anti-money laundering news

Money Laundering and Wall Street

“Wall Street executives are freaking out under the strain of widespread money fraud.  More compliance cops, more technology and expanded budgets are needed, they warn, to help stem the flood of dirty money laundered internationally, according to a new survey.

In a field paying anywhere from $75,000 to $250,000 in annual salary for qualified compliance pros, staffing is one of the biggest challenges for firms today.”

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Standard Chartered Faces Extension of U.S. AML Vigilance

“Standard Chartered expects it will remain under U.S. supervision for several more years over lapses in Iran-related anti-money laundering efforts because it needs more time to improve its internal standards, sources with knowledge of the matter said.

Under a deferred prosecution agreement it reached with U.S. authorities in 2012, the bank is due to remain under supervision by an independent monitor until the end of 2017. The sources said the bank now expects that date to be extended, possibly by several years.

The agreement has already been extended once, in 2014, and a decision on whether it will be extended again is expected by the end of this year, the sources said.”

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FinCEN Proposes Tougher Requirements

“To ensure consistent Bank Secrecy Act (BSA) coverage across the banking industry, FinCEN is proposing to require banks lacking a Federal functional regulator to establish and implement Anti-Money Laundering Programs. FinCEN also is proposing to extend Customer Identification Programs (CIP) requirements and beneficial ownership requirements consistent with the recently implemented Customer Due Diligence amendments to those banks not already subject to these requirements.

Banks without a Federal functional regulator (FinCEN estimates that they number 740 nationwide) are currently covered by many other BSA obligations, including filing suspicious activity reports and currency transaction reports. FinCEN anticipates that banks lacking a Federal functional regulator will be able to leverage existing policies, procedures, and internal controls required by other statutory and regulatory requirements to fulfill the proposed obligations.”

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PwC Settles $5.5B Fraud Detection Lawsuit

“PwC has settled a lawsuit brought against it over one of the biggest bank collapses in US history, in a landmark case that shone a light on the responsibility of auditors to detect fraud.

The world’s biggest professional services firm by annual revenues had been accused of failing to catch a multibillion-dollar conspiracy between executives at Taylor, Bean & Whitaker, a defunct mortgage lender, and counterparts at Colonial Bank, an Alabama-based lender that supplied TBW with loans. The decision to settle – for a confidential sum – came four weeks into proceedings in a state court in Miami.  ‘The case was settled to the mutual satisfaction of the parties,’ said a PwC spokesperson.”

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Bitcoin in Australia

“Australia is moving to become one of the first countries to regulate e-currencies such as bitcoin under its anti-money laundering and counter-terrorism financing laws.  Bitcoin – the most prominent digital currency to emerge globally – is backed by a computer code rather than a physical substance such as gold or mainstream currency.

The anonymity of payments using digital currencies make them attractive for terrorism financing, according to Australia’s financial intelligence agency, AUSTRAC…”

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Singapore to Use Data Tracking Against Money-Laundering

“Singapore will step up the fight against money-laundering with a newly created surveillance unit and data tracking but private banks must take the lead, its chief financial regulator said Tuesday.  Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) which also serves as the central bank, said financial institutions must set the right moral tone to help battle illicit fund flows.

‘Boards and senior management in particular must send a clear signal that profits do not come before values and ethics, and compensation structures must motivate not only high performance but also right conduct,’ Menon told a forum with foreign correspondents.”

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Risk Management Systems Mandated in Colombia

“On August 19, 2016, the Superintendence of Companies issued a modification to the Basic Legal Circular (No. 100-000006), which, among other matters, regulated which companies, according to their economic sector, are required to adopt Self-control and Risk Management Systems against Money Laundering and Terrorist Financing (in Spanish, SAGRALAFT), to the extent that such companies meet all of the following criteria or requirements, per sector.

Failure to comply with this regulation can result in fines, successive or not, to be imposed by the Superintendence of Companies to the company and/or its officers, up to 200 minimum legal wages (COP$137,891,000, c. USD$45,900).”

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India: Sebi Suspects Money Laundering

“The Securities and Exchange Board of India (Sebi) has come across fresh evidence indicating that as many as five brokers might have used the ‘exchange mechanism’ to launder money in the Rs 5,574-crore National Spot Exchange (NSEL) scam, according to the audit report submitted to it.

The third-party auditor appointed by Sebi has submitted its audit finding to the regulator, said a person with direct know of the matter.”

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Canada Confiscates More Suspect Money

“Suspected criminal proceeds or undeclared money seized from Chinese travelers has more than doubled in Canada since 2013, as the rate of capital flight from China continues its unprecedented pace.  According to recent numbers from the Canada Border Services Agency, airport officials confiscated $11.5 million CAD in non-reported currency and ‘monetary instruments’ in 2015, up from $5.5 million two years earlier.

The number in 2016 could be even higher if the amount discovered thus far — $6.5 million — is any indication.”

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Brazil Probe into Olympic Ticket Ring

“Brazilian police said that they had uncovered emails between International Olympic Committee (IOC) member Patrick Hickey and the head of the THG Sports hospitality company that discussed the illegal sale of Olympic tickets.

Police told a news conference in Rio de Janeiro that they were also investigating bank documents amid suspicion of money laundering tied to the illegal ticketing ring.

Three members of the Olympic Council of Ireland (OCI) whose passports were seized by police on Sunday – Executive Director Stephen Martin, Secretary-General Dermot Henihan and Treasurer Kevin Kilty – are suspected of involvement in the illegal sales, police said.”

