ACFCS NOVEMBER REGULATORY REPORT: ELEVATED AML RISK CONTINUES, SOCGEN PENALTY, AND MORE – ACFCS

ACFCS NOVEMBER REGULATORY REPORT: ELEVATED AML RISK CONTINUES, SOCGEN PENALTY, AND MORE

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Posted by: Brian Monroe

By Brian Monroe

bmonroe@acfcs.org

December 5, 2018

Welcome to a monthly feature from ACFCS to help you keep up to date on the latest rules, guidance and enforcement trends: The Regulatory Report!

In this feature, ACFCS highlight’s key current, upcoming or potential changes in the global financial crime landscape, so compliance professionals, investigators and regulators can better keep abreast of pressing vulnerabilities, issues and legislative fixes. Enjoy!

In this month’s ACFCS Regulatory Report, top U.S. regulator highlights elevated anti-money laundering risks, SocGen pays $1.3 billion sanctions penalty, MoneyGram struggles on compliance remediation, suffers new fine, and more.


United States

Guidance

In latest OCC risk perspective, AML risks remain ‘elevated’ as banks juggle multiple rising regulatory focal points, attempt to ferret out crypto criminals

The largest and most complex banks in the United States still face “elevated” financial crime compliance risks as they must more adroitly juggle resources to appease regulators also seeking to ensure better overall protection to consumers while at the same time countering soaring criminal crypto vulnerabilities, according to a just-released regulatory update.

Those are just some of the takeaways from the U.S. Treasury’s Comptroller of the Currency’s (OCC) Semiannual Risk Perspective covering the Fall period. The risk perspective, as it has done in several prior missives, notes that AML risk continues to be “elevated” due to a bevy of reasons, including:

·Compliance risk remains elevated as banks seek to manage money-laundering risks in a complex, dynamic operating and regulatory environment. In addition, the adoption of new technologies and other innovations and implementing changes to policies and procedures to comply with amended consumer protection requirements are challenging banks’ compliance risk management processes.

·It is important for management at banks of all sizes and business models to consider innovation and emerging industry trends in their strategic planning processes. Strategic planning should include a discussion of the evolving needs and preferences of existing and potential future bank customers.

·Failure to appropriately consider innovation and the responsible adoption of technology could pose strategic risk to some banks. Consumer compliance, Bank Secrecy Act/ anti-money laundering (BSA/AML), third-party, and operational risk should be closely monitored depending on the partnerships, products, and technologies adopted by the bank.

·Complex and dynamic activity is not only in the form of traditional products and services but now may also relate to increases in virtual currency and crypto assets, which may create vulnerabilities that criminals can exploit for money laundering, terrorist financing, and other criminal enterprises.

·The majority of BSA/AML-related deficiencies identified by the OCC stem from issues related to customer due diligence/enhanced due diligence, customer risk identification, and processes related to suspicious activity monitoring and reporting. To read more, click here.

Individual liability

DOJ charts revisions to policy granting leniency for corporate cooperation, takes harsher prosecutorial tone by requiring information on all complicit senior officials

Federal prosecutors will now take a harsher stance for allowing cooperation credit for corporate investigations and settlements by requiring that all – and not just some – senior executives involved are brought to light, a move that will add needed consistency in compliance negotiations but could make leniency more difficult to achieve in high-profile cases.

In a November 29, 2018 speech, Deputy Attorney General Rod Rosenstein announced a softening of the US Department of Justice’s (DOJ) policy on giving credit for cooperation in corporate prosecutions.

As memorialized in the 2015 memo titled Individual Accountability for Corporate Wrongdoing (known as the “Yates Memorandum”), DOJ had followed an “all or nothing” policy that barred corporate defendants from receiving cooperation credit if they failed to provide information on all employees who were involved in criminal conduct.

But that strict cooperation credit requirement has now given way to a regime that allows prosecutors to give credit even where companies provide information only on those employees who were “substantially involved in or responsible for the misconduct at issue” and “provide . . . all relevant facts relating to that misconduct.”

On the plus side, the attention on the actions of senior executives could allow financial institutions to do a more focused internal review at the upper echelons of bank, rather than wasting sparse investigative resources on attempting to uncover the involvement of all rank and file staffers.

