Episode 146

24th February – 2nd March 2025

Sanctions

There has a been a reasonably significant level of sanctions news this week, but that is scarcely surprising given the third anniversary of the Russian invasion of Ukraine has come and gone. So, we’ll start in the UK, where the Foreign, Commonwealth & Development Office has announced 107 new sanctions, including many new designations. The targets include ‘producers and suppliers of machine tools, electronics and dual-use goods for Russia’s military, including microprocessors used in weapons systems. These are based in a range of third countries including Central Asian states, Turkey, Thailand, India and China, which is the largest supplier of critical goods for Russia’s military.’ Additionally, there are also targeted sanctions against the North Korean Defence Minister and other North Korean generals and senior officials who were part of the decision leading to the deployment of North Korean armed personnel to fight for Russia in Ukraine. The Consolidated List has been updated. In other news from the UK, a new licence (INT/2025/5855272) has been issued in relation to the payment of membership fees for International Organisations transferred from an account held by Gazprombank.

Following the anniversary activity, later in the week, the government announced that elites linked to the Russian state face exclusion from the UK. The new measures allow the government to ‘expand the criteria for exclusion to cover Kremlin-linked elites.’ Those who could be barred are those who provide significant support to the Russian state; owe their significant status or wealth to the Russian state; or enjoy access to the highest levels of the Russian state. The government also announced, through the Department for Business and Trade, an update to the export control guidance in relation to Russian sanctions, and removed Francois Edouard Mauron from the consolidated list, together with five corrections.

And finally from the UK, the Treasury Select Committee has published a letter from HMRC provided by way of response to a request for information earlier in the year. The letter updates the Committee ‘on HMRC sanctions enforcement-related issues arising from the oral evidence session the Committee held with the Office for Financial Sanctions Implementation (OFSI) on 26 November 2024.’

Before moving on, one quick addendum to the UK sanctions position, and law firm Cooley reflects on OFSI enforcement over the last year in a blog post.

To the European Union now, where the European Council has formally announced the 16th package of economic sanctions and designations to mark the third anniversary of the Russian invasion of Ukraine. ‘The Council agreed on a significant set of 83 listings, consisting of 48 persons and 35 entities responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. In addition, the Council established two new criteria that will allow the EU to impose restrictive measures on individuals and entities that own or operate vessels of Putin’s shadow fleet, and those supporting or benefitting from Russia’s military and industrial complex.’ The Commission press release is here, and the second press release from the Council is here. And finally from Europe, again marking the third anniversary of the Russian invasion of Ukraine, Europol has announced an increased effort to trace sanctioned assets. ‘The Agency has established a dedicated Target Group on Sanctions within the [European Financial and Economic Crime Centre], which will serve as the central hub for sanction-related investigations. This initiative will improve the tracking of illicit financial flows and asset seizures, ensuring a more coordinated response to sanctions evasion.’

On sanctions news from the US, the State Department has designated 16 entities and vessels for their activity in the Iranian petrol and petrochemical industry. The action is taken in conjunction with the Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’). Then, towards the middle of the week, the OFAC targeted ‘six entities based in Hong Kong and the People’s Republic of China (PRC), engaged in the procurement of unmanned aerial vehicle (UAV) components on behalf of OFAC-designated Iranian firm Pishtazan Kavosh Gostar Boshra (‘PKGB’) and its subsidiary Narin Sepehr Mobin Isatis (‘NSMI’). These entities operate as front companies and facilitate the purchase and shipment of key components for the benefit of PKGB and NSMI, which serve as key suppliers for Iran’s UAV and ballistic missile programs.’ And finally from the US, and for sanctions across the globe this week, some sanctions against Russia will be extended until 6th March 2026. The decree relating to this decision is on the US Federal Register.

Money Laundering

This week’s money laundering news is sourced predominantly from the Financial Action Task Force (‘FATF’). Following the Paris plenary, Philippines has been removed from the list of Jurisdictions Subject to Increased Monitoring. The country has made ‘significant progress in improving its AML/CFT regime [meeting] the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021…’ Additions following this plenary are Nepal and Lao PDR. On more positive news, it looks as though South Africa is on the right path to removal from the list as is it continues to ‘work on implementing its action plan to address its remaining strategic deficiency on demonstrating a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile.’ The High-Risk Jurisdictions subject to a Call for Action remain unchanged with North Korea and Iran being subject to a FATF call on its members and other jurisdictions to apply countermeasures, and Myanmar being subject to a FATF call on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction.

In other news from the FATF this week, it has ‘updated its Standards after the February 2025 FATF Plenary approved changes to Recommendation 1 and its Interpretive Note, with corresponding amendments to Interpretive Notes to Recommendations 10 and 15, as well as related Glossary definitions to better support financial inclusion.’ The FATF has also announced that it is ‘holding a second round of public consultation on revisions to Recommendation 16 (R.16), its Interpretive Note (INR.16) and the related Glossary of specific terms, to adapt them to the changes in payment business models and messaging standards.’ Responses to the Consultation by 18th April 2025.

