Episode 158

19th May – 25th May 2025

Sanctions

UK Strengthens Sanctions Enforcement Amid Global Challenges

The UK government has announced in parliament its comprehensive review of sanctions implementation and enforcement strategy, emphasising its commitment to economic deterrence against Russia and other malign actors. This is something which we looked at it last week’s podcast, but now a statement has been made to parliament. The Foreign Office highlighted the impact of sanctions on Russia’s economy, including depriving Putin of $450 billion since the Ukraine invasion. The government has introduced over 500 new sanctions since July 2024, targeting individuals, entities, and ships linked to Russia’s shadow fleet. Additionally, sanctions have been used to counter corruption and destabilisation efforts in Moldova, Georgia, and Guatemala.

To enhance enforcement, the UK has launched new agencies and expanded existing ones, including the Office of Trade Sanctions Implementation and the Joint Maritime Security Centre. The government is increasing penalties for violations, with recent fines imposed on law firms and successful prosecutions under financial sanctions regulations. Future measures include improved intelligence coordination, expanded transport sanctions, and strengthened oversight in British Overseas Territories. The government aims to simplify compliance for businesses while ensuring robust enforcement to deter sanctions evasion and uphold international security.

UK Imposes Sweeping Sanctions as Russia Escalates Attacks on Ukraine

The UK has announced 100 new sanctions targeting Russia’s military, energy, and financial sectors in response to Russia’s largest drone attack on Ukraine, which included a strike on a bus in Sumy which killed nine civilians. The sanctions aim to disrupt Russian weapons supply chains, including those supporting Iskander missile systems, which have been used in deadly civilian strikes. The UK is also tightening the Oil Price Cap to further restrict Russian oil revenues. Additionally, 46 financial institutions aiding Russia in evading sanctions have been blacklisted, along with 18 ships in Russia’s shadow fleet transporting oil. The measures align with the EU’s upcoming 17th sanctions package, reinforcing international efforts to pressure Russia into a ceasefire.

UK Sanctions Extremist Settlers Amid Rising West Bank Violence

The UK government has announced new sanctions targeting individuals and organisations involved in violence against Palestinian communities in the West Bank. These measures include asset freezes, travel bans, and director disqualifications, affecting prominent settler leader Daniella Weiss, two illegal settler outposts, and two organisations linked to aggressive actions. The sanctions follow a sharp increase in settler violence, with over 1,800 recorded attacks since January 2024. Foreign Secretary David Lammy emphasised the UK’s commitment to holding extremist settlers accountable, urging Israel to take responsibility for halting these aggressive actions.

Additionally, the UK has formally paused free trade agreement negotiations with Israel, citing concerns over Israel’s recent military operations in Gaza. The Foreign Secretary condemned the Israeli Defence Forces' expansive ground offensive and the humanitarian crisis resulting from restricted aid access. Minister for the Middle East Hamish Falconer has summoned Israel’s Ambassador to express the UK’s firm stance against settlement expansion and the escalating violence. The UK, along with France and Canada, has warned Israel of further diplomatic actions if aggressive policies continue.

UK Expands Sanctions Amid Russia’s Intensified Attacks on Ukraine

The UK government has announced 100 new sanctions targeting Russia’s military, energy, and financial sectors in response to Russia’s largest drone attack on Ukraine, which included a strike on a bus in Sumy which killed nine civilians. The sanctions aim to disrupt Russia’s weapons supply chains, including those supporting Iskander missile production, which has been used in deadly civilian attacks.

Additionally, the UK is tightening restrictions on Russia’s financial networks, sanctioning 46 financial institutions, the St. Petersburg Currency Exchange, and the Russian Deposit Insurance Agency to block efforts to evade existing sanctions. The measures also extend to 18 more ships in Russia’s shadow fleet transporting oil, alongside individuals facilitating these operations. The UK is working with partners to lower the Oil Price Cap, further restricting Russia’s revenue streams. Foreign Secretary David Lammy emphasised that delaying peace efforts would only strengthen the UK’s resolve to support Ukraine and weaken Putin’s war machine.

