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Financial crimes around the world

In Poland, 25 people were accused of committing VAT fraud using fake invoices and documents, causing the state to lose $46 million. Another tax fraud surfaced in Pakistan where accounts of Waqas Ahmed, accused of money-laundering and tax evasion, were frozen under the AML law. Meanwhile, members of a gang were apprehended by the Nigeria Customs Service at the Murtala Muhammed International Airport while trying to carry out money-laundering of  $8.6 million. They were assisting some corrupt government officials in moving cash out of the country. In another case of corruption, a warrant was issued against former president of South Africa, Jacob Zuma, after he skipped a court trial for suspected irregularities in the acquisition of arms worth $2.5 billion in the late 1990s. Meanwhile, Zamira Hajiyeva, imprisoned wife of an Azerbaijani banker, was asked to reveal the sources of her wealth after it was found that she had acquired her properties with illegal funds. Also, a court in Belgium convicted two brothers of money-laundering and fraud for trading illegal gold in exchange for cash, paying over $1.1 billion during 2010-2011. Meanwhile, Bavarian police raided several properties of the Munich-based organized money-laundering network Hawala, seizing over $65,677 of cash among other evidences of illicit activities. In another case of organized crime, in Italy, 12 people were detained for a money-laundering association with the Italian mafia Cosa Nostra.

Drug trafficking and money-laundering

Trade-based money laundering (TBML) has emerged as a systematic way of cleaning dirty money by concealing the proceeds of trade-related earning through illegal trade transactions. TBML techniques have been used by a Colombian drug cartel by smuggling illegal drugs into the US in lieu of goods such as personal computers and household appliances from the US. Similarly, Spain has become susceptible to drug trafficking from Morocco through its Iberian territory. In other news, after the Spanish law enforcement authorities declared Christian Camilo Millan-Romero wanted for drug trafficking and money-laundering, the US Immigration and Customs Enforcement (ICE), has removed the Colombian national from the US to the Colombian law enforcement. Meanwhile, in Mexico, the count of 34582 murder cases including the brutal killing of women and children by drug cartels in 2019 has raised concerns towards national security. Billions of dollars are laundered through the Mexican financial system every year and spent on drug trafficking, high-powered weapons, bribing government officials and strengthening criminal activities. Also in Mexico, a federal court sentenced Cesar Hernandez Martinez to 137 months in prison after he pleaded guilty for washing over $13 million for the Sinaloa Cartel in his network of money exchange houses in Tijuana. Martinez conducted several money-laundering activities and dealt drugs including heroin, methamphetamine and cocaine.

The Airbus Bribery Case

Airbus SE, a global provider of civilian and military aircrafts based in France, has consented to pay combined penalties of over $3.9 billion to resolve foreign bribery charges with authorities in the US, France and the UK in order to avoid prosecution on several charges in the US. The charge came as a result of Airbus SE’s engagement in a multi-year and massive scheme to corruptly enhance its business interests by offering bribes in China and other countries. The plea dealmarks the largest global foreign bribery resolution so far and has attracted the attention of prosecuting executives. Meanwhile, the three countries have approved the deal, implying that Airbus is no longer convicted under the Deferred Prosecution Agreement. There are, however, concerns that allowing big companies to go unpunished in such cases gives them more confidence to commit crimes.

AML violations by banks worldwide

The US Central Bank has finally placed a heavy sanction on Andrea Vella, a former co-president of Goldman Sachs of Asia, banning him from working in the banking industry. Vella was relieved of his job in 2018 following his violation of the US anti-corruption law when he offered to pay bribes to Malaysian and Abu Dhabi officials. Meanwhile, Abu Dhabi Commercial Bank PJSC, Jersey Branch has been fined around $644,625 after the bank pleaded guilty to the violation of regulations when two customers withdrew hundreds of thousands of US dollars (USD) in cash in its UAE branch. Although it was not confirmed that the customers were involved in criminal activity, yet the bank was convicted because of its non-compliance with the AML law. Similarly, a court has instructed the Netherlands largest financial services provider, ING, to pay $33 million in fines on charges of money-laundering in 2018. ING admitted that criminals were able to launder money via its account due to a weak monitoring system and agreed to pay $848 million to take care of the case in the Netherlands. On the other side, Australia’s lender Westpac was hit with a class-action suit in connection with shares purchased on the New York Stock Exchange between November 11-19, 2015. The lawsuit seeks to recover damages for money-laundering of $23 million.

Gaming, gambling and the crypto-world

Eight residents of South Florida have pleaded guilty for their involvement in a multi-million dollar fraud scheme and embezzlement at Miami’s Miccosukee Resort & Gaming. They manipulated electronic gaming machines run by the casino, stealing over $5 million dollars between 2011 and 2015. The US has also caught two Las Vegas men who helped gamblers bypass the annual limit of foreign currency exchange. They received money into Chinese bank accounts from gamblers and transferred an equivalent in USD to their customers’ US-based accounts for a commission. Meanwhile, in the crypto-world, three men suspected of money-laundering via cryptocurrency were arrested in Zurich and millions of dollars were frozen in their bank accounts. To avoid such money-laundering incidents, the Financial Action Task Force (FATF) had recently introduced a new rule for virtual asset service providers around the world, requiring digital currency exchanges to provide detailed information of senders and receivers of a specified threshold. The industry has come up with a SWIFT-like network which will be reviewed by the FATF by June. Similarly, following a directive of the Australian Transaction Reports and Analysis Centre (Austrac) to extend the country’s AML regulation to cryptocurrency, 310 digital currency exchange companies have registered with Austrac. The directive includes KYC and reporting suspicious transactions, especially those exceeding AUD10,000 (US $6673) to Austrac.

AML and transparency efforts worldwide

As per the BDO annual track report published in 2019, total value of fraud in the UK dropped from $2.7 billion to $962.2 million in 2018. Meanwhile, the global market research report on AML for early 2020 has also been released, focusing on AML volume and value at the global, regional and company levels. Indeed, many effective AML efforts have been initiated all over the world. For instance, a new AML/CFT rule made by the Eurasian Economic Union requires documents showing the source of the money to be provided when moving funds over $100,000 across the border. Romania’s AML authority will also now monitor certain business sectors, imposing hefty fines for irregular transactions. In a similar effort, St. Kitts-Nevis passed its AML bill to comply with FATF rules. It will go through a one-on-one on-site evaluation in March 2020 to meet FATF’s AML recommendations. In a step to improve transparency, Germany had proposed a competition register or an electronic ‘blacklist’ of companies identified for illegal worker money-laundering so that the public can check a company’s records before awarding contracts. However, this project may further get delayed due to limitations of the current IT infrastructure. In separate news, the United States and Jersey have signed a trilateral agreement with Nigeria to transfer all the forfeited assets from former Nigerian dictator Sani Abacha’s loot to Nigeria to support three critical and financially transparent infrastructure projects.