Regulatory Guidance


In this feature, ACFCS highlight’s key current, upcoming or potential changes in the global financial crime landscape, so compliance professionals, investigators and regulators can better keep abreast of pressing vulnerabilities, issues and legislative fixes. Enjoy!

In this month’s ACFCS Regulatory Report, the U.S. Treasury releases guidance on guidance and finalizes temporary relief for pieces of new beneficial ownership duties, Dutch, Danish, French banks, pay or plan to play hefty fines for AML failings, Europe proposes stronger AML rules, and more.

United States


AML guidance does not have the force of laws, bank regulators say in rare multi-agency guidance

The top banking agencies of the United States, in conjunction with the U.S. Treasury, this month attempted to delineate more clearly what banks should do in crafting financial crime compliance programs related to following laws, regulations or guidance – a likely response to widespread criticism in the recent implementation of new rules to capture beneficial ownership details.

Regulators, including the Office of the Comptroller of the Currency and Federal Reserve, likely issued the guidance on supervisory guidance recently to address industry criticisms that examiners can fault bank anti-money laundering (AML) programs solely on their subjective interpretation of already murky guidance. To read ACFCS coverage of the guidance, click here.

Specifically, the statements are likely related to the industry debacle that occurred in the aftermath of the recent U.S. Treasury’s Financial Crimes Enforcement Network’s (FinCEN) beneficial ownership rule coming into effect.

At issue was that just weeks before the May 11, 2018 deadline, FinCEN released dozens of questions and answers (Q&As), which in some ways contrasted with perceived expectations and current regulations – forcing the financial sector to choose between which one to follow.

Some other key areas regulators worked to clarify in the recent guidance:

  • The agencies intend to limit the use of numerical thresholds or other “bright-lines” in describing expectations in supervisory guidance.
  • Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. Rather, any citations will be for violations of law, regulation, or non-compliance with enforcement orders or other enforceable conditions.
  • The agencies will aim to reduce the issuance of multiple supervisory guidance documents on the same topic and will generally limit such multiple issuances going forward.
  • The agencies will continue efforts to make the role of supervisory guidance clear in their communications to examiners and to supervised financial institutions.

After months of reprieves, FinCEN permanently extends limited relief for renewable, rollover products related to new beneficial ownership rule

This month, after 90-day and then 30-day extensions, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) permanently extended a rare ruling granting exceptive relief related to an ambiguous, potentially burdensome piece of new beneficial ownership obligations for legal entity customers that took effect in late July.

The original final rule, released in May of 2016, requires financial institutions to capture beneficial ownership details on certain legal entity customers down to the 25 percent level, or more on a “risk-based basis,” and list a top-level person who exercises managerial control. Institutions can chiefly rely on what companies provide about their flesh-and-blood owners on a self-certification form.

The crux of the ruling has to do with bank products that renew annually and, under the new rule, would require a bank to reach out and get verbal, written or email confirmation that beneficial ownership details haven’t changed. To read more, click here. To read ACFCS coverage of the original 90-day exception, click here.

IG reports

TIGTA chides IRS in two key compliance areas, stating its AML efforts have a ‘minimal impact’ and its failing to properly use CTR data

The U.S. Treasury Office of Inspector General for Tax Administration (TIGTA) has criticized the Internal Revenue Service in two key areas related to financial crime compliance and investigations, stating in one report that the agency’s anti-money laundering (AML) division – that typically examiners all non-bank operations without a federal functional regulator, has “minimal impact,” while it’s also failing to fully maximize the data in customer transaction reports (CTRs).

The TIGTA report stated that the IRS Small Business/Self-Employed Division was lax in the majority of its exams, letting major violators slide with letters, not penalties.

“TIGTA reviewed a statistically valid random sample of 140 compliance cases from a population of 24,212 closed cases worked by the BSA Program for Fiscal Years 2014 through 2016 and found that 105 (75 percent) were closed with 383 Title 31 violations in which the respective business only received a letter citing the violations found.”

