Fight against cryptocurrency-based financial crimes
Criminals are taking advantage of the COVID-19 pandemic to launder money through cryptocurrency exchanges. Some of their schemes include threatening emails to demand payment in Bitcoin, and work from home and investment scams. The FBI has advised people to be careful to protect themselves from such crypto-crimes. Internet users need to verify the vendors and perform thorough research before making a payment. Meanwhile, law enforcement agencies have accelerated their power to track bitcoin transactions. Crypto-criminals frequently use ransomware in illicit operations. Law enforcement agencies have now increased their proficiency in tracking ransomware payments. As a result, authorities have indicted the suspected operators of some of the most notorious cybercrime campaigns. In the same direction, cryptocurrency exchange platform Huobi Group (Singapore) has launched a new analytics tool Star Atlas. The tool will help in detecting and preventing money-laundering, illegal transactions, fraud, and dark web sales.
Other financial crimes around the world
An Indian court convicted ex-minister Anosh Ekka and others of laundering $2.65 million, sentencing them to seven years in prison. Meanwhile, Latvian authorities have accused a group of laundering more than $7.67 million by using fictitious plastic granule companies. Elsewhere, authorities found that some Angolan government officials illegally moved hundreds of millions of dollars to Portugal.
In other news, Pope Francis removed Tommaso di Ruzza as the head of the Vatican Financial watchdog. Earlier, Pope Francis had also decided not to renew the mandate of the Financial Information Authority (AIF) president, Rene Bruelhart. The raids and scandals over the AIF leadership have raised eyebrows about Vatican’s finances. Meanwhile, fast-food restaurateurs in the American states of Wyoming and Colorado have forfeited another $900,000 to the government. This decision came after allegations of their involvement in a black money scheme involving Mexican drug cartels. Separately, the US also announced that it has returned $300 million to Malaysia. This is in lieu of the money misappropriated from 1Malaysia Development Berhad through financial entities in the US, among others.
AML suggestions for different countries
EU parliamentarians have announced the urgent need to develop innovative approaches to cryptocurrency regulations to stop financial crimes using cryptocurrency. Criminal organizations can invest illicit funds in big datacenters on mining cryptocurrency which currently forms a regulatory blind spot. Elsewhere, Korea’s AML/CFT framework is functioning effectively ever since it was last evaluated in 2008. Currently, high-risk criminal activities associated with money-laundering are illegal gambling, fraud, corruption, and tax evasion. The country needs to adjust its AML/CFT to include politically exposed people who launder proceeds from corruption. Meanwhile, due to Malta’s deficient compliance with the AML/CFT act, the IMF has advised it to improve its AML measures. The IMF has provided several suggestions for such improvements.
Amendments to the US Bank Secrecy Act
The US Federal Financial Institutions Examination Council (FFIEC) has updated its Bank Secrecy Act (BSA)/AML Examination Manual. In an interagency statement, FFIEC emphasized its risk-focused approach to the supervision of banks for BSA/AML compliance. The BSA also requires companies involved in the $350 billion Paycheck Protection Program to comply with its requirements. The requirements include designating a compliance officer to implement the program effectively, installing policies for internal control, and training personnel. Other requirements under the BSA include reporting suspicious transactions above $5000 to the Financial Crimes Enforcement Network.
New AML measures by authorities
The Financial Crimes Investigation Board (MASAK) in Turkey has announced a new set of AML measures. In response to FATF’s AML demands, MASAK has developed a new condition for reporting non-commercial payments belonging to an individual. Individuals making offshore payments of more than $14,427 and less than $144,270 must upload them on MASAK database every day. Those making payments above the range must share them with MASAK a day before the payment. However, this does not affect corporate transactions and inter-financial institution transactions. In other news, the Securities and Exchange Commission (SEC) in Nigeria has developed a standardized investors’ data and consent form. This will help to check identity theft and money-laundering in the capital market. Identifying the investors will prevent the flow of illicit funds into the capital market.
Arguments for and against a cashless economy
The world has transitioned from coins, to paper currency, and finally to digital currency. The coronavirus pandemic could result in a major shift to more digital payments. From an economics perspective, a cashless economy has numerous benefits like reduced money-laundering and tax evasion. However, risks and threats of privacy also increase. Some also argue that digitalizing cash would give the governments and banks complete control of one’s financial activities. This would raise issues about data protection and money-laundering. Moreover, not everyone can afford smartphones or other devices to use the digital cash network.
