Episode 134

11th November – 17th November 2024

Sanctions

The sanctions news this week starts in the UK where two entries have been added to the consolidated list relating to the Sudan financial sanctions regime. The two individuals concerned, Abdel Rahman Juma Barkalla, and Osman Mohamed Hamid Mohamed, also had the reasons for their UN designations provided this week. The Office of Financial Sanctions Implementation has also updated its FAQs again. Question 124 has been added under the ‘General Section’ and 'provides guidance regarding the transfer of assets from the Russian National Settlement Depository to local registrars, pursuant to the Russian Presidential Decree 840.’ Then, late in the week, four amendments to, and one removal from, the Consolidated List relating to the Russia Financial Sanctions regime.

In legislative changes from the UK, the Sanctions (EU Exit) (Miscellaneous Amendments) (No.2) Regulations 2024 was laid before Parliament this week. The ‘instrument introduces numerous changes to improve OFSI’s intelligence on industry’s compliance, strengthen OFSI’s enforcement powers, enable OFSI to deal with licensing applications more efficiently, and clarify financial sanctions legislation where there is existing uncertainty.’ The measures come into effect on 5th December 2024. The FAQs 125 – 131 have also been updated to clarify ‘the use of regulatory payments exceptions.’ A blog post detailing the changes has been published by OFSI.

And finally on financial sanctions from the UK this week, OFSI has released financial sanctions guidance for letting agents and for high value dealers and art market participants.

In the US, the Office of Foreign Assets Control (‘OFAC’) has sanctioned the Sudanese commander Abdel Rahman Joma’a Barakallah for human rights abuses committed in western Darfur. The Department of Justice has also reported the sentencing of a Venezuelan national for his part in a sanctions evasion scheme. Finally from the US, the State Department has made a statement announcing the designation or identifying blocked property of ‘26 entities, individuals, and ships comprising a network associated with the Syria-based Al-Qatirji Company, an entity with ties to the U.S.-designated Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and the Houthis.’

Money Laundering

This week’s money laundering news starts with the Council of Europe’s MONEYVAL annual report which, while broadly praising the membership on the effective implementation of standards, acknowledges that 'major improvements are still needed in the supervision of the financial sector, private sector compliance, transparency of legal persons, and the implementation of targeted sanctions for the financing of terrorism and the proliferation of weapons of mass destruction.’

The Financial Action Task Force (‘FATF’) has opened a consultation on revisions to FATF Recommendation 1 (‘Assessing risks and applying a risk-based approach’) and its Interpretive Note, with corresponding changes to Recommendations 10 (‘Customer due diligence’) and 15 (‘New technologies’) and related Glossary definitions. ‘These proposed revisions aim to better promote financial inclusion through increased focus on proportionality and simplified measures in the risk-based approach, and to give countries, supervisors, and financial institutions greater confidence and assurance when implementing of simplified measures.’ The deadline for receipt of responses is 6th December 2024 (18h00 CET).

In other money laundering news this week, the US Embassy in Bangladesh has, acting alongside Bangladeshi law enforcement agencies, launched an Anti-Money Laundering and Counter-Threat Finance (AML/CTF) training programme at the Police Staff College. ‘The year-long training will cover critical techniques for financial investigations, including open-source intelligence and cryptocurrency tracing, equipping Bangladeshi law enforcement officials with international standards for evidence gathering and case presentation.’

In the UK, the Financial Intelligence Unit (‘FIU’) has published the November 2024 SARs Reporter Booklet. This edition contains case studies on Fraud, Bribery, Money Laundering, and Drugs.

Bribery and anti-corruption

On bribery and corruption news this week, in the US the Department of Justice has announced that ‘Telefónica Venezolana, C.A., a Venezuela-based subsidiary of Telefónica, S.A., a publicly traded global telecommunications operator based in Spain, will pay over $85.2 million to resolve an investigation by the DOJ into a scheme to bribe government officials in Venezuela to receive preferential access to U.S. dollars in a currency auction.’

