Money Laundering Bulletin

Of wealth and funds: back to the source

Understanding the source of a client’s wealth and the source of funds are key components of an organisation’s due diligence and thus of its broader money laundering prevention strategy. However, although these terms are used in legislation and guidance, they are not defined and, writes Gary Evans of Follow The Money, anecdotal evidence suggests that the line between the two can sometimes become blurred in practice. So, what do we actually mean by source of wealth and source of funds and what can an organisation do in practical terms?

Customer Due Diligence, Training

Depressurisation – Iran sanctions relief in prospect

In the early hours of 14 July 2015, it was announced that the P5+1/EU3+3 and Iran had reached agreement on the Joint Comprehensive Plan of Action (JCPOA) regarding Iran’s nuclear programme, building on the framework announced in April this year. A key element of the JCPOA will be extensive relief from current EU and US sanctions against Iran. However, celebrations may be premature, caution Scott Balber and Susannah Cogman of Herbert Smith Freehills, as sanctions relief will be effective only upon Iran meeting its obligations regarding its nuclear programme and, as such, the existing UN, US and EU sanctions remain in force.

Sanctions, Middle East

UK to report land & property owned by foreign companies

UK Prime Minister David Cameron has announced plans to make public individual foreign company holdings of land and property in England and Wales, collectively worth UK£122 billion.

Customer Due Diligence, PEPs, Estate Agents, Corporate Vehicles

Cashing in, and out

If it ain’t broke why fix it, the saying goes and criminals find that cash still affords one of the best ways to launder the proceeds of crime, according to Europol. In a major study of cash misuse, the police agency finds that it triggers 34% all EU suspicious transaction reports (STRs).

Training, Law Enforcement, Typologies, Payments, Cash Seizure, Accountants and Tax Advisers, Money Service Businesses, High Value Dealers, Precious Metal Dealers and Jewellers, Practice Findings, Europe

SWIFT guides banks to complete wire transfer information

Garbage in means garbage out, and the risk of fines. Banks are facing intense scrutiny, by regulators, if not prosecutors, of not only the mechanics but the inputs to their sanctions screening and transaction monitoring applications. “There’s no point telling the authorities you’re running all these sophisticated scenarios if the data’s wrong or missing,” says Brigitte de Wilde, Head of Financial Crime Intelligence at SWIFT, the global provider of secure financial messaging services.

Customer Due Diligence, Monitoring, Payments, Banks

Money laundering is strategic threat to UK, says NCA

“We assess that hundreds of billions of US dollars of criminal money almost certainly continue to be laundered through UK banks, including their subsidiaries, each year.” The National Crime Agency view in its National Strategic Assessment of Serious and Organised Crime 2015 makes grim reading for an industry already spending many millions on compliance in the wake of fines and admonitions by prosecutors and regulators.

Law Enforcement, Typologies, Accountants and Tax Advisers, Banks, Lawyers, Money Service Businesses, Trust and Company Service Providers, Casinos, Estate Agents, Practice Findings, Corporate Vehicles
Risks and Controls

India ratchets up controls on foreign-held ‘black money’

India has passed a new law to help prosecutors pursue individuals who hide the proceeds of tax evasion in foreign bank accounts.

Tax Evasion, Legislation & Guidance, South Asia

Virtual currencies, charities and de-risking: FATF plenary outcomes

Be it hard metal or bits on a blockchain, any means to hold value will interest criminals  and so, too, their strategic enemy, the Financial Action Task Force. Gold and virtual currencies both feature in new papers – typologies and guidance, respectively – emanating from FATF’s June plenary.

Terrorist Financing, Risks and Controls, Payments, Banks, Money Service Businesses, Precious Metal Dealers and Jewellers, Government and International Bodies, Legislation & Guidance
Money Laundering

De-risking – not without risk

The calculus that underpins a bank’s decision to exit customers is complicated by an increasing number of actual and potential cost variables as policy-makers respond to the wider economic and social impact. Colin Darby of Bovill plots a risk map of de-risking.

