Episode 181

1st September – 4th September 2025

Sanctions

US Treasury Sanctions Iraqi-Led Network Smuggling Iranian Oil to Evade Sanctions

On 2nd September 2025, the US Treasury’s Office of Foreign Assets Control sanctioned a network led by Iraqi-Kittitian businessman Waleed al-Samarra’i for smuggling Iranian oil disguised as Iraqi-origin crude, generating hundreds of millions in revenue for Iran. Operating through UAE-based firms Babylon Navigation and Galaxy Oil, the network used ship-to-ship transfers, AIS spoofing, and shell companies to mask its activities. The sanctions target vessels, companies, and individuals involved, reinforcing the US campaign to disrupt Iran’s oil revenue stream and counter its influence in Iraq. This action builds on earlier July sanctions and aligns with Executive Order 13902.

Sanctioning Environmental Crime: A New Frontier for UK Accountability

Environmental crime, which ranges from illegal mining and deforestation to wildlife trafficking, is now the third most profitable criminal sector globally, often enabled by corruption and financial secrecy. The UK plays a significant role, with its financial systems and offshore territories facilitating illicit flows tied to environmental harm. Current enforcement is weak, with minimal prosecutions and recoveries. Spotlight on Corruption argues for a dedicated UK sanctions regime targeting environmental harms, which could disrupt criminal networks, incentivise ethical divestment, and reinforce global partnerships—especially with nations most affected by climate change and resource exploitation. Such a regime would bolster the UK’s ambitions as a clean energy leader and sustainable finance hub.

UK & EU Slash Russian Oil Price Cap to $47.60 — New Limit Now in Force

Effective 2nd September 2025 at 23:01 BST, the UK and EU have lowered the Oil Price Cap on seaborne Russian crude from $60 to $47.60 per barrel, aiming further to restrict Russia’s war financing. A 45-day wind-down period is granted for contracts dated before the cutoff, allowing compliance under the previous cap until 17th October 2025. All contracts dated after the cutoff must adhere to the new $47.60 limit. The UK’s Office of Financial Sanctions Implementation (‘OFSI’) has issued updated FAQs (154–161) to guide businesses through the transition, with standard reporting and attestation requirements remaining in force. OFSIs FAQs are here, Oil Price Cap general licence here, and Oil Price Cap guidance is here.

Money Laundering

HM Treasury Approves Key Updates to JMLSG Anti-Money Laundering Guidance

The Joint Money Laundering Steering Group (‘JMLSG’) has received ministerial approval from HM Treasury for several amendments to its Part I Guidance. The approved revisions include updates to paragraphs 5.3.97A, 5.3.99, 5.3.138A–B, 5.6.36–5.6.38, and 2.16–2.24. These changes reflect evolving regulatory expectations and are now available under the “Revisions” tab (June 2025) on the JMLSG website. The approval reinforces the Guidance’s role in shaping UK financial institutions’ compliance with anti-money laundering obligations.

FATF Unveils Toolkit to Help Nations Tackle Money Laundering Risks

The Financial Action Task Force (‘FATF’) has launched a new National Risk Assessment toolkit to help countries identify and address their most pressing money laundering threats. Designed to support a risk-based approach, the toolkit offers cross-country insights, practical examples, and guidance on high-risk areas such as corruption, virtual assets, legal entities, and informal economies. It aims to strengthen global efforts by improving data use, risk understanding, and targeted action planning, ultimately helping governments and financial systems prevent illicit financial flows. The Toolkit is here.

Wolfsberg Group Releases Updated Framework for Monitoring Suspicious Activity

The Wolfsberg Group has published its second Statement on Effective Monitoring for Suspicious Activity, building on its 2024 guidance which urged financial institutions to move beyond traditional transaction monitoring. This new statement introduces a responsible innovation framework aimed at integrating automation, AI, and machine learning into financial crime detection strategies.

The framework is anchored in three pillars: transition and validation of new technologies, balancing model risk with financial crime risk, and ensuring explainability to maintain transparency and trust. These principles are drawn from member banks’ experiences and shaped by global consultations with financial intelligence units, regulators, and policymakers.

By promoting a structured yet flexible approach, the Wolfsberg Group encourages industry-wide adoption of these standards to foster innovation while safeguarding integrity. The initiative reflects a growing consensus that effective monitoring must evolve in step with technological capabilities and regulatory expectations.

HM Treasury Proposes Targeted AML Reforms to Address Crypto, Trusts, and Risk Alignment

HM Treasury has released a policy note and draft regulations proposing amendments to the Money Laundering Regulations 2017, aiming to close regulatory gaps and address emerging risks in areas such as cryptoassets, pooled client accounts, and trust registration. Key changes include refined customer due diligence for letting agents and art market participants, narrowed enhanced due diligence focused on high-risk jurisdictions now defined as “FATF call for action countries,” and updated cryptoasset firm obligations aligned with FSMA 2000. Pooled client accounts will require case-by-case risk assessment, and trust registration rules will expand while offering exclusions for low-risk trusts. Additional technical updates improve coordination among supervisory bodies, with Companies House and the Financial Regulators Complaints Commissioner added to the information-sharing framework. Public responses are invited by 30th September 2025, with final regulations expected in early 2026.

