Articles
AML Roundup: Spotlight on Terrorism Financing – Russia Sanctions – Money Laundering & Fraud – Crypto – Legislation & Initiatives
29 Jul 2022

Acts of terrorism destroy lives, damage economies, and spread fear across nation states. This week we turn the spotlight on how terrorists finance their attacks, most often by transferring funds via wire transfers, electronic payments, and increasingly through cryptocurrencies. We report on what steps countries are taking to combat the financing of terrorism and how public-private partnerships can help counter the threat.

The weaponisation of energy, namely Russia’s moves to drastically reduce Europe’s gas supply, has pushed sanctions back onto the front pages. Meanwhile, there are reports that Russia’s economy is suffering heavily from the effect of existing sanctions, while in western democracies such as the UK, the tightening of regulations is leading to arrests and deterring sanctioned individuals and entities from investing on its shores.

We also report on the most recent money laundering and fraud cases, how the crypto sector is coming increasingly under scrutiny, and complete this week’s Roundup with news of the latest financial legislation and initiatives.

Spotlight on Terrorism Financing

Book: The Alphabet of Terrorism Financing

One of France’s leading security experts has penned a new book in the form of an A-Z that analyses the funding mechanisms used by terrorists. Senator Nathalie Goulet has spent the past decade working on the terror threat in France, gaining insight into the extent of terrorist infiltration of lucrative markets, such as art, arms, drugs, counterfeiting, crowdfunding, and cryptocurrency.

“It is a major subject for the international community. What’s important for me is for governments and heads of state to understand the links between money laundering and the financing of terrorism.”

~ Senator Nathalie Goulet

Indonesia freezes assets of charity after allegations of possible terrorist financing

ACT is one of the most successful philanthropic organisations in Indonesia raising funds in 2020 amounting to Rp 519 billion (U$6.7 million). But recently, the Financial Transaction Reports and Analysis Center (PPATK) says it is investigating suspicious transactions made by ACT, including money channeled to foreign organisations that may be linked to international terrorist networks.

Tunisia opposition leader investigated on terrorism charges

Rached Ghannouchi, the leader of Tunisia’s main opposition party is due to be questioned by the country’s anti-terrorism unit on suspicion of money laundering and terrorist financing through an association charity. He was among several Ennahdha party officials who had their bank accounts frozen recently by Tunisia’s central bank, in what many have labelled a power grab by the government.

Property and money seized from Northern Irish man with alleged connections to terrorist organistion

The UK’s National Crime Agency (NCA) has seized a property valued at £85,000 and £28,000 from a man purported to have links to a terrorist organisation. Steven Armstrong is suspected of engaging in fraud and money laundering offences through his alleged links to the West Belfast Ulster Defence Association, which is proscribed as a terrorist organisation under the Terrorism Act 2000.

EU members reject Israeli ‘terrorist’ designation for Palestinian NGOs

Nine European Union states have said that they will continue working with the six Palestinian civil society groups that Israel designated terrorist associations last year, citing a lack of evidence. Israel designated the Palestinian groups as terrorist organisations and accused them of funnelling donor aid to militants, a move that was criticised by the UN and human rights watchdogs.

Briefing: Public-Private Partnerships to Counter Terrorist Financing

This CRAAFT research briefing entitled PPPs and Terrorist Financing: Opportunities and Challenges outlines the legislative, technological and security-related challenges to establishing successful PPPs. It delivers sound guidance on how these challenges can be navigated to yield the benefits of structured public-private information sharing.

Webinar Replay: Migrant Smuggling

This webinar examines the key findings from a recent FATF report on money laundering and terrorist financing risks arising from migrant smuggling and possible solutions to detect this activity. It reveals how smugglers have changed their modi operandi, how to better detect smugglers’ illegal money and what state authorities, the private sector and NPOs can do to fight this pernicious business.

Russia Sanctions

Gas prices soar as Russia cuts flow to Europe

Gas prices have soared again after Russia further cut gas supplies to Germany and other central European countries. Russia has been steadily cutting flows through the Nord Stream 1 pipeline claiming that this is due to maintenance issues on a turbine. The EU has responded by agreeing a plan to ration gas this winter in an attempt to avoid an energy crisis.

Opinion: Sanctions are having a devastating effect on Russia’s economy

While many have argued that international sanctions and voluntary business retreats have had little effect, some observers believe that the Russian economy is imploding under their weight. The steadily deteriorating economy is proving to be a powerful complement to the deteriorating political landscape that Putin is now facing.

Possible Fabergé egg found on sanctioned Russian oligarch’s seized yacht

US law enforcement officials have discovered what appears to be a Fabergé egg on a $300 million yacht seized from sanctioned Russian oligarch Suleiman Kerimov. If found to be authentic, it would be one of the few remaining examples of these priceless collectibles, that were created by the House of Fabergé in Saint Petersburg between the late 19th and early 20th century.

