Andorran Bank Queries Fincen

In this week’s Financial Crime Wave, shuttered Andorran bank asks U.S. Treasury’s Financial Crimes Enforcement for answers in wake of “money laundering” designation implosion, the Federal Reserve is looking to ban some JPMorgan bankers for life after “princeling” scandal, U.S. federal prosecutors charge 21 in ATM skimming scheme that used Vegas casinos to launder the money, and more.


Andorra bank pushing for FinCEN probe after closure due to being labeled a “primary money laundering concern”

The former owners of the now defunct Banca Privada d’Andorra S.A. are calling for an investigation into why the U.S. Treasury Department labeled the Andorran bank a “primary money laundering concern,” a move which helped drive the bank out of business. A lawyer for the Cierco family, which controlled the bank, sent a letter to Treasury Department’s Office of the Inspector General on Tuesday, asking for the office to investigate how the department reached the conclusion that BPA was aiding money launderers. The Ciercos claim that the naming of the bank as a money launderer by the Treasury’s Financial Crimes Enforcement Network (FinCEN) naming of the bank, was “based on an insufficient and inadequate investigation,” which they were unable to challenge, according to the letter, which was shared with Reuters.

The case illustrates the enormous power U.S. financial regulators can use against foreign banks caught in their sights. Soon after the FinCEN designation, foreign correspondent banks severed ties with BPA and regulators moved to dismantle the bank. Its remaining assets were sold to a U.S. investment firm last year, an attorney for the Ciercos said. The USA Patriot Act, passed in response to the 9/11 attacks, gives FinCEN the power to label companies as aiding and abetting money launderers without going through a court process, (via Reuters).

Investigators grilling bank examiners in Wells Fargo bogus accounts probe

Federal investigators have begun interviewing bank examiners in Charlotte as they pursue a probe of Wells Fargo’s phony accounts scandal, sources familiar with the matter said this week. The interviews are the latest sign that the U.S. Justice Department is still pursuing its investigation, even as the San Francisco-based bank works to put the scandal behind it. This week, Charlotte-based community bank head Mary Mack announced changes to her leadership team, as part of what she called an effort to build a better bank. Wells also confirmed that three more executives in California and Arizona – the epicenter of the scandal – have left the company. The U.S. Attorney’s Offices in Charlotte and San Francisco, which cover Wells’ two biggest corporate hubs, are heading the federal investigation, the Observer has previously reported. Prosecutors have issued subpoenas to the bank seeking communications and documents, sources have said, (via the Charlotte Observer).


UK Banks still hesitant to do business with Iran due to lack of anti-fraud, AML measures

British banks are refraining from doing business with Iranian counterparts despite the lifting of legal limits on such deals because the Iranian banks “aren’t up to the same anti-money-laundering and financial fraud standards,” The Wall Street Journal reported Wednesday. The Journal article focuses on the Iranian-owned Bank Sepah International PLC, which handled more than 2,000 monthly transactions and had a $1.5 billion balance sheet before sanctions were imposed.

But more than a year after sanctions were lifted, the bank “still hasn’t processed a single commercial transaction, other than paying 28 employees and some vendors, because it is still effectively frozen out of the financial system, especially in the U.K., by big banks unwilling to risk dealing with Iranian entities,” the Journal reported. “On paper, there may be banks removed from sanctions, but the geopolitical environment suggests this is not a done deal,” said Juan Zarate, a former Treasury Department official and leading expert on financial sanctions. “Western institutions feel it is very risky.” Despite efforts by former Secretary of State John Kerry to encourage European banks to do business with Iranian financial institutions, most have hesitated, (via the Tower).


Nine more accused of bribery in worst corruption scandal in navy history

Nine high-ranking Navy officers were arrested for accepting luxury travel, elaborate dinners and prostitutes from a Malaysian defense contractor in exchange for classified Navy information, U.S. authorities said Tuesday. The officers are the most recent to be accused of taking bribes from Leonard Glenn Francis, known as “Fat Leonard,” who is at the center of the worst corruption scandal in Navy history. The former CEO of Malaysian defense contracting firm Glenn Defense Marine Asia was arrested in 2013 in an international operation that lured him from Singapore to San Diego, according to The Washington Post.

Since then, “Fat Leonard” has pleaded guilty to defrauding the Navy and U.S. tax payers tens of millions of dollars. More than two dozen people have so far been charged in connection with the corruption and fraud investigation. Of those charged, 20 are former or current U.S. Navy officers and five are Glenn Defense Marine Asia executives, according to an indictment unsealed by The United States Justice Department Tuesday, (via the OCCRP).

