FINANCIAL CRIME WAVE – IDAHO AND WESTERN UNION FRAUD SETTLEMENT, ISIS AND GIFT CARDS, AND MORE

Western Union

In this week’s Financial Crime Wave, Idaho gets in on historic Western Union fraud settlement, ISIS gets aid with gift cards, meshing anti-money laundering and blockchain technology could result in most money laundering being caught, say experts, and more.

Legislation

Trump’s new executive orders restricting new rulemaking don’t extend to independent agencies, say sources

President Donald Trump recently signed a presidential memoranda and executive order that significantly impact the future of regulations across all industries. But for housing specifically, there’s a major catch. The two new actions do not apply to independent agencies. Despite the initiative to pull back on regulation, the biggest housing regulator, the Consumer Financial Protection Bureau, is considered an independent agency. Other independent agencies include: the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission and the National Credit Union Administration. After announcing its executive order to reduce regulation on Monday, the Trump administration later clarified that the new order does not apply to independent regulatory agencies such as the SEC, (via Housing Wire).

Fraud

Bankers, consultants found guilty of bribery and fraud in more than $300 million scheme involving Scottish bank

Six people accused of bribery and fraud that cost Halifax Bank of Scotland (HBOS) £245 million ($317 million) were found guilty on Monday. Five of the six on trial – David Mills and Michael Bancroft who ran Quayside, accountants Tony Cartwright and Jonathan Cohen, and HBOS manager Mark Dobson had pleaded not guilty. Lyndon Scourfield, who ran the HBOS impaired assets division, had pleaded guilty to six counts including corruption, (via Business Insider).

Enforcement

After historic federal penalty, Idaho settles lawsuit against Western Union over wire-transfer scams

Idaho has settled a lawsuit against Western Union over its role in wire-transfer scams that targeted Idahoans. Western Union received more than 2,000 complaints from Idahoans about fraud-induced wire transfers between 2004 and 2015, according to Idaho Attorney General Lawrence Wasden. The complaints allege victims lost $2.4 million. The multistate settlement requires Western Union to pay $5 million to states for their investigation costs, including $47,000 to Idaho, and to improve its anti-fraud practices, according to Wasden. The Federal Trade Commission and the U.S. Department of Justice reached a settlement on similar allegations against Western Union earlier this month. That settlement includes $586 million in restitution, (via the Idaho Statesman).

Corruption

House looking to remove measure against corruption, would allow secret foreign payments

Lawmakers in the House of Representatives are expected to introduce a controversial resolution to repeal a bipartisan anti-corruption safeguard, a move that would basically allow firms to secret payment information that could hide bribes, a scenario widely panned by non-partisan anti-corruption experts, (via the FACT Coalition).

Protests erupted in Bucharest on Tuesday after Romania’s left-wing government scrapped some anti-corruption rules in a move likely to allow leading politicians to avoid criminal persecution, (via the EU Observer).

AML

The U.S. government’s war on money laundering is causing the wrong kind of casualties and some believe trump should cut AML regulations, (via the People’s Pundit Daily).

Money laundering

Regulators in United States, United Kingdom fine Deutsche bank more than $600 million tied to Russian “mirror trades” scandal

U.S. and U.K. regulators fined Deutsche Bank $630 million for illegally moving billions of dollars out of Russia through the bank’s Moscow, London and New York branches in a massive, longstanding money laundering scheme. Authorities stated in penalty documents the bank missed “numerous opportunities” to uncover, investigate and halt the scheme tied to what are called “mirror trades” between 2011 and 2015. Clients would purchase stocks in rubles in Moscow before their counterparts sold the same stock at the same price through the bank’s London branch, (via the BBC).

Terror financing

How a Washington transit officer got accused of aiding ISIS with gift cards and the country’s fumbling fight against lone wolves

The FBI had a job offer for Nick Young, a veteran Washington transit officer: Become an undercover informant for the bureau and gather information at local mosques on fellow Muslims who might pose a terrorism threat. The clandestine work would be “a lot sexier” than his current job, Mr. Young remembered an agent named Ryan telling him. And it could pay him a lot of money if the intelligence was good. Young turned him down. But it would not be the last time he would see the F.B.I. agent, (via the New York Times).

Tax evasion

Mexican official alleges Trump evaded taxes, permits on border town condo project

A Mexican official widened a tax evasion complaint against U.S. President Donald Trump on Wednesday, the same day the new American leader signed a decree to speed up construction of a border wall between the two countries. The complaint was originally filed in October alleging the Trump Organization and Los Angeles real estate firm Irongate did not pay federal taxes, or have proper building permits for an ultimately failed luxury condominium project in the Mexican border city of Tijuana. The complaint was broadened on Wednesday to allege Trump violated Mexican law by, as a foreigner, seeking to buy property within 31 miles (50 km) of the U.S. border to develop the Trump Ocean Resort Baja project, the official Jaime Martinez, who filed the complaint as a private citizen, told reporters, (via Reuters).

Cybersecurity

Hackers lock hotel guests in their rooms

Hackers use new tactic at Austrian hotel: locking the doors, trapping guests and demanding ransom payment,(via the New York Times).

Fintech

Merging AML and blockchain technologies could mean more money laundering is caught, way more, says one expert

There could be some incredible efficiencies gained when merging financial crime compliance and the technology underpinning Bitcoin, say analysts. Using blockchain distributed ledger technology to create a shared database for transactions would limit the involvement of banks in the ongoing transaction monitoring for AML, and aid in avoiding sanction breaches through automated SAR reporting. Want to know how transformative? One expert believes that the two percent of money laundering traced today would increase to 90 percent or higher, (via Brave New Coin).

Capital flight

To fight illicit financial flows hitting nearly $70 billion a year, Africa must bolster financial crime powers, transparency

Illicit financial flows (IFFs) out of the developing world are a key impediment to tackling poverty and inequality. They rob the African continent of an estimated $70-billion each year – funds that could be used for development, an economic hemorrhage that could be staunched with a multi-step plan covering both bolstering financial crime compliance and increasing transparency.  The 14 steps are broken down into five categories: create governmental IFF policy, promote financial transparency, increase enforcement efforts and powers, tackle tax evasion and avoidance, and prevent financial crime, (via ENews Channel Africa).

Terrorist financing

Pakistan improving investigative, analytical powers tied to money laundering, terror financing

The Law Enforcement Agencies (LEAs) of Pakistan have submitted at least 230 cases under the country’s Anti Money Laundering (AML) Act. The number of cases registered under the Foreign Exchange Regulation Act (FERA) was 498. The number of cases registered as Suspicious Transaction Reports (STRs) from the Financial Monitoring Unit (FMU) was 116. The country has also updated its laws tied to terror financing, including more aggressive monitoring, screening for designated entities and enhanced reporting and analysis of SARs, (via the Nation).

MSBs

Alibaba digital payment subsidiary buys U.S. remitter giant MoneyGram, now must merge compliance systems

Ant Financial – a digital payment subsidiary of Alibaba group – has acquired U.S.-based money transfer service MoneyGram for $880 million, a merger that puts meshing AML systems at the forefront of global compliance practices, via (Tech Times).

Compliance

Nepal ‘indifferent’ to too many money laundering risks, suspicious transactions

More than half of commercial and development banks operating in Nepal do not review money laundering risks at every transaction, signaling an indifferent approach to curbing financial crimes that could tarnish the banking sector’s image abroad, (via the Kathmandu Post).