Russian sanctions licences

UK Treasury Grants Temporary Licence for St Petersburg Financial Entities Wind-Down

In the UK, HM Treasury has issued a general licence allowing financial institutions and individuals to wind down transactions involving St. Petersburg Currency Exchange (‘JSC SPCEX’) and Petersburg Settlement Centre (‘JSC PSC’). Effective from 20 May 2025 to 19 June 2025, this exemption permits the closing of existing positions and related activities without breaching UK sanctions under The Russia (Sanctions) (EU Exit) Regulations 2019. However, it does not authorise actions which would knowingly violate other parts of the regulations. The Office of Financial Sanctions Implementation retains the authority to modify or revoke this licence at any time. OFSI has also extended General Licence INT/2022/1834876 relating to Russian Designated Persons, Charities and Interim Managers and trustees until 23:59 on 30th May 2028.

UK Treasury Authorises Permitted Payments to Russian Deposit Insurance Agency

HM Treasury has also issued a general licence allowing certain financial transactions with Russia’s State Corporation Deposit Insurance Agency. Effective from 20 May 2025, this exemption permits individuals and financial institutions to process insurance premium payments to the agency without breaching UK sanctions under The Russia (Sanctions) (EU Exit) Regulations 2019. However, all transactions must comply with record-keeping requirements, ensuring accurate documentation for at least six years. The licence does not authorise any other actions which would violate UK sanctions, and HM Treasury retains the right to modify or revoke it at any time.

Whistleblowing and Trade Sanctions Enforcement

The Department for Business and Trade and Office of Trade Sanctions Implementation (OTSI) have updated guidance on reporting suspected breaches of trade sanctions. A new section, ‘Whistleblowing for trade sanctions,’ has been added. Workers who report wrongdoing related to trade sanctions are considered whistleblowers. This typically involves reporting breaches observed in the workplace, though it may extend beyond direct employment. Whistleblowers are legally protected from unfair treatment or job loss as a result of their disclosures, provided the information is in the public interest and affects others, such as the general public. Starting 26th June 2025, individuals will be able to report suspected violations of trade sanctions directly to the OTSI. If unsure where to file a report, guidance is available to assist whistleblowers in determining the appropriate reporting channel.

EU Unveils Sweeping 17th Sanctions Package Targeting Russia’s War Economy

The EU has adopted its 17th package of sanctions against Russia, aiming to cut off access to military technology and curb energy revenues fuelling its war against Ukraine. The measures heavily target Russia’s shadow fleet, doubling the number of sanctioned vessels to 342, restricting their port access and financial services. The package also includes sanctions on Surgutneftegas, a major Russian oil producer, and shipping companies from the UAE, Türkiye, and Hong Kong which facilitate Russian oil transport. Additionally, 45 Russian companies and individuals supplying military equipment, drones, and ammunition have been blacklisted, alongside Chinese, Belarusian, and Israeli entities aiding Russia’s defence sector. The EU has also tightened export restrictions on dual-use goods and technologies, further limiting Russia’s ability to sustain its war effort.

US Treasury Sanctions Leaders of Cartel del Noreste for Terrorism and Trafficking

The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has sanctioned two high-ranking members of the Mexico-based Cartel del Noreste (‘CDN’), a violent drug trafficking organisation designated as a Foreign Terrorist Organisation (‘FTO’). CDN has been involved in narcotics, human trafficking, arms smuggling, and violent attacks, including a 2022 assault on the US Consulate in Nuevo Laredo. Miguel Angel de Anda Ledezma and Ricardo Gonzalez Sauceda, the sanctioned individuals, were instrumental in arms procurement and enforcement operations. The sanctions block their assets in the US and prohibit transactions with them, reinforcing efforts to disrupt CDN’s criminal activities. This action was coordinated with US and Mexican authorities under Executive Orders targeting drug proliferation and terrorism.