As well, the entire penalty process and coordination with IRS Criminal and the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the agencies with powers to hand down monetary fines, was a flawed, money-losing operation – and one that has yet to adequately train or examine firms related to virtual currency operations.

TIGTA issued several recommendations:

  • coordinate with the FinCEN on the authority to assert Title 31 penalties or reprioritize resources to more productive work;
  • leverage the BSA Program’s Title 31 authority and annual examination planning in the development of the IRS’s virtual currency strategy;
  • notify examiners of new appointment letter enclosures that includes Publication 1;
  • evaluate the effectiveness of the newly implemented review procedures for FinCEN referrals; and
  • improve the process for referrals to IRS Criminal Investigation.

To read the full report, click here.

On the issue of CTRs, the oversight body also found a host of issues.

“Although IRS management agreed with TIGTA’s recommendation in a September 2010 report and cited steps taken to develop examination referrals from the CTRs, the IRS is still not systemically using the CTRs to identify and pursue potentially noncompliant individuals,” according to the report.

It is also “not effectively tracking information referrals from Bank Secrecy Act examiners to the Examination function. Finally, some examiners are not documenting that they are considering available CTR information in their audits.” To read the full report, click here.


Beleaguered French banking giant SocGen expects to pay nearly $1.3 billion to settle sanctions case 

French banking behemoth Société Générale stated this month it is expecting to pay a 1.1-billion-euro penalty, or $1.27 billion, to a host of U.S. federal and state investigative and regulatory authorities for breaching U.S. sanctions rules – the second time in recent months the bank has negotiated a high-profile settlement for financial crime compliance failures.

Société Générale stated it has “entered into a phase of more active discussions” with U.S. officials and stated that a finalized settlement is likely “within the coming weeks,” according to a company announcement, adding that the mammoth penalty would be mostly covered by previously set-aside provisions for legal expenses.

The figure is reportedly the first time the bank has put a number on the looming U.S. sanctions fines, though it has been in recent years raising its full set aside figures for penalties and settlements. To read ACFCS coverage of the action, click here.

The incoming penalty is yet another black mark on the bank’s financial crime compliance programs. Earlier this year SocGen was part of a historic multi-jurisdictional graft and rate-rigging deal. In June, the bank stated it would pay $1.3 billion in a global settlement related to corruption and currency manipulation charges in the United States and France, according to authorities.

The allegations related to bribing Gaddafi-era Libyan officials and illicitly influencing the Libor interest rate benchmark, a further showing that global regulators are more aggressively teaming up to tackle major corruption investigations to better see all the pieces of the puzzle.

Both countries at the time called the settlement the first ever such resolution coordinated and negotiated by both countries simultaneously. To read the prior SocGen action, click here.

Tax evasion

In historic first, former Loyal bank executive pleads guilty to failing to comply with Fatca

Federal authorities Tuesday secured a guilty plea involving Adrian Baron, the former Chief Business Officer and former Chief Executive Officer of Loyal Bank Ltd, for failing to comply with the Foreign Account Tax Compliance Act (Fatca).

The U.S. extradited Baron from Hungary in July 2018 after an undercover sting where agents enticed him to use Loyal bank, an off-shore bank with offices in Budapest, Hungary and Saint Vincent and the Grenadines, to evade requirements to report the assets of individuals with U.S. indicia to their home government or directly to U.S. tax authorities.

Fatca is a broad federal law with powerful extraterritorial reach enacted in 2010 requiring foreign financial institutions to identify their U.S. customers and report information about financial accounts held by U.S. taxpayers either directly or through a foreign entity.

The law’s primary aim is to prevent U.S. taxpayers from using foreign accounts to facilitate the commission of federal tax offenses. For a list of current Fatca governmental agreements, which come in two key forms, please click here. To read ACFCS coverage of the action, click here.

