North Korea

In this week’s Financial Crime Wave, more global cyberattacks could come from North Korea in retaliation, desperation as China cuts off coal, key European regulators fear that countries don’t understand money laundering, terror risks and could be missing out on sending vital, timely intelligence to law enforcement, HSBC again in the AML hot seat, this time at home, and more. 


Expect more cyberattacks from North Korea, shunned by China after assassination of leader’s relative

On Sunday, China suspended imports of North Korean coal for the rest of the year, in a move widely seen as a punitive response to the assassination of North Korean Supreme Leader Kim Jong Un’s older half-brother, Kim Jong Nam, who was close to the Chinese leadership. The 45-year-old was poisoned at Kuala Lumpur airport and died on his way to hospital. Two women — one Vietnamese and one Indonesian — and two men — one Malaysian and one North Korean — have been detained in connection with his death. Malaysian police also want to talk to four other North Koreans who apparently fled the country soon after the attack. However, one likely consequence will be a spike in illicit methods of currency generation — especially cybercrime. North Korea already has an elite squad of 6,800 state hackers who are engaged in global fraud, blackmail and online gambling, together generating an estimated annual revenue of $860 million, according to the Korea Institute of Liberal Democracy in Seoul, (via Time).

Want to find a cyber stud to safeguard your company? Good luck, says survey

A new survey has found that there could be major challenges in terms of having a workforce to create adequate cyber defenses and adequately respond to and recover from virtual incursions. That is a significant issue for banks, retailers and many large corporates, as they have been key targets, and been perforated, by hackers. Among the findings:

  • Quality and quantity are both big problems—organizations are getting very few applicants for each open cyber security role, and most of those candidates are not qualified.
  • It often takes six months or longer to fill cyber security roles.
  • More than half of respondents say hands-on experience is the most important quality for candidates to have, and 7 in 10 require a security certification, (via ISACA).

Corporate transparency

That Mossak Fonseca considered Canada a tax haven is no surprise to investigators, attorneys seeking pilfered assets

The developing story that Canada was considered by tax advisors at law firm Mossack Fonseca, the company at the center of the Panama Papers scandal, to be an excellent place to hide assets comes as no surprise due to at times insurmountable legal hurdles in getting a judge to grant company details, including coveted beneficial ownership information. But while Canada, the United Kingdom and other jurisdictions screen transactions from companies, creating those companies is at times too easily done, while creating, capturing and making available beneficial ownership information is an afterthought, or initiative still in its infancy.

As one Canadian attorney working in the British Virgin Islands states, those of us who work in and around the offshore world will appreciate that in order to get hold of the Holy Grail of fraud investigations — genuine Ultimate Beneficial Ownership (UBO) identification documents — you need to produce some evidence of apparent wrongdoing on the part of a target company. It may not be much, but it needs to be sufficient to sway a magistrate to sign the requisite disclosure order or warrant. But having successfully gained access to a Canadian company’s records, in many instances you will be faced with a total lack of UBO identifiers, (via the FCPA Blog).


HSBC again getting scrutiny over its financial crime compliance controls, this time in U.K.

The United Kingdom’s Financial Conduct Authority is looking afresh at HSBC, Britain’s largest bank, tied to potential breaches of money laundering rules after concerns raised last year by the anti-crime monitor installed that were not disclosed and addressed to domestic regulators, (via The Guardian). HSBC also stated in its annual report it has set aside more than $773 million tied to an ongoing tax investigation, part of total provisions totaling $2.4 billion for legal settlements and regulatory fines, (via Bloomberg BNA).

After Fintrac withholds name of penalized bank, people revolt, online that is

Canadians were furious last April over a decision by the country’s money laundering watchdog to impose an unprecedented $1.2-million fine against a Canadian bank — and then refuse to name the bank, according to documents obtained by the National Observer and the Toronto Star. The agency tracked public reaction to the decision — internally and online — and noted nearly unanimous criticism from experts, journalists and the public against the Financial Transactions and Reports Analysis Centre of Canada (Fintrac). Even within government, officials were quietly worrying about Fintrac’s refusal to name the bank, fearing it would cause all banks facing penalties to expect anonymity and could taint the entire financial industry with the actions of one institution, (via the Toronto Star).

