Episode 235

Sanctions

US Treasury Sanctions International Network Accused of Diverting Funds to Hizballah

The US Department of the Treasury announced sanctions against a network of 16 individuals and entities across multiple countries, alleging they were involved in financial activities which generated and moved funds for Hizballah’s finance team. According to the announcement, the network, which is linked to Lebanese national Alaa Hassan Hamieh, operated companies and projects which collectively diverted more than $100 million since 2020. The designations, issued under Executive Order 13224, target individuals, companies, and associated entities said to be involved in money laundering, procurement, and sanctions‑evasion schemes. As a result, their US-linked assets are blocked, and US persons are generally prohibited from engaging in transactions with them, with potential penalties for violations.

UK Guidance Outlines How Exceptions and Licences Allow Compliance with Sanctions Regimes

The UK government has issued updated guidance which explains how individuals and businesses can determine whether their activities fall under automatic exceptions to sanctions regimes or require formal licences, outlining the roles of OFSI, ECJU, OTSI, the Insolvency Service, and the Department for Transport, in issuing and managing these permissions. It details common exceptions across financial, trade and transport sanctions, highlights regime‑specific examples, and sets out the conditions, such as notification and record‑keeping, which apply when using exceptions. The guidance also describes the different types of licences available, including general, trade and individual licences, and provides direction on how to apply for them, particularly where activities intersect both trade and financial sanctions.

Fraud

Former Bank CEO Pleads Guilty to Wire Fraud Conspiracy and Venezuela Sanctions Evasion

According to the US Department of Justice, the former CEO of Nodus International Bank pleaded guilty to participating in a scheme which diverted at least $24.9 million from the bank and to conspiring to evade US sanctions related to Venezuela’s state‑owned oil company. Court filings state that the defendant and associates concealed self‑benefiting investments, arranged fraudulent purchases of promissory notes, and engaged in prohibited transactions with a sanctioned individual. The conduct allegedly contributed to the bank’s collapse in 2023. The defendant faces up to 20 years in prison on each count and has agreed to forfeit at least $16.9 million. Sentencing is scheduled for June this year.

UN Member States and Major Tech Firms Outline Global Framework to Strengthen Fraud Prevention

A coalition of UN Member States and major private sector organisations has agreed a set of principles to support a global public‑private partnership aimed at improving the prevention, detection and disruption of fraud. The framework emphasises shared responsibility across governments and industry, coordinated cross‑sector prevention measures, improved information‑sharing within legal boundaries, stronger victim support, enhanced public education, and the use of emerging technologies to counter evolving fraud threats. Participants commit to closer collaboration, clearer standards and ongoing innovation to build a more resilient international response to scams and related criminal activity.

Operation Henhouse Marks Record Year as UK Fraud Crackdown Nets 557 Arrests and £27m in Disruptions

Operation Henhouse has delivered its strongest results to date, with the National Crime Agency and City of London Police coordinating a nationwide February 2026 crackdown which led to 557 arrests, £9 million in frozen accounts, and £18.1 million in seized assets, according to the National Crime Agency. Every UK police force and major national agencies took part, targeting fraud networks ranging from online scams and intellectual property crime to offshore call centres responsible for millions of nuisance calls. Highlights included major SFO‑NCA raids restraining £10 million in assets, large‑scale cash seizures, and the conclusion of a long‑running van‑sale fraud involving more than 300 victims. Officials hailed the operation as a landmark in the UK’s escalating fight against one of its most pervasive and harmful crime types.

Money Laundering

Council of Europe Report Maps Financial Footprint of Human Trafficking in Bosnia and Herzegovina

A new Council of Europe report presented in Sarajevo outlines how human trafficking networks in Bosnia and Herzegovina move and disguise illicit profits, highlighting cash‑intensive operations, fictitious companies, trade‑based schemes, real‑estate investments, high‑value assets, casinos, virtual currencies, and informal payment channels as common laundering methods. Designed as a practical tool for financial institutions and law‑enforcement bodies, the publication aims to strengthen detection, disrupt criminal networks, and improve victim protection, forming part of a broader anti‑trafficking reform initiative under the Council of Europe’s 2026–2029 Action Plan for Bosnia and Herzegovina.

