Episode 144

10th February – 16th February 2025

Sanctions

The sanctions news this week starts in the UK with a range of changes to the Russia financial sanctions regime where the Office of Financial Sanctions Implementation (‘OFSI’) has, first, delisted Irina Chubarova, Head of Corporate Finance at Gazprom Neft. Secondly, OFSI has made a minor amendment to the Oil Price Cap General Licence. Thirdly, OFSI has published a Threat Assessment Report on Financial Services. ‘The report identifies key evasion threats, red flags that businesses should be aware of, and recommendations on how to mitigate the identified risks.’ Finally from the UK on the Russia financial sanctions regime, towards the end of the week, there were five further additions and one amendment. The Consolidated List has been updated.

On other financial sanctions regimes, OFSI has issued a licence allowing for payments to be made in respect of relevant humanitarian assistance activities in Syria. Also on the Syria financial sanctions regime, the government has announced its intention to adapt the regime since the fall of Assad last year. The changes are being made to ‘support the Syrian people in re-building their country and promote security and stability. They will include the relaxation of restrictions that apply to the energy, transport and finance sectors, and provisions to further support humanitarian delivery.’

In the US, the Department of Justice has announced it has obtained a warrant to seize an aircraft owned by Russian Energy Company PJSC LUKOIL. In other news from the US, the United Nations has voiced its condemnation of the decision by the US administration to sanction the International Criminal Court, along with personnel and individuals or entities who cooperate with it.

And finally on sanctions news this week, the European Union has updated on ‘data used to calculate financial sanctions proposed by the Commission to the Court of Justice of the European Union in infringement proceedings.’

Money Laundering

On money laundering news this week, the Council of Europe’s anti-money laundering body, MONEYVAL, has published a report on Guernsey, urging it to ‘improve the investigation, prosecution and conviction of money laundering offences’, while identifying its ‘good understanding of the risks of money laundering/terrorist financing and its highly effective application of targeted financial sanctions.’ The report also commended Guernsey’s Financial Intelligence Unit. RUSI has issued a comment piece on the news.

In the UK, there are nascent reports that the Financial Conduct Authority (‘FCA’) is conducting an investigation into whether anti-money laundering laws have been broken by Barclays Bank. No comment from FCA, but this news comes to us via a Barclays press release.

And finally on money laundering news this week, the FATF has announced that its second Plenary ‘under the two-year Mexico Presidency of Elisa de Anda Madrazo will take place on 19 – 21 February 2025…. The Plenary will discuss key developments in the fight against illicit finance that fuels crime around the world, including a new FATF project to help detect, disrupt and investigate online child sexual exploitation. Also on the agenda is work to strengthen financial inclusion through a risk-based implementation of the FATF Standards, a key priority of the Mexican Presidency. Delegates will also discuss progress made by some jurisdictions identified as presenting a risk to the financial system.’

A couple of pieces of reading before we move on. First, a blog post from law firm, Dentons, respecting ‘money mules’ and their role in facilitating money laundering. Secondly, the UK Financial Intelligence Unit has published Issue 30 of SARs in Action, with focus on the fight against the illegal wildlife trade and environmental crime, and the use of AI to circumvent customer due diligence checks.

Bribery and Corruption

The bribery and corruption news this week comes from the US. First, the ‘former mayor of Humacao, Puerto Rico, [has] pleaded guilty … to engaging in a bribery scheme in which he received cash payments for awarding municipal contracts to two companies.’ Secondly, a Panamanian citizen has ‘pleaded guilty … for laundering $28 million in connection with a … bribery and money laundering scheme involving Odebrecht S.A. (Odebrecht), a Brazil-based global construction conglomerate.’ However, these stories from the US are much less significant than the big news which is the announcement by Executive Order that the US is pausing all enforcement under the Foreign Corrupt Practices Act (‘FCPA’) 1977 until new guidelines have been issued. As François Valérian, Chair of Transparency International has stated in a press release published by the organisation in response to the announcement: ‘U.S. enforcement of the FCPA has long been a gold standard in the fight against corruption. Weakening it will empower wrongdoers and send a dangerous signal that bribery is back on the table. Foreign bribery is by no means,… a routine business practice. This is a betrayal of U.S. leadership in global anti-corruption efforts and a gift to those who profit from bribery and illicit financial flows. This dangerous course needs to be immediately reversed.’

Fraud

The fraud news this week starts in the US, where the Immigration and Customs Enforcement service has provided guidance on how vulnerable people can protect themselves against romance scams. In other news from the US, the FBI has updated on ‘Operation Level-Up’ which aims to protect individuals from exposure to cryptocurrency fraud.

In Europe, Europol has announced the arrest of six individuals ‘following a coordinated operation targeting an organised crime group behind a multi-million-euro investment fraud and money laundering scheme. The operation,… was carried out by law enforcement authorities in France, Spain and Israel, with support from Europol and judicial authorities. The investigation began after a French citizen was deceived between April and May 2022, believing he was making substantial investments in renewable energy contracts. The suspects maintained regular contact with the victim, persuading him to transfer large sums of money to company bank accounts both inside and outside the EU. To reinforce the illusion of a legitimate investment, the fraudsters returned small amounts of money, falsely presenting them as interest payments – a common tactic used to build trust before stealing larger sums. When the victim realised they had been scammed, they reported the fraud to the French Gendarmerie, triggering a major international investigation.’