The new policy “prohibits our attorneys from awarding any credit whatsoever to any corporation that conceals misconduct by members of senior management or the board of directors, or otherwise demonstrates a lack of good faith in its representations.” To read more, click here.


Compliance

The Financial Crimes Enforcement Network (FinCEN) and its regulatory partners this week issued a joint statement encouraging banks and credit unions to take innovative approaches to combating money laundering, terrorist financing, and other illicit financial threats, while at the same time also exhorting examiners to not ding banks for trying something new.

The communique was direct on that issue in particular: “The joint statement notes that innovative pilot programs in and of themselves should not subject banks to supervisory criticism, even if the pilot programs ultimately prove unsuccessful. Likewise, pilot programs that expose gaps in a BSA/AML compliance program will not necessarily result in supervisory action with respect to that program.

“The joint statement also notes that the agencies are open to engaging with banks to discuss pilot programs for innovative BSA/AML approaches. As banks pursue innovative change, early engagement can promote a better understanding of these approaches by the agencies, as well as provide a means to discuss expectations regarding compliance and risk management.”

To read more, click here.

The move follows a statement by the same cadre giving their blessing for smaller institutions to pool AML resources to increase efficiency, effectiveness, lower costs. To read the joint, interagency press release, click here. To read the full statement, click here.

FinCEN casts wider net on real estate transactions, expanding GTOs to 12 major US cities

On Nov. 15th, the US Financial Crimes Enforcement Network (FinCEN) reissued its existing Geographic Targeting Orders (GTOs) in six cities, and added an additional six to the list. It also changed the reporting threshold to $300,000.

The GTOs require title insurance providers to identify the beneficial owners behind companies involved in all-cash real estate purchases, and notify FinCEN through a Currency Transaction Report.

The new $300,000 threshold is a substantial drop. Previously, thresholds varied by city and county, ranging from $500,000 to $1.5 million. The lower price point is likely to capture a wider range of real estate transactions, beyond the high-end luxury market that was the original focus. The latest round of orders also covers transactions done in cryptocurrencies.

FinCEN’s Acting Director, Jamal Al-Hindi, has in the past stated that GTOs were gathering useful intelligence for law enforcement on suspicious flows of funds, raising speculation that formal regulations for the real estate sector were on the horizon.

The newly covered regions include certain counties in Boston, Chicago, Dallas-Fort Worth, Los Vegas, Honolulu and Seattle, along with the reissued orders covering parts of Los Angeles, Miami, New York City, San Antonio, San Diego and San Francisco. To read more, click here.


Corruption

Former bank owner who used institution to launder corruption proceeds sentenced to prison

A former owner of Banco Peravia bank in the Dominican Republic was sentenced to three years in prison last week for his role in a billion-dollar money laundering scheme involving currency exchange. To read more, click here.

Terror finance

Woman in New York pleads guilty to supporting ISIS through cryptocurrencies, bank fraud

The 27-year old obtained credit cards and personal loans through fraud, then used the funds to purchase about $62,000 in bitcoin and other cryptocurrencies and transmit them to the Islamic State.

The woman also sent more than $150,000 in wire transactions to shell companies that were fronts for ISIS in Turkey, China and Pakistan. She was arrested at the JFK international airport in New York City while attempting to travel to Syria.

The case represents one of the few documented instances of a terrorist group raising a significant amount of funds through cryptocurrencies. It also suggests that while ISIS has largely lost its territorial holdings, it remains a potent force in online radicalization and fundraising. To read more, click here.

Enforcement

French banking giant SocGen enters $1.34 billion agreement with US authorities for longstanding sanctions violations

On Nov. 19, France’s third-largest bank entered a deferred prosecution agreement and agreed to pay more than a billion dollars to US federal and state agencies over illegal transactions with Cuba, Iran and the Sudan.

As part of the settlement, Societe Generale (SocGen) agreed that it violated US sanctions laws by conducting transactions for sanctioned countries between 2003 and 2013, which included a US-dollar credit facility for Cuba that moved approximately $10.3 billion. That business line continued until 2010, despite concerns from compliance staff that dated back to 2004.