Bribery and Corruption

Dutch Prosecutors Fine Fleurette €25.8m for Bribery Scheme in the DRC

Dutch prosecutors have issued a €25.8 million penal order against Fleurette Properties Ltd after concluding the company engaged in bribery of foreign public officials in the Democratic Republic of Congo to secure valuable cobalt and copper mining licences between 2010 and 2017. The case stemmed from a 2018 investigation by the FIOD’s Anti‑Corruption Centre, which examined Fleurette and Glencore International AG; the latter was dropped from Dutch proceedings after Swiss authorities imposed their own penal order in 2024. By accepting the Dutch penal order, Fleurette acknowledges its role in the bribery scheme, bringing the long‑running investigation to a close.

Other Financial Crime

SFO to Host First International Economic Crime Conference with French and Swiss Partners

The UK Serious Fraud Office will co‑host an international economic crime conference in May alongside France’s Parquet National Financier and Switzerland’s Office of the Attorney General, bringing together more than 70 practitioners from leading global agencies to discuss approaches to tackling complex fraud, bribery and corruption. The event, the first major multi‑jurisdictional conference organised by the SFO, will feature panels and workshops on topics such as joint investigations, asset recovery, cryptocurrency‑related crime and corporate liability. Organisers aim to strengthen operational cooperation, share practical insights and support the development of new partnerships ahead of the UK’s Illicit Finance Summit in June.

FCA Launches Investigation After MFS Collapse Amid Money Laundering Concerns

The Financial Times reports that Market Financial Solutions (MFS), a mortgage lender at the centre of a group of entities which collectively borrowed more than £2 billion for short-term property loans, was found to be compliant with UK money laundering regulations during a review by law firm DWF in 2024, commissioned by the Financial Conduct Authority (FCA). The FCA’s review concluded that MFS had met its obligations, although some possible improvements were recommended. Despite this, MFS’s collapse in 2026 amid fraud allegations has led to increased scrutiny, with the FCA opening a formal investigation into potential breaches of anti-money-laundering rules. The FCA has expressed concerns about the adequacy of due diligence and ongoing monitoring of clients by MFS and associated companies, which have been linked to a property scandal involving Bangladeshi politician Saifuzzaman Chowdhury. MFS, classified as an Annex 1 firm and subject only to anti-money-laundering oversight, was previously part of a regulatory survey and received a “Dear CEO” letter regarding shortcomings in financial crime controls. Entities linked to MFS were involved in numerous property charges, and the UK National Crime Agency froze hundreds of properties connected to Chowdhury as part of a civil investigation. The FCA has indicated that its supervisory work continues and further action may be considered.

While I am not saying that this is comparable, this does have echoes of Northern Rock and its supervisory oversight in 2007. As I recall, it received approval of its Basel II waiver in June 2007, a technical regulatory decision allowing the bank to use its own internal risk models to determine required capital reserves. This move from the Financial Services Authority (FSA), as the regulator was then known, effectively signalled confidence in Northern Rock’s business model and risk management systems. As a result, the waiver classified the bank’s assets as "lower risk," enabling the release of additional capital. Capitalising on this favourable assessment, Northern Rock announced a 30.3% increase in its interim dividend to shareholders in July 2007.

The FSA monitored high-impact firms using the ARROW (Advanced Risk Responsive Operating Framework), yet despite Northern Rock’s rapid expansion and its “extreme” business model, no full ARROW risk assessment had been conducted since early 2006, with the next comprehensive review not scheduled until 2009. Internal audits later exposed that, during this crucial period, the team overseeing Northern Rock actually had expertise in insurance rather than banking, which resulted in a regulatory approach which was largely reduced to ticking boxes rather than conducting robust scrutiny.

