Episode 147

3rd March – 9th March 2025

Sanctions

In the UK, the Office of Financial Sanctions Implementation (‘OFSI’) has made a correction to the Global Anti-Corruption financial sanctions regime. The correction relates to Teodoro Mangue, the Equatoguinean politician. The Notice is here. There have also been amendments to the Russia financial sanctions regime respecting OJSC Keremet Bank and TBank, while Rosbank PJSC and Active Denizcilik have been removed and are no longer subject to sanctions. The Notices are here and here, respectively. On the Syria financial sanctions regime, OFSI has lifted sanctions on 24 individuals. The Notice is here, and the Consolidated List has been updated. Finally, a licence (INT/2025/5635701) relating to the wind-down or divestment relating to Russian oil majors has expired. The list of expired general licences has been updated.

To the US now, where the administration is, according to a range of reports, scoping the possibility of easing the sanctions which have been imposed on Russia since its invasion of Ukraine. The scoping will inform discussions with Russia over improved diplomatic and economic relations. In other sanctions news from the US, the Office of Foreign Assets Control (‘OFAC’) has taken action against ‘seven high-ranking members of Ansarallah, commonly known as the Houthis. These individuals have smuggled military-grade items and weapon systems into Houthi-controlled areas of Yemen and also negotiated Houthi weapons procurements from Russia. OFAC is also designating one Houthi-affiliated operative and his company that have recruited Yemeni civilians to fight on behalf of Russia in Ukraine and generated revenue to support the Houthis’ militant operations.’

Money Laundering

This week’s money laundering news brings us once more to the door of the Financial Action Task Force (‘FATF’) which has announced a Consultation into proliferation financing risks. The Consultation will assist in the production of a final report. The FATF has provided a list of eight questions and welcomes answers by submission of an online form by 21st March 2025. Secondly, the FATF has also announced a public consultation on updates to FATF Guidance on AML/CFT measures and financial inclusion. Comments by email with a deadline of 4th April 2025.

In the US, the Department of the Treasury has announced that it has suspended enforcement of the Corporate Transparency Act and that ‘not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.’ Transparency International has made an understandable response to the decision indicating that effectively exempting ‘domestic companies from disclosing their real owners will reopen the US financial system to abuse by money launderers and corrupt officials from around the world….’ The International Consortium of Investigative Journalists has also published a report on the news.

And finally on money laundering this week, two stories from the UK. First, the Gambling Commission has fined AG Communications Limited, which trades as AspireGlobal, around £1.4m for social responsibility and money laundering failings. In relation to the money laundering failings, AspireGlobal had, first, ‘AML/Counter Terrorist Financing (CTF) policies and procedures [which] were too reliant on financial thresholds’. Secondly, ‘when customers hit a medium, medium/high or high ML risk score they were not subject to a manual Enhanced Customer Due Diligence (‘ECDD’) check until a financial trigger was hit.’ Thirdly, ‘when financial thresholds were reached, there were delays in completing ECDD checks. One customer who reached the financial threshold did not have an ECDD review conducted until a week later.’ Fourthly, it did not follow its ECDD checks. ‘One customer who reached a financial threshold but did not have a high AML risk score, did not have a manual ECDD review until eight days later. This was contrary to AG Communications Limited’s policy.’ Secondly, the Crown Prosecution Service has announced the conviction of four individuals for what it described as one of the largest money laundering operations in the UK worth well-over £200m. Cash was brought into ‘business addresses owned or managed by these defendants. It was delivered by cash couriers in sports bags, carrier bags and holdalls full of hundreds of thousands of pounds at a time, all of which was paid into the bank account of Fowler Oldfield [the scrap jewellery business at the centre of the operation]. The prosecution case established that this cash represented criminal property and Fowler Oldfield was being used as the vehicle to launder the dirty cash. The cash was counted on the premises by staff using specialist counting machines such as those used in banks. The money was then bundled together for collection by G4S or the Post Office, who then delivered it to the NatWest bank to be deposited into Fowler Oldfield’s bank account.’

Bribery and Corruption

On bribery and corruption news this week, the Council of Europe’s Group of States against Corruption (‘GRECO’), has published a fairly critical report on Bosnia and Herzegovina finding that, ‘beyond the adoption of the Law on Conflict of Interest and the revision of the Law on the High Judicial and Prosecutorial Council, only little progress has been made … regarding the prevention of corruption of parliament members, and judges and prosecutors.’

