Episode 172

Sanctions

Interactive Brokers Settles $11.8 Million with US Treasury Over Sanctions Violations Across Multiple Jurisdictions

Interactive Brokers LLC (‘IB’) has agreed to pay $11,832,136 in a settlement with the US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) for apparent violations of several sanctions programmes. The settlement follows IB’s provision of brokerage and investment services to individuals and entities in Iran, Cuba, Syria, and the Crimea region of Ukraine, as well as transactions involving parties under sanctions linked to China, Russia, Venezuela, and the Global Magnitsky program.

The violations included processing trades involving securities tied to the Chinese Military-Industrial Complex, facilitating new investments in Russia, and conducting transactions with individuals on OFAC’s Specially Designated Nationals (‘SDN’) list. Though considered non-egregious, the breaches spanned a broad spectrum of sanctions and demonstrated significant lapses in compliance.

OFAC noted that IB voluntarily self-disclosed the violations, which contributed to the final settlement terms. The enforcement underscores the growing complexity of international sanctions regimes and the imperative for financial institutions to maintain rigorous due diligence and real-time monitoring systems.

US Treasury Targets Leadership of Tren de Aragua Criminal Network

On 17th July 2025, the US Treasury’s Office of Foreign Assets Control (‘OFAC’) announced sanctions against Hector “Niño” Guerrero and five other leaders of Tren de Aragua—a Venezuelan-origin criminal organisation designated as a Foreign Terrorist Organisation earlier this year. Guerrero has transformed the group from a prison gang into a transnational threat engaged in human trafficking, drug trade, extortion, and terrorism across the Western Hemisphere.

Key figures sanctioned include Yohan “Johan Petrica” Romero, responsible for illegal mining and military-grade arms supply; Josue “Santanita” Santana Pena, linked to bombings and homicides; Wilmer “Guayabal” Perez Castillo, a cell leader implicated in high-profile murders and drug trafficking; Wendy Rios Gomez, Guerrero’s wife, suspected of laundering terrorist funds; and Felix “Pure Arnel” Castillo Rondon, operator of “Los Gallegos,” active in Chile and tied to human trafficking and sexual exploitation.

Under these sanctions, US persons are prohibited from engaging with the group’s assets, which are blocked if within US jurisdiction. This move is part of a broader effort to dismantle the organisation’s infrastructure and reduce its regional influence, aligning with the administration’s commitment to public safety and counterterrorism.

EU Targets Russian Hybrid Threats with New Sanctions on Individuals and Entities

The European Union (‘EU’) has intensified its response to Russian hybrid threats by imposing sanctions on nine individuals and six entities linked to destabilising actions in both EU member states and Ukraine. These measures aim to counter foreign information manipulation, cyber interference, and disinformation campaigns orchestrated by state and non-state actors connected to Russia.

Among those sanctioned is the Russian Television and Radio Broadcasting Network (‘RTRS’), accused of replacing Ukrainian broadcast infrastructure in occupied territories with Kremlin-approved propaganda. Several of its senior figures are named, highlighting the network’s role in suppressing dissent and promoting Russian state narratives.

The 841st Separate Electronic Warfare Centre and its staff have also been listed, due to GNSS signal disruptions traced to operations in Kaliningrad—impacting civil aviation and communications in the Baltic region. Additional entities include the BRICS Journalists Association, Foundation to Battle Injustice, and Centre for Geopolitical Expertise, cited for campaigns targeting Ukraine, France, and Western political processes. These were created or influenced by controversial figures like Yevgeny Prigozhin and Aleksandr Dugin.

A GRU officer and pro-Russian propagandists, including Yevgeny Shevchenko and his company Tigerweb, were sanctioned for disseminating harmful content across Europe. The move builds on recent actions against Nathalie Yamb, a social media influencer pushing Moscow’s anti-West narratives, particularly in Africa.

Sanctions include asset freezes, travel bans, and restrictions on financial support. With these additions, the EU’s sanctions list now covers 47 individuals and 15 entities engaged in hybrid threats—part of a strategic effort to uphold democratic integrity and safeguard European stability.