The $1.3 billion will be paid out to a host of agencies, including the Department of Justice, Manhattan District Attorney’s Office, Federal Reserve, US Treasury and New York Department of Financial Services (DFS). The DFS also hit the bank with a $95 million penalty for weak AML controls.

The settlement includes requirements to remediate sanctions compliance failings. For US authorities, it continues a long string of big-ticket sanctions enforcement actions against non-US financial institution, and suggests that scrutiny of sanctions remains a high priority for regulators and enforcers. To read more analysis, click here. To read the full release, click here.

After breaching DPA, Moneygram forfeits $125 million, agrees to further bolster AML program, counter-fraud tactics

One of the country’s largest money transmitters last month agreed to forfeit $125 million after breaching the provisions of a 2012, $100 million settlement for broad failures in financial crime compliance programs and for not adequately identifying agents engaged in fraudulent funds transfers.

The U.S. Department of Justice (DOJ), Federal Trade Commission (FTC) and other federal authorities stated last month that Dallas-based MoneyGram International Inc. had breached the provisions of its 2012 deferred prosecution agreement (DPA), which gave the company five years to improve its anti-money laundering (AML) and counter-fraud programs – a deadline that was up in 2017.

Authorities allowed MoneyGram to extend the DPA to November of this year, but was still found to have “significant weaknesses” in uncovering and preventing rogue agents from engaging in fraudulent transfers from a range of domestic and foreign scammers, a cabal typically preying on the elderly and vulnerable by making wild claims, like a person won a sweepstakes or lottery, and only needed to pay the “taxes or fees.”

To read the full DOJ report, click here. To read ACFCS coverage of the penalty, click here.


Investigations

Deutsche Bank headquarters raided in money laundering investigation tied to Panama Papers

German police spent two days recently searching Deutsche Bank’s headquarters and five other offices in Frankfurt, part of a probe into whether the bank facilitated suspicious transactions tied to customers in offshore tax havens.

German prosecutors alleged that two unnamed employees of Deutsche Bank helped clients launder funds and conceal potentially illicit activity, to the tune of hundreds of millions of euros. Investigators reportedly searched the offices of the bank’s board of directors on Friday November 30th, after about 170 agents took part in Thursday’s action.

The case was prompted by information contained in the Panama Papers, the massive trove of documents that was leaked from law firm Mossack Fonseca in 2016. That data dump and subsequent analysis and reporting by journalists ensnared politicians and has already led to enforcement actions targeted at other financial institutions.

Deutsche Bank has faced a series of investigations and is no stranger to enforcement actions in recent years, paying about $700 million in AML penalties in 2017. The scale of this most recent investigation suggests more trouble to come.

One notable issue is the time period in which the wrongdoing allegedly took place – German prosecutors have stated they are examining conduct that took place from 2013 to 2018, at a time when the bank was already under regulatory pressure to improve its compliance controls. To read more analysis, click here.

DOJ charges four men with fraud, money laundering tied to Panama Papers investigation

The Department of Justice filed charges including fraud and money laundering against four individuals, one a U.S. citizen, in connection with their alleged roles in a decades long criminal scheme perpetrated by Mossack Fonseca & Co, a Panamanian global law firm.

The case is part of an investigation stemming from the Panama Papers, a massive leak of financial details about secret offshore accounts in 2016.

Prosecutors say members of the group, while working with Mossack Fonseca clients, marketed, created, and serviced sham foundations and shell companies in foreign countries to conceal U.S. taxpayers’ actual incomes from the IRS, the Justice Department said in a statement.

To read more analysis click here. To read the full release, click here.


Congress

FinCEN, OCC and FBI officials testify on bolstering AML compliance, oversight through AI, more aggressive information gathering, sharing

In testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, top regulatory and investigative agencies stated current and upcoming plans to better count illicit finance, strengthen anti-money laundering (AML) countermeasures and more effectively arm the public and private sectors with more information on criminal and terror funding patterns.