IRS Amnesty Program ends Sept. 28, has resulted in $11 billion paid in back taxes

The Offshore Voluntary Disclosure Program (OVDP), a program the IRS started to give amnesty to American taxpayers who had previously unreported overseas accounts, will end September 28, 2018. Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used the various terms of the program to comply voluntarily with U.S. tax laws.

These taxpayers with undisclosed offshore accounts have paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations. To read more analysis, click here.


Congress and cryptos converged recently as companies query lawmakers for guidance on regulations

Some 80 representatives from the cryptocurrency and traditional finance industries trekked to Washington, D.C. on Tuesday with a singular message for U.S. lawmakers: we need regulatory clarity on cryptocurrencies and initial coin offerings (ICOs).

That message was fully on display during the “Legislating Certainty for Cryptocurrencies” event held this week at the Library of Congress. Over the course of the morning and early afternoon, stakeholders outlined the difficulties they face when launching projects and products in the U.S.

The culprit behind their woes: uncertainty as to when cryptocurrencies are treated as securities and how startups should approach compliance more broadly. To read more analysis, click here.

House passes bevy of bills with ties to compliance, investigations

The House Financial Services Committee also passed several bills by voice vote with financial crime and compliance tethers, including:

  • H.R. 5036, the “Financial Technology Protection Act,” sponsored by Representative Ted Budd (R-NC), establishes an Independent Financial Technology Task Force (Task Force) to improve coordination between the private and public sectors to research and develop legislative and regulatory proposals to decrease terrorist and illicit use of new financial technologies, including digital currencies.
  • H.R. 6729, the “Empowering Financial Institutions to Fight Human Trafficking Act of 2018,” sponsored by Representative Ann Wagner (R-MO), instructs the Secretary of the Treasury to establish a mechanism for non-profit organizations to qualify for safe harbor when sharing specific information with financial institutions that facilitates their duties of customer due diligence and the reporting of suspicious activities relating to human trafficking.
  • H.R. 6751, the “Banking Transparency for Sanctioned Persons Act of 2018,” sponsored by Representative Mia Love (R-UT), requires the Secretary of the Treasury to issue a semi-annual report to both the House Financial Services Committee and Senate Banking Committee regarding financial services provided to state sponsors of terrorism or certain sanctioned individuals.

This bill aims to increase transparency regarding the illicit activity of financial institutions and certain sanctioned persons on a global scale so that plans can be made to combat future cruelties.

To read more click here.

Early in the month, the committee also held a hearing to better understand terror funding cycles called: “Survey of Terrorist Groups and Their Means of Financing,” noting that as major groups, like ISIS, have lost ground, their funding has become more diffuse, creative and difficult to track.

The committee members and witnesses also highlighted the growing nexus between narco and criminal groups and terror groups to partner with each other to grow coffers, influence and fear. To watch the hearing and read witness statements, click here.

The committee also tackled another hot button issue on the finecrime and compliance landscape: sanctions programs in a hearing titled “Administration Goals for Major Sanctions Programs.”

The hearing analyzed the panoply of economic sanctions in place to gauge their effectiveness in achieving foreign policy objectives with respect to Iran, North Korea, Russia, and “other countries of strategic importance.”

The hearing further emphasized that these countries use similar tactics to support terror or illicit proliferation – and even support each other, with Russia helping Iran and Syria directly and remains a “permissive environment” to aid North Korea move arms, supplies and materials.

“All three countries use some similar tactics to exploit the global financial system, particularly by establishing and employing front and shell companies to mask the origin and beneficial ownership of illicit financial flows, to disguise the nature of—and intent behind— transactions.” To view the hearing or read the witness statement, click here.

Senate holds hearings on Russia, election meddling, potential of more, stronger sanctions

The Senate Banking Committee held hearings on some of the same subjects, including countering Russia influence and what sanctions powers should be employed for the objective.

The committee this month held a hearing entitled: “Countering Russia:  Assessing New Tools,” cognizant of the regime’s meddling with U.S. elections.

