In this week’s Financial Crime Wave, the U.S. Federal Reserve hits the domestic branches of Taiwan’s Mega International Commercial Bank for $29 million tied to a host of financial crime compliance issues, including lax foreign correspondent oversight and missed suspicious activity reports, the U.S. Congress analyzes ways to bolster the country’s anti-money laundering defenses, illicit narco gold flowing through Miami, and more.


Fed penalizes Taiwanese bank $29 million due to AML failures around correspondents, affiliates, staffing

The Federal Reserve Wednesday penalized the U.S. operations of a large Taiwanese bank $29 million for extensive financial crime compliance failures in nearly every area of the program, including weak monitoring systems, failing to report certain suspicious activities entirely and lax oversight of affiliates and correspondent banking channels. The lengthy order against Mega International Commercial Bank echoes trends by other federal and state regulators to hone in on the anti-money laundering (AML) practices of the domestic operations of large foreign banks, with a particular recent focus on financial institutions with headquarters in Asia.

The Fed order also mirrors many of the failures citing in similar actions and penalties, including too small and inexperienced a staff, without the requisite experience and qualifications to look for aberrant activities, lukewarm board oversight and a host of issues around properly monitoring for suspicious activity alerts and having them escalated, tracked and reviewed as to why they were, or were not, filed, (via the Federal Reserve).


Law enforcement needs more power to share, leverage to garner information from foreign partners: Senate hearing

U.S. law enforcement agencies need more power to share information with domestic and foreign banks and need more leverage to nudge investigators in other countries to help them in complex international financial crime investigations – something that can be stunted with countries clam up due to strict privacy laws. Those are just a few of the obstacles and opportunities tied to the country’s anti-money laundering (AML) framework in a hearing before the Senate Banking Committee.

The hearing, just the latest in series examining the country’s countermeasures against organized criminal and terror groups and corrupt powerbrokers, also look at current issues, focal points and future attack vectors, including foreign bank correspondent networks, prepaid access, money services businesses, trade-based money laundering, obscure beneficial ownership structures and virtual currencies. This hearing listened to speakers purely on the federal government side of the equation, while past hearings queried private sector compliance professionals and civil society groups, (via the U.S. Congress).


A look at the top 10 cyber trends to watch out for in 2018, including more defensive automation, continued nation-state attacks

David Ferbrache, chief technology officer in KPMG’s cyber security practice, highlights what he sees as the ten cyber security trends to look out for in 2018, with the general expectation being that this year will see even more attacks from more actors, including criminal groups, hackers and rogue nation states. Here are some examples:

  • Automation of controls and compliance will be the order of the day: “Firms are coming under pressure to contain their burgeoning cyber security budgets. Manpower intensive compliance processes are beginning to give way to continuous testing and controls monitoring, helping firms build a more accurate picture of their IT estate – helping the CIO as well as the CISO. The growing demand for supply chain security and third party assurance will also lead to a burgeoning industry of testing firms offering risk scoring and testing services for those third parties.”
  • The Shadow of State activity lengthens: “As countries invest to develop their cyber espionage and offensive capabilities, we will see more signs of their activities. Disclosures of high end techniques used by nations will continue, fuelling the opportunistic re-purposing of these vulnerabilities by less sophisticated States and organised crime groups. Expect more evidence of industrial control system attack tools being tested as States explore the potential of this new form of warfare,” (via Actuarial Post).

Canadian founder of LeakedSource arrested for operating site that collected and monetized stolen personal identity records to the tune of three billion credentials

Authorities in Canada have arrested and charged an Ontario man for operating a website that collected ‘stolen’ personal identity records and credentials from some three billion online accounts and sold them for profit. According to the Royal Canadian Mounted Police (RCMP), the 27-year-old Jordan Evan Bloom of Thornhill is the person behind the notorious—a major repository that compiled public data breaches and sold access to the data, including plaintext passwords. Launched in late 2015, LeakedSource had collected around 3 billion personal identity records and associated passwords from some of the massive data breaches, including LinkedIn,, Last.Fm, Ashley Madison, MySpace, Twitter, Weebly and Foursquare, and made them accessible and searchable to anyone for a fee.