Some highlights include: FinCEN Director Kenneth Blanco emphasized the importance of information obtained through AML compliance requirements, adding that components of FinCEN’s efforts to improve the AML regime include:

  • using artificial intelligence and machine learning to analyze the data;
  • sharing information with the private sector to help identify suspicious activity; and
  • developing new ways to provide feedback to financial institutions on the value and benefits of reporting.

OCC Compliance and Community Affairs Senior Deputy Comptroller Grovetta Gardineer testified that AI and machine learning provide opportunities to cut costs and better spot criminal activity. She recommended that Congress consider legislation that would:

  • require regular review of BSA/AML regulations to identify those that might be outdated or burdensome; and
  • amend the BSA’s safe harbor rules to clarify that a financial institution can file a suspicious activity report without being exposed to civil litigation, and that information sharing between financial institutions will not incur liability.

FBI Criminal Investigative Division Section Chief Steven M. D’Antuono testified that criminals use opaque corporate structures to hide the true beneficial owners of assets. He identified the Treasury Department’s recent Customer Due Diligence Rule as one step taken in response to that challenge.

For more analysis, click here. To watch the full hearing and view all witness statements, click here.

Cybersecurity

Marriott reveals theft of information from 500 million customers in years-long data breach

The hotel giant released a statement on Nov. 30th that said nearly half a billion customers who made reservations at their Starwood properties had their data compromised, in an attack that apparently dated back to 2014.

According to Marriott, the attack potentially exposed personally identifying information and passport numbers of an estimated 327 million guests, and the company couldn’t rule out that payment card data was also stolen. The company’s internal investigation is ongoing.

Attackers reportedly encrypted the data stolen on Marriott’s servers to avoid detection, which is complicating efforts to investigate. The attack is one of several on major international hotel chains that have come to light in recent years, suggesting that cybercriminals are finding tempting targets in the hospitality industry. To read more analysis, click here.


Securities

Finra offers insight, strategies to better secure virtual value vaults

As part of its series on the emerging world of digital assets, the U.S. securities’ sector’s chief self-regulatory body, the Financial Industry Regulatory Authority (Finra), tackles key strategies to better store and secure crypto currencies – currently a top target for a wide array of criminal, hacker and rogue nation state groups.

Finra adds clarity around the risks tied to public and private keys and illumines on the various types of storage, including “cold storage” and “hot storage,” referring to offline safekeeping or various online “wallets.”

They key takeaway: any online storage option can be susceptible to hackers, a group now more aggressively targeting virtual currency exchanges and any digital storage depots holding their keys. Additional articles explore Initial Coin Offerings, digital tokens, the virtual currency regulatory landscape and tips to avoid fraud and scams in this area. To read more, click here.

Sanctions

SWIFT says suspending some Iranian banks’ access to messaging system

The Belgium-based SWIFT financial messaging service said last month it is suspending some unspecified Iranian banks’ access to its messaging system in the interest of the stability and integrity of the global financial system.

In a brief statement, SWIFT made no mention of U.S. sanctions coming back into effect on some Iranian financial institutions on Monday as part of U.S. President Donald Trump’s effort to force Iran to curtail its nuclear, missile and regional activities.

The SWIFT statement said suspending the Iranian banks access to the messaging system was a “regrettable” step but was “taken in the interest of the stability and integrity of the wider global financial system.”

Having abandoned the 2015 Iran nuclear deal, Trump is trying to cripple Iran’s oil-dependent economy and force Tehran to quash not only its nuclear ambitions and its ballistic missile program but its support for militant proxies in Syria, Yemen, Lebanon and other parts of the Middle East. To read more analysis, click here.

OFAC hits Iranian bitcoin financiers, top Nicaraguan officials with sanctions

The US Office of Foreign Assets Control added two Iranians to its list of Specially Designated Nationals and published their bitcoin addresses for the first time. Nicaragua’s vice president and a security adviser were also added to the blacklist.

The two addresses tied to the Iranians have conducted over 7,000 in bitcoin transactions, worth millions of US dollars, and is the clearest sign yet that the nation is utilizing cryptocurrencies in an effort to circumvent the US sanctions regime. In the same announcement, OFAC published two new frequently asked questions on digital currencies.

