Money Laundering Bulletin

Technical gains – Argentina, only at the outset

A cash-intensive economy with a significant untaxed component, Argentina also has to contend with a thriving black market in its currency, the peso. Pacifica Goddard finds reasons, even so, for optimism in its recent approach to AML.

Reporting, Financial Intelligence Units, Legislation & Guidance, Practice Findings, Latin America and Caribbean

Standard Chartered transaction monitoring gaps cost $300m penalty & US dollar clearing suspensions

Standard Chartered Bank will pay a $300m penalty to the New York Department of Financial Services after it failed to remediate transaction monitoring deficiencies in line with a consent order agreed with the regulator in September 2012. A new consent order, signed yesterday [19 August 2014] by SCB CEO Peter Sands, also requires the bank to suspend dollar clearing through its New York branch for high-risk retail clients in its Hong Kong subsidiary and close some business accounts in the UAE.

Monitoring, Banks, Cases, North America

PwC pays $25m for changing report on wire stripping at Bank of Tokyo Mitsubishi

PricewaterhouseCoopers Regulatory Advisory Services will pay a $25m penalty to the State of New York and not undertake consulting assignments for financial institutions supervised by the New York Department of Financial Services (NYDFS) for 24 months following its alteration of a report to regulators on wire stripping by Bank of Tokyo Mitsubishi (BTMU).

Sanctions, Banks, Cases, Supervisors, North America

Bank fines, Compliance dividends

Financial institutions may be paying the price of past neglect, if not, on occasion, downright disregard of AML and sanctions obligations, but it’s a good time to be in Compliance as they are having to pay more, much more for talent as well. Alan Osborn reports on a thriving market.

Practice Findings, Europe, North America

Sector-wide: EU & US sanctions on Russia move to next level

On 31 July 2014 the EU announced ‘tier 3’ sanctions on Russia in the wake of escalating tension in eastern Ukraine and the downing of flight MH17. Susannah Cogman of Herbert Smith Freehills in London provides a guide to the corresponding EU regulations while Scott Balber in the firm’s New York office examines the tightening US sanctions.

Sanctions, Europe


Firms, and so their AML compliance teams, are under intense scrutiny by competent authorities as they seek to rebuild business and balance sheet after the financial crisis. Practitioners, a UK regulator and law enforcement candidly discussed areas of specific focus and how their organisations are responding at Tavistock Media’s London AML & Financial Crime conference. Timon Molloy took notes.

Law Enforcement, Practice Findings, Supervisors, Europe

Call my bluff – Crimea

Sanctions, on the hard edge of international diplomacy, are presently ratcheting up over Crimea, with US and EU asset freezes and visa bans prompting retaliation in kind by Moscow, but there are good reasons to think they won't go much further, says Timon Molloy.

Sanctions, PEPs, Legislation & Guidance, Europe, North America
Money Laundering

The next act in the AML cycle

Germany was judged to have fallen sufficiently far short of Financial Action Task Force expectations in 2010 to merit regular inspection visits to check on remediation efforts to its AML/CFT regime. Sue Grossey looks at the steps it took to earn removal from the follow-up process by this June’s FATF Plenary.

Customer Due Diligence, Reporting, Government and International Bodies, Legislation & Guidance, Practice Findings, Supervisors, Europe

US takes a measured stride on beneficial ownership

The Financial Crimes Enforcement Network first proposed extension of existing customer due diligence obligations to identification of beneficial owners of accounts in covered US financial institutions in February 2012. After protracted consultations with industry a notice of proposed rulemaking (NPRM) was published at the end of July. Franca Harris Gutierrez, Sarah Pfuhl, Boyd M. Johnson III, Katrina Carroll and Elijah M. Alper of WilmerHale look at how much more financial institutions will need to know about who owns or controls some of their corporate and other legal entity customers.

Customer Due Diligence, Banks, Securities, Consultations and Responses, Legislation & Guidance, North America
Risks and Controls

Singapore slingshot

Acutely conscious of accusations that hitherto the AML regime has served as little more than window-dressing, Singapore, by its own calculation, the world’s fourth largest offshore financial centre, is tightening up its controls – and not just on paper, reports Mark Rowe.

