Efforts to combat financial crime worldwide

G20 ACWG and FATF Experts Meet

“The Financial Action Task Force (FATF) and the G20 Anti-Corruption Working Group (ACWG) held a joint Experts Meeting on Corruption in Paris, France, on 16 October 2016. The meeting was chaired jointly by the FATF President, Mr. Juan Manuel Vega-Serrano (Spain) and the G20 ACWG Co-Chair, Mr. Creon Butler (United Kingdom). This is the sixth time that the FATF and G20 ACWG have held such an event, which brings together anti-money laundering/counter-terrorist financing (AML/CFT) experts and anti-corruption experts to discuss issues of common interest. Participants in this dialogue included 104 delegates from 36 jurisdictions and 16 international organizations. The focus of this meeting was on transparency and beneficial ownership given the topic’s priority in both the FATF and G20 agendas and its particular interest to the international community overall.

The misuse of legal persons and arrangements which was highlighted earlier this year focused attention on the need to improve implementation of controls against the misuse of corporate structures. Some countries have already put in place adequate legal frameworks to collect and maintain beneficial ownership information as part of their AML/CFT customer due diligence processes. However, effective implementation of these measures presents significant shortcomings and remains a challenge. Work also still needs to be undertaken in most jurisdictions to ensure that such information is available for the purpose of investigating and prosecuting corruption offences.”


BVI After the Panama Papers

“Half a year has passed since the corruption story of the year – the Panama Papers – revealed the real owners behind thousands of shell companies.

Over 50 percent of the shell companies uncovered in the Panama Papers were set up in the British Virgin Islands (BVI). As of June this year, BVI hosted 430,000 companies: 15 for each of their 28,000 inhabitants. Have these revelations led to any changes in the way BVI does business?”


Termination of Burma Sanctions Program

“President Obama signed an Executive Order terminating the national emergency with respect to Burma, revoking the Burma sanctions Executive Orders and waiving other statutory blocking and financial sanctions on Burma.  As a result, the economic and financial sanctions administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) are no longer in effect.  These steps fulfill the announcement made by President Obama during the visit of State Counsellor Aung San Suu Kyi, stand as a testament to the far-reaching changes that Burma has undergone in the past few years, and are intended to support efforts by the civilian government and the people of Burma to continue their process of political reform and broad-based economic growth and prosperity.”


Bank Penalties Down 99.7%

“As of October 5, the combined total of fines from the Financial Conduct Authority and the Prudential Regulation Authority in 2016 was £36.5 million, according to analysis by regulatory technology firm Wolters Kluwer. That compares with £906 million in all of 2015, almost £1.5 billion in 2014 and about £335 million in 2013, when the FCA and PRA were set up in the April that year.

There has been a particularly sharp fall in the share of all fines levied against banks. Those account for less than 7 percent of fines so far in 2016, compared with more than 90 percent in each previous year. Bank fines totaled £2.4 million in the year to October 5, compared with £851 million in 2015.”


Chinese Police Bust Underground Banks

“Police in China’s southern province of Guangdong have busted underground banks that handled 230 billion yuan ($35 billion) in illegal money transfers this year, state news agency Xinhua reported, underscoring the challenges Beijing faces in blocking illicit outflows.

Illegal banking has been rampant in some parts of the province such as the capital Shenzhen, where an underground bank that handled 30 billion yuan in transactions was busted in August.”


U.K. Introduces Criminal Finances Bill

“New legislation designed to tackle accusations that the U.K. is a haven for dirty money would give British law enforcement officers sweeping new powers to tackle money laundering and corruption, as well as recover criminal proceeds.

The highlight of the proposed Criminal Finances Bill will allow law enforcement agencies to force suspected criminals to prove the source of their wealth, the U.K. government said Thursday.  Under the so-called ‘unexplained wealth orders,’ those unable to explain where their wealth came from would risk having their assets seized, including lucrative property.

The bill is subject to parliamentary approval before coming into force.”


U.K. Top Sporting Officials PEPs?

“The U.K.’s Treasury is considering tagging senior managers at international sporting federations as politically-exposed persons, a move that would give compliance officers a clearer path for tackling the risks of money laundering and corruption associated with these institutions.

‘Sporting federations deal with governments, with the public trust and with significant amounts of money…so classifying them as PEPs would give banks and other financial institutions the means to correctly assess the risk and detect when unusual payments are being made,’ said Judy Krieg, a partner at Sheperd and Wedderburn LLP in London.”


Swiss Banks in Money Laundering “Red Zone”

“Roughly 15 Swiss banks are in a ‘red zone’ of lenders particularly exposed to money-laundering risks, the head of Swiss banking watchdog FINMA said in a newspaper interview published recently.