In pan-national news, Transparency International has urged leaders at the G20 in Rio to reinvigorate the G20’s anti-corruption agenda since the recent declaration that it ‘neglects …[its]… critical role and responsibility in marshalling efforts against cross-border corruption and illicit financial flows.’ This criticism came from the failure of the G20’s Ministerial Declaration failing to address previous pledges. The other global anti-corruption news comes from the United Nations Office on Drugs and Crime (‘UNODC’) which has, first, highlighted that ‘addressing corruption and action by law enforcement and financial intelligence units are crucial to mitigating climate change.’ Secondly, the UNODC has also reported on the movement towards whistle-blower protection in the Democratic Republic of Congo. Thirdly, UNODC has reported on the implementation of the UN Convention Against Corruption in Central Asia. Finally, the Organization for Security and Co-operation in Europe (‘OSCE’) has organised a ‘one-day roundtable discussion on Asset Recovery and Management in Banja Luka, Bosnia and Herzegovina…. Discussions focused on the pressing need to strengthen asset recovery processes to combat transnational organized crime and corruption, examining both current challenges and opportunities for legal improvements at state and entity levels.’

Fraud

On fraud news this week, in the UK the Payment Systems Regulator (‘PSR’) has written to firms ‘most commonly reported as enabling contact between fraudsters and victims’ ahead of its plan to publish fraud enabler data. A ‘fraud enabler’ is an entity that a victim reported as either being a ‘a platform or service through which the fraudster made contact with the victim’ or ‘a website or platform where the victim saw an advertisement or profile that led to an APP scam.’

In the US, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (‘FinCEN’) has issued an alert ‘to help financial institutions identify fraud schemes associated with the use of deepfake media created with generative artificial intelligence (GenAI) tools’, while the US Trustee Program has issued a warning that a ‘scam operator calling itself the “Bankruptcy Fraud Watchdog Group” has recently set its sights on consumer debtors, sending letters falsely accusing debtors of failing to disclose assets in their bankruptcy cases.’ To my mind, the dead giveaway with this form of scam is the demand of a one-time fine to be paid in Bitcoin. There’s one massive red flag.

And finally on fraud news this week, European Anti-Fraud Office (‘OLAF’) and the President of the Integrity Authority of Hungary met to agree strengthened cooperation to combat fraud and corruption. ‘The two leaders emphasized the importance of pooling resources and expertise to address complex cross-border fraud schemes that jeopardize EU taxpayer money. Both parties expressed a shared commitment to enhancing the powers and capabilities of national authorities and improving detection, investigation, and prosecution of international fraud.’

Other Financial Crime News

In other financial crime news this week, Europol has highlighted the issue of the recruitment of young people to operate in criminal networks. While the issue is not a new one, the use of minors in criminal networks is increasing, especially as a ‘tactic … to avoid detection, capture, and prosecution…. Recent data contributed to Europol reveals that minors are now involved in over 70 per cent of criminal markets. These markets, which frequently exploit minors, include cybercrime and online fraud, drug trafficking and related violence, migrant smuggling, and property crime.’

In the UK, the Financial Conduct Authority has issued a Final Notice which outlines information concerning a fine of £16m imposed on Metro Bank for failing to have ‘the right systems and controls to adequately monitor over 60m transactions, with a value of over £51bn, for money laundering risks.’ The automated system did not work as it ought to have done with the result that transactions were ‘taking place on the same day an account was opened, and any further transactions until the account record was updated, were not monitored.’ In other news from the UK, the government has announced an open consultation on proposals ‘which would make senior executives of tech companies personally liable when the rules on the sale of knives are broken.’ Now, I know this is not technically about the forms of financial crime at which this podcast is aimed, but I thought that the principle which is the subject of the consultation is an interesting one, and I wonder whether an extension of it, for example, to the fraud setting, might make senior executives more interested in cleaning up their platforms.

And finally on other financial crime news this week, the second European Anti-SLAPP Conference has taken place in Strasbourg.

Cyber Crime

We end this week’s financial crime news with a brief round-up of cyber crime news. First, the European Commission and EU have taken part in an annual test of their preparedness for a cyber-related crisis. This year’s exercise was headed by Italy.

In the UK, the fourth Republic of Korea (ROK)-United Kingdom (UK) Cyber Dialogue was held in London. ‘The dialogue involved around 50 officials from cybersecurity-related departments and agencies in the two countries…. Both chairs agreed to further strengthen cooperation on cybersecurity as a key area of cooperation in the bilateral relationship, and reviewed implementation of the Strategic Cyber Partnership which was agreed during the State Visit of President Yoon in November 2023.’