On 13 June 2019, the US Department of Justice, U.S. Attorney’s Office, Southern District of New York indicted four individuals, Moazu KROMAH, Amara CHERIF, Mansur Mohamed SURUR, and Abdi Hussein AHMED charged with participating in a conspiracy to traffic more than US$7 million in rhino horns and elephant ivory. In addition, KROMAH, CHERIF, and SURUR were charged with conspiracy to commit money laundering, and SURUR and AHMED were charged with participating in a conspiracy to distribute and possess with intent to distribute more than 10 kilograms of heroin. One of those charged is now in the US, another awaiting extradition in Senegal and two remaining Kenyans still at large, on the run.
This is not just important in terms of the action taken but how co operation across agencies and between public and private sectors and effective information sharing made a difference.
In February 2019, FATF issued its proposed recommendations for AML governance of the crypto industry. Under pressure from the international community, the FATF aimed to bring amendments to Recommendation 15 (New Technologies) into force at the June 2019 plenary. Within the proposals, one point was opened for consultation; colloquially known as 7(b) the proposal seeks to introduce wire transfer recommendations required of the traditional banking sector into the crypto industry. That is, originator and beneficiary information is collected, screened and transmitted between correspondent institutions with the objective to prevent criminals and terrorists having unfettered access to the financial system.
The crypto industry responded but not for the reason many thought; the response was not to fight against regulation or kick the can down the road for another day but to make sure that the regulation could be effective.
So called laundromats, like the Russian, Azerbaijani and Troika laundromats are making headlines, tarnishing once stellar reputations, and leading to serious questions about their prevalence, how they operated and for so long, why more wasn’t done and what lessons can be learned and actions taken to prevent these laundromats from washing dirty money in the future. This article on laundromats, provides an explanation and commentary on these matters.
These laundromats, are neither discreet events nor simple in construction. Indeed, the very reason they are referred to as “laundromats” rather than simple “money laundering” examples is indicative of a professionally run business rather than a one off event. They do not represent the efforts of corrupt politicians or organised criminal gangs laundering the proceeds of their own crimes, rather they are run by separate, professional money launderers who, for a fee, will clean up ill-gotten gains for just about anyone.
Some people have argued that the next frontier in the fight against financial crime is using new technology to detect money laundering. New technology could well be the next frontier, but new technology alone is never the answer. It forms a part of the people, process technology and data mix, that is brought together to find solutions to problems. Whilst new technology for example could help the industry in producing less false positives or be able to handle them more efficiently, we have to expect more from ourselves and our partners than simply doing less of the work we shouldn’t be doing in the first place.
The bigger challenge is to make sure we are able to accurately understand the true costs and benefits of the new technology, and importantly whether it helps those relying on our work to more often and more effectively interrupt the illicit actors benefitting from financial crime.