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Financial Crime Wave – Terror groups turning to auction sites, hackers hitting retailers, and more

Thursday, August 17, 2017   (0 Comments)
Posted by: Brian Monroe
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By Brian Monroe
August 17, 2017

In this week’s Financial Crime Wave, ISIS turning to rigged auctions to gain funds, move money internationally, hackers are more aggressively hitting online and brick-and-mortar retailers, a financial crime index reveals the overall risks of criminals moving money through the world is rising, and more.


Overall financial crime risk rising, putting more pressure on countries, institutions to improve AML defenses

The overall risk to countries of financial crime taking advantage of their financial sectors is rising, according to a watchdog group that ranks global compliance vulnerabilities and defenses, with some countries only being paper tigers when it comes to tackling terror financing. Those are just some of the findings of the sixth edition of the Basel Anti-Money Laundering (AML) Index, the only research-based risk rating of countries in the field of financial crime and compliance issued by an independent non-profit institution. Average country risks for a range of crimes, including money laundering, corruption and terror financing, has risen from 5.85 last year to 6.15, out of a possible maximum of 10, (via the Basel AML Index).


U.K. regulator planning to push firms to better disclose corruption failings in annual reports

Britain’s accounting regulator released plans to force UK firms to make more detailed anti-corruption disclosures in their financial statements. The Financial Reporting Council (FRC) published a consultation on amending guidelines previously issued in 2014 that stipulate what should be in the narrative section of annual reports. The watchdog wants firms to “tell the story” behind profit and loss accounts and balance sheets.

The proposals will make large companies bulk up detail on “environment, employees, social matters, respect for human rights and anti-corruption and anti-bribery matters.” FRC executive director of corporate governance and reporting Paul George said: “High-quality reporting enhances transparency and trust in business,” (via City AM).

Ireland to adopt DPAs in corruption crackdown

The Government has announced new plans to introduce more punitive anti-corruption legislation. Separately, however, the Law Reform Commission is also considering calling for the introduction of Deferred Prosecution Agreements (DPAs), which would obviate the need for criminal trials altogether. This is a potentially paradoxical approach by the State to be "tough on corporate crimes", but one in which criminal punishment is the sanction of last resort, (via the Independent).


Congressmen demand DOJ ‘Repudiate’ Operation Choke Point, which labeled certain industries, like gun dealers, payday lenders, as high-risk

Five Republican Congressmen fired off a letter last week to Attorney General Jeff Sessions, Fed Chair Janet Yellen, and Acting U.S. Comptroller Keith Noreika, demanding that they repudiate the Obama administration’s successful and continuing efforts to strangle financially gun shops and other supposedly “high-risk” and “disreputable” businesses. Called Operation Choke Point, the program continues despite declamations from the Justice Department to the contrary. The congressmen signing the letter included Financial Services Chairman Jeb Hensarling of Texas and Judiciary Chairman Bob Goodlatte of Virginia, in conjunction with Representatives Blaine Luetkemeyer of Missouri, Tom Marino of Pennsylvania, and Darrell Issa of California.

Operation Choke Point was a scheme to choke off financing to various businesses and industries deemed disreputable, according to the previous administration’s totalitarian worldview. The extensive list created by the DOJ and implemented by the FDIC included gun shops, ammunition sellers, pawn shops, coin dealers, those offering payday loans and selling tobacco products, among others. The lawmakers accused the Obama Administration of using the program to punish certain sectors that didn’t align with administration political leanings by restricting sources of credit, (via the New American).

Human trafficking

A seven-month sting run by Miami Beach detectives has shuttered four massage parlors, led to three arrests and uncovered what authorities say was a human trafficking operation that forced two women from China to provide sex for money, with a wide selection of services from $40 to $400, (via the Miami Herald).


Russia in U.S. sanctions bullseye

Find out how a new sanctions law against Russia is complicating trade compliance, (via Michael Voklov).

Terror finance

Company creates terror alert app

TerrorTech LLC, part of the US-based international defense contractor, DTS Group, has launched the world’s first terror alert app, which alerts users to both possible and actual terror attacks and provides information on how to stay safe in the affected area, (via American Security Today).

