In this week’s Financial Crime Wave, the U.S. Treasury looks to update the anti-money laundering suspicious activity report form fields to capture more details on cyber events, frauds, Transparency International asks for more data, details tied to global financial crime compliance enforcement actions, crowdfunding and cryptocurrency collide to create digital investment opportunities for criminal groups, and the everyman, and more.


FinCEN requesting comments to update SAR form fields to give more granularity, detail tied to cyber-related events

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the country’s financial intelligence unit and arbiter of anti-money laundering (AML) rules, is proposing to update and revise some of the fields in the suspicious activity report (SAR), the document financial institutions, such as banks, money services businesses, securities firms and others, use to tell law enforcement about potentially illicit actions, individuals and entities.

The request for comment, released earlier this month with a comment period ending in early April, includes a host of critical changes that nudge banks to capture more details on cyber-enabled events, includes more opportunities for concise narrative descriptions on a broader array of activities and gives institutions more options to detail certain kinds of frauds, such as Ponzi schemes, just to name a few, (via the Federal Register).

Virtual currency

When crowdfunding and cryptocurrency collide, get ready to ride euphoria of an ICO

With the growth of crowdfunding showing no sign of slowing, new innovations are beginning to take hold of the sector. One of these combines crowdfunding with another major trend in the financial sector – cryptocurrency. Whilst its popularity still pales into insignificance when compared to that of both equity and rewards-based crowdfunding, raising money through Initial Coin Offerings is fast becoming a common alternative for the growing number of cryptocurrency companies. In 2016, blockchain start-ups raised around $200 million in Initial Coin Offerings (ICO), a new form of crowdfunding based on cryptocurrency tokens.

ICOs are similar to Initial Public Offerings (IPO) that see companies float on a stock exchange. In an IPO, the cryptocurrency company sells a proportion of its currency to early backers in exchange for money or, more frequently, bitcoin. These are then called ‘tokens’ – and is an easy way for new companies to circumvent the difficulties encountered during the process of raising money through venture capitalists or banks. Supporters then hope that their cryptocurrency ‘token’ will be worth more as the company takes off. They can then sell it for the higher value, (via The Investment Observer).

Austria creates cryptocurrency bank

Austria gets its first bitcoin digital currency “bank,” in bid to bolster safety, transparency, (via RT).


In many countries hosting world’s largest banks, little data on AML prevention, enforcement, says TI

A new report from Transparency International shows that in countries hosting the world’s biggest banks, little data on anti-money laundering prevention and enforcement is published, or is if it is published it is out-of-date. Transparency International’s study, Top Secret: Countries keep financial crime fighting data to themselvesshows that data about authorities’ anti-money laundering efforts are only partially available across 12 countries, including Germany, Luxembourg, Switzerland, the UK and the US. This includes data as basic as the number of times banks were sanctioned for money laundering failures in a given country, a number which is only public in four out of the 12 countries assessed – Australia, Cyprus, Italy and the US, (via Transparency International).

Data breaches

Australia passes breach notice law

Thrice is nice as Australia finally gets data breach notification laws at third attempt, (via ZDNet). To read the original Parliament notice, please click here.

Political donations

Are political donations money laundering in Australia?

Australia’s political donation system has been likened to the operation of criminal money laundering with one key difference — the political donation system is entirely legal, (via


DOJ subpoenas PayPal on AML program, potentially looking at users, not company compliance failings

PayPal Holdings Inc.’s anti-money laundering program received subpoenas for information from the U.S. Department of Justice, the company said Wednesday in a filing. San Jose, California-based PayPal processed $354 billion in transactions in 2016, with about half of the volume overseas.

Since it handles transactions across borders, it has to comply with laws targeting money laundering. PayPal suggested in a statement that the Department of Justice is seeking information regarding PayPal users, not targeting the company in the probe. Previous Justice Department investigations involving PayPal include a 2015 conviction of organizers of a software piracy ring who used PayPal to accept payments, (via Bloomberg).


