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News surrounding the FATF
In Paris, 205 countries and jurisdictions, as well as international organizations, discussed AML/CFT issues in the second Plenary under the chairmanship of the Financial Action Task Force (FATF) President Xiangmin Liu. In the FATF’s evaluation of various countries, the UAE was found to have strengthened its AML/CFT system, while Albania, Barbados, Jamaica, Mauritius, Myanmar, Nicaragua and Uganda showed some strategic AML/CFT deficiencies. Following this addition of Myanmar to the FATF’s ‘gray list’, the Myanmar Real Property Development Association said that real estate agents must undergo training to identify potential money-laundering threats. Meanwhile, Switzerland, which was on the EU’s gray list for 2 years, was asked by the FATF to ensure that advisers to the financial service industry also report suspicious transactions. The FATF also recently added five new African countries – Botswana, Ghana, Mauritius, Uganda, and Zimbabwe – under its enhanced surveillance. These countries have been advised to reform their legal, regulatory and administrative frameworks to deal with their AML/CFT deficiencies. Meanwhile, FATF’s recommendations have led the regulators in Hong Kong, South Korea and Japan to tighten their crypto exchange policies. Elsewhere, Latvia, which was required to submit an AML progress report to the FATF in 2019, has reported a rapid rise in the number of criminal cases brought to court. The increase can be attributed to the active involvement of the prosecution office in AML training.
Financial crimes around the world
A money-laundering case involving billions of dollars of dirty money funneled through casinos, real estate, and luxury car sales in Canada’s British Columbia (BC) is set to start by fall this year. Over $5 billion was laundered through the BC real estate industry in 2018 alone. Meanwhile, for its ineffective AML procedures, UK’s online gaming operator Mr. Green will pay $3.85 million to the National Strategy to Reduce Gambling Harms in lieu of a financial penalty and Commission costs. Elsewhere, US prosecutors are set to charge 4 members of Venezuela’s young business elite known as ‘boliburgueses’ and 2 former high-ranking officials in the government’s oil sector following an order of the Swiss High Court in relation to a money-laundering case. The business elites allegedly paid hefty bribes to the government officials in exchange for making loans in bolivars to the national oil company, Petróleos de Venezuela, S.A., and then receiving repayments in dollars. Meanwhile, 2 football agents in Spain are being investigated by the Spanish Civil Guard for laundering money through fake football player transfer deals via a Cypriot football club. In other news, authorities investigating the irregularities in the operations of the Infrastructure Leasing and Financial Services (IL & FS) Transportation Network in India have found that the parent company, IL & FS, was involved in money-laundering of over $900 million.
Financial crimes through banks
Wells Fargo & Company and its subsidiary, Wells Fargo Bank will pay $3 billion to resolve their potential criminal and civil liability. Wells Fargo admitted that it collected millions of dollars in fees and interest to which the company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information. Meanwhile, 17 banks in Romania have been probed by Romania’s National Bank following transactions linked to money-laundering. Authorities found that the beneficiaries of the money-laundering scheme were foreigners,though their identities are yet unknown. Elsewhere, a Belgian law firm filed a case against the former executive officer of Danske Bank, Thomas Borgen, on behalf of 155 institutional investors for damages of up to $387 million. The case came after the bank’s failure to screen almost 200 billion euros of suspicious transactions reduced its market value to half. In another case, actions of some employees of Julius Baer will be investigated by the Switzerland’s FINMA – for ignoring money-laundering risks in payments linked to corruption in Venezuela and the world soccer body FIFA. FINMA said that the bank has erred in many ways including its acceptance of a $71 million transfer for a Venezuelan customer in 2014 despite knowing that he was accused of corruption.
Drugs and money-laundering
Jacqueline Hughes, a lawyer for Canada’s British Columbia (BC) has said that money-laundering has fueled the opioid crisis and overheated the real estate markets. Moreover, current AML efforts by the government – such as creating a beneficial ownership registry to prevent real estate buyers from hiding behind corporations and requiring those spending $10,000 or more at casinos to verify their source of funds – are not enough. Meanwhile, US physician Francisco Patino has been charged by the government in a healthcare fraud and money-laundering scheme of over $120 million. He distributed over 2.2 million doses of controlled substances, forcing the patients to submit to harmful injection in exchange. Also in the US, a former Drug Enforcement Administration agent, Jose Ismael Irizarry, who was sent to Cartagena to investigate a money-laundering case involving a Colombian drug cartel, has been charged with money-laundering. Irizarry allegedly worked with a Colombian drug dealer to launder money recovered from an undercover drug operation and used it to purchase properties and luxury goods.
Progress and updates in AML policies and strategies
Over 40 million people are estimated to be victims of modern slavery globally with about $150 billion in illicit proceeds being generated yearly. Thankfully, machine learning and artificial intelligence can now help banks to identify transaction patterns in or around the locations associated with human trafficking, and simultaneously check for any links between account holders and beneficiaries of payments, and their involvement in modern slavery crimes. Meanwhile, government agencies in Kenya have proposed to curb illegal transactions in the shipping industry through a new bill that will require importers and exporters to identify those sending or receiving packages from anywhere in the world. In other news, in Hungary, the number of service providers suspected of money-laundering and instructed to report to the National Tax and Customs Board has increased drastically. They must also provide a contact for home providers or cryptocurrency traders now. Meanwhile, in the Netherlands, increased attention to AML/CFT efforts has resulted in a big spike in the number of money-laundering cases taken to courts to 1,499 last year. Separately, as part of the new EU policy against money-laundering, all trustees of Dutch pension funds will have to register as ‘ultimate beneficial owners’ and tax and law enforcement authorities will have access to the register.