Virtual currencies

Stronger Bitcoin laundering laws coming in West Virginia

In West Virginia, lawmakers are pushing to make money laundering through virtual currencies a felony, (via Coindesk).

Money laundering

Il Papa unleashes holy retribution on dirty money

Vatican authorities froze more than two million euros in cases of suspected money laundering in 2016 as part of Pope Francis’ drive to clean up the finances of the Holy See (via Business Insider).

Terror financing

European regulators fear countries don’t understand financial crime risks, reporting and law enforcement is missing critical intelligence

The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published a joint Opinion addressed to the European Commission on the risks of money laundering (ML) and terrorist financing (TF) affecting the European Union’s financial sector. This Opinion will contribute to the European Commission’s risk assessment work as well as that of the ESAs of fostering supervisory convergence and a level playing field in the area of anti-money laundering (AML) and countering the financing of terrorism (CFT). In particular, this Joint Opinion finds that problems exist in relation to firms’ understanding and management of the ML/TF risk they are exposed to. The Opinion also highlights difficulties associated with the lack of timely access to intelligence that might help firms identify and prevent terrorist financing, and considerable differences in the way national competent authorities discharge their functions.(via Foreign Affairs).


In a confluence of attorney, whistleblower and virtual currency issues, a lawyer was arrested trying to sell a secret complaint for Bitcoin

A lawyer for a major US lobbying firm has been arrested and charged after trying to sell confidential information for bitcoin. According to court documents filed on 1st February and unsealed yesterday, Jeffrey Wertkin sought to sell a criminal complaint related to a whistleblower case for $310,000, asking that he be paid in bitcoin for the offer. Wertkin, who was arrested on 31st January, was previously a partner for Akin Gump Strauss Hauer & Feld, a major Washington, DC-based law practice and lobbying firm, (via Coindesk).

Arts and crafts

Secrecy, anonymity, high-dollar pieces could be attracting criminals, the corrupt to art world

Secrecy has long been central to the art world. Anonymity protects privacy, adds mystique and cuts the taint of crass commerce from such transactions. But some experts are now saying this sort of discretion — one founded in a simpler time, when only a few wealthy collectors took part in the art market — is not only quaint but also reckless when art is traded like a commodity and increasingly suspected in money laundering, (via the New York Times).


SEC watering down enforcement

The SEC’s acting chair is reportedly scaling back the enforcement unit’s subpoena powers (via Reuters).

When it comes to the cyber SAR, does the securities and futures industry get it?

A look at U.S. calls for convergence and how that could be tricky for traders, many of which are already struggling on cyber and AML individually, so could find merging compliance doctrines doubly challenging, (via the HLC Blog).


More complex relations between regulators, banks in 2017

As we move further into 2017, the state of relations between FIs and regulators is as complex and compelling as ever, with higher expectations, penalties and liability, (via Financier Worldwide).


Banks, lobbying groups pushing to trim AML rules, streamline SARs

America’s largest banks are planning to propose a complete overhaul of how financial institutions investigate and report potential criminal activity, arguing that rules imposed in the years after the Sept. 11, 2001, attacks and strengthened during the Obama administration are onerous and ineffective, sources said. The Clearing House, a trade association representing the largest U.S. banks including JPMorgan Chase & Co., Bank of America and Citigroup, has long raised concerns about the effectiveness of the rules, but this will be the first time the group has publicly called for them to be revamped, (via Reuters).

Tax evasion

Groups push to publish information on corporate taxes

How much tax do multinational companies pay in your country? Find out why and how that question should be answered here, (via Tax Research).