Episode 145

17th February – 23rd February 2025

Sanctions

The sanctions news this week starts in the UK where the government has announced sanctions targeting members of the Russian government and those supporting Russian state-owned businesses. The sanctions target, in particular, ‘Pavel Fradkov, a Russian Defence Minister and Vladimir Selin, who heads up an arm of the Russian Ministry of Defence. They also target Artem Chaika, whose extractives company supports Russian state-owned business.’ In other sanctions news, the Office of Financial Sanctions Implementation (‘OFSI’) has updated the list of Expired Licences. Further, OFSI has also made a minor amendment to the sanctions relating to Eden Levi. According to his entry on the Consolidated List, Levi ‘is and/or has been responsible for, engaging in, facilitating, inciting or providing support for activity which amounts to a serious abuse of the right of individuals not to be subjected to cruel, inhuman or degrading treatment or punishment. Specifically, Levi has been involved in threatening and perpetrating acts of aggression and violence against Palestinian individuals.’

At the United Nations, the Security Council has agreed to extend sanctions against Sudan until 12th March 2026. The vote was passed with 13 votes in favour, none against, with abstentions from Russia and China.

In the European Union, and to mark the third anniversary of the Russian invasion of Ukraine, EU diplomats have in principle agreed the 16th package of sanctions against Russia. The 16th package contains further designations, asset freezes, and trade restrictions, specifically a ban on imports of Russian aluminium. They are likely to be confirmed by EU foreign ministers on Monday 24th February.

To the US now, where the Office of Foreign Assets Control (‘OFAC’), has sanctioned James Kabarebe, Rwanda’s Minister of State for Regional Integration, and Lawrence Kanyuka Kingston, a senior member of US and UN-designated armed group, ‘March 23’. ‘Kabarebe is central to Rwanda’s support for the March 23 Movement … and is responsible for human rights abuses’ while Kingston is ‘an M23 and Congo River Alliance senior member and spokesperson.’ In other news from the US, the State Department has issued a joint statement following the inaugural meeting of the Multilateral Sanctions Monitoring Team (MSMT) Steering Committee.

And finally this week, I direct you to some interesting reading. First, from the University of Warwick which looks at the value of economic warfare and whether sanctions work. Frankly, it could not be more timely. Secondly, some research by Chainanlysis which indicates that sanctioned jurisdictions may be havens for illicit crypto activity. ‘Sanctioned jurisdictions and entities received $15.8 billion in cryptocurrency in 2024, accounting for about 39% of all illicit crypto transactions.’

Money Laundering

This week’s money laundering news starts in Australia, where AUSTRAC has announced further action against remitters and digital currency exchanges as part of its anti-money laundering strategy. It took action ‘against 13 remittance and digital currency exchange providers with more than 50 others still in its sights.’ The regulator is ‘wrapping up a year-long blitz to target non-reporting and under reporting, issuing another round of alerts to the industry’s potentially non-compliant operators.’

In Europe, Europol has announced the arrest of 14, mainly Russian nationals, as part of action taken against money laundering on the continent. In addition to the arrests, nine house searches were conducted, and €1m in cash and cryptocurrencies was seized. The suspects ‘mainly operated in Spain, used the Hawala method to move the cash sourced mainly from drugs trafficking, and launder the funds collected relying on their own company networks. Investigators believe the gang were carrying out daily cash transactions, occasionally reaching up to €300 000 per day.’

Bribery and Corruption

The bribery and corruption news this week comes in the form of a little light reading. First, an article by Michelle Grattan in The Conversation, on the action being taken by the National Anti-Corruption Commission in Australia relating to individuals referred to it over the Robodebt scandal. Secondly, a piece by Transparency International on the subject of corruption in the European Union.

Fraud

The fraud news this week starts in the UK where two individuals have been sentenced in relation to a significant fraud scheme. ‘Between 2017 and 2019, Jan Ciecierski and Rukon Miah, both 39, opened 394 fraudulent business accounts that were used to launder fraudulently obtained funds. Miah worked as a Business Manager at the bank and Ciecierski supplied counterfeit documents for Miah to open the accounts. The fraudulent money was then passed through the bank accounts to be cashed out or was sent to offshore banks. The money funnelled through the accounts was mostly obtained by fraud committed against UK and International companies, including charities, as well as individuals.’ Miah was sentenced to five-and-a-half years’ imprisonment, and Ciecierski to four years imprisonment.

Market Abuse

The market abuse news this week starts and ends in the UK, where the Financial Conduct Authority (‘FCA’) has fined Mako Financial Markets Partnership LLP (‘Mako’) £1,662,700 ‘for failing to ensure it had effective systems and controls to guard against financial crime. Mako also failed to adequately apply the policies and procedures it did have in place. This eighth enforcement case brought by the FCA, concludes its investigations into cum-ex trading…. Between December 2013 and November 2015, Mako executed purported over-the-counter equity trades on behalf of clients of the Solo Group, worth approximately £68.6bn in Danish equities and £23.6bn in Belgian equities. Mako received commission of approximately £1.45m. The trading was circular, which is highly suggestive of financial crime. It appears to have been carried out to allow the arranging of withholding tax (WHT) reclaims in Denmark and Belgium. Several individuals have now been convicted in Denmark as part of this scheme. Mako additionally failed to identify red flags in other instances related to the Solo Group business. This involved a series of transactions which had no obvious rationale, and which resulted in the Solo Group’s controller incurring a €2m loss, to the benefit of his business associates. Mako also received payment from a United Arab Emirates-based third party connected to the Solo Group for outstanding debts owed by the Solo Group’s clients without performing any due diligence which created an increased risk of money laundering.’

Other Financial Crime News

In other financial crime news this week, the Competition and Markets Authority in the UK has announced settlement in a competition case with four banks over sharing sensitive information relating to the buying and selling of gilts. Citi, HSBC, Morgan Stanley and Royal Bank of Canada will pay fines totalling over £100 million, while Deutsche Bank has immunity for reporting its conduct. ‘Following an investigation by the Competition and Markets Authority, the banks have agreed to pay fines for specific instances in which traders shared competitively sensitive information about aspects of the pricing of UK bonds. The sharing of information occurred in one-to-one exchanges between traders about the buying and selling of gilts and gilt asset swaps. This conduct took place on various dates between 2009-2013, with the last exchanges occurring in 2010 for HSBC, 2012 for Morgan Stanley, and 2013 for each of Citi, Deutsche Bank and Royal Bank of Canada. Since then, the banks have implemented extensive compliance measures to ensure this behaviour does not happen again.’

Other news from the UK this week concerns the pressure group Spotlight on Corruption, which has made a submission to Comprehensive Spending Review 2025, identifying it as a ‘major opportunity to enhance the UK’s ability to fight economic crime and promote economic growth for law abiding business….’