UK Sanctions Russian Spies in Response to Escalating Hybrid Threats

The UK Government has imposed sanctions on three Russian GRU military intelligence units and 18 officers for orchestrating cyber and disinformation campaigns which threaten European and British security. This marks a decisive move against Russia's long-running operations aimed at sowing chaos across borders, including their involvement in the 2022 missile strike on Mariupol Theatre—an attack which killed hundreds of civilians—and the earlier targeting of Yulia Skripal using malware tied to a failed nerve agent assassination attempt.

Foreign Secretary David Lammy condemned the Kremlin's hybrid warfare strategy, which includes cyberattacks on critical UK infrastructure, disinformation, and political interference. The sanctions align with a broader national security initiative known as the “Plan for Change,” focused on defending British citizens and countering global threats. The UK also announced a historic increase in defence spending to 2.6% of GDP by 2027.

In collaboration with NATO, the EU, and global partners like the FBI, the UK is intensifying efforts to combat technology-enabled threats. Sanctions also extended beyond Europe to include three leaders of Russia’s "African Initiative," accused of using social media campaigns to undermine global health programmes in West Africa. The Russia Notice is here, and the Cyber Notice is here. The National Cyber Security Centre press release is here.

UK Authorises Transfer of Non-Designated Funds from Sanctioned Brokers

The UK Treasury has issued a general licence (INT/2025/6641960) allowing the transfer of frozen assets from Russian and Belarusian designated brokerage firms to clients who are not themselves sanctioned. Under this licence, non-designated account holders can reclaim investments and client funds deposited before the broker became designated, provided all transfers meet consent and reporting requirements. Asset holding institutions, brokers, and registrars may facilitate these transfers, deducting pre-agreed fees and ensuring no benefit reaches the designated parties beyond that. The licence is valid until 16th July 2026, with strict record-keeping and reporting obligations to ensure transparency.

OFSI Launches Online Sanctions Reporting and Licensing Forms

The Office of Financial Sanctions Implementation (‘OFSI’) has launched new online forms to streamline the reporting and licensing processes for financial sanctions, marking a significant modernisation step. These forms, introduced on 17th July 2025, cover licence applications, breach reporting, and key disclosures such as frozen assets and designated persons’ resources. A transition period is in place during which the new forms will run alongside existing methods, but stakeholders are encouraged to adopt the digital system early for improved speed and accuracy.

The move aims to simplify submissions, reduce delays, and minimise follow-up queries by incorporating built-in guidance and mandatory fields to ensure information is complete and well-formatted. Once submitted, users receive a confirmation email for transparency and tracking. Although the forms cannot be saved mid-process, session data will persist for up to 20 hours unless the browser is closed.

A wide range of form types are available, including:

-          Licence applications and amendments

-          Reporting suspected sanctions breaches (including Russian oil price cap violations and counter-terrorism issues)

-          Frozen and immobilised asset reporting

-          Designated Persons resource declarations

-          Legal Services General Licence reporting

-          Compliance reporting under various exceptions

Support materials include downloadable templates for previewing questions and gathering necessary documents ahead of submission. Users are invited to provide feedback via email to help refine the forms further.

Money Laundering

UK Raises Criminal Property Threshold Under Proceeds of Crime Framework

The UK government has amended the Proceeds of Crime Act 2002 to raise the threshold for criminal property transactions, enhancing flexibility for financial institutions and regulated businesses. The Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025, which comes into effect on 31st July 2025, increases the threshold amount from £1,000 to £3,000.

This change applies to two key contexts under Section 339A of the 2002 Act. First, banks and similar financial entities can now process transactions involving criminal property up to £3,000 without breaching money laundering laws, provided they’re operating a customer account in good faith. Secondly, regulated businesses—such as lawyers, accountants, and estate agents—can return funds up to this new threshold when ending client relationships, again without contravening the law.

