Episode 142

27th January – 2nd February 2025

Sanctions

The sanctions news this week starts in the UK, where the Office of Financial Sanctions Implementation (‘OFSI’) has made nine additions to the Belarus financial sanctions regime, and a minor amendment to Oil Price Cap General Licence - INT/2024/4423849. Finally, Nikolay Ivanovich Bortsov has been removed from the Russia financial sanctions regime, and is no longer subject to an asset freeze.

In Europe, the Council of Europe has announced sanctions 'against three Russian individuals responsible for a series of cyberattacks carried out against the Republic of Estonia in 2020. The individuals listed are officers of the General Staff of the Armed Forces of the Russian Federation (GRU) Unit 29155. The cyber-attacks granted attackers unauthorized access to classified information and sensitive data stored within several government ministries....’

And finally this week, law firm, Stephenson Harwood has published a UK sanctions guide for High value dealers and art market participants.

Money Laundering

On money laundering news this week, in Europe, the European Public Prosecutor’s Office in Riga has filed an indictment ‘against the suspected ringleader of the criminal syndicate targeted by the Admiral 2.0 investigation. The investigation unveiled a large-scale VAT fraud scheme involving the trade of popular electronic goods and creating an estimated VAT loss of €297 million. The indictment takes place only two months after the arrest of the defendant, a record time for such a complex investigation.’

Staying in Europe now with two further stories. First, to France, where it is reported that the public prosecutor has announced an investigation into the cryptocurrency exchange, Binance, for money laundering and tax fraud. The investigation covers the period from 2019 to 2024, and stretches beyond actions undertaken in France. Secondly, the Conference of the Parties of the Council of Europe ‘Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism has published updated thematic monitoring reviews assessing, for the first time, compliance by Aruba (The Netherlands) and Morocco with several treaty provisions. The reports evaluate the implementation of the provisions concerning the reversal of the burden of proof in confiscation proceedings, the management of the frozen or seized property, monitoring of banking operations as an investigative mean, the money laundering offence, corporate liability, international recidivism, postponement of suspicious transactions, and sharing and return of confiscated property. They contain recommendations to both jurisdictions to improve compliance with the convention’s provisions.’ The reports can be accessed here.

In the UK, the Joint Money Laundering Steering Group (‘JMLSG’) has published proposed revisions to Part One of its Guidance. Comments on the proposal should be received by 28th March 2025.

And finally on money laundering news this week, Iran has announced a parliamentary debate on the FATF-related legislation next week as it continues its quest to be removed from the FATF black list - High-Risk Jurisdictions subject to a Call for Action.

Fraud

The fraud news this week starts in the UK, where the National Crime Agency has announced the sentencing of three individuals for ‘running a website enabling criminals to defraud victims by circumventing banking anti-fraud checks.’ The individuals received a range of sentences.

And finally on fraud this week, we stay in the UK where the published reflections of the Solicitors’ Regulation Authority (‘SRA’) Chair, Anna Bradley, have been published. They indicate that in relation to the Post Office Horizon IT scandal, while it can't confirm the exact timeline, the SRA is hopeful it ‘can launch prosecution action in some cases in the summer of this year.’ The Post Office Horizon IT scandal in the UK, for those outside who may not be familiar with it, was the most significant miscarriage of justice in English criminal history and came about when sub-postmasters and mistresses were prosecuted for fraud and other offences, eg, false accounting, based on evidence derived from a faulty electronic accounts system named ‘Horizon’, which was created by Fujitsu. This is interesting because the SRA has always said that it is unlikely to proceed with action against its members until the conclusion of the public inquiry. Does this suggest that they expect the Inquiry report to be published in June or July? Do they know something which we do not? I guess we wait and see.

Market Abuse

The market abuse news this week comes from the UK, where the Financial Conduct Authority has announced that Infinox Capital Ltd has been fined £99,200 for failing to submit transaction reports. ‘To monitor, detect and disrupt market abuse effectively, the FCA needs to receive complete, accurate and timely transaction reports. Between 1 October 2022 and 31 March 2023, Infinox failed to submit transaction reports for single-stock contracts for difference (CFD) trades executed through one of its corporate brokerage accounts. Trades executed through this corporate brokerage account accounted for the majority of this business line. Although Infinox identified its failure to submit these transaction reports following a third-party review, it did not proactively report the breach to the FCA. The FCA independently identified this discrepancy in transaction data submitted by Infinox. The breach highlighted weaknesses in Infinox’s transaction reporting systems and controls for a high-risk investment product.’ There is a comment on the Paper published by law firm, CMS, and you can view it here.

