Money-laundering in the cryptocurrency world

A study by RUSI has identified the popular game Counter-Strike: Global Offensive as a marketplace for criminal and terrorist activities and fraud. A year ago, Fortnite was also identified as a front for money-laundering with its currency being sold on the dark web and eBay. However, the companies behind these games have evaded know-your-customer (KYC) and other anti-money laundering (AML) requirements. On the other hand, Changpeng Zhao, the executive director of Singapore’s cryptocurrency exchange company Binance, actively clarified the requirements of KYC and AML following the case of a Binance user whose account was frozen under AML and countering financing of terrorism (CFT) controls. Meanwhile, in the US, Ethereum researcher Virgil Griffith was arrested, then granted bail, for training North Korea on avoiding cryptocurrency sanctions.

Banks across the world strengthen their AML initiatives

The Central Bank in Malaysia, Negara Malaysia has strengthened its AML/CFT act by demanding insurance, takaful and Lembaga Tabung Haji branches to set up compliance officers to identify, report or reject suspicious transactions. Meanwhile, the Bank of Lebanon has directed money transfer agencies like MoneyGram and OMT to pay their customers in the currency of the original payments to be able to trace fund movements. Qatar Central Bank has also adopted new executive regulations for its AML/CFT law to strengthen its policies. In line with strengthening actions by other banks, the South African Reserve Bank has sanctioned the Durban-headquartered and Pakistan-owned HBZ Bank for violating the country’s AML/CFT regulations by not reporting suspicious financial transactions. In other news, HSBC took up a novel AML initiative as it announced its partnership with Element.AI, a firm that offers AI solutions for trade flow and documents search. HSBC had also partnered with Ayasdi in 2018 to develop AI-enabled anti-money-laundering software.

Preventing money-laundering in the luxury goods industry

Liz Campbell, a professor of criminal law at an Australian university, has pointed out the weakness in Australia’s current anti-money laundering laws as it continues to lose $10-$15 billion to money laundering each year. Campbell and other experts claimed that current laws ignored at-risk sectors such as luxury goods like jewellery. In November, the Australian Federal Police had seized laundered jewellery and other luxury goods worth $8.5 million. Starting from January 2020, art and antique dealers in the EU are also required to report untrusted transactions. Similarly, in India, a Joint Working Group has been set up as an AML/CFT measure, with the Directorate General of GST Intelligence as an effective regulator for the Gems and Jewellery sector. Campbell’s concern, however, is that addressing the issue in one sector or country does not eliminate the crimes.

Directives for better AML execution

The Caribbean Financial Action Task Force issued 60 recommendations to the Cayman Islands to be executed by February 2020 to evaluate their money-laundering and terrorist-financing risks. Their police have now partnered with agencies in the UK to get trained on investigating such risks. Similarly, recommendations were issued in the US when Kharon reported that supply chain violations formed most of the sanctions issued by the Treasury Department last year. The US Office of Foreign Assets Control has thus urged companies to ensure thorough supply chain monitoring when importing their goods. Meanwhile, statistics gathered by The Star have shown that 86% of money-laundering and terrorism-financing charges during 2012-2017 were withdrawn before court trials in Canada. According to Postmedia, in the Canadian province of British Columbia, millions of dollars were laundered through Lower Mainland casinos, and $43 million has been attached to a money-laundering case that was pursued unsuccessfully. A proposed new law would require all property owners to disclose their identity or face a hefty penalty. The government will also formulate AML regulations for gambling.

Fraudsters targeting the elderly

In Miami (US), Lin Helena Halfon, 26, was arrested after she tried withdrawing $1 million to purchase a Yacht with her husband Richard Rappaport, 77. The withdrawal was denied since Rappaport was absent. Suspicion arose when Halfon offered to pay $100,000 for the transaction. She has been charged with money laundering, organized fraud and exploitation of an elderly person. A similar incident also surfaced in Spain where two people who oversaw property management for two elderly people took advantage of their declining physical and mental health to deceptively inherit their assets worth 3 million euros. The accused have been arrested for misappropriation, documentary falsity, fraud and money laundering.

Bank frauds at an all-time high

The Reserve Bank of India reported that the amount of money linked to bank-reported frauds in 2018-2019 rose by 74% from 2017-2018 due to the Indian government’s new policies that enable early detection and investigation of frauds. In line with this finding, India’s Punjab National Bank filed its third complaint of fraud in the past two years, accusing Jagdish Khattar, the founder of Carnation Auto India Pvt. Ltd., of cheating the bank of $15.4 million. Elsewhere, an Indian court granted the banks that lent to Vijay Mallya, an embattled Indian liquor baron, permission to liquidate his assets of ₹11 crores, although the amount is far less than anticipated. Meanwhile, Denmark’s Danske Bank is also involved in yet another money-laundering lawsuit concerning suspicious payments of 200 billion euros during 2007-2015 through a branch in Estonia. A key witness and the former head of the bank’s Estonia unit, Aivar Rehe, was found dead earlier, allegedly by suicide. In a similar tone, Jiang Xiyun, the former chairman of Hengfeng Bank in China was sentenced to death on several charges including illegal accounting practices and collection of bribes.