Reporting, Tax Evasion, Practice Findings, Asia-Pacific

Russia – on the offensive

Rosfinmonitoring, Russia’s financial intelligence unit, charged with development and direction of the country’s anti-money laundering and counter terrorist financing regime - and reporting straight to President Putin - is working on a raft of stricter controls and penalties. Eugene Vorotnikov spoke to Yuri Chikhanchin, head of Rosfinmonitoring; Additional reporting by Alan Osborn.

Customer Due Diligence, Tax Evasion, Financial Intelligence Units, Legislation & Guidance, Practice Findings, Europe

Bank of America pays $16.6m for narcotics trafficking sanctions failings

Bank of America is to pay $16,562,700 to settle 213 apparent violations of US sanctions programmes against narcotics traffickers.

Sanctions, Banks, Cases, North America

More than meets the eye: the case of the Chong Chon Gang

In July 2013, Panamanian customs officials boarded and searched a North Korean- owned and-flagged vessel, the Chong Chon Gang, during its passage through the Panama Canal. Having sailed from Puerto Padre, Cuba, the Chong Chon Gang was carrying over 10,000 tons of sugar for delivery to North Korea as part of a trade agreement between those two countries. On boarding the ship, however, Panamanian authorities discovered trailers and containers full of military equipment hidden beneath the 200,000 bags of sugar in the vessel’s cargo hold. The shipment was part of an elaborate scheme to circumvent United Nations prohibitions on arms shipments to North Korea. David Carlisle picks up the trail and draws the lessons for deeper due diligence in trade finance if sanctions evasion is to be detected.

Sanctions, Customer Due Diligence, Trade Finance, Banks, Trust and Company Service Providers, Practice Findings, Asia-Pacific
Terrorist Financing

Holiday plans – after the FATF plenary

June’s Financial Action Task Force plenary yielded assorted updates, admonishments and typologies sure to spice the summer reading list of any AML/CFT professional.

Terrorist Financing, Government and International Bodies, Practice Findings

More fingers in more AML dykes

During its February 2014 plenary meeting, the Financial Action Task Force approved a bumper crop of follow-up evaluation reports, writes Sue Grossey. Last month, we looked at the fate of Luxembourg, now it is the turn of their lowland friends in the Netherlands.

Terrorist Financing, Customer Due Diligence, Financial Intelligence Units, Government and International Bodies, Practice Findings, Europe
Legal / Regulatory

BNP Paribas pays $8.9bn, senior staff exit over US sanctions breaches

BNP Paribas (BNPP) has pleaded guilty to criminal conspiracy to violate US sanctions [1]; the French bank will pay $8.9 billion to US authorities for systematically disguising more than $190 billion of transactions with clients from Iran, Sudan and Cuba. In addition, commencing 1 January 2015, BNP Paribas will be subject to a one-year suspension of its US dollar clearing services for selected business lines and offices. For two years it will also be prohibited from US dollar clearing as a correspondent bank for unaffiliated third-party institutions in New York and London.

Sanctions, Cases

Fraud funds through foreign bank account caught by UK law

A person may be tried for money laundering under the Proceeds of Crime Act 2002 (POCA) for permitting fraudulently obtained funds to enter their foreign bank account and then allowing them to be withdrawn, the Court of Appeal has ruled.

Cases, Europe

Four more months – measured sanctions relief for Iran

On 19 July 2014, the United States, the United Kingdom, Germany, France, Russia, and China (the “P5+1”) and Iran mutually consented to extend the Joint Plan of Action (JPOA), reached by the parties on 24 November 2013, for an additional four-month period, to 24 November 2014. The JPOA provides for limited, temporary, and reversible relief from certain US and EU sanctions targeting Iran in exchange for Iran taking specified steps as the parties continue negotiating a long-term agreement to ensure that its nuclear programme is used exclusively for peaceful purposes. Peter Flanagan and David Lorello of Covington & Burling review the nuances in the accompanying documentation.

Sanctions, Middle East

EU expands sanctions against Russia

On 25 July 2014 the European Union expanded its Ukraine-related targeted sanctions, which impose EU-wide asset freezes and travel bans. Maya Lester of Brick Court Chambers examines the lengthening list.

Sanctions, Europe