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Financial crimes around the world
Australian authorities have charged a sixth person in an ongoing drug investigation linked with laundering of $100 million. A security business in southwest Sydney allegedly acted as a front for the money-laundering. Meanwhile, US authorities have arrested Russian rap artist Maksim for his alleged involvement in money-laundering using cryptocurrencies. Maksim also had a connection with a transnational organized crime group called QQAZZ. In other news, UK’s Gambling Commission has fined Caesars Entertainment with $16 million for failing to prevent money-laundering. The commission investigated Caesar’s 11 casinos and found systemic failings and high spending. Caesars has admitted its failings and will improve its compliance policies.
Elsewhere, authorities have listed Zimbabwe’s Old Mutual PPC Limited and Seed Co International for suspected illicit activities. The activities relate to trading in fungible stocks and the Zimbabwe Stock Exchange is now investigating the matter. Meanwhile, many EU nations are yet to implement the AML/CFT measures defined in the 5th AML Directive. Only 5 out of the 27 EU states have fully complied with the directive. Malta, Cyprus and Portugal are yet to set up a functioning public registry as required by the directive. Additionally, Malta and Cyprus have been involved in numerous cases of Golden Visa fraud.
News from Transparency International and Swedbank
As the coronavirus pandemic continues, many nations are releasing funds to curb the disaster. To prevent losing these funds to corruption, Transparency International’s (TI’s) chapters across Latin America have released a set of guidelines. TI has requested the institution of anti-corruption safeguards and rigorous AML supervision. Still, there has been more evidence supporting the alleged money-laundering activity of Swedbank. TI had earlier revealed that Swedbank and its Baltic branches initiated about $40 billion high-risk transactions between 2014 and 2019. Now, it has found new evidence that the bank was involved in laundering of funds from Azerbaijan, Russia and Ukraine. As a result, the bank will be overhauling its system. Swedbank’s CEO Jens Henriksson stated that the bank has commenced a review so the management can correct any anomaly. To strengthen such efforts, TI is calling for stronger EU-wide supervision so the governments can enhance AML in bank sectors.
The coronavirus pandemic is affecting financial crimes
As the coronavirus pandemic continues, organized criminals are exploiting first-time online users. The world may also witness a significant increase in corruption and financial crimes. The reason is that governments are releasing huge funds to mitigate the disaster without ensuring transparency in their usage. Many such funds are misallocated, giving room for fraud, corruption, bribery and misappropriation. Thus, authorities must ensure due diligence and develop measures for AML compliance even when working from home. Governments must ensure transparency, accountability and anticorruption priority matters in the disbursement of relief funds in this period.
Meanwhile, the coronavirus pandemic is also affecting criminal proceedings. A case against Pilatus Bank owner Ali Sadr Hasheminejad stopped just before sentencing due to the outbreak. Sadr was found guilty of breaching US sanctions against his home country. He laundered millions of dollars through a housing project in Venezuela. The court previously placed him under house arrest with a GPS tracking device for monitoring. However, the pandemic has led to the suspension of all court cases. Many high-profile defendants tagged with the GPS tracking device have disconnected and left the US. Considering Al Sadr’s wealth and the probability that he might face 85 years in prison, he might run away too.
Good news from the AML world
The US has taken significant actions to strengthen its AML/CFT framework based on the recommendations of the FATF. The international watchdog recently re-rated the US to be largely compliant on Customer Due Diligence. The US is now compliant on 9 out of 40 recommendations and non-compliant on 4. It will continue to be in enhanced follow-up and will report its progress to FATF later. In other news, lawyers are now beginning to recognize money-laundering and manipulation of beneficial owners as major issues confronting them. The realization will be effective in preventing future money-laundering in the sector. Knowing that an escrow account is a means for money-laundering, lawyers must voluntarily enact due diligence over escrow deposits.
Artificial Intelligence could improve AML techniques
Organized crime groups are using advanced technological developments to launder funds across border. In these times, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has provided a new AML/CFT technique. Through AUSTRAC’s first Codeathon, technology experts are using big data and applying artificial intelligence (AI) as AML/CFT measures. The use of AI in AML and fraud prevention is becoming important. Still, companies are advised to be careful as the advent of the digital age has moved financial criminal activities online. Using machine learning, companies can train computers to show a discrepancy between a normal transaction and a suspicious one. Nevertheless, proper supervision and understanding are key to the use of AI in fraud detection and AML.