LeakedSource was shut down, and its associated social media accounts have been suspended after the law enforcement raided its operator earlier last year. However, another website with the same domain name hosted by servers in Russia is still in operation. Bloom is accused of operating the notorious website and claimed to have earned nearly US$200,000 by selling stolen personal identity records and associated passwords for a “small fee” via his site, (via the Hacker News).

Malware targets Apple systems

Watch out for new domain name server malware targeting Apple computer operating systems, (via the Hacker News).

Dangerous security vulnerability in Intel hardware, say researchers

As Intel was rushing to roll out patches for Meltdown and Spectre vulnerabilities, security researchers have discovered a new critical security flaw in Intel hardware that could allow hackers to access corporate laptops remotely, potentially in as little as 30 seconds, (via the Hacker News).


Third Barclays FX trader charged in global scandal that has led to $10 billion in bank fines

The former head of New York foreign exchange trading at Barclays Plc’s investment bank became the lender’s third trader to face U.S. charges related to market manipulation, as prosecutors pursue officials responsible for misconduct that has led to $10 billion in fines. Robert Bogucki, 45, is facing seven charges over his role in defrauding a client with a front-running scheme, the U.S. Justice Department said Tuesday. The case relates to the manipulation of foreign-exchange options before Hewlett-Packard Co.’s $11 billion takeover of Autonomy Corp. in 2011, according to the prosecutor.

U.S. authorities have been pursuing criminal prosecutions following a global crackdown on currency rigging that saw banks pay more than $10 billion in penalties. At least eight traders have been charged by American prosecutors over behavior uncovered in the scandal, including three from JPMorgan Chase & Co., Barclays and Citigroup Inc., known as the “Cartel,” who are scheduled to stand trial in June. The other Barclays traders, Chris Ashton and Jason Katz, were charged by the U.S. in separate cases involving price fixing. In October, former HSBC Holdings Plc currency trader Mark Johnson was found guilty of fraud for front-running a $3.5 billion client order, (via Bloomberg).

Corporate Transparency

OECD targets beneficial ownership evaders

OECD releases mandatory disclosure rules to prevent groups using opaque ownership structures to evade CRS, (via the IELR Blog).


Big apple takes a bite out of antiquities traders

Manhattan DA cracking down on illicit antiquities trafficking, targeting private art collectors, shady dealers, (via the IELR Blog).


A look at MSB AML compliance in across the pond

Improving Fincrime compliance and supervision for MSBs in the U.K., a RUSI report, (via RUSI).

Money laundering

Are British corporates engaging in willful blindness when it comes to money laundering and corruption

More than half of Britain’s multinational corporations are turning a blind eye to corruption and money-laundering offences at their businesses, a report claims.


Law firms struggling on compliance

Research commissioned by Baker McKenzie, one of the world’s biggest law firms, found that 52 per cent of large UK corporations anonymously admit to having unresolved compliance issues that are yet to be discovered by regulators.

In addition to money laundering and bribery, corporates were aware of unresolved cases of breaches of competition, tax, sanctions and data protection laws, the firm claimed. Despite that, senior executives at more than a third of the business confessed to slashing their internal compliance budgets to keep a lid on costs, (via The Times).

Individual liability

Are regulators, law enforcement targeting compliance officers unfairly in breakdowns?  

One financial crime compliance professional is arguing that law enforcement is unfairly attacking compliance officers in large scale failures – raising the risk of liability and potentially pushing experienced, senior-level compliance officers out of the sector entirely. Goldman Sachs executive Court Golumbic is raising the red flag. Golumbic says a string of recent enforcement actions targeting financial sector compliance officers is “fueling concerns that they are being unfairly targeted.” Golumbic is head of finance crime compliance at Goldman Sachs. He’s also an adjunct professor at NYU Law School.

Golumbic is the author of The Big Chill: Personal Liability and the Targeting of Financial Sector Compliance Officers — posted yesterday at the NYU Law Compliance and Enforcement Blog. In a recent survey of chief compliance officers of public companies, sixty percent said they would think more carefully about future roles they might consider given the risk of personal liability. One of the solutions: giving compliance officers more power to make business side decisions, and require business lines to share more compliance responsibilities, similar to a model used in the United Kingdom, he said, (via the Corporate Crime Reporter).