The amendment builds on previous increases, which saw the threshold rise from £250 to £1,000 in 2022. It is designed to ease compliance burdens while maintaining safeguards against money laundering. An accompanying Economic Note outlines the cost implications for businesses and public sector institutions.

UK Unveils Robust Anti-Money Laundering Strategy in 2025 National Risk Assessment

The UK government has published its fourth National Risk Assessment (‘NRA’) of money laundering and terrorist financing, alongside its official response to the consultation on enhancing Money Laundering Regulations (‘MLRs’). The documents, presented by Economic Secretary to the Treasury Emma Reynolds, outline a comprehensive and risk-based strategy to safeguard the integrity of Britain's financial system. Central to the initiative is a renewed commitment to curbing illicit financial activity through updated regulation, intelligence sharing, and public-private collaboration.

Key findings highlight the UK’s persistent exposure to high money laundering risks, exacerbated by global instability and the increasing sophistication of laundering methods. Risks include kleptocracy-linked fund concealment, use of cash-intensive businesses, and exploitation of new technologies. The UK also continues to face threats from terrorist financing, which often involves small but strategic transactions via both legitimate and illegal channels.

Reforms to the MLRs include enhanced due diligence for high-risk scenarios, clarified requirements for pooled client accounts, tighter oversight on trust registrations, and updated rules for crypto asset service providers. These changes aim to close regulatory loopholes and ensure consistency across supervised entities. By aligning with global standards—particularly those of the Financial Action Task Force—the updated framework strengthens the UK's defences while supporting compliant businesses and protecting public welfare.

Bribery and Corruption

New Anti-Corruption Bill Targets Presidential Library Donations and Influence-Peddling

A bipartisan group led by Senator Elizabeth Warren has introduced the Presidential Library Anti-Corruption Act, aiming to eliminate the growing risk of corruption surrounding presidential library donations. The legislation addresses loopholes which currently allow sitting presidents to solicit or accept unlimited contributions—often anonymously—from corporations, lobbyists, foreign governments, and individuals seeking political favours.

The move follows revelations that entities such as Paramount, Meta, and the Qatari government have pledged significant funds or valuable assets to Donald Trump’s planned presidential library. These include a $400 million luxury jet donation and a $16 million legal settlement, raising concerns about influence-peddling tied to pending regulatory decisions and international diplomacy.

Key provisions of the bill include:

-          Banning fundraising during a president’s time in office (with limited exceptions).

-          Capping donations from nonprofit organisations at $10,000.

-          Enforcing a two-year ban on donations from high-risk sources after a president leaves office.

-          Requiring quarterly disclosure of contributions over $200.

-          Prohibiting personal use of library donations and outlawing straw donors.

Backed by numerous watchdog groups—including CREW and the Campaign Legal Centre—the bill seeks to restore presidential libraries to their original purpose: preserving history, not monetising political access.

Minister Urges Ban on Cryptocurrency Donations Amid UK Political Integrity Concerns

Cabinet Office minister Pat McFadden has called on election authorities to consider banning political donations made via cryptocurrency, raising alarm over the potential for untraceable digital funds to influence UK democracy. His remarks follow Reform UK’s announcement that it would begin accepting bitcoin donations, a move reminiscent of Donald Trump’s campaign strategy in the US.

Speaking during a parliamentary committee meeting, McFadden emphasised the difficulty in tracing the origin of crypto donations and highlighted the importance of knowing the identity and legitimacy of donors. He warned that current legislation may not be keeping pace with technological changes and called for updates to protect democratic financing.

The campaign group Spotlight on Corruption and several MPs echoed these concerns, pointing to the risk of foreign interference and the need for tighter scrutiny over “unlimited companies” and donations derived from overseas profits. McFadden also advocated for increased resources for the Electoral Commission and National Crime Agency to strengthen enforcement capabilities.

While a forthcoming government strategy paper is expected to address broader foreign interference, it may stop short of recommending an outright ban on crypto donations. Transparency advocates continue to push for reforms including restoring powers to the Electoral Commission, enhancing donor checks, and potentially introducing automatic voter registration to bolster electoral engagement and oversight.