Record number of £10m-plus London properties sold as pound falters and new ownership rules loom

The collapse in the value of the pound has resulted in the super-rich buying scores of London properties worth more than £10m in the first six months of 2022. Observers believe that the recent flurry of activity may have been sparked by foreign buyers rushing to complete before the introduction of new rules that will force overseas buyers to declare their ownership from August 1, 2022.

Ukraine war motivates boardrooms to prioritise tackling financial crime

The war in Ukraine has galvanised the C-suite to elevate anti-financial crime up the governance agenda for companies and investors. Financial crime has now become a boardroom priority as organisations seek to comply with increasing numbers of regulations and stem the rising number of offences.

EU adopts 7th package of Russia sanctions

The EU Council has adopted a new package of sanctions that target Russia and Putin’s war machine. This includes a “maintenance and alignment” sanctions package and new measures that target an additional 54 individuals and 10 entities.

UK sanctions leaders of Ukraine’s breakaway regions

Two leaders of the breakaway regions in Ukraine have been sanctioned by the UK government. In addition to having their assets frozen, the Donetsk People’s Republic Prime Minister Vitaly Khotsenko and Luhansk People’s Republic First Deputy Chairman Vladislav Kuznetsov have been banned from coming to the UK.

Crime Agency confirms arrest of lawyers in sanctions evasion crackdown

The UK’s National Crime Agency recently announced that it has arrested more than 10 lawyers who are all suspected of helping “corrupt elites” to evade sanctions. The charges have been brought under the Sanctions and Anti-Money Laundering Act 2018 (The Sanctions Act) and other UK legislation such as the Export Control Order 2008 and the Anti-Terrorism, Crime and Security Act 2001.

Russia to pull out of International Space Station and plans to build its own

Russia says it intends to withdraw from the International Space Station (ISS) and build its own station instead. Roscosmos chief Yury Borisov stated that Russia will fulfil its obligations to its partners but will quit the project after 2024 when the current agreement runs out.

Money Laundering & Fraud

Deutsche Bank settles money-laundering case for $7.1 million

Deutsche Bank AG has settled an investigation by Frankfurt prosecutors which found the bank failed to file 701 reports of suspicious activities. The bank agreed to pay $7.1 million and accepted an administrative penalty notice for violating money-laundering prevention rules.

Watchdog warns illicit money is placing South Africa banks at high risk

According to a new report by the regulatory Prudential Authority, South Africa’s largest banks are at ‘high risk’ of facilitating money laundering, terrorism and proliferation financing activity. This has led to fears that South Africa could find itself on the FATF’s ‘grey list’ if measures aren’t taken soon.

Former Guatemalan economics minister guilty of money laundering

Acisclo Valladares Urruela, Guatemala’s former economics minister has pleaded guilty to conspiring to commit money laundering while paying hundreds of thousands of dollars in bribes to Guatemalan politicians through the U.S. banking system. He faces up to five years in prison and agreed to forfeit $140,000.

Two arrested over $27 million ‘multi-layered’ fraud scheme

Two New Yorkers have been arrested by US Federal authorities for alleged involvement in a $27 million (€26.3 million) investment scam in which 12 investors were charged $93,000 to attend a Trump fundraiser. Sherry Xue Li and Lianbo Wang were charged with conspiracy to commit wire fraud, money laundering and defrauding the Federal Election Commission (FEC).

Credit Suisse subsidiary to pay $22.6 million for defrauding investors

Credit Suisse Group AG’s European subsidiary has admitted conspiring to defraud investors in Mozambican bonds and agreed to pay $22.6 million in restitution. The subsidiary, Credit Suisse Securities Europe, pleaded guilty to conspiracy last year as part of a $475 million settlement with U.S. and British authorities.

Crypto

Three charged in first ever cryptocurrency insider trading scheme

An ex-employee of Coinbase allegedly tipped his brother and a friend regarding crypto assets that were going to be listed on Coinbase exchanges. As a result, Ishwan Wahi, a former product manager at Coinbase, Nikhil Wahi, and Sameer Ramani were charged with wire fraud conspiracy and wire fraud.

“Today’s charges are a further reminder that Web3 is not a law-free zone. Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street.”

~ U.S. Attorney Damian Williams

UK extends definition of “relevant firm” to include crypto exchange providers

Two new regulations introduce powers that will authorise government departments, agencies, and relevant bodies to share information to help HM Treasury discharge its sanctions-related functions. Furthermore, the new regulations widen the definition of a “relevant firm” to include crypto-asset exchange providers and custodian wallet providers.