US Sanctions Sudan for Chemical Weapons Use

The United States has determined that Sudan used chemical weapons in 2024, violating its obligations under the Chemical Weapons Convention. In response, the US will impose sanctions, including export restrictions and limits on access to government credit, following a 15-day Congressional notification period. These measures will take effect around June 6, 2025, upon publication in the Federal Register. The US government urges Sudan to cease all use of chemical weapons and comply with international agreements.

Money Laundering

£64bn in UK Property Hidden Behind Trusts, Raising Corruption Concerns

A new report reveals that nearly a quarter of a million properties in England and Wales—worth a combined £64bn—are owned through opaque trust structures, allowing individuals to conceal their identities. Transparency International warns that these trusts have become the “go-to vehicle for kleptocrats,” enabling corrupt actors to stash wealth in Britain while evading scrutiny. Despite the UK’s 2022 register of offshore property ownership, loopholes still allow thousands to hide assets by registering them under trusts or companies owned by trusts. The government acknowledges that these structures may be hampering sanctions enforcement, particularly against Russian nationals, by allowing them to move wealth undetected.

Campaigners are urging the government to close these loopholes and ensure full transparency in property ownership. Labour MP Joe Powell highlights that 40% of overseas-owned property in Kensington and Chelsea is held through trusts, reinforcing concerns about illicit wealth shielding. Transparency International proposes making trust ownership publicly accessible, requiring land registries to record ownership structures, and expanding the scope of the UK’s trust register. As the government consults on whether to allow third-party access to trust data, experts stress that tackling this issue is essential for Britain to maintain its global leadership in anti-corruption efforts.

Global Call to Action Against Money Laundering and Terrorist Financing

At the 34th Session of the Commission on Crime Prevention and Criminal Justice in Vienna, leaders from FATF, INTERPOL, and UNODC urged governments to strengthen efforts against financial crime. They emphasised that illicit profits from drug trafficking, human trafficking, and fraud fuel organised crime and terrorism, harming societies worldwide. The FATF tightened asset recovery standards, revealing that nearly 80% of countries show low or moderate effectiveness in reclaiming criminal assets.

INTERPOL introduced its Silver Notice, enabling 51 pilot countries to track and recover illicit assets more efficiently. The organisations stressed the need for cross-border cooperation, public-private partnerships, and innovative financial crime solutions ahead of the 2026 UN Crime Congress in Abu Dhabi. They also highlighted the importance of engaging the private sector and civil society to accelerate operational responses against financial crime.

Bribery and Anti-Corruption

EU Supports Uzbekistan’s Anti-Corruption Drive with ‘Islands of Integrity’ Initiative

Vobkent District in Uzbekistan has become one of the first local administrations to implement the ‘Islands of Integrity’ methodology, an internationally recognised anti-corruption framework supported by the EU and UNDP. The initiative aims to diagnose and mitigate corruption risks in key sectors such as construction, procurement, and utilities. A strategic roadmap for 2025-2026 has been developed, focusing on digital oversight, staff integrity training, and citizen participation. The methodology, which has been applied in 11 countries, empowers local leaders to enact systemic reforms rather than relying solely on punitive measures. The project is part of a broader effort to enhance transparent and accountable governance across Uzbekistan. The UNDP press release is here.

Fraud

Cloning Scams Lead Investment Fraud Concerns as AI Fuels Sophisticated Deception

The Investment Association (‘IA’) has warned consumers about the growing threat of cloning scams, which have become the most common fraud affecting those looking to invest. These scams involve criminals creating near-identical copies of legitimate websites, emails, and even WhatsApp groups to deceive investors into handing over their money. In the second half of 2024, fraudsters impersonated investment management firms 478 times, with 23% of these attempts succeeding—resulting in consumer losses of £2.7 million. The IA also highlights other types of fraud, including stolen debit card details used for investments and account takeovers, where criminals alter payment details to cash in an individual's holdings.