Other Financial Crime News

In other financial crime news this week, to Pakistan where meetings have been held in Karachi and Islamabad to consider the role which financial intelligence has in 'disrupting criminal networks and safeguarding national security.’ The meetings, hosted jointly by the United Nations Office on Drugs and Crime and Pakistan’s Financial Monitoring Unit, 'mark a transformative step towards combating terrorism financing.... [The] initiatives aimed to equip investigators with cutting-edge tools to transform financial data and intelligence into actionable insights, strengthening Pakistan’s fight against terrorism financing.’

In the European Union, Europol has announced the arrest of ‘several suspects and the seizure of various criminal assets. In total, the operation, which took place over several months, led to the arrest of 23 suspects, the seizure of €35.7 million in cash, bank accounts and cryptocurrencies as well as 36 vehicles, real estate, watches, and jewellery. The organised criminal network, composed of mostly Ukrainian but also Armenian, Azerbaijani, or Kazakh nationals, has been providing cash courier and underground banking services to other criminal networks. Chinese actors were also part of this criminal network, providing money laundering services. This catalogue of crime-as-a-service offerings was used by various Russian-speaking and Asian criminal actors engaged in drug trafficking, tax evasion, or the smuggling of illicit goods. These crimes were mostly committed in Spain.’ The Eurojust press release announcing the same action is here.

In other news from Europe, Europol has announced, along with its financial sector private partners, the publication of the EFIPPP Practical Guide for Operational Cooperation between Investigative Authorities and Financial Institutions. ‘The guide provides best practices and lessons learned, drawing from the EFIPPP’s experience as a successful partnership and from other existing cooperative mechanisms. It addresses policymakers, investigative authorities and private stakeholders, providing suggestions to advance operational cooperation from a legal and a practical perspective.’

And finally on other financial crime news this week, the UK’s Financial Intelligence Unit has published its SARs Reporter Booklet for January 2025. This edition has case studies on money laundering and fraud.

Cyber Crime

On cybercrime news this week, in the UK, the National Audit Office has published a report on Government Cyber Resilience. The report recognises the importance of cyber resilience, while identifying that the threat which cyber-attacks pose is ‘severe and advancing quickly.’ While the UK government has ‘published and started leading work to implement the first cyber strategy for government … progress is slow and cyber incidents with a significant impact on government and public services are likely to happen regularly, not least because of the growing cyber threat. The government’s cyber resilience levels are lower than it previously estimated, and departments have significant gaps in their system controls that are fundamental to their cyber resilience.’ Further, the report identified that the government is unlikely to meet ‘its aim for its “critical functions” to be resilient to cyber attack by 2025.’

With more from the UK now, and the National Cyber Security Centre has published, alongside the National Security Agency in the US, Content Credentials: Strengthening Multimedia Integrity in the Generative AI Era. The publication is in response to the problems generated by the misuse of AI platforms to create or modify data ‘with minimal effort, low cost, and increased realism.’

And finally on cybercrime this week, a couple of stories from Europol. First, it has announced the takedown of two cybercrime forums. ‘The two platforms, Cracked and Nulled, had more than 10m users in total. Both of these underground economy forums offered a quick entry point into the cybercrime scene. These sites worked as one-stop shops and were used not only for discussions on cybercrime but also as marketplaces for illegal goods and cybercrime-as-a-service, such as stolen data, malware or hacking tools. Investigators estimate that suspects earned €1m in criminal profits.’ Secondly, and jointly with Eurojust, Europol has published ‘Common Challenges in Cybercrime’ a report which ‘highlights several pressing challenges faced by law enforcement, including the overwhelming volume of digital data, the risk of data loss, and the persistent barriers to accessing critical information due to legal and technical constraints.’ Additionally, the ‘increasing use of anonymisation services has further complicated efforts to track criminal activities online.’ The report explores mitigation strategies, including the impact of new legislative tools, including ‘the e-Evidence Package, the Digital Services Act, and the EU AI Act. These instruments aim to facilitate data access, improve cross-border cooperation, and enhance investigative capabilities. However, their effectiveness will largely depend on how they are implemented and integrated into existing operational strategies.’ Finally, the report reflects on the ‘strategic cooperation between Europol and Eurojust, highlighting initiatives such as the SIRIUS Project, which has strengthened collaboration in cybercrime investigations.’