Fraud

DOJ and DHS Launch Joint Task Force to Combat Trade Fraud and Tariff Evasion

The US Departments of Justice and Homeland Security have announced the formation of a cross-agency Trade Fraud Task Force aimed at cracking down on importers who evade tariffs, smuggle prohibited goods, or violate customs laws. Drawing on civil and criminal enforcement powers, the task force will pursue violators through penalties, seizures, and prosecutions under the Tariff Act and False Claims Act. Officials say trade fraud undermines American manufacturers, threatens national security, and drains public funds. The initiative aligns with the administration’s “America First Trade Policy” and encourages whistleblower participation to identify fraud schemes across industries.

UK Introduces Landmark Corporate Offence to Combat Fraud Across Large Organisations

As of 1st September 2025, the UK government has enacted a new corporate failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act. The law holds large organisations criminally liable if employees, agents, or subsidiaries commit fraud intended to benefit the company. Businesses must now demonstrate they had reasonable fraud prevention measures in place or face prosecution. The move is part of a broader anti-fraud strategy which includes banning SIM farms, partnering with the insurance sector, and supporting the first UN resolution on fraud. Officials say the legislation aims to foster an anti-fraud culture, protect the economy, and restore public trust in corporate governance.

Bribery and Corruption

Portugal Shows Progress on Anti-Corruption Measures, But GRECO Calls for Deeper Reform

Portugal has made notable strides in curbing corruption within central government and law enforcement, according to a new follow-up report by the Council of Europe’s Group of States against Corruption (‘GRECO’). Key developments include the operational launch of the National Anti-Corruption Mechanism and the Entity for Transparency, as well as a newly adopted code of conduct for government officials. However, GRECO warns that integrity controls remain inconsistently applied at senior levels and urges more decisive action.

The report highlights several gaps: the absence of a corruption-risk-prevention plan tailored to executive roles, delays in publishing gift register data, and limited public access to asset declarations. GRECO also recommends extending post-employment restrictions and disclosure requirements to cabinet members.

In law enforcement, GRECO commends the adoption of a code of conduct for the Public Security Police and progress on one for the National Republican Guard. Internal whistleblowing channels have been introduced, yet challenges persist around gender balance, vetting systems, and staffing at the Inspectorate General for Internal Affairs. GRECO has requested a further progress update from Portuguese authorities by 30th September 2026.

Market Abuse

West Brothers Sentenced for Insider Trading, Ordered to Repay £280,000

Matthew and Nikolas West, seasoned UK-based traders, have been sentenced for insider dealing following an FCA investigation. The brothers exploited confidential investment information to execute trades yielding nearly £43,000 in profit. However, under the Proceeds of Crime Act, they must repay over £280,000, which is the full value of the shares traded, within 14 days or face prison time. Their actions, which included coordinated trades and message exchanges revealing intent, were deemed a serious breach of market integrity. The case underscores the FCA’s intensified crackdown on market abuse and its commitment to deterrence.

Other Financial Crime

SFO says other Rate-Rigging Convictions may be Unsafe After Supreme Court Ruling

The UK’s Serious Fraud Office has announced that five convictions related to Libor and Euribor rate manipulation may be unsafe, following the Supreme Court’s decision to overturn the fraud convictions of traders Tom Hayes and Carlo Palombo. The court found that flawed jury instructions had deprived them of fair trials, prompting the SFO to reassess similar cases. The affected individuals, former Barclays bankers, were sentenced to between four and eight years in prison. The SFO now says these convictions may be reconsidered, though it’s up to each defendant to pursue appeals. The announcement marks a significant shift in the long-running Libor scandal, which once symbolised global financial misconduct.

Scotland Expands Self-Reporting Pathway for Economic Crimes Under New COPFS Guidance

The Crown Office and Procurator Fiscal Service has broadened its self-reporting policy for businesses in Scotland, allowing voluntary disclosure of a wider range of economic crimes as of 1st September 2025. Originally focused on bribery under the Bribery Act 2010, the initiative now includes offences such as failure to prevent tax evasion, fraud, and misconduct by senior managers under recent legislation. Businesses must submit reports via solicitors, backed by thorough internal investigations and evidence of remedial action. Cases may be prosecuted or referred to the Civil Recovery Unit, with recovered funds reinvested into communities through the CashBack for Communities programme. The expansion reflects Scotland’s commitment to corporate accountability and evolving enforcement standards.