Despite the rise in scams, vigilance has helped mitigate losses. Reported fraud declined by 29%, and the value of losses prevented rose by 17% to £11.9 million. Adrian Hood, a regulatory expert at the IA, stresses the importance of consumer awareness, noting that AI-driven scams will likely become more sophisticated, making fraudulent websites and emails harder to distinguish from legitimate ones. The IA urges investors to take precautionary steps: pausing before transferring money, verifying sender details, and immediately reporting suspicious activity. With AI enabling increasingly deceptive tactics, the push for robust fraud prevention measures is more critical than ever.

Market Abuse

The Rise of AI-Powered Market Manipulation: Are Trading Bots Gaming the System?

There have been several reports across the mainstream media this week that recent advancements in AI-driven trading bots are raising concerns about potential market manipulation. Unlike traditional algorithmic trading, modern AI bots can learn autonomously, synthesise vast amounts of data, and adapt their strategies in real-time. A particularly troubling scenario involves AI bots coordinating misinformation campaigns via social media—amplifying existing news to sway market sentiment. Investors relying on automated financial advisors may unknowingly benefit from these distortive practices, making regulatory intervention challenging. While experts stress that large-scale AI-driven manipulation is still hypothetical, similar schemes are already observed in decentralised finance and crypto markets.

Assistant professor Alessio Azzutti highlights that malicious actors, whether human or AI-driven, exploit social media platforms to influence investments. Less sophisticated bots are already polluting discussions with misleading information, raising concerns about the potential for more advanced actors to manipulate even well-established markets. As AI trading tools evolve, regulators face mounting difficulties in detecting and counteracting deceptive practices—especially when profits are reaped unintentionally. With AI reshaping financial landscapes, the question remains: How can authorities prevent markets from being unfairly skewed while navigating the complexities of automated trading?

SEC Commissioner Warns Against Deregulatory Push Amid Market Volatility

SEC Commissioner Caroline Crenshaw has raised concerns over the agency’s recent deregulatory actions, likening them to a precarious game of regulatory Jenga. In her speech at SEC Speaks 2025, she criticised the rollback of key financial protections, the loss of 15% of SEC staff, and the weakening of enforcement against crypto-related misconduct. Crenshaw warned that these moves could destabilise markets, disproportionately harming ‘Main Street’ investors rather than powerful financial interests.

She highlighted the dilution of longstanding regulations, including changes to proxy proposals, investment adviser marketing rules, and crypto oversight, often implemented without public comment or Commission votes. Additionally, she expressed concerns over private market exposure in retail funds, arguing that increased opacity and risk could lead to future financial crises. Drawing parallels to the 2008 financial crash, Crenshaw urged regulators to reconsider their approach before market instability escalates.

Other Financial Crime News

UK Deregulation Sparks Concerns Over Financial Stability and Governance

The UK government, led by Prime Minister Keir Starmer, is pursuing a deregulatory agenda aimed at stimulating economic growth. This includes scaling back financial regulations, merging regulatory bodies, and loosening oversight on corporate governance. Notably, the Financial Conduct Authority (‘FCA’) has suggested scrapping "Know Your Customer" rules for smaller transactions, raising concerns about increased financial crime risks. The government also replaced key regulatory leadership with figures more focused on growth, prompting fears about the independence of financial oversight. However, according to practitioners interviewed on the subject by the International Bar Association, scaling back enforcement measures could lead to reckless corporate behaviour, potentially echoing the financial crisis of 2008, with additional risks to financial crime.

Beyond financial regulation, the deregulatory push extends to artificial intelligence, planning laws, and environmental protections. Starmer's AI action plan aims to create "AI growth zones," prioritising private-sector investment while downplaying concerns about ethics and human rights. Critics argue that failing to consider legal safeguards could lead to costly challenges in the future. Additionally, the government is expediting planning approvals to support housing and infrastructure projects, reducing opportunities for legal challenges. Environmental groups oppose proposed reductions in nature protections, warning of long-term damage to ecosystems. While some stakeholders welcome efficiency improvements, others fear deregulation prioritises short-term economic gains over stability, governance, and societal safeguards. Here is the speech by Dominic Holland, director of market oversight at the FCA, at the Association of Corporate Treasurers Annual Conference 2025, on a similar theme.