Precious metals

Dirty gold and clean cash: South Florida newspaper says a river of gold controlled by drug lords flows through Miami

Gold has become the secret ingredient in the criminal alchemy of Latin American narco-traffickers who make billions turning cocaine into clean cash by exporting the metal to Miami. The United States depends on Latin American gold to feed ravenous demand from its jewelry, bullion and electronics industries. The amount of gold going through Miami every year is equal to roughly 2 percent of the market value of the vast U.S. stockpile in Fort Knox.

But much of that gold comes from outlaw mines deep in the jungle where dangerous chemicals are poisoning rainforests and laborers who toil for scraps of metal, according to human rights watchdogs and industry executives. The environmental damage and human misery mirror the scale of Africa’s “blood diamonds,” experts say, (via the Miami Herald).


Law firm Hogan Lovells accused of ‘whitewash’ investigation into South African government corruption

City law firm Hogan Lovells has been drawn into the growing corruption scandal in South Africa amid allegations it produced a “whitewash” report into claims of money laundering at a government agency. Lord Peter Hain, the former Labour minister and anti-apartheid campaigner, wrote to Britain’s law watchdog the Solicitors Regulation Authority (SRA) on Friday requesting an inquiry into Hogan Lovells’ conduct.

The move threatens to drag the ­international law firm into the political storm swirling around South Africa’s president Jacob Zuma and close associates the billionaire Gupta family. British firms linked to misconduct by the Guptas have included disgraced PR agency Bell Pottinger – which collapsed after a dirty tricks campaign was exposed – KPMG, which has subsequently cleared out its South African management, and management consultancy McKinsey, (via the Anti-Corruption Digest).

Will new U.K. counter graft strategy make a dent?

Even with the UK government holding its inaugural meeting of the Global Forum on Asset Recovery and launching a new Anti-Corruption Strategy, will this be enough to tackle the flow of criminal proceeds into Britain? (via RUSI).

Corporate anonymity could have benefitted Trump

Did Trump make millions of dollars selling real estate to anonymous, risky buyers? Some say yes, (via Buzzfeed).

Virtual currencies

U.S. Treasury chief worried that anonymous crypto currencies will become the next ‘Swiss bank account’

U.S. Treasury Secretary Steven Mnuchin said he will work with the Group of 20 nations to prevent cryptocurrencies such as bitcoin from becoming the digital equivalent of an anonymous Swiss bank account, a nod to both the fears around anonymity in both the real and virtual worlds.  Under U.S. law, “if you have a wallet to own bitcoins, that company has the same obligation as a bank to know” you as a customer, Mnuchin said. “We can track those activities. The rest of the world doesn’t have that, so one of the things we will be working very closely with the G-20 is making sure that this doesn’t become the Swiss bank account.”

Mnuchin said U.S. authorities, including the Federal Reserve, were studying the pros and cons of issuing digital dollars instead of hard cash, but “the Fed and we don’t think there’s any need for that at this point.” Last year, U.S. federal investigators brought down some of the largest dark net sites on the world wide web, and penalized a virtual currency exchanger for being the nexus point for all manner of scum and villainy that used virtual currencies to pay for drugs and stolen credit card numbers, (via Bloomberg).

Illegal immigration

ICE raids 100 7-11 stories on immigration fears, Trump says more to come

Federal immigration agents stormed into nearly 100 7-Eleven stores nationwide in an unprecedented search for undocumented workers under President Donald Trump, the Associated Press reported on Wednesday. And Immigration and Customs Enforcement says it is only getting started. “This is what we’re gearing up for this year, and what you’re going to see more and more of is these large-scale compliance inspections, just for starters,” Derek Benner, acting executive associate director for ICE’s Homeland Security Investigations, told the AP. “It’s not going to be limited to large companies or any particular industry, big medium and small. It’s going to be inclusive of everything that we see out there,” (via Newsweek).


Canada more aggressively targeting North Korea

Canadian financial institutions ordered to scrutinize what few transactions are done with North Korea in a bid to up pressure on recalcitrant regime, (via Canadian Business).