Individual liability

Federal Reserve seeking lifetime ban for bankers running corrupt JPMorgan “Princeling” program

The Federal Reserve Board Friday said it will seek fines and permanent bans against two former managing directors at J.P. Morgan Securities (Asia Pacific) Limited who allegedly led an illegal hiring program. The Fed said Fang Fang and Timothy Fletcher ran the bank’s “sons and daughters” program. They allegedly won at least $35 million in business for the bank by offering prestigious internships and other jobs to individuals referred by foreign officials, clients, and prospective clients. The hiring practices violated both firm policies and the FCPA, the Fed said in a statement. In addition to lifetime bans from the banking industry, the regulator is seeking a fine against Fang of $1 million and $500,000 against Fletcher.

In November, JPMorgan Chase and the Hong Kong unit where Fang and Fletcher worked — J.P. Morgan Securities (Asia Pacific) Limited — agreed to pay $264.4 million to the DOJ, SEC, and Federal Reserve to resolve FCPA offenses for the illegal hiring practices. Hiring a family member or friend of a government official isn’t always a violation of the FCPA. But a hiring decision intended to reward or induce an official to award work can be an offense. In August 2015, BNY Mellon paid $14.8 million to settle SEC charges that it violated the FCPA by giving student internships to family members of officials affiliated with a Middle Eastern sovereign wealth fund, (via the FCPA Blog).


Federal prosecutors indict top-ranking Russian government officials in Yahoo! hack

A grand jury in the Northern District of California has indicted four defendants, including two officers of the Russian Federal Security Service (FSB), for computer hacking, economic espionage and other criminal offenses in connection with a conspiracy, beginning in January 2014, to access Yahoo’s network and the contents of webmail accounts, (via the U.S. Justice Department).

Cyber gangs targeting U.K. banks, businesses, copying nation-state style attacks

Cyber criminals are targeting British businesses by imitating nation state-style attacks, the National Crime Agency warns. An annual assessment of the biggest threats has uncovered a growing fast-changing threat based on government-sponsored hacking. It discusses the trend of criminals copying suspected nation state ‘actors’ who are given license to attack financial institutions and other organizations – knowing they will be highly unlikely to be arrested in their home country. They often have close links to the military, intelligence or state control apparatus of their country – and a high degree of technical expertise. The report said: “The lines between those committing attacks continue to blur, with criminal groups imitating states in order to attack financial institutions and more advanced actors successfully using ‘off the shelf’ malware to launch attacks. The report emphasizes the need for increased collaboration between industry, government and law enforcement. It also highlights increased levels of aggressive and confrontational cyber crime – particularly through Distributed Denial of Service (DDoS) attacks combined with extortion and ransomware,” (via the Wakefield Express).

Cybercrime interweaving with espionage exposure in Russia

Is Russia piggybacking on a cybercriminal’s hacking ring to gain access to U.S. government secrets? Some say yes, (via the New York Times).


More corruption, financial crime concerns mean deeper layers of due diligence, say experts

Want to go down the rabbit hole and found out what is Level III, deep dive due diligence? Tom Fox guides the discussion on the many layers of getting to know individuals and companies, (via JD Supra).


Federal prosecutors charge 21 in ATM skimming, money laundering scheme using Las Vegas casinos

The FBI has broken a cross-country money laundering scheme involving 21 people, capturing 11. US federal authorities say they used “card skimming” devices to steal millions of dollars. The mechanisms used stolen money from ATM machines and then laundered the cash through Las Vegas casinos and all other operations across the country. The criminals stole debit card information by attaching skimming devices to ATM machines. The defendants than withdrew large sums of cash and purchased prepaid cash cards to launder the money, according to the indictment.

The suspects funneled the ill-gotten money through casinos up and down the Las Vegas Strip, and also traveled to gambling resorts in other areas of the country. In total, the cabal named in the indictment are thought to have stolen upwards of $6 million. The FBI said $2.6 million was withdrawn at MGM Resorts properties in Las Vegas alone. Authorities are still seeking ten of the suspects, who remain on the lam and are considered fugitives, (via


U.K. pilot project to train front-facing bank, postal building staff leading to drop in fraud, arrests of scammers

The United Kingdom is partaking in a pilot project to better fight financial crime and fraudsters preying on the elderly and other vulnerable victims, known as the Banking Protocol, which is aimed at ensuring banks and police are more active in protecting customers on a more real-time basis. The effort is a joint venture between the police, Financial Fraud Action – which represents banks – and National Trading Standards. At the heart of the initiative is new training for all customer-facing bank staff on specific signs a client may be a fraud victim. If they have suspicions, they are encouraged to call the police and give a special password. The groups are also extending the training to post offices and building societies.