Domestic terrorist following in footsteps of 1995 Oklahoma City bombing

An Oklahoma man angry with the government has been arrested by the FBI on charges that he tried to blow up an Oklahoma City bank building with a van he thought was packed with explosives, an attack similar to the 1995 bomb that killed nearly 170 people, U.S. prosecutors said on Monday. (via Reuters).

Retreating ISIS creating AML issues

A look at the AML challenges that rise to the fore as the Islamic State tries to move funds out of its crumbling caliphate, (via Reuters).

ISIS, shunned by formal banking system, adopts using eBay to finance terror network, says FBI

A recently unsealed FBI affidavit reveals that investigators in the U.S. have been looking into a global financial network which used fake eBay transactions to funnel money to an alleged operative in the U.S. The network was run by senior Islamic State official Sitful Sujan, who was killed in a U.S.-led airstrike in December of 2015. The Wall Street Journal reported: "The alleged recipient of the funds was an American citizen in his early 30s who had been arrested more than a year ago in Maryland after a lengthy Federal Bureau of Investigation surveillance operation that found the first clues to the suspected network.

"The government had alleged in a 2016 indictment that the American suspect, Mohamed Elshinawy, pledged allegiance to Islamic State and had pretended to sell computer printers on eBay as a cover to receive payments through PayPal, potentially to fund terror attacks. "The recently unsealed FBI affidavit, filed in federal court in Baltimore, alleges that Mr. Elshinawy was part of a global network stretching from Britain to Bangladesh that used similar schemes to fund Islamic State, (via NPR).

Corporate Transparency

Top officials at Irish company registration firms face fines if they don’t register beneficial ownership data under new EU AML rules

Directors are facing fines of up to €5,000 from the Companies Office if they fail to collate and register information on the beneficial owners of their company before a September.  The new obligations are imposed by the EU anti money laundering directive. "There's a current obligation on all Irish registered companies - save for those listed in the jurisdiction - to identify who their beneficial owners are, by which I mean the individuals who ultimately own the company either directly or indirectly," said to Nick Metcalfe, who is a senior associate with Mason Hayes and Curran. 

He said that companies are currently required to keep such details on an internal register - but the change set to be brought in by the upcoming legislation will require that data is also passed on to a central register. The deadline for compliance is expected to be in quarter four, but the matter is somewhat complicated by the fact that the legislation giving effect to this in Irish law has not yet been finalized, (via RTE).


Cyberattacks on online retailers double in a year as hackers try to steal shoppers’ details

The numbers of online shops hit by serious losses of customer data has doubled in the past year as hackers try to plunder retails sites for valuable personal details, a law firm has warned. Customers are increasingly at risk as retailers amass ever growing collections of their shoppers’ personal information. Online shopping, digital marketing and loyalty schemes mean shoppers submit more and more information to retailers that is of value to cyber criminals.

Jeremy Drew, a partner at the RPC law firm, said: “Retailers are a goldmine of personal data but their high-profile nature and sometimes aging complex systems make them a popular target for hackers.” Figures released by the Information Commissioner’s Office show the number of retail firms reporting data breaches has doubled in just one year, (via The Telegraph).

Hackers phishing in China

Watch out for a new phishing email related to Bank of China, (via the HKMA).


U.S. hits drug cartel with new sanctions

The US Treasury sanctioned an alleged mid-level Mexican drug-cartel operator and his organization on Wednesday, naming them as significant foreign narcotics traffickers, (via Business Insider).


Navy PEP in corruption sting

In an example of the risks of U.S. politically-exposed persons, an active-duty U.S. Navy commander pleaded guilty this week in connection with his efforts to obstruct a federal criminal investigation of the owner and chief executive officer of a multi-national defense contracting firm headquartered in Singapore, (via the U.S. DOJ).


Find out how to do a walkthrough of a website

Check out TransparINT’s tips for conducting a web site visit, (via TransparINT).

Money laundering

Israel nabs billionaire suspected of massive corruption, laundering scheme

Israeli Billionaire Beny Steinmetz arrested related to suspected bribery, money-laundering scheme, (via Haaretz).

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