CEO of Titanium Blockchain admits guilt over $21 million cryptocurrency fraud scheme

Michael Alan Stollery, CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS), pleaded guilty over a cryptocurrency fraud scheme involving an initial coin offering (ICO) that raised $21 million from investors. According to court documents, he touted TBIS as a cryptocurrency investment opportunity and lured investors through false and misleading statements.

Dubai metaverse strategy to attract over 1,000 firms

Dubai’s leaders want to make the most populous city in the United Arab Emirates (UAE) one of the world’s top 10 metaverse economies. The Dubai Metaverse Strategy aims to attract over 1,000 blockchain and metaverse companies and create 40,000 virtual jobs by 2030.

Opinion: Technology can’t remove all financial risks, crypto needs regulation.

According to Bank of England Deputy Governor Jon Cunliffe, finance carries inherent risks, and while technology can change the way these risks are managed and distributed, it cannot eliminate them completely. The extension of a regulatory framework to encompass crypto “must be grounded in the iron principle of ‘same risk, same regulatory outcome.’” 

Legislation & Initiatives

Ireland establishes new powerful watchdog to fight white-collar crime

The new Corporate Enforcement Authority has been formally established in Ireland according to the Companies (Corporate Enforcement Authority) Act 2021 (the “Act”) in order to enhance the fight against white-collar crime.

UK introduces new Financial Services Bill to Parliament

The UK Government has introduced new legislation to enhance the competitiveness of its financial services sector. The Financial Services and Markets Bill will repeal hundreds of pieces of EU retained law in order to deliver a model of regulation for the UK. The government claims this will establish a “coherent, agile and internationally respected approach to financial services regulation that works in the interests of the British people and businesses”.

Corrupt elites are being ‘dissuaded from investing in UK due to arrests of enablers’

The National Crime Agency (NCA) claims corrupt foreigners are being deterred from investing money in the UK after a crackdown on “enablers”. The agency said that around a dozen people had been arrested recently, including some from the legal profession, and will help shake the capital’s reputation as the home of illicit money.

Opinion: Britain must raise its defences against weaponised finance

The West is already geared up to deal with hard security threats such as terrorism and are beginning to wake up to the growing threat posed by state-backed information warfare campaigns. But their awareness of the role played by finance is far less developed, making them increasingly vulnerable to active financial measures.

Opinion: Stale thinking and inaction threaten G7 illicit finance commitments

While the recent robust stance on anti-corruption has reinvigorated countries’ commitments to tackle corruption and kleptocracy, transforming these commitments into effective action will require G7 countries to move beyond mere rhetoric.

“There is an opportunity to expand the approach to tackling kleptocracy beyond Russia, to address broader vulnerabilities and to reduce the threat represented by illicit finance globally.”

FATF is conducting a review of the transparency and beneficial ownership (BO) of legal arrangements

After toughening up its global beneficial ownership rules for legal persons, the Financial Action Task Force (FATF) is now revising its standards in other interlinked areas. As a result, the FATF wants to hear your comments on what needs to be done to strengthen the international standard on beneficial ownership for trusts and other legal arrangements to stop criminals exploiting them to hide illicit money. The deadline for comments is August 1, 2022 (18h00 CEST).

FATF has updated its guidance for a risk-based approach for the Real Estate sector

The updated guidance will help the private sector develop a better understanding of the risks they face and take effective measures to mitigate them. It also highlights the need for sufficient powers, resources and sanctions for supervisors to effectively supervise the real estate sector and take necessary action. The guidance was updated following input from the private sector, including through a public consultation in March and April 2022.

Blog: How the Real Estate sector can protect itself from the threat of money laundering

The need for improved compliance across the Real Estate sector is greater than ever due to its internationally recognised susceptibility. The starting point is to understand the gaps that financial criminals look for and close them before they can be exploited.

RiskScreen AML spotlight report

AML Vulnerabilities in the Real Estate sector

The Real Estate sector has long been regarded as a soft target for criminals looking to legitimise the proceeds of illegal activity. Now Russia’s war with Ukraine has brought this issue into even sharper focus, as Western countries apply sanctions to prominent Russians with overseas properties.

As a result, regulators are now cracking down on Real Estate businesses that fall short on anti-money laundering (AML) and countering the financing of terrorism (CFT) standards.

To ensure your business doesn’t fall foul of new national and international legislation and regulatory requirements, this industry report will help you to identify any weaknesses in your existing compliance framework.

In this industry report, we look at:

– Where Real Estate businesses face AML risks

– The current regulatory environment

– The international perspective

– Screening for sanctions, ultimate beneficial owners (UBOs), and politically exposed persons (PEPs)

– How to ensure compliance with AML

Click here to download this valuable free compliance analysis.

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