How Criminal Networks Destabilise the EU

Serious and organised crime poses a dual threat to the European Union, undermining its economy, rule of law, and social stability while also serving as a tool for hybrid threat actors seeking to destabilise member states from within. This theme is explored in a new Europol podcast which highlights how illicit activities—including drug and firearms trafficking, corruption, and organised violence—generate vast criminal proceeds and normalise corruption, eroding trust in institutions.

Additionally, criminal networks are increasingly recruiting young individuals for violent acts, including contract killings, further exacerbating security concerns. Europol’s latest analysis explores these evolving threats, drawing from recent operations against cocaine cartels, firearms traffickers, and migrant smuggling networks. The agency underscores the urgent need for coordinated EU-wide responses to counter these destabilising forces.

Eurojust Expands Global Partnerships to Combat Organised Crime in 2024

Eurojust’s 2024 Annual Report highlights the agency’s growing role in international judicial cooperation as cross-border crime escalates. Case volumes have surged by over 60% in five years, with nearly 13,000 cases handled in 2024 alone.

A key development was the launch of the European Judicial Organised Crime Network (‘EJOCN’), aimed at strategically tackling criminal networks, with drug-related crime at European ports as its first priority. Eurojust also strengthened ties with Latin America, signing agreements with Bolivia, Chile, Costa Rica, Ecuador, Panama, and Peru to enhance collaboration on drug trafficking, cybercrime, and other offences.

The agency’s international reach expanded through new agreements with Armenia and Bosnia and Herzegovina, along with increased cooperation with the UAE and Iceland. In 2024, over 1,200 suspects were arrested, criminal assets worth over €1 billion were seized, and drug seizures reached nearly €20 billion in value.

Eurojust continues to play a significant role in European justice, facilitating international investigations and coordinating efforts against fraud, money laundering, and cybercrime. The press release is here.

CPS Economic Crime Strategy 2025: Final Progress Report

The Crown Prosecution Service (‘CPS’) has made significant strides in tackling economic crime, as outlined in its final progress report on the Economic Crime Strategy 2025. Over the past four years, the CPS has prosecuted more than 25,665 defendants for fraud and forgery, securing 21,717 convictions. Conviction rates remain strong, with an 85.4% success rate in the first three quarters of the 2024/25 financial year. The CPS has also played a key role in asset recovery, securing over £450 million from confiscation orders since 2019, with £88 million returned to victims. Additionally, civil and criminal enforcement actions have led to the recovery of £1.2 billion, including a £652 million fraud settlement with HMRC and a £615 million Deferred Prosecution Agreement with a multinational corporation.

Legal and policy developments have been central to the CPS’s strategy. The organisation supported the introduction of the Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Act, set to take effect in September 2025. It also contributed to the Independent Review of Disclosure and Fraud Offences, aimed at modernising legal frameworks for handling complex economic crime cases. The CPS continues to focus on digital transformation, particularly in managing the growing threat of crypto-related crimes. Prosecutors are receiving specialised training to tackle cryptocurrency-related fraud and money laundering. A new Digital Case File system is also being developed to streamline case management, enhancing efficiency in handling large-scale fraud cases.

Strategic partnerships have been critical to the CPS’s effectiveness in combating economic crime. The organisation has collaborated on the UK’s Anti-Corruption Strategy and supported government initiatives to strengthen fraud enforcement. The CPS provided insights to the Home Affairs Select Committee Fraud Inquiry, advocating for improved victim support and streamlined case processing. Looking ahead, the CPS is helping establish the National Fraud Squad, which aims to enhance investigative capabilities in tackling financial crime. The report highlights the increasing complexity of fraud, which now accounts for 43% of all crime in England and Wales. Many incidents remain unreported, reinforcing the need for sustained efforts across law enforcement and the judicial system.