U.S. Treasury sanctions Venezuela’s VP as “drug kingpin” further straining relations

The Trump administration on Monday slapped sanctions on Venezuela’s new vice president, Tareck El Aissami, accusing him of being an international drug kingpin. The Treasury Department’s Office of Foreign Assets Control (OFAC) said that El Aissami, who was named vice president just last month, helped facilitate drug shipments out of the country through his control of air bases and shipping ports. Treasury officials said that in his previous positions as governor of Aragua state and the country’s interior minister, he was involved in large drug shipments bound from Venezuela to Mexico and the United States, (via the Washington Post).


Perennially gripped by graft, Gambia is trying to change its stripes in corruption fight by aligning with global norms

Gambia, which proclaims it has the ignoble title of “one of the most corrupt countries in the world,” is trying to regroup and recover by aligning its practices of fighting graft with international standards. That is not an easy turnabout as its prior leader “reached a level of corruption during the 22 years of the worst kleptocrat in modern times,” according to a presidential memo.

The country is also “reaching out to our development partners such as the EU, ADB, and other international development agencies to assist in the development of the new Gambia especially in the aftermath of a massive emptying of the state coffers by the rapacity of a mercurial dictator who ruled the country with rampant greed and corruption, (via the Freedom Newspaper).

Corporate transparency

German financial institutions support boosting beneficial ownership initiatives  

German banks support stricter beneficial ownership rules for companies and trusts, while the leading Scandinavian bank backed an offshore corporate economic substance test to help comply with EU laws against money laundering and tax evasion, (via Bloomberg BNA).


AML, cyber teams should tackle compliance shoulder-to-shoulder, says Finra head

To counter criminals, terrorists and hackers at securities firms, cyber teams should “remain in close contact with your AML staff,” says top Finra official, (via Finra).

Panama Papers

Police arrest founders of Mossack Fonseca, firm at center of “Panama Papers” scandal

Police in Panama arrested the founders of Mossack Fonseca, the law firm at the center of the Panama Papers scandal, on money laundering charges after authorities raided the firm’s headquarters as part of investigations into Brazil’s largest-ever bribery scandal. The firm’s founding partners, Ramón Fonseca and Jürgen Mossack, were taken into police custody on Thursday, according to the men’s lawyer. Kenia Porcell, Panama’s attorney general, released a statement that said evidence gathered by her office indicated that the law firm was a potential “criminal organization” that concealed and removed evidence related to “illegal activity.”

Both Fonseca and Mossack are well-known in business and political circles in Panama. Fonseca is a former adviser to Panama’s president, Juan Varela, and Mossack served on Panama’s council on foreign relations from 2009 to 2014. They have consistently denied any wrongdoing. Their law firm says that it is not at fault in cases in which offshore companies it set up for clients were later used for illegitimate purposes. The firm told ICIJ last year that it follows “both the letter and spirit of the law,” (via ICIJ).


AI could help in AML compliance, lower alert volumes, better cluster risk

There is so much noise about AI and its ilk that, in my opinion, it’s important for us in the worlds of fraud and compliance to take a step back and focus on how we can implement this incredibly advanced technology in the context of our current technology and regulatory environment. For instance, using clustering techniques based on the customer’s archetypes allows customer clusters to be formed within their KYC hard segmentation. Different clusters have different risk, and customers that are not within any cluster are suspicious. Other areas include rank-ordering of AML alarms, higher quality alerts and a better ratio of alerts to analysts, (via Fico).


Stronger global FCPA enforcement built on the backs of more international cooperation, coordination

As dramatic as the increase in Foreign Corrupt Practices Act fines and penalties were in 2016, one of the more important themes for the year was the globalization of enforcement. By the end of 2016, international enforcement numbers had reached a staggering level with Odebrecht/Braskem, and then in the first month of 2017 with the Rolls-Royce resolution. But looking at the global momentum more broadly, there are several key factors leading to this dramatic upswing in fines and penalties for anti-corruption and bribery enforcement, including more international cooperation, other countries putting into practice what the U.S. has taught them and more regulators prosecuting bribery and corruption, (via Compliance Week).

Graft scandal in Latin America spreads to capture bigger fish

A Latin America bribery scandal widens to engulf two of the continent’s highest profile figures, (via the Los Angeles Times).