Fraud

The fraud news this week starts in the UK, where the Home Office and National Cyber Security Centre have urged 18 – 39 year-olds to be wary of the fraud risk to which they are exposed by the residential rental market. ‘Young people aged between 18 and 39 account for almost three quarters of cases of rental fraud, according to exclusive National Fraud Intelligence Bureau (‘NFIB’) data…. Rental fraudsters typically target their victims by offering access to properties that do not exist, or which are not theirs to rent, often using fake details and photos, and usually offering prices at well below market rate. To secure the property or even arrange a viewing, they will usually demand a deposit or the first month’s rent, and many individuals desperate to find a home will make the upfront payment to avoid missing out. According to the NFIB data, the resulting fraud losses amounted to nearly £9 million across around 5,000 reported cases last year. The 18 to 29 age group accounted for 48% of all reported rental fraud cases in England, Wales, and Northern Ireland last year, with the 30 to 39 age group accounting for 25%.’ This sort of data is no surprise. Older renters constitute a smaller percentage of the market overall and, further, the rental system is a broken system in some parts of the UK, but especially London. The removal of social housing from local authority stock by the ‘right-to-buy-scheme’, and the gradual erosion of tenants’ rights over the last 40 or so years, have all contributed to the market as it exists, and allowed for fraudsters to enter the market and exploit.

In other fraud news from the UK, the Government Counter Fraud Profession Centre of Learning, which is a function of the Public Sector Fraud Authority, has published a Practice Note on Building a Counter Fraud Strategy. The ‘guide is produced to support the development of [a] Counter Fraud Strategy. It is an organisational decision whether you have a standalone strategy for counter fraud, or if a combined approach is taken in which it also considers risks of wider economic crime, bribery and corruption. Either approach is reasonable as long as the scope and purpose is clearly defined.’ This guide aims to provide support for that purpose.

Other Financial Crime News

In other financial crime news this week, the Financial Conduct Authority (‘FCA’) in the UK has announced that an individual who operated an illegal crypto ATM network has been sentenced. Olumide Osunkoya, between ‘30 December 2021 and 12 March 2022,… operated crypto ATMs at 28 different locations via his company, GidiPlus Ltd, despite being refused registration with the FCA.’ Osunkoya has received four years’ imprisonment, and the FCA has also initiated confiscation proceedings.

And finally on other financial crime news this week, you may recall in episode 120 of the podcast that we reported the news that the National Crime Agency in the UK had obtained forfeiture orders over luxury properties belonging to Zamira Hajiyeva, wife of jailed Azerbaijani banker, Jahangir Hajiyeva. Well, according to the BBC, the house and the golf course have been put up for sale with a total asking price of almost £20m. I’ll take a look down the back of the sofa.

Cybercrime

There is a wealth of cybercrime news this week, with the bulk of it coming from the US in the form of cyber sanctions. First, the Department of Justice has announced the unsealing of ‘indictments charging Zhou Shuai and Yin Kecheng, eight employees of i-Soon, a Chinese technology company, and two officers of China’s Ministry of Public Security (‘MPS’) with a variety of hacking-related offenses. Further, the Diplomatic Security Service’s Rewards for Justice Program is offering up to $10 million for information on i-Soon, its employees, and the MPS officers engaged in malicious cyber activities highlighted in the Department of Justice’s indictments.’ The Office of Foreign Assets Control (‘OFAC’) has also ‘imposed sanctions on the Shanghai-based malicious cyber actor and data broker, Zhou Shuai, and his company, Shanghai Heiying Information Technology Company. Zhou Shuai illegally acquired, brokered, and sold data from highly sensitive U.S. critical infrastructure networks, including in the defense industrial base, communications, health, and government sectors. Finally, the Department of State has ‘announced reward offers under the Transnational Organized Crime Rewards Program (TOCRP) of up to $2 million each for information leading to the arrests and/or convictions of Zhou Shuai and Yin Kecheng.’ In other cyber sanctions, OFAC has sanctioned ‘Iran-based Behrouz Parsarad, the sole administrator of Nemesis, an online darknet marketplace, which was subject of an international law enforcement operation and was taken down in 2024. Prior to its takedown by law enforcement, narcotics traffickers and cybercriminals openly traded in illegal drugs and services on Nemesis, which was designed with built-in money laundering features.’

In other cybercrime news from the US this week, the FBI’s Cybersecurity and Infrastructure Security Agency has warned of a ‘scam involving criminal actors masquerading as the “BianLian Group.” The cyber criminals target corporate executives by sending extortion letters threatening to release victims’ sensitive information unless payment is received.’