Police trained under the protocol will also commit to investigating the fraud as a priority – often visiting the bank branch, or the customer’s home, immediately. In some cases, they may be able to catch the criminal waiting outside the bank or the victim’s home to collect the cash. Bank staff taking part in the trial scheme in London made 178 calls to police which resulted in 16 arrests. Banks say 1.4 million pounds have already been stopped from leaving customer accounts. In one of the early success stories, bank staff recognized an elderly gentleman being scammed by a fraudulent builder, questioning him about a withdrawal of 13,000 pounds, soon after pulling out 6,000 pounds. The bank staffer called the police, who showed up to meet the crafty craftsman and, finding prior suspicious activities tied to the person, arrested him, (via the BBC).

On heels of Wells Fargo insider sales penalty, TD Bank employees come clean

Hundreds of current and former TD Bank employees respond to CBC report with stories of pressure to upsell customers, (via the CBC).

Corporate Transparency

Is the U.S. a secrecy haven? The EU Parliament thinks so

The U.S. is emerging as a “leading tax and secrecy haven for rich foreigners” because of its resistance to global tax disclosure standards and the array of tax-free facilities available for non-residents, according to a European Parliament report. Released March 7—two weeks before European Union lawmakers visit Washington D.C. and Delaware to probe money laundering and tax evasion issues— the report says U.S. states such as Nevada, Wyoming, South Dakota and Delaware are attracting money flows from around the world because of laws that permit beneficial owners of companies to remain anonymous. “The United States provides a wide array of secrecy and tax-free facilities for non-residents both at the federal level and at the level of individual states,” the report said.

The report underlines that the U.S., unlike “virtually all of the other developed counties in the world,” hasn’t agreed to implement the OECD’s common reporting standard for the automatic exchange of bank and tax data between tax authorities. The European Parliament’s Panama Papers investigative committee will visit the U.S. March 21-24 for what has been described as a fact-finding mission. The delegation will meet with counterparts in the U.S. Congress as well as with representatives of the U.S. Department of Treasury, the Internal Revenue Service and various think tanks and organizations, (via Bloomberg BNA).


In ‘EUAML4,’ stronger focus on risk, analytics, CDD, PEPs

On June 26 compliance with the EU’s Fourth Anti-Money Laundering Directive (AML4) by Member States becomes compulsory. Designed to boost defenses against money laundering and terrorism financing, and inspire greater confidence in the workings of the financial industry, AML4 was adopted by the EU Commission in April 2015, with member states given two years to write the directive into National Law. So how does AML4 differ from AML3, what steps should business be taking to ensure they are fully compliant, and are there any, perhaps unintended, consequences that business should be aware of?

The overarching aim of AML4 is to provide greater transparency in financial transactions, making it easier for authorities to identify those institutions that may be deliberately engaging in money laundering activities. The new regulations have wide reaching effects, affecting Customer Due Diligence (CDD), the vetting of Politically Exposed Persons (PEPs), risk assessments, and the ways in which beneficial owners are identified. In contrast to AML3, AML4 places a greater emphasis on risk analysis; the emphasize that point, the word ‘risk’ appears 149 times in AML4 compared to just 36 times in AML3. There is a new requirement for member states to have a National Risk Assessment. The focus on risk itself may not be new, but AML4 requires firms to more thoroughly document their risk-based approach, (via Bob’s Guide).


Look for Fintrac to mine your social media messages, pics after you make a large transaction

Canadians who make large cash transactions, international wire transfers or win big at the casino could end up with a federal agency scrutinizing their Facebook pages and other social media posts, CBC News has learned. The Financial Transactions and Reports Analysis Centre (Fintrac), the federal government body charged with monitoring financial transactions to detect money laundering and terrorist financing, has been quietly scrutinizing the social media posts of Canadians whose transactions attract its attention.

Fintrac defends the practice, saying the rules that govern it allow it to collect a variety of information. “It is important to remember that the perpetrators of these crimes oftentimes have an online presence and actively use the web, including social media, to connect with associates, facilitate their activities and, in the case of terrorism financing, even raise funds,” a Fintrac spokesperson said. However, privacy advocates say that just because something is publicly available doesn’t mean that it’s fair game for government bodies to scrutinize or monitor, (via the Canadian Broadcast Corp.).

Financial advisors

FinCEN working to finalize AML rules for financial advisors

U.S. Treasury’s Financial Crimes Enforcement Network working to subject financial advisors to formal AML rules, following other securities, certain real estate operations, (via Barrons).


Moneygram sale to Chinese firm under scrutiny by U.S. government

Should the Feds block the purchase of Moneygram by Chinese firm, on national security fears? (via The Hill).

U.S. Treasury’s Financial Crimes Enforcement Network working to subject financial advisors to formal AML rules, following other securities, certain real estate operations, (via Barrons).