Money Laundering Bulletin

Warm hearts and cold crimes

Charities or non-profit organisations are often at work in conflict zones close to terrorist operations and open to direct attack. The threat of financial compromise by the same extremists, arising from NPOs’ extended communication lines, heavy reliance on volunteers, who may not always be properly vetted, high cash turnover, and perhaps weak financial controls due to a strong ethos of trust, applies, equally, away from trouble spots. In a recent typology report, the Financial Action Task Force considers these risks and how AML/CFT professionals can respond. Sue Grossey reviews the text.

Terrorist Financing, Government and International Bodies, Practice Findings

National risk assessment on a small island

Aruba in the Caribbean began work on its money laundering and terrorist financing risk assessment even as the Financial Action Task Force’s revised Recommendations, which require it, were launched in early 2012. Bas Jennen, who managed the project, sets out the approach that was followed together with the findings and lessons for the conduct of future NRAs.

Government and International Bodies, Practice Findings, Supervisors, Latin America and Caribbean

Arab Bank found liable for terrorist financing

Arab Bank was liable for knowingly supporting terrorism in and around Israel which led to the deaths of US citizens, a federal jury in New York found on 22 September.

Terrorist Financing, Banks, Cases, North America

EU & US tighten sectoral sanctions on Russia

On 12 September the European Union and United States issued new sanctions against Russia over hostilities in Ukraine. The sectoral measures target named Russian banks as well as defence and energy companies and bar provision of dual-use goods and some oil project services. Susannah Cogman and Scott Balber of Herbert Smith Freehills work through the detail.

Sanctions, Europe, North America

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

Citigroup settles with OFAC over Iran sanctions breaches

Citigroup will pay $217,841 to the US Treasury following eight apparent violations of US sanctions programmes.

Sanctions, Cases, North America

Domestic PEPs – lessons from Russia

Debate over how to identify domestic Politically Exposed Persons (PEPs) seems never-ending, writes Oleg Zadalia of Accuity. Bankers, lawyers and assorted consultants all have an opinion, sharpened against the timetable for the Fourth EU Money Laundering Directive - the final text still looked for later this year. One question is whether anything might be learnt from elsewhere, outside the EU, from Russia perhaps.

PEPs, Europe
Money Laundering

Alert service to focus banks on real-time financial crime

A new Financial Crime Alerts Service (FCAS), warning banks about the latest financial crime and cyber threats, is to be launched by the British Bankers Association.

Money Laundering, Terrorist Financing, Predicate Crimes, Banks, Government and International Bodies, Europe

Failure to report

Unsure whether to go ahead with a transfer of funds for a high net worth client, something doesn’t feel right to the MLRO in London, who opts to file a consent SAR...

Reporting, Financial Intelligence Units, Europe
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

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

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
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

Bangladesh – law and practice

Extensive legislative remediation by Bangladesh may have strengthened its AML/CFT regime sufficiently for technical approval by the Financial Action Task Force but corruption and capital flight leave the real impact in doubt. A Z M Anas reports from Dhaka.

Financial Intelligence Units, Legislation & Guidance, Practice Findings, South Asia

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

North Korea, arms and Africa: three case studies

The Democratic People’s Republic of Korea (DPRK) works actively to promote trading links in Africa but its commercial agenda hides darker objectives that include the supply of dual-use goods in breach of international sanctions. Melissa Hanham, Leslie Wukstich and Stephanie Lieggi examine the risk that Pyongyang’s subterfuge presents to institutions with connections to the continent through a set of clear, documented cases.

Sanctions, Africa, Asia-Pacific

EU & US sanctions hit Russia’s finance, energy and defence sectors

New rounds of sanctions have been announced by the European Union (EU) and United States, which reduce Russian access to their capital markets and restrict EU and US persons' dealings with Russian banks, arms manufacturers and oil companies.

Sanctions, Europe, North America