The Nicaraguan officials added to the SDN list include the vice president Rosario Murillo, wife the country’s president Daniel Ortega, as well as the couple’s senior security advisor. The pair are alleged to have held sway over paramilitary gangs that suppressed public protests through killings and violence, amid months of public outcry and deteriorating conditions in the country.

To read more analysis, click here. To read the OFAC release, click here.


FATF

FATF report to the G20, noting key focal points under U.S. presidency, including crypto, terror, proliferation

The report set out FATF’s ongoing work to fight financial crime, including:

  • Strengthening the institutional basis, governance and capacity of FATF
  • FATF’s work program on virtual assets
  • Countering the financing of terrorism, proliferation of weapons
  • Improving transparency and availability of beneficial ownership information
  • Improving the effectiveness of the criminal justice system
  • Financial technologies, regulatory technologies: digital identity
  • De-risking

To read more, click here.


United Kingdom

UK barrister challenges sanctity of AML SARs, scores win to gain access

A London-based barrister has challenged a bank’s decision to file suspicious activity reports (SARs) about him, after it froze his accounts and provided limited evidence to back its actions – a move that strikes at the heart of anti-money laundering (AML) programs as these filings are supposed to be confidential and immune from civil and other information requests. NatWest began filing SARs on David Lonsdale in March 2017, when it froze his joint account for a number of days. In December it then froze his remaining six accounts.

When he requested information about the account freezes, the bank reportedly provided ‘limited documentary’ evidence about the SARs and did not disclose them. Lonsdale began legal proceedings against the bank after it informed him that it was going to shut down his accounts.

He made a number of claims, including breach of the Data Protection Act, and he also applied for permission to be allowed to view the SARs. The court granted him permission to view the SARs and also stated that the bank had not given him evidence to back any suspicions of money laundering. To read more analysis, click here.

Whistleblower in Danske scandal blasts use of UK corporate entities in global money laundering

Howard Wilkinson, who blew the whistle on the bank’s alleged role in a $228 billion money laundering scheme, called UK corporate structures “a disgrace” for their years-long use in financial crime.

Speaking before European Union lawmakers in Brussels, the former Danske executive called out UK limited liability partnerships and Scottish liability partnerships in particular, saying they had been “abused for absolutely years.”

While UK authorities have taken steps in recent years to crack down on misuse of legal entities, historically they have been attractive to financial criminals for their relative opacity and access to the European financial system.

Wilkson also maintained that “80 – 90 percent” of the money flowing through Danske bank was passed through correspondent institutions in the United States. A number of large banks, including Deustche Bank, JPMorgan, and Bank of America reportedly handled funds from Danske. Given the vast sums involved, further regulatory scrutiny is possible. To read more analysis, click here.


Canada

Canada’s Minister of Finance introduced a budget bill that would amend the country’s laws on company formation to require companies to capture more information on their beneficial owners, a move that would follow similar initiatives by Europe, the United Kingdom and, to a lesser degree, the United States. To read more analysis, click here.


European Union

EU details assessment of financial crime “high risk” third countries and priority regions for future assessments, highlighting U.S., Canada, but no U.K.

The EU Commission recently detailed its list of third countries it considers to be at a higher risk of financial crime and should be prioritized for deeper assessments, lumping the United States, Canada and other regions with generally stout anti-money laundering (AML) rules and enforcement with jurisdictions like Iran and Iraq – but leaving out the United Kingdom.

To read more, click here.

EU presses legal leverage against Luxembourg, Malta to buttress AML defenses, Spain wins reprieve

The European Commission this week took rare and drastic steps to increase legal pressure on Luxembourg and Malta for not adequately implementing bloc-wide financial crime compliance regulations, while pulling back similar actions against Spain after a range of recent improvements.

The move comes as several EU member states – including Denmark, Estonia, Latvia, the Netherlands and others – have become mired in money laundering scandals to the tune of hundreds of billions of dollars and individual banks in some countries have paid in some cases record penalties in the hundreds of millions of dollars for extensive and longstanding anti-money laundering program (AML) failures.

In short, the commission levied a range of censures against the three countries. Authorities chastised Malta’s financial intelligence unit for having lax supervision of the banking sector with ostensibly the worst punishment handed down to Luxembourg, which was faces a lump sum penalty and daily fines until examiners deem it in line with Europe’s Fourth AML Directive.