Global Call to Action: International Anti-Corruption Conference 2026 Unveiled

Transparency International has announced that the 22nd International Anti-Corruption Conference (‘IACC’) will be held from 1–4 December 2026 in Punta Cana, Dominican Republic, under the theme “Igniting the Power of Integrity.” The event promises to be the world’s largest gathering of anti-corruption advocates, bringing together over 2,000 participants from more than 140 countries—including heads of state, civil society organisations, journalists, and youth representatives.

This year’s theme calls attention to the mounting threats posed by authoritarian regimes and democratic backsliding. The IACC aims to unite individuals and institutions committed to transparency, justice, and accountability in an era where integrity is under increasing pressure. The conference will serve as a hub for dialogue, strategic collaboration, and bold initiatives to combat corruption globally.

Leadership figures at Transparency International emphasised the urgency of standing up for democratic values and supporting those on the front lines of the fight against kleptocracy and political corruption. Speakers also highlighted the importance of deepening international alliances, enhancing inclusivity, and recognising the sacrifices of integrity-driven leaders across sectors.

Fraud

HMRC Intensifies Fraud Crackdown with £3.9 Billion Compliance Yield

HM Revenue & Customs (‘HMRC’) has published its latest technical note on the performance of its Fraud Investigation Service (‘FIS’) for the 2024–2025 financial year, revealing a significant £3.9 billion compliance yield from tackling tax fraud. HMRC continues to define fraud broadly, encompassing false returns, offshore concealment, and organised tax crime. Most interventions use civil powers, allowing financial penalties of up to 200% of owed tax. Serious or complex cases may trigger criminal investigations under HMRC’s discretionary powers when deterrence or civil action proves insufficient.

The report highlights targeted criminal cases focused on high-impact frauds, yielding £1.5 billion through disruption. Court proceedings saw 446 investigations adopted, leading to 310 prosecutions and 281 convictions—a 91% success rate. Custodial sentences averaged 35 months across 141 cases, with 109 suspended sentences averaging 18 months.

On the civil front, investigations generated £2.4 billion in benefits. HMRC’s Code of Practice 8 and 9 mechanisms facilitated voluntary disclosure and penalty collection, with COP9 cases delivering £96.7 million in yield from 591 closures. As of March 2025, the directorate is reviewing cases with a total estimated tax liability under consideration of £2.1 billion, emphasising its strategic targeting of high-risk fraud.

Other Financial Crime News

Evaluating Whistleblowing in Great Britain: A Framework Under Scrutiny

The independent research report by Grant Thornton UK LLP, commissioned by the Department for Business and Trade, investigates the effectiveness of Great Britain’s whistleblowing framework. The framework centres on protecting workers who disclose misconduct in the public interest, underpinned by laws such as the Public Interest Disclosure Act 1998 (‘PIDA’) and later amendments.

Purpose and Scope: The study evaluates whether the current whistleblowing framework meets three original PIDA goals: enabling disclosure, protecting workers from retaliation, and fostering cultural change. Using a mix of literature review, interviews, focus groups, and tribunal data analysis, it focuses on England, Scotland, and Wales, excluding Northern Ireland.

Methodology and Limitations: Despite a rigorous mixed-methods approach, including 35 interviews and six focus groups, the research is cautious about drawing firm conclusions. Responses were largely negative, highlighting systemic weaknesses. Researchers acknowledge potential biases in literature and feedback, which limits the report’s ability to definitively measure effectiveness.

Key Findings and Themes

• Definitions: Terms like “reasonable belief” and “public interest” were considered vague, leading to misinterpretations and inconsistent protections.

• Disclosure Routes: While internal reporting systems have improved, gaps exist in sector coverage and clarity around contacting prescribed persons, resulting in inefficiencies and risks.

• Concerns Raised: Organisations vary in their investigation capabilities. Differences between legal and organisational definitions cause confusion and unmet expectations.

