Money Laundering Bulletin

Halting advance – beneficial ownership registers

A year ago, MLB put forward a broadly upbeat assessment of the prospects for legislation to create effective registers of beneficial ownership in the world’s leading financial centres. Alan Osborn reviews progress in 2015 and looks for evidence of backsliding.

Customer Due Diligence, Tax Evasion, Government and International Bodies, Supervisors, Europe, North America

China economy jitters spur creative money outflows

Weakening of the Chinese currency, the Yuan Renminbi (RMB), last year may have spooked large investors but it’s meant a bonanza for the money changers of Hong Kong. Mark Godrey reports.

Trade Finance, Money Service Businesses, Practice Findings, Asia-Pacific

End high denomination banknotes to cut crime, says StanChart ex-CEO

Governments worldwide should eliminate their high denomination banknotes, such as €500, US$100, Swiss francs 1,000 and UK£50, as a way to cut an annual US$2 trillion in financial crime and US$1 trillion in corruption globally, according to former Standard Chartered Bank chief executive Peter Sands.

Money Laundering, Payments, Cash Seizure, Practice Findings

EU launches new counter terrorist financing action plan

The European Commission has released a detailed action plan of reforms designed to choke off the supply of money to terrorist organisations, including amending the recently agreed European Union (EU) Fourth Money Laundering Directive (4MLD).

Money Laundering, Terrorist Financing, Financial Intelligence Units, Government and International Bodies, Legislation & Guidance, Europe

HSBC monitor report must be published, US judge rules

The content of a January 2015 report on HSBC’s progress in overhauling its AML controls to satisfy a 2012 deferred prosecution agreement is a matter of public interest, U.S. District Judge John Gleeson decided on 28 January 2016.

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

‘Implementation Day’ dawns – Iran sanctions recede

On 16 January 2016, or “Implementation Day”, legislation in the United States and European Union came into effect, relaxing significantly the sanctions in place against Iran; this followed a report by the International Atomic Energy Agency to the UN Security Council, confirming that Iran had complied with its commitments under the Joint Comprehensive Plan of Action. Andrew Cannon, Susannah Cogman, and Jonathan Cross of Herbert Smith Freehills set out the key changes to the sanctions regimes and how these might affect business.

Sanctions, Europe, Middle East, North America
Risks and Controls

MEPs advised to focus on financial crime control around virtual currencies

European Union (EU) regulation of virtual currencies (VCs) such as Bitcoin should not go beyond preventing and fighting crime, including money laundering, experts told the European Parliament's economic and monetary affairs committee at a hearing on Monday (25 January). Participants were discussing the benefits and risks of VCs ahead of a parliament report on the topic.

Payments, Internet, Government and International Bodies, Legislation & Guidance, Europe

Something’s fishy

Visit your local fishmonger, writes David Carlisle, and you are likely to see signs advertising their commitment to the sale of sustainably harvested seafood. Call it a win for environmentalists. Yet despite the growing recognition of the benefits of sustainable fishing, the seafood industry is under scrutiny by governments for other reasons.

A colossal sector that touches every continent (yes, including Antarctica!) and employs an estimated 10-12% of the world’s population, the fishing industry is a critical feature of the international economy; but its vulnerability to criminal exploitation, attendant corruption, and an array of other risks is setting off blips on law enforcement’s radar.

Training, Predicate Crimes, Practice Findings
Money Laundering

The secrets of SARs

Exactly how useful are suspicious activity reports (SARs) to law enforcement and how can they be improved? Sue Grossey gained valuable insight from talking to serving officers who handle SARs for the Metropolitan Police Service in London.

Reporting, Training, Law Enforcement, Financial Intelligence Units, Practice Findings, Europe

FinCEN orders beneficial owner disclosure in New York & Miami luxury home cash deals

US title insurers involved in ‘all cash’ high-end residential property transactions by companies in Manhattan, New York and Miami-Dade County, Florida will have to provide details of the beneficial owners to FinCEN, the US financial intelligence unit, under Geographic Targeting Orders it issued yesterday [13 January 2016].

Reporting, Bribery and Corruption, Insurance, Estate Agents, Financial Intelligence Units, Legislation & Guidance, North America

To bank or not to bank? – Iran

‘Implementation Day’ (16 January 2016) has finally arrived, writes Henry Balani of Accuity, with the International Atomic Energy Authority (IAEA) busy ensuring Iran commits to limiting its nuclear enrichment programme, as set out in the Joint Comprehensive Plan of Action (JCPOA). And, as assets previously blocked by U.S., EU and UN regulations are unfrozen, Implementation Day also heralds a brighter future for the Iranian economy - the IMF estimates it grew 3% in 2015 and could by 5% a year after sanctions are lifted.

Sanctions, Banks, Middle East

Shaky foundations – real estate compliance

Real estate has only recently started to come under the regulatory AML spotlight shone on other sectors, says Paul Cochrane, and not before time.

Estate Agents, Europe, North America
Terrorist Financing

In tension over terrorist finance – EU to US data transfer & privacy rights

US intelligence has access to European Union citizens’ banking transfer records by virtue of a controversial 2010 agreement. Paul Cochrane examines the Terrorist Financing Tracking Programme, currently set for renegotiation.

Terrorist Financing, Customer Due Diligence, Monitoring, Law Enforcement, Europe, North America

Emerging terrorist financing risks

The horrific events in Paris will sharpen focus on how such attacks are funded. The Financial Action Task Force had already revisited the evolving threat in a report issued after its October 2015 plenary. Sue Grossey studies the latest terrorist financing methods and evidence.

Terrorist Financing, Typologies, Government and International Bodies, Practice Findings
Legal / Regulatory

EU CDD & risk-based supervision guidelines on right track, public meeting suggests

Firms in EU member states where competent authorities are not currently running an AML/CFT lens over their supervisory resource allocation may have to deal with a battery of information requests about their ML/TF exposure as regulators seek to implement the Fourth EU Money Laundering Directive (4MLD).

Customer Due Diligence, Legislation & Guidance, Supervisors, Europe

UK regulator may publish industry aggregate view on high-risk jurisdictions

Denied access to the UK Financial Conduct Authority’s own list of high money laundering risk jurisdictions – the Information Commissioner agreed that publication might prejudice UK relations with “some of the countries named” – firms may instead gain an industry-wide view under new proposals from the regulator.

Supervisors, Europe

Dualism – Russian AML and sanctions

Annexation of Crimea comes at a high price: the sanctions against Russia hurt; they are, though, to be distinguished from AML by, if not bright lines, at least a continuing dialogue with international partners through the Financial Action Task Force, says Paul Cochrane. Some, though, question Moscow’s real compliance agenda.

Money Laundering, Sanctions, Financial Intelligence Units, Government and International Bodies, Practice Findings, Europe

Deutsche Bank pays $258m for wire-stripping breaches of US sanctions

Deutsche Bank’s use of “OFAC-safe” payment processing to circumvent US sanctions against Iran, Libya, Syria, Burma and Sudan between 1999, at the latest, and 2006 have bought it a $200m penalty from the New York Department of Financial Services (NYDFS), and a further $58m payment to the Federal Reserve. An independent monitor, appointed for one year, will review the bank’s compliance programmes around AML and sanctions and six employees implicated in the violations will be terminated.

Sanctions, Banks, Cases, Asia-Pacific, Middle East, North America