Swiss federal prosecutors last week said that they have opened criminal proceedings against Zurich-based Falcon Private Bank for alleged failure to prevent suspected money laundering linked to Malaysia’s scandal-tainted 1MDB fund.

‘We have introduced a warning system in relation to money-laundering risks,’ FINMA Chief Executive Mark Branson said in an interview with Swiss newspaper SonntagsZeitung. ‘Roughly 15 banks are in the red zone here. That means they are particularly exposed.'”


Saudi Arabia Prosecutes $3.73B+ in Money Laundering

“Saudi Arabia will prosecute a number of its citizens and expatriates for their involvement in SR14 billion ($3.73 billion) money laundering racket, according to news report.  Al-Watan daily reported that the money was transferred through two ‘hawala’ transactions – SR6 billion and SR8 billion – which were largest uncovered so far.

The Bureau of Investigation and Public Prosecution (BIP) officials said the trial will begin in October at a local court in Jeddah.”


Tax Havens Under Attack

“Ireland, accused of being a tax haven for multinationals such as Apple to pay nearly zero tax on the bulk of its profits earned outside the United States, finds itself with a new adversary in the global fight against unfair tax practices — Brazil.

As of October 1, Brazil will add Ireland to its blacklist of tax havens, where it will join Panama and Monaco. As a result, any company based in Ireland will have to pay a 25 percent tax rate instead of 15 percent on its Brazilian earnings.  The G20 and some other nations have agreed to new rules, including the exchange of information between tax authorities.  The new rules are already in place and have started being phased this year.”


U.S. Fed: Enforcement Action

“The Federal Reserve Board announced the execution of the enforcement action listed below:

Agricultural Bank of China, Beijing, Peoples Republic of China and Agricultural Bank of China New York Branch, New York, New York Cease and Desist Order.”


Top Lawyer Advocates New Global Anti-Financial Crime Measures

“Governments worldwide should pass new laws to facilitate the sharing of information between themselves and the private sector in order to better combat financial crime, HSBC’s top lawyer told a banking conference in Geneva on Monday.

‘Put simply, the way we do financial crime compliance is outdated,’ Stuart Levey, chief legal officer at HSBC (HSBA.L) told the annual Sibos financial conference.

Levey, who was undersecretary for terrorism and financial intelligence at the U.S. Treasury Department from 2004 to 2011, called on the inter-governmental Financial Action Task Force (FATF) to set far-reaching global standards to help banks share information with governments and vice-versa.”


FATF Training and Research Institute (TREIN)

“September 20 was the opening ceremony of the FATF Training and Research Institute (TREIN) took place in Busan, Korea, during which FATF Executive Secretary David Lewis delivered opening remarks.

The TREIN institute meets the need for training and capacity-building in the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) measures.  Through the institute’s facilities, government officials from all member countries of the FATF Global Network will have access to a comprehensive training and research program.  Low-capacity countries or countries with a less mature AML/CFT regime will be able to benefit greatly from this additional expertise and research. The institute will also provide a venue for the training of government officials involved in the assessments, or mutual evaluations, of countries’ implementation of effective AML/CFT measures.   Assessors, reviewers and officials whose country is being reviewed, will learn more about the way the FATF and the FATF-Style Regional Bodies (FSRBs) measure the effectiveness of an AML/CFT regime.


SWIFT Announces Fraud Pattern Detection Controls

“To help financial institutions better spot attempted fraud, the SWIFT interbank messaging network plans to begin offering voluntary ‘daily validation reports’ to customers in December.

The move is designed to provide an ‘out-of-band’ view of an institution’s messages to help anti-fraud teams better spot unauthorized attempts to move money via SWIFT, the organization says in a statement.

‘A key step in the modus operandi in recent wire fraud cases at customer firms involves the attackers concealing their fraudulent messaging activity on customers’ local systems,’ says Stephen Gilderdale, who heads SWIFT’s customer security program, in a statement. ‘Daily validation reports will provide a reliable and independent source of information, providing such institutions with an activity lens to help them quickly detect fraud – whether perpetrated by external attackers or by malicious insiders.”


Scam “Every 15 Seconds” in Britain

“A financial scam takes place every 15 seconds across Britain, according to Financial Fraud Action (FFA), which says fraudsters are using, increasingly developing sophisticated tactics to trick people out of their money.

FFA says there were more than 1 million cases of card, check, phone or online fraud recorded from January to June. That is a 53 percent rise on the same period last year.  Scammers are directly targeting customers through email deception, known as phishing, and phone and text-based scams, known as vishing and smishing.

Many are pretending to be from legitimate bodies such as banks, utility companies or customs. Other fraudsters are hacking into email accounts and then posing as the builder, solicitor or tradesperson that the consumer has legitimately employed.


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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