Cybercrime

Google Warns US Retailers of Cyber Threat Linked to UK Attacks

Google has alerted US retailers to an escalating cyber threat from hackers linked to the group "Scattered Spider," which previously caused major disruptions in the UK retail sector. The same network, known for its aggressive tactics, is now targeting American businesses, with experts warning of sustained attacks on the industry. Major retailers and cybersecurity groups are preparing defences in coordination with Google.

Cyber Security: A Wake-Up Call for UK Businesses

In light of the cyber-attack, the National Cyber Security Centre (‘NCSC’) CEO, Richard Horne, has warned businesses, in a blog post, that recent high-profile cyber-attacks are not anomalies but a reflection of the persistent threats organisations face daily. These attacks disrupt critical services, harm businesses financially, and expose customer data, underscoring the urgent need for stronger cyber defences. Horne emphasises that cyber security is a continuous contest, requiring proactive risk management and preparedness. He urges all businesses, from small enterprises to national infrastructure providers, to follow NCSC guidance and redouble efforts to defend against and respond to cyber incidents. The blog provides key resources on incident response, cyber governance, and protective measures like the Cyber Essentials certification.

HSBC Boss Warns of Constant Cyber Threats as Banks Battle Rising Security Costs

HSBC UK's chief executive, Ian Stuart, told MPs that the bank is constantly under attack by cybercriminals, making cybersecurity its biggest business expense—costing hundreds of millions of pounds. He emphasised the importance of robust defence mechanisms and quick recovery from breaches, as digital banking becomes increasingly central to financial operations. The comments come amid rising concerns following major cyberattacks on retailers such as Marks & Spencer and the Co-op, which have disrupted services. Stuart highlighted the sheer scale of HSBC's digital operations, processing 1,000 payments per second and making 8,000 system changes weekly. Meanwhile, Barclays' UK chief executive, Vim Maru, apologised for recent outages caused by third-party software failures, pledging improvements to prevent future disruptions.

Europol and Microsoft Disrupt World's Largest Infostealer, Lumma

Europol’s European Cybercrime Centre and Microsoft have successfully disrupted Lumma Stealer, the world’s most significant infostealer malware. Between March and May 2025, Microsoft detected 394,000 infected Windows computers globally. The operation targeted Lumma’s technical infrastructure, cutting off communications between the malware and its victims. Europol coordinated with law enforcement across Europe, while the US Department of Justice (‘DoJ’) seized Lumma’s control panel, a critical component of its marketplace. Additionally, 1,300 domains linked to Lumma were seized or transferred to Microsoft, preventing further exploitation. The operation highlights the growing importance of public-private partnerships in combating cybercrime.

Operation ENDGAME: Major Blow to Ransomware Infrastructure

Law enforcement agencies, coordinated by Europol and Eurojust, have dismantled key infrastructure used in ransomware attacks, striking at the early stages of the cybercrime kill chain. Between 19 and 22 May 2025, authorities took down 300 servers, neutralized 650 domains, and issued 20 international arrest warrants against individuals involved in distributing initial access malware—a crucial step before ransomware deployment.

A total of €21.2 million in cryptocurrency has been seized throughout Operation ENDGAME, with €3.5 million recovered in this latest phase. Targeted malware variants included Bumblebee, Qakbot, Trickbot, and DanaBot, which cybercriminals use to infiltrate networks.

Europol coordinated efforts from its headquarters in The Hague, working with law enforcement from Canada, Denmark, France, Germany, the Netherlands, the UK, and the US. Investigators focused on disrupting access brokers—cybercriminals who sell stolen credentials to ransomware operators.

Moving forward, Europol’s Internet Organised Crime Threat Assessment (IOCTA) 2025, set for publication on 11 June, will focus on initial access brokers to further strengthen ransomware countermeasures. Several suspects will also be added to the EU Most Wanted list, reinforcing ongoing enforcement actions.