• Protections: Many whistleblowers reported feeling victimised. Legislation was seen as insufficiently protective, especially concerning anonymity and detriment.

• Redress via Tribunals: Participants often found tribunals complex, emotionally draining, and inaccessible. Non-disclosure agreements and time limits also hindered justice.

• Awareness and Guidance: Guidance from government and prescribed persons was criticised as unclear or inconsistent, with stronger reliance on whistleblowing charities and peer support.

• Cultural Change: Despite progress in implementing frameworks and reporting, stigma around whistleblowing persists. Support mechanisms, particularly for mental health and financial consequences, remain underdeveloped.

Suggestions for Change: The report catalogues many proposed improvements—such as clearer definitions, expanded guidance, sector-specific support, and more robust protections—but stresses that these suggestions haven’t been weighed for feasibility or cost-effectiveness.

UK Regulators Launch Joint Overhaul of Senior Managers Regime to Cut Red Tape and Boost Financial Sector Growth

The Financial Conduct Authority (‘FCA’) and Prudential Regulation Authority (‘PRA’), in coordination with HM Treasury, have jointly proposed significant reforms to the Senior Managers and Certification Regime (‘SM&CR’). These reforms aim to streamline regulatory processes, reduce compliance burdens, and enhance the UK’s competitiveness in financial services—all while preserving high standards of accountability.

Key Proposals Across Both Papers:

• Removal of the Certification Regime: The government plans to eliminate the statutory Certification Regime, allowing regulators to design a more flexible framework using their rule-making powers.

• Reduced Pre-Approval Requirements: Regulators propose reducing the number of senior roles requiring formal pre-approval, enabling firms to self-certify certain appointments and notify regulators post-hoc.

• Streamlined Processes:

o   More time and flexibility for firms to submit senior manager applications during unexpected changes.

o   Extended validity for criminal record checks.

o   Simplified annual fitness and propriety checks.

o   Clearer definitions of Senior Management Functions (SMFs).

o   More time to update the FCA Directory and report changes to responsibilities.

The SM&CR was introduced post-2008 financial crisis to improve individual accountability. It is a regulatory framework designed to make sure people in financial firms are personally accountable for their actions and decisions. However, feedback from a 2023 Call for Evidence revealed that firms—especially smaller ones—face disproportionate administrative burdens. The reforms respond to this feedback and align with the government’s broader Financial Services Growth and Competitiveness Strategy.

FCA Chief Executive Nikhil Rathi emphasised maintaining integrity while improving efficiency. PRA Chief Sam Woods echoed the need to uphold accountability without stifling growth.

These consultations mark Phase 1 of reform. A Phase 2 is anticipated, contingent on legislative changes, which could further reduce regulatory friction and reshape the SM&CR landscape.

UK Insolvency Service Unveils Strategic Overhaul to Combat Economic Crime

The UK Insolvency Service has announced an ambitious five-year strategy aimed at intensifying its fight against economic crime and strengthening corporate accountability. The plan marks a significant expansion of its enforcement role, positioning the agency as a leading authority in safeguarding the UK’s business environment.

Under the new strategy, the agency will broaden its remit to prosecute a wider array of offences, crack down on companies acting against the public interest, and recover proceeds of crime more aggressively. Leveraging artificial intelligence and analytics, it will target complex financial misconduct and enhance its intelligence-gathering capabilities. This includes hiring specialists in cryptoassets and stepping up efforts against money laundering and shell company misuse.

Recent performance figures highlight the agency’s impact: over 1,000 director disqualifications, 77 criminal convictions, and economic benefits exceeding £50 million from corporate enforcement actions in just one year. Its role in investigating COVID-19 Bounce Back Loan abuse also continues to expand.

Collaboration with other key organisations like Companies House, HMRC, and the National Crime Agency is central to the new strategy. The agency will also implement enforcement powers granted under the Economic Crime and Corporate Transparency Act 2023, which introduced over 100 new offences under the Companies Act.