To read the full commission report on Malta, click here.

To read the full commission report on Luxembourg, click here.

To read the full commission report on Spain, click here.

To read ACFCS coverage of the EU AML actions, click here.

EU planning pan-bloc AML office to oversee enforcement

The European Central Bank is planning a dedicated “AML Office” that would oversee an “AML network” to connect and monitor enforcement in the region. To read more analysis, click here.


Denmark

Money laundering could affect financial stability, Danish central bank warns

A money laundering scandal at Danske Bank involving billions of euros of suspicious flows is serious enough to potentially affect the country’s financial stability, the central bank warned on Friday, a rare statement revealing how lax compliance processes at even one large bank in a region can have disastrous, countrywide consequences.

Denmark’s state prosecutor filed preliminary charges recently against Danske Bank, Denmark’s largest lender with a balance sheet 1-1/2 times Danish gross domestic product, for alleged violations of the country’s anti-money laundering act in relation to its Estonian branch.

In the report, the central bank said money laundering issues at a single bank could spread to the entire financial sector. Danske Bank in September disclosed payments totaling 200 billion euros ($227 billion) through its Estonian branch, many of which the bank said were suspicious.

Authorities in Denmark, Estonia and the United States are currently investigating the bank, which could be facing sizeable fines. To read more analysis, click here.To see the charges and a bank statement, click here.

Estonia

Estonian financial watchdog proposes money laundering prevention measures

Estonia is the first country in the euro area where a bank has been stripped of its activity license at the request of a financial supervision authority for breaking anti-money laundering rules, Chairman of the Board of the Financial Supervision Authority (FSA) Kilvar Kessler said at a debate in the Riigikogu about the prevention of money laundering last month.

According to Kessler, the section of Estonian penal law on misdemeanors needs to be revamped, as in its current state, with its short limitation periods, complicated procedures and small terms of punishment, it is unsuitable for the finance sector.

He also highlighted the need to establish a central national analysis center that would handle risk analysis for money laundering, the financing of terrorism and the violation of financial sanctions in Estonia.

The FSA chief also found that the EU needs a central institution tasked with the prevention of money laundering which would coordinate the work of member states’ corresponding authorities. To read more, click here.


Singapore

Singapore greenlights harsher penalties for money laundering, terrorist financing

Singapore’s Parliament on Nov 19th approved a package of laws and amendments that strengthen the country’s hand in investigating and prosecuting financial crime offenses.

Among other changes, the legislation increases the penalty for failing to file a suspicious activity report from 20,000 Singapore dollars to 250,000 and up to three years in jail. Amendments criminalize the possession or use of proceeds “which would be suspected by a reasonable person of being benefits from criminal conduct”, in a bid to combat money mules using Singapore as a destination.

The legal measures also included amendments to boost intelligence sharing with authorities in other countries, and make it easier for prosecutors to bring cases tied to illicit financial activity in other countries. To read more analysis, click here.

Israel

Tax transparency watchdog urges Israel to step up moves against money laundering

After global index puts Israel in top third of most financially secretive countries, NGO calls for more public scrutiny and regulations to stop rich from hiding their assets.

Israel must immediately move to pass regulations against tax evasion and money laundering if it is to protect its credit rating and avoid being shunned by the international financial community, a tax transparency watchdog cautioned in a report published Sunday.

The strongly worded advice coincided with a plea issued Monday by Angel Gurria, secretary-general of the 36-member Organisation for Economic Co-operation and Development (OECD) to Israeli officials to speedily pass regulations enabling Israel to honor a commitment it made in 2014 to automatically exchange financial information.

Gurria said he would have to report on non-compliant countries as early as next year. The only other OECD member currently not complying is Turkey. To read more analysis, click here.

UAE

UAE issues new federal AML laws, to expand coverage of sectors, create FIU, more aggressively share information

The UAE has stepped up the fight against money-laundering and financing terrorism by announcing a new law, the federal government stated on Tuesday. According to the Ministry of Finance, Federal Decree No. (20) of 2018 issued by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, will make it difficult for illegal transfers of cash or valuables out of the country to hide the source or to back activities by terrorist organizations.

