminding the context for the hearing stating that, “ML/TF are threats not only to the stability of our financial systems but also for public security.