Customer Due Diligence, Banks, Money Service Businesses, Government and International Bodies, Practice Findings, Supervisors

It's not all beer and waffles in Belgium

Belgium may be at the policy centre of AML/CTF, with Brussels home to the European Commission, source of draft EU ML Directives, but its record on translating words into effective practice is far from satisfactory according to the Financial Action Task Force: Sue Grossey checks its latest evaluation.

Reporting, Lawyers, Precious Metal Dealers and Jewellers, Financial Intelligence Units, Government and International Bodies, Practice Findings, Europe

Ownership, control, sanctions: the Hmicho case

On 19 June 2015 the High Court handed down judgment in Elaine Hmicho v Barclays Bank PLC [2015] EWHC 1757 (QB). The ruling is important for all financial institutions, writes Zia Ullah of Eversheds, for the useful guidance it provides on the concepts of ownership and control in the context of international sanctions.

Sanctions, Banks, Cases, Europe

Stings in the sanctions tail

Sanctions impact all sides: Sarosh Zaiwalla of Zaiwalla & Co Solicitors worries that the consequences are not properly considered.

Sanctions, Lawyers, Cases
Terrorist Financing

The professionals: risk and response in Europe

A problem shared is unlikely to mean a problem halved in AML/CFT and sanctions compliance but it may, at least, point a way forward and foster fellow-feeling, both worthy goals of the Association of Certified Anti-Money Laundering Specialists, which addressed a host of current challenges at its annual European conference in London. David Coates reports.

Terrorist Financing, Training, Law Enforcement, Typologies, Bribery and Corruption, Legislation & Guidance, Practice Findings, Supervisors, Europe

The foreign terrorist fighter: profile and funding typologies

Tracking the flows of money that finance terrorist groups is both difficult and highly resource-intensive. An ever-growing problem, it is the source of much unease within the AML community, writes John Bryne, Executive Vice President of ACAMS, the Association of Certified Anti-Money Laundering Specialists. He looks at the tools and content available to help those in financial crime compliance.

Terrorist Financing, Training, Typologies, Middle East
Legal / Regulatory

Questioning transactional logic: Credit Agricole v Papadimitiou

A recent Privy Council decision goes to the heart of what financial institutions should know about the commercial rationale behind transactions and the source of customers’ funds. Charles Sorensen and Ed Shorrock of Baker & Partners draw the lessons for due diligence.

Customer Due Diligence, Monitoring, Tracing and Recovery, Training, Payments, Banks, Cases, Europe, Corporate Vehicles

Charities, financial access and terrorism laws: squaring the circle?

That charities play an essential humanitarian role in conflict zones is a given; that they carry some risk of abuse by terrorists is also generally accepted – which leaves the financial institutions that service them having to trade off commercial, legal exposure and social responsibility imperatives, while HM Government watches from the sidelines. David Coates traces a destructive tension.

Terrorist Financing, Risks and Controls, Banks, Government and International Bodies, Practice Findings, Supervisors, South Asia, Europe, Middle East, Non-Profit Organisations

Out in the cold – Russia sanctions extended into next year

On 19 June 2015, the Council of the European Union determined to extend existing sanctions relating to the Russian financial, energy and defence sectors until 31 January 2016. It also extended [2] existing sanctions measures targeting dealings with Crimea and Sevastopol until 23 June 2016. The foregoing sanctions restrictions had been due to expire in the coming weeks, pursuant to sunset measures set forth in earlier EU Council Decisions under which the sanctions were issued.

Sanctions, Europe

HSBC AML gaps carry too much risk to publish

If HSBC’s anti-money laundering deficiencies were made public they could be “exploited by those who would promote criminal activity, transfer the proceeds of crime, or evade US sanctions”.

Money Laundering, Sanctions, Banks, Cases, Practice Findings, North America