In other fraud news this week, insurer Allianz has announced that it ‘uncovered 33,027 instances of insurance fraud worth a total of £157.24m in 2024 – equivalent to 90 frauds worth £430,000 a day, and up 10% on the £142.38m figure for 2023.’

And finally on fraud news this week, the Financial Conduct Authority (‘FCA’) in the UK has charged an independent financial adviser with a range of fraud offences. Lisa Campbell, who was the sole director of Campbell and Associates Independent Financial Advice Ltd, is alleged to have, between 1st April 2013 and 10th May 2023, ‘misappropriated funds from clients on numerous occasions. The allegations include that Mrs Campbell created multiple false documents which she used to falsely reassure her clients that their money had been invested. In addition, the FCA alleges that Mrs Campbell provided false documents to the FCA in an effort to conceal her criminal behaviour. During the period, the FCA alleges that Mrs Campbell stole more than £2.3m, leading to significant financial losses for multiple victims, including family members, friends and a vulnerable child.’

Market Abuse

The market abuse news this week starts in the US, where the Department of Justice has charged an individual with being ‘engaged in a scheme to fraudulently obtain approximately $110 million worth of cryptocurrency from the cryptocurrency exchange Mango Markets and its customers and achieved this objective by artificially manipulating the price of certain perpetual futures contracts.’

In Switzerland, the Office of the Attorney General of Switzerland has indicted ‘a Swiss citizen in the Federal Criminal Court on charges of insider dealing in transactions worth millions of francs. The indictment alleges that in five cases in the period from 2018 to 2020, the accused exploited confidential and price sensitive information about ongoing or planned takeovers. By doing so, he is believed to have made an unlawful profit of around ₣10.6 million. He is alleged to have obtained the confidential information from an acquaintance of many years standing who worked for an investment bank.’

And finally on market abuse news this week, the Financial Conduct Authority (‘FCA’) in the UK has ‘highlighted concerns with cryptoasset, debt solutions, and claims management company (‘CMC’) promotions.’ In 2024, 9,197 CMC promotions were withdrawn with the FCA urging social media companies to do more proactively to ‘identify and prevent illegal financial promotions.’ This action comes with a reminder of the targeted action taken against finfluencers in the last year or so. Alongside the announcement, the FCA published financial promotions data for 2024, as well as the Q4 data for 2024.

Other Financial Crime News

In other financial crime news this week, the United Nations has heard from Under-Secretary-General, Vladimir Voronkov, Head of the UN Office of Counter-Terrorism, about the evolving threat from Da’esh (ISIL).

In other financial crime news this week, the European Union has awarded the International Consortium on Combating Wildlife Crime (‘ICCWC’) ‘€27 million to tackle organized crime networks trafficking in wildlife globally and reduce the demand driving this illicit trade, in collaboration with civil society organizations. The new initiative, GUARD Wildlife - Global United Action to Reduce and Dismantle Organized Wildlife Crime – aims to conserve endangered species and biodiversity for future generations. The project will be implemented through a close partnership between ICCWC members  – the Secretariat of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (‘CITES’), the International Criminal Police Organization (‘INTERPOL’), the United Nations Office on Drugs and Crime (‘UNODC’) and the World Customs Organization (‘WCO’) – and civil society organizations.’

And finally in other financial crime news this week, the Public Accounts Committee (‘PAC’) in the UK has announced the findings of a report indicating that the estimated £5.5bn lost to tax evasion in 2022-23 may be far higher. ‘HMRC estimates that tax evasion cost £5.5 billion in lost revenue in 2022-23, 81% of which could be attributed to small businesses. But the introduction of legislation in 2021 making online marketplaces liable for VAT from overseas sellers led to £1.5bn in additional taxes per year, five times greater than HMRC predicted. The PAC is therefore concerned HMRC may have underestimated the level of evasion occurring and is calling on HMRC to assess the reasons behind this gap. The report is concerned by the lack of curiosity shown by HMRC to investigate the issue, further noting that its inquiry heard that anywhere between 5% and 20% of UK registered companies were fraudulent in 2023.’

Cyber Crime

On cybercrime news this week, in the UK, the government has sanctioned a Russian cybercrime network. ZSERVERS, which is a key aspect of the Russian cybercrime supply chain, has been sanctioned along with six ‘of its members, as well as its UK front company, XHOST Internet Solutions LP. ZSERVERS provide vital infrastructure for cybercriminals as they plan and execute attacks against the UK. The illicit supply chain protects, supports and conceals the operations of some of the world’s most ruthless ransomware gangs. Ransomware actors rely on these services to launch attacks, extort victims and store stolen data.’ The UK Cyber Sanctions regime has been updated. This action was coordinated with the US Department of the Treasury’s Office of Foreign Assets Control, and Australia’s Department of Foreign Affairs and Trade.

In Europe, Europol has announced that ‘coordinated international law enforcement action … has led to the arrest of four individuals leading the 8Base ransomware group. These individuals, all Russian nationals, are suspected of deploying a variant of Phobos ransomware to extort high-value payments from victims across Europe and beyond. At the same time, 27 servers linked to the criminal network were taken down.’

It is coordinated and concerted action such as that which has been announced this week which might, at least in part, be responsible for the fall in global ransomware payments which has been announced this week. Money stolen via ransomware is understood to have fallen from $1.25bn to $813m, according to analysis from the research firm, Chainalysis, which was reported in The Guardian. So, a little positive news on which to end.