Now to MONEYVAL, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, which this week hosted the ‘second forum of FATF-Style Regional Bodies (FSRBs), … in collaboration with the GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit)… The Forum set the stage for discussion on key challenges encountered in the last round of mutual evaluation and priorities in the upcoming evaluation round. Insights and experiences from past evaluations conducted by the FSRBs and the FATF contributed to discussions on benchmarks for future assessment and follow-up processes. A key dialogue also examined the role of FSRBs in the FATF’s International Co-operation Review Group process and post-exit actions.’

And finally on money laundering news this week, two stories. First, BaFin, the Federal Financial Supervisory Authority in Germany, has published a blog on its experience of on-site inspections identifying that among companies operating in the financial sector, further improvement is needed in a number of areas on the prevention of money laundering and terrorist financing. Secondly, in the UK, the National Crime Agency has issued a warning over money laundering linked to people smuggling.

Bribery and Corruption

The bribery and corruption news this week concerns Ukraine, where the Council of Europe’s anti-corruption group (‘GRECO’) has published a report commending the country on its implementation of anti-corruption recommendations. ‘Ukraine has satisfactorily implemented 18 out of 31 recommendations on corruption prevention in respect of members of parliament, judges and prosecutors. Of the remaining recommendations, 11 have been partly implemented and two have not been implemented.’

In other anti-corruption news this week, the United Nations Development Programme (‘UNDP’) ‘in partnership with Iraq's Supreme Judicial Council and … support of the European Union, launched the Second Trial Monitoring Report, a comprehensive view of Iraq’s progress in tackling high-level corruption through the Central Anti-Corruption Criminal Court (‘CACC’). Covering the period from August 2023 to July 2024, the report analyzes 170 monitored cases at the CACC and 80 verdicts issued by criminal and misdemeanour courts in Rusafa and Karkh…’ The report notes, amongst other things, an increase in prosecutions of high-ranking officials, a higher conviction rate, an indication of increased judicial efficiency, and a reduction in the use of general amnesty and trials held in abstentia.

Fraud

The fraud news this week starts in the US, where the Federal Emergency Management Agency, which is an agency of the Department of Homeland Security,  has warned ‘Crow Tribe members who have applied for disaster assistance to be alert to potential fraud by scam artists, identity thieves and other criminals.’ The warning follows reports that scammers are believed to be targeting members of the tribe.

In the UK, the Inquiry into the UK government’s response to the Covid-19 pandemic has announced that it will hear evidence related to PPE Medpro during a closed session later this month. This is necessary due to the possible prejudice which may be done to the ongoing National Crime Agency investigation into the PPE contract awarded to the firm.

And finally on fraud news this week, a link to some reading from Thomson Reuters on the subject of ‘Fraud-as-a-Service’ which is believed to be the new ‘secretive industry in which cybercriminals offer tools, services, and support to fraudsters in exchange for payment.’

Market Abuse

On market abuse news this week, the Central Bank of Ireland has fined Cantor Fitzgerald Ireland Ltd (‘Cantor’) €452,790 ‘pursuant to the European Union (Market Abuse) Regulations 2016 (S.I. No. 349 of 2016) (the 2016 Regulations), for a breach of Cantor’s obligations under Article 16(2) of the Market Abuse Regulation (596/2014/EU) (‘MAR’). Cantor failed on a number of occasions to report identified suspicious transactions that may have indicated market abuse to the Central Bank. Cantor failed to put in place effective governance arrangements to detect and report suspicious orders and transactions that may have indicated market abuse. Cantor also failed to consistently document its analysis as to whether it considered certain orders and transactions to be suspicious and failed to consistently escalate suspicious transactions internally – during a period of over 6 years between March 2017 and June 2023. Cantor … admitted to the breach. The Central Bank has determined the appropriate fine to be €646,840, which was reduced by 30% to €452,790 by way of a settlement discount.’

Other Financial Crime News

In other financial crime news this week, first, ‘INTERPOL and the African Development Bank Group have signed a letter of intent to pursue greater cooperation to combat corruption, financial crime, cyber-enabled fraud and money laundering.’ The agreement is marked out as a significant step forward in combatting financial crime.

In the Isle of Man, the Department of Home Affairs has launched a consultation on proposed changes to its Proceeds of Crime Act 2008. ‘The draft changes aim to enhance the effectiveness of the legislation which is one of the Island’s most important tools in combating financial crime.’ The consultation closes on 27th March 2025.

Cybercrime

On cybercrime news this week, it is being widely reported – and even the FBI is saying it – that the £1.1bn cryptocurrency theft from Bybit, the Dubai-based company, is believed to have been committed by the North Korean hackers, the Lazarus Group. Hackers stole the funds from Bybit’s Ethereum coin wallet, and the company has already committed to cover the loss.

A report by Omdia, in partnership with Telstra International, has found that while 80 per cent of manufacturing firms experienced an increase in cybersecurity incidents in 2024, just under half – 45 per cent – are prepared for a cyberattack. With this in mind, there is a reminder for cyber vigilance from global law firm, Clyde & Co, which was published, without paywall, in The Scotsman newspaper on Monday 24th February.

And finally this week, and again back to the Isle of Man, where its Cyber Security Centre has published its annual threat report which ‘indicates that residents who fell victim to scams lost over £2.2 million in 2024.’ In terms of a breakdown, ‘investment scams were the largest contributor at £1.2 million, with other losses including £391,674 to scam voice calls (Vishing) and £113,472 to account compromises.’ However, the actual figure may be higher because the data is based solely on reported scams.