Home Office Releases First Progress Report on Economic Crime Plan 2, Citing Data Gaps and Collaboration Gains

The Home Office has published its inaugural progress report on Economic Crime Plan 2, detailing efforts across England and Wales to tackle economic crime through public-private collaboration. The report emphasises the development of an outcomes framework and key performance indicators to assess system-wide impact. While early data reflects strategic alignment and some progress, limitations in data quality and coverage hinder comprehensive evaluation. The report outlines ongoing initiatives to strengthen data infrastructure, aiming to enhance transparency, national security, and support for legitimate economic growth.

Cybercrime

Nevada Suffers First-Ever Statewide Government Shutdown from Ransomware Attack

Nevada has entered its second week under a sweeping ransomware attack which has effectively shut down most state government services. First detected on 24th August 2025, the cyberattack forced the closure of DMV branches, agency websites, and phone lines, leaving residents unable to access essential services. Federal agencies including the FBI and CISA are now involved in the investigation and recovery efforts.

What makes this incident unprecedented is its scale. While ransomware attacks on individual departments or local jurisdictions have occurred before, cybersecurity experts say this is the first documented case of a cyberattack disabling nearly an entire US state government. Dr. Gregory Moody of UNLV described Nevada as a “guinea pig” in this new frontier of cybercrime.

Officials confirmed that some data was stolen, though the exact nature of the breach remains unclear. Nevada’s legal definition of “personal information” is unusually narrow, requiring a first name or initial paired with another identifier in unencrypted form, such as a Social Security number or medical ID, to qualify as a breach. This could complicate notification requirements, but experts warn that lawsuits are likely inevitable given the scale of disruption.

Bringing the perpetrators to justice may prove difficult. Many ransomware groups operate from countries without US extradition treaties or where digital crimes are not prosecutable. As Moody noted, attackers often choose jurisdictions where they can act with impunity, making accountability a major challenge.

Anthropic AI Misused by Hackers in Espionage, Extortion, and Ransomware Schemes

Anthropic has revealed alarming cases of its AI tools being weaponised by cybercriminals in its latest Threat Intelligence Report. The company identified three major incidents: a large-scale extortion campaign using Claude Code, a North Korean employment scam targeting Western firms, and the sale of AI-generated ransomware by individuals with minimal technical expertise. These examples highlight how advanced AI capabilities are lowering the barrier to entry for cybercrime.

In one case, hackers used Anthropic’s AI to write code which could infiltrate at least 17 organisations, including government agencies. Instead of deploying traditional ransomware, the attackers threatened publicly to expose stolen data, demanding ransoms which sometimes exceeded $500,000. The AI was also used for credential harvesting, network penetration, and reconnaissance, which were activities previously reserved for highly skilled threat actors.

Perhaps most striking was the revelation that North Korean operatives used Claude to create convincing fake identities, pass technical assessments, and perform actual work at US Fortune 500 companies. These fraudulent employment schemes were designed to funnel money back to the North Korean regime, circumventing international sanctions. One notable victim, KnowBe4, admitted to hiring, for a brief period, a North Korean national before detecting and terminating the access within 25 minutes.

Anthropic says it has disrupted the specific threat actors involved, but the report underscores the growing risk of AI misuse in cybercrime and state-sponsored espionage.

SK Telecom Fined $97 Million After Cyberattack Exposes Data of 23 Million Users

South Korea’s Personal Information Protection Commission has fined SK Telecom approximately $97 million following a massive cyberattack which compromised the USIM data of 23 million subscribers, which is nearly half the country’s population. Regulators cited serious lapses in basic cybersecurity practices, including the failure to implement access controls, leaving over 26 million authentication keys unencrypted, and storing thousands of server credentials in plaintext. The breach highlights growing concerns over telecom infrastructure vulnerabilities and sets a precedent for regulatory enforcement in large-scale data incidents.

New ISO/IEC Standard Targets AI-Driven Morphing Attacks in Biometric ID Fraud

As biometric systems become central to identity verification, AI-powered “morphing attacks”, where facial images are digitally blended to deceive recognition systems, pose a growing threat. Notable cases in Germany and Slovenia highlight how morphed passports have enabled fraudulent identity claims. To counter this, the newly released ISO/IEC 20059 standard introduces methodologies to assess biometric systems’ resistance to morphing, including metrics like morphing attack classification error rates. By simulating real-world scenarios such as border control, the standard helps vendors and authorities evaluate and strengthen biometric defences against increasingly sophisticated fraud techniques.

The International Electrotechnical Commission (‘IEC’) is a Geneva-based global standards organisation founded in 1906, responsible for developing and publishing international standards for electrical, electronic, and related technologies. Its work spans everything from power generation and semiconductors to biometrics, cybersecurity, and environmental safety. The IEC collaborates with ISO on joint standards, such as ISO/IEC 20059 for biometric morphing attack resistance, and oversees conformity assessment systems which ensure global interoperability and safety of electrotechnical products. With 89 member countries, the IEC plays a pivotal role in harmonising technical standards across borders.