The decree is in line with the requirements and recommendations of the Financial Action Task Force (FATF), an inter-governmental body created to develop international standards to combat money laundering and terrorist financing.

The law is expected to strengthen AML rules and overall financial crime investigations in several areas, including:

  • Requiring cross-border currency declarations at certain thresholds and across a range of items that can hold value, including currency, bearer instruments, precious metals and stones, and more.
  • The rules for money laundering will include those who know they are moving or disguising the ownership of illicit funds.
  • The new law will allow prosecutions for predicate crimes and the laundering of the funds.
  • The new law is recommending the formation of an independent “Financial Information Unit” within the Central Bank to receive and investigate all reports submitted by financial institutions and other corporate establishments regarding suspected illicit financial activity.
  • The finance ministry said the new unit would follow up and gather evidence on the transaction in question, and share this information with the relevant law-enforcement departments domestically and abroad.
  • The unit will also be responsible for establishing a database, or a special record, of the information and protect it by establishing rules governing information security and confidentiality.

The law will also subject many non-financial businesses to certain AML rules, including customer due diligence, risk assessments and filing reports on suspicious activity. To read more analysis, click here.


Venezuela

Venezuela’s former national treasurer gets 10-year sentence in billion-dollar bribery case

Alejandro Andrade, the head of the Venezuelan treasury from 2007 to 2010, pleaded guilty in a Miami federal court to money laundering conspiracy after accepting over $1 billion in bribes to steer government currency exchange contracts.

Andrade entered his guilty plea in December of last year, but it was under seal until today’s announcement. As part of the plea deal, Andrade agreed to forfeit $1 billion and assets purchased with the proceeds of corruption, including houses, horses, private jets, yachts and luxury goods the former official held in South Florida.

The guilty plea is the latest in a series of cases that have highlighted the flood of illicit proceeds from Venezuela coming into the Miami area. Earlier this year, law enforcement agents charged former officials from the Venezuelan oil agency and a private banker in an alleged $1.2 billion money laundering scandal that saw millions flowing into South Florida real estate. To read more, click here.

India

India’s national anti-corruption enforcement efforts are hamstrung by infighting at top agency

A battle between the senior officers of the Central Bureau of Investigation (CBI) continues decades of struggles to set up effective anti-graft enforcement.

The CBI is the country’s top investigative agency, and de facto anti-corruption watchdog. The current conflict at CBI dates to October, when the agency’s director accused his second-in-command with extorting funds from an individual in exchange for dropping a corruption investigation.

In response, the Indian government put both men on forced leave while the allegations are investigated. CBI’s director has now filed a petition to the country’s Supreme Court, arguing his position as the head of an investigative agency is protected from political interference.

The struggle is the latest in a long line of setbacks in efforts to set up robust anti-corruption enforcement in India. Legislation calling for an independent anti-corruption enforcement agency was originally passed in 1968, but that agency has still yet to become a reality. To read more analysis, click here.

Hong Kong

Hong Kong securities regulator looking to improve ease, response times for filing AML STRs

In order to enhance the capacity in suspicious transaction report (STR) processing and shorten the time required for STR reporting entities to receive feedback from the country’s Joint Financial Intelligence Unit (JFIU) after submitting an STR, the JFIU has recently developed a new solution, e-STR Submission (e-STR) which will soon replace the existing STR submission channel, S-box, tentatively in the first quarter of 2019, with testing already underway since August, according to the Hong Kong Securities and Futures Commission (SFC).

The e-STR unlike the existing S-box, does not require any installation and/or subsequent maintenance of software but it requires users to have the followings in place when they decided to use the e-STR channel for STR submission: web browser (Chrome and Firefox are recommended), latest version of Adobe Acrobat Reader and e-certificate from Hong Kong Post.

The JFIU’s purpose of rolling out e-STR is to allow users to make disclosure via an electronic means in a faster and more secure manner. The e-STR also provides additional supporting functions such as retrieval of previous STRs as well as a real-time check of the feedback given by the JFIU. To read more, click here.