The strategy signals a transformational moment, with an intensified focus on upholding corporate standards, protecting consumers, and fostering a fair business climate. It positions the Insolvency Service as an essential force in deterring fraud and enhancing the UK’s economic integrity.

UK Strikes Off 11,500 Companies in Major Crackdown on Economic Crime

More than 11,000 companies have been removed from the Companies House register following a sweeping multi-agency crackdown led by the National Economic Crime Centre. The operation targeted entities violating Registered Office requirements under the Companies Act 2006, particularly those suspected of facilitating criminal activity across the UK and abroad.

The coordinated effort involved the National Crime Agency, HMRC, Companies House, The Insolvency Service, and multiple police forces. Investigators focused on high-risk incorporation addresses and company formation agents. A two-day enforcement blitz uncovered widespread non-compliance: officers visited eleven addresses where 30 high-risk trust and company service providers operated—many lacked any legitimate business activity. One London firm had registered up to 5,000 businesses at a single site, despite many being located elsewhere.

As a result, key agents have been barred from registering new companies, three trust and service providers face closure, 27 others are under enforcement review, and criminal property has been flagged for civil recovery. The initiative coincides with new Companies House reforms, including tougher ID verification and the Authorised Corporate Service Provider regime, under the Economic Crime and Corporate Transparency Act.

Officials described the operation as a landmark in UK efforts to stem money laundering—estimated at over £100 billion annually—and protect legitimate business. The Insolvency Service is also expanding its enforcement strategy to include economic crime, building on intelligence partnerships established during the crackdown.

Cyber Crime

NCSC’s Vulnerability Research Initiative Boosts UK Cybersecurity Through Industry Collaboration

The UK’s National Cyber Security Centre (‘NCSC’) has launched the Vulnerability Research Initiative (‘VRI’) to enhance national cybersecurity by partnering with external experts. This initiative expands the NCSC’s capacity to understand, detect, and mitigate vulnerabilities in both widely used and niche technologies. By combining internal expertise with industry knowledge, the programme aims to improve resilience against evolving threats and support secure product development.

Through the VRI, the NCSC gains deeper insights into vulnerabilities, researcher methodologies, and effective mitigation techniques. This collaborative effort ensures that tools and tradecraft used in vulnerability discovery are shared across the UK’s cybersecurity ecosystem, supporting both public and private sector readiness.

Importantly, research findings influence the NCSC’s official guidance and inform discussions with tech vendors to encourage fixes and strengthen product security. Future plans include expanding into emerging areas such as AI-driven vulnerability detection, with the NCSC inviting skilled researchers to contribute to this growing effort.

Co-op Confirms Massive Data Breach Affecting 6.5 Million Members

In an interview with the BBC, Co-op’s chief executive Shirine Khoury-Haq publicly apologised for a cyber-attack which compromised the personal data of all 6.5 million Co-op members. The breach, discovered in April 2025, exposed names, addresses, and contact details, though financial and transactional data remained secure. Khoury-Haq described the incident as personally devastating, acknowledging the emotional toll it took on her colleagues, particularly IT staff who scrambled to contain the threat. She noted the hackers were swiftly removed from Co-op’s systems, allowing authorities to track their activity and gather evidence, although the stolen data could not be recovered.

The retailer, which operates on a member profit-sharing model, is still assessing the financial fallout and working to restore its backend systems. As part of its response, Co-op is partnering with The Hacking Games—a cybersecurity recruitment initiative aimed at diverting young digital talent into legal tech careers. A pilot program is set to launch with Co-op Academies Trust, reinforcing efforts to build future cybersecurity resilience.

This breach was part of a wider wave of cyber-attacks targeting major UK retailers this spring, with Marks & Spencer and Harrods also affected. Four individuals aged 17 to 20 were arrested under suspicion of cybercrime-related offenses including blackmail and money laundering. Authorities credit Co-op’s rapid disconnection of internet access for preventing a potential ransomware deployment, which could have caused even greater disruption.