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Global Regulators Investigate Money-Laundering Worries

“Global regulators will try to get more insight into why major banks are withdrawing from handling cross-border payments, making it harder for people to send money to relatives and loved-ones abroad.  Banks say it has become more costly to comply with tougher customer checks against money-laundering and terrorist financing, putting pressure on regulators to ease up.

The Financial Stability Board (FSB), which coordinates regulation across the Group of 20 economies (G20), says it is worried that fewer major banks are offering smaller banks correspondent relationships, the links which enable such remittances.”

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Deloitte Sued for not Flagging $200M+ in Dirty Money

“A Dubai-based investment group is suing accounting firm Deloitte and Touche’s Middle Eastern arm for failing to flag up money laundering at a now-defunct Lebanese bank.

Lebanese Canadian Bank paid over $100 million (£76 million) in 2011 to settle claims brought by US authorities that it was involved in laundering drug money and funnelling funds to Hezbollah and other militant organisations.

Deloitte and Touche declined to immediately comment.  Nest Investments Holdings, along with 10 other minority shareholders, is suing the accounting firm and Middle East managing partner Joseph El Fadl for negligence at the Dubai International Financial Centre.”

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Money Laundering a Major Risk in High-End Housing

“An ongoing Federal investigation into the high-end U.S. housing market has yielded some rather shocking results. According to a report recently released by the Treasury Department, more than 25% of buyers using limited liability companies (LLCs) who purchased high-end homes in Manhattan (over $3 million) and Miami (over $1 million) were linked to a ‘suspicious activity report,’ an ‘indication of possible criminal activity.’  That’s no small potatoes.

The U.S. government has long suspected that anonymous shell companies are being used to purchase multi-million dollar homes, an as-of-yet undetermined portion of which were merely fronts for money laundering or criminal activity. Now we have actual proof.

This investigation is being expanded to include additional affluent localities throughout the U.S., including San Francisco, counties north of Miami and Los Angeles County among others. The outcome of this investigation could have major widespread ramifications for investors. Once the government finds out just how endemic this problem is, the resulting crackdown could be sharp.”

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Anti-Corruption Developments in Mexico

“The recent enactment of a sweeping overhaul to Mexico’s anti-corruption regime serves as a stern warning to all companies with operations in the country that it’s time to revisit your anti-corruption compliance program.

Mexican President Enrique Peña Nieto late last month approved a series of secondary laws that effectively put into practice Mexico’s landmark National Anti-Corruption System (NAS), passed in May 2015. NAS is designed to coordinate the efforts of Mexico’s federal, state, and municipal government agencies in rooting out corruption among governments, companies, and individuals.

Mexico’s anti-corruption developments won the praise of the Organization for Economic Cooperation and Development. According to the OECD, passage of these laws ‘substantially transforms the anti-corruption architecture of Mexico by putting in place measures that the OECD considers effective.'”

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Billions in Illegal Banking Activity in China

“A task force has found illegal banking in 192 locations, China’s state-run news agency says.

Chinese police have this year uncovered $30 billion worth of illegal banking activity, involving 158 cases of underground banks and money laundering, the official Xinhua news agency reported the Ministry of Public Security (MPS) as saying late on Tuesday.

A special task force, jointly launched by the MPS, central bank, and foreign exchange regulator, uncovered illegal banking services in 192 locations, the report said.”

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Scotland a Laundering Money Hub?

“International gun-runners are using Scotland to launder their profits, Mafia watchers in the former Soviet Union have said. Organised criminals are increasingly exploiting secretive and obscure Scottish shell firms as fronts for everything from cyber-scams to the wholesale looting of banks.  Now Mafia monitoring group CRiME has warned that Scotland has become a money-laundering factory for criminal gun-runners hiding behind SLPs.”

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U.S. Loses Trillions on Mispriced Trade Goods

“Trillions of dollars may be missing from U.S. government coffers due to widespread corporate tax evasion and criminal money laundering strategies.

IU College of Business professor John Zdanowicz conducted an analysis of 12 years’ worth of U.S. Customs data and found that abnormally priced goods imported and exported by U.S. companies are masking complex tax avoidance strategies that have cost the U.S. government more than $2.3 trillion in revenue from 2003 to 2014.  ‘Criminals and tax evaders have discovered that laundering money through the banking system is dangerous, especially with the new financial institution reporting requirements under the Patriot Act and other banking regulations,’ Zdanowicz said.  ‘However, moving money through international trade can be virtually undetectable.'”

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Bank of Italy closes AS PrivatBank branch

“The Bank of Italy said it had started proceedings to shut down the Italian branch of Latvian lender AS PrivatBank after finding breaches of money-laundering regulations.  The Bank of Italy said AS PrivatBank would not be allowed to carry out any further operations in the country beyond letting clients withdraw savings or transfer them to other banks.

The Italian central bank said it had taken the measures after inspections carried out between March 16 and April 6 this year.”

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Ahmed Taimour

Feb 1 - Ahmed Taimour headshot (319x400)Ahmed Taimour is a CAMS-certified professional with more than 10 years of experience in compliance, internal audit and risk consulting with banking and international consulting firms in the Middle East. He has extensive experience in AML, internal auditing, corporate governance and risk management in the financial services sector gained from working in tier-one banks and Big 4 firms.

Ahmed can be reached at: https://ae.linkedin.com/in/ahmedtaimour

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