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A string of financial crimes in the US
Following an investigation into a money-laundering scheme by US authorities, the FBI has arrested five people including a Florida-based trainer for treating racehorses with performance-enhancing drugs and accepting bribes from Brazilian politicians. Meanwhile, a court found Lev Aslan Dermen, the owner of the California-based fuel company NOIL Energy Group, guilty of money-laundering and mail fraud used to obtain more than $511 million in renewable fuel tax credits from the Internal Revenue Service. Also in the US, 24 people have been arrested for defrauding several lonely and elderly people of over $30 million in an international money-laundering scheme based in Atlanta, using business email compromise, romance frauds and retirement account scams. Similarly, Robert Lee Blom, a Corisca farmer, was booked for fraud and money-laundering through his cattle Ponzi scheme using which he conned 53 people of millions of dollars. In another case, the Chief Financial Officer of a New Hartford company was arrested for diverting the company’s $776,000 to his expenses. Meanwhile, Andrew Fisher, owner and operator of Physician Specialty Pharmacy in Pensacola, was convicted of conspiracy to defraud and launder over $4.8 million from TRICARE, a federal health program designed for uniformed service members, retirees and their families. In other news, Kenneth Warren Rhule has been accused of operating and advertising an unlicensed cryptocurrency trading business.
Financial crimes through banks
The UAE Central Bank is working closely with the home regulator of a Pakistani bank operating in the country following a report of irregularities in dealing with politically exposed clients and in investigating transactions. It has restated that it has zero-tolerance for non-compliance with AML regulations and expects that all banks in the country including foreign banks strictly comply with regulations. Elsewhere, Swedbank AB has been levied a $397 million fine by Sweden’s Financial Supervisory Authority after an investigation of its AML measures revealed the bank’s insufficient awareness of the risk of money-laundering and its processes, routines and control systems. The bank also withheld documentation and information that revealed the seriousness of the situation. Meanwhile, India’s Punjab National Bank (PNB) is still reeling from the mega scam that rocked it 2 years ago. PNB has the chance to recover its losses under the provisions in the Prevention of Money Laundering Act as it allows for the restitution of assets owned by Nirav Modi, which were auctioned for a total of $7.27 million.
Other financial crimes around the world
Abdilgafar Fali Ramadani, the German-born Macedonia manager who oversaw Luka Jovic’s transfer from Eintracht Frankfurt to Real Madrid for 60 million euros in 2019, has been charged with money-laundering in Spain. Ramadani is a director and co-founder at Lian Sports, an agency whose activities are concentrated in the Balkan countries, working to acquire highly skilled talents. The Spanish investigators have now decided to view the documentation on various signings at 11 different Spanish clubs, mostly players from Serbia and other Yugoslav countries. Elsewhere, Singapore’s TMF Trustees Singapore Limited (TTSL) has been fined a penalty of S$400,000 for failing to comply with the AML/CFT requirements of the Monetary Authority of Singapore (MAS). TTSL entertained many settlors of trust without verifying the source of their money and did not monitor their transactions. Meanwhile, Philippines senator Richard Gordon, also the chair of the Senate Blue Ribbon Committee, claimed to have uncovered more than US$ 633 million in cash flown in by couriers through the country’s airports, and refused a bribe of over $393,000 offered by a Filipino family that smuggled $283 million into the country to avoid the panel’s summon.
Countries responding to FATF concerns
More than a year ago, FATF added Cambodia to its list of countries vulnerable to money-laundering due to its weak system of investigating financial crimes and minimal use of financial intelligence in investigating money-laundering and terrorism financing. Now, Cambodian authorities have strengthened their AML measures, recording a total of 75 cases of money-laundering and seizing a total of $7,786,179 and about $24,000 from suspects. Moreover, Cambodia has not recorded any major money-laundering case so far this year. Meanwhile, FATF added Myanmar to its watchlist of countries with strong financial crimes. The country has acknowledged the deficiencies in its system and agreed to work tirelessly to address them. Myanmar’s government said it has developed a detailed strategy and implementation plan to fight money-laundering and is focused on strengthening the country’s legal framework and crime reduction capabilities, although ethnic violence in the country may dampen the pace of these measures.
Dealing with AML non-compliance
UK’s law firm regulator has publicly rebuked the law firm Withers for its non-compliance by failing to provide appropriate AML training to its staff. While Withers has agreed to pay the authority’s investigation costs and promised to henceforth take its AML obligations seriously, non-compliance is a growing problem. Only recently, after allegations of non-compliance with AML regulations, the CEO of Australia’s Westpac Banking Corp. had resigned from his post. To address such non-compliance in financial institutions, it is advised that top management teams ensure that employees understand the gravity of AML efforts, ascertain the effectiveness of their investigative capabilities and confirm compliance to emerging industry standards. It is also important to look for new and effective tools and strategies to address non-compliance. Robust information technology has proven to be a critical part of AML compliance and should be used by financial institutions to monitor and identify any unusual transactions and behaviors. Meanwhile, some institutions such as the Financial Transactions and Reports Analysis Centre of Canada(FINTRAC), are also being commended for their efforts to promote compliance. FINTRAC’s measures have protected citizens and the country’s financial systems against trafficking of fentanyl, romance fraud and human trafficking have been highly significant. It also launched a Comprehensive Transparency Initiative to support businesses in fulfilling their AML/CFT obligations.
New technologies to improve AML measures
In the fight against money-laundering, working out who owns what in global financial systems is an essential and non-trivial task. To accurately address the question of ownership, commercial data and analytics firm Dun & Bradstreet has explored graph technology, which is based on the networks that connect items and their attributes. Its benefits include ease of querying, good response times, use of calculated risk levels in an ownership relationship, and a facility to detect a change of ownership. The FATF is also endorsing technologies to improve AML measures. It has developed guidelines to help governments, financial institutions, virtual asset service providers and other regulated entities determine whether a digital ID is appropriate for use for customer due diligence since traditional verification tools are not applicable. A digital ID makes it easier, cheaper, and more secure to identify individuals in the financial sector and can also ensure a significant control of human measures. To know if a digital ID is suitable, stakeholders should understand the assurance levels of the digital ID system’s technology and determine whether it is appropriately reliable.