Taken together, these episodes highlight the persistent challenges regulators face in identifying and addressing weaknesses within financial institutions before they escalate into full-blown crises. Whether in the case of MFS or Northern Rock, apparent compliance and regulatory sign-off have, in hindsight, proved insufficient to prevent significant failures and reputational damage. They highlight the necessity for robust, ongoing supervision, a willingness to look beyond box-ticking exercises, and the importance of specialist expertise in scrutinising complex business models. As the FCA continues its investigation and wider industry reforms take shape, it remains vital for both regulators and firms to learn from past missteps and maintain vigilance against emerging risks in the financial sector.

FCA Trials Palantir for Financial Crime Analysis Amid Rising Privacy Concerns

The UK Financial Conduct Authority has awarded Palantir a three‑month contract to analyse its internal intelligence data as part of efforts to strengthen financial crime detection, giving the US tech firm access to sensitive regulatory information, including case files, fraud reports and consumer complaints. The move expands Palantir’s footprint within the British public sector and has prompted renewed scrutiny from campaigners, MPs and some FCA insiders, who warn of significant privacy and ethical risks given the company’s controversial global track record. The FCA says strict controls will ensure Palantir acts only as a data processor, with information stored in the UK and destroyed after the trial, while experts note that AI could help regulators better use under‑exploited data to combat fraud and money laundering.

However, opposition response has been critical. Both Daisy Cooper of the Liberal Democrats and Green party MP Siân Berry voiced strong opposition to the FCA’s decision to award Palantir a contract for handling sensitive UK financial data, highlighting concerns over the tech firm’s ties to controversial US political figures and its involvement in questionable overseas activities. They urged for a thorough investigation and called on the government to intervene, emphasising the need to safeguard national and economic security.

FCA Reports 10% Increase in Conduct Rule Breaches for 2024

In 2024, the Financial Conduct Authority (FCA) received 4,224 reports of conduct rule breaches, marking a 10% increase from the 3,843 cases recorded the previous year. The regulator has attributed this rise to a more active reporting culture within financial firms, suggesting that employees are becoming more willing to disclose internal issues, particularly regarding non-financial misconduct such as bullying and harassment. This data arrives as the FCA prepares to expand its Conduct Rules to approximately 37,000 additional firms in September 2026. As part of its current strategy, the regulator is focusing on "impactful deterrence," prioritising high-stakes enforcement for the most serious violations while encouraging firms to use these reporting trends as a benchmark for their own internal standards.

Cybercrime

Global Operation Shuts Down 373,000 Fraudulent Dark Web Sites in Major Cybercrime Crackdown

A coordinated international law‑enforcement operation led by German authorities and supported by Europol resulted in the shutdown of more than 373,000 fraudulent dark web sites advertising child sexual abuse material and cybercrime‑as‑a‑service offerings, according to Europol’s announcement. The investigation, which began in 2021, identified a single operator allegedly responsible for the network and uncovered 440 customers across 23 participating countries, prompting further inquiries. Authorities seized 105 servers, traced cryptocurrency payments, and took protective action in cases where children were deemed at risk. The operation remains ongoing as investigators continue to pursue both the operator and additional suspects.

House of Lords Library Examines Evolving Cyber Threats and Government Response

Officials in the House of Lords have published an ‘In Focus’ briefing in the House of Lords Library which outlines the growing complexity of cyber threats facing the UK government, describing common attack methods, key malicious actors, and recent high‑profile incidents affecting public and private sectors. It summarises how the threat landscape is changing, including increased use of advanced tools and AI, and explains the government’s current plans to strengthen cyber resilience through a new cyber action plan, updated coordination structures, and proposed legislative changes.

NCSC Chief Urges Global Security Community to Harness AI ‘Vibe Coding’ Safely

At the RSAC Conference in San Francisco, NCSC CEO Dr Richard Horne called on the international cyber‑security community to seize the transformative potential of “vibe coding”, which is AI‑generated software, while urgently addressing the risks it introduces. He warned that insecure, unreviewed AI‑written code could amplify existing vulnerabilities, but argued that well‑trained AI tools embedded with strong security principles could dramatically improve software resilience. With cyber risk escalating amid increasingly interconnected threat actors, Horne urged security professionals to shape AI development now, ensuring that the coming wave of AI‑assisted coding becomes a net positive for global cyber defence.