Witnesses and the committee analyzed the “potential for expanding on the existing set of sanctions authorities in order to amplify the economic effects on Russia sufficient to cause a change in Putin’s behavior and strategic calculus.” To view the hearing and read witness statements, click here.

In a similar vein, the committee held another hearing: “Outside Perspectives on Russia Sanctions: Current Effectiveness and Potential for Next Steps.”

The hearing looked at the new powers and key outcomes related to the “Countering America’s Adversaries Through Sanctions Act,” or CAATSA, enacted in August 2017, concluding that over the last year, the U.S. had sanctioned some 230 individuals and entities through its use of CAATSA and its own administrative authorities.

“Those targeted include the heads of major state-owned banks and energy companies, as well as some of Putin’s closest associates or oligarchs,” with discussions noting there could be more sanctions on key officials and banks to come. To view the hearing and read witness statements, click here.

Information sharing

FinCEN to potentially gain more teeth to investigate international, crypto-based crimes, while Fed faces greater oversight related to certain financial firms, with passage of two House financial services bills

The House of Representatives passed two bills from the Financial Services Committee recently, one focusing on strengthening the U.S. Treasury’s ability to gather and share information with foreign financial intelligence units to cripple criminals and terror groups using crypto assets to support their illicit networks, while a second could bring more oversight of a federal regulator related to certain insurance-related financial holding companies.

H.R. 6411, the “FinCEN Improvement Act of 2018,” sponsored by Rep. Ed Perlmutter (D-CO), requires the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to work with foreign financial intelligence units to thwart the use of virtual currencies used by terrorist groups for illicit activity and money laundering. The bill passed by voice vote.

H.R. 5059, the “State Insurance Regulation Preservation Act,” sponsored by Keith Rothfus (R-PA), creates a definition of an Insurance Savings and Loan Holding Companies (ISLHC) and creates a regulatory framework that would limit the Federal Reserve’s oversight of ISLHCs, also passed by voice vote. To read more, click here.


First new U.S. government cybersecurity strategy in more than a decade focuses on more rigorous defense, more aggressive offense to punish hackers, foreign adversaries

The public and private networks of America’s networks are threatened daily by criminals, terrorists, and foreign adversaries. In the face of growing threats, the Federal Government has the responsibility to do its part to ensure America has the best cybersecurity in the world. Failures to prioritize cybersecurity by both government and industry have left our Nation less secure, according to the White House.

As a result, the President last week signed the National Cyber Strategy—the first fully articulated cyber strategy for the United States since 2003. These are the key tenets on which we build this National Cyber Strategy:

  • Protection: Take specific steps to secure Federal networks and information, secure critical infrastructure, combat cybercrime, and improve incident reporting.
  • Promotion: Support a vibrant and resilient digital economy, foster and protect American ingenuity, and develop a superior cybersecurity workforce.
  • Disruption: We will identify, counter, disrupt, degrade, and deter behavior in cyberspace that is destabilizing and contrary to our national interests. Enhance cyber stability through norms of responsible state behavior, attribution of unacceptable behavior in cyberspace, and the imposition of costs on malicious cyber actors.
  • Preservation: Preserve the long-term openness, interoperability, security, and reliability of the Internet, while supporting market growth for infrastructure and emerging technologies and building cyber capacity internationally. To read more, click here.


Federal judge says SEC rules apply to initial coin offering

A federal judge in Brooklyn refused to throw out a case in which a defendant argued two cryptocurrencies were beyond the reach of federal securities laws. Bitcoin and ether are the only digital assets the SEC has explicitly said are exempt from Securities law, and are instead viewed as commodities. The judge in this case denied the motion to dismiss, and said current securities laws should be clear enough for a jury to decide. To read more analysis, click here.


Trump signs order to enable sanctions for U.S. election meddling

Under fire over his handling of Russian election meddling, U.S. President Donald Trump signed an executive order this month meant to strengthen election security by slapping sanctions on foreign countries or people who try to interfere in the U.S. political process, though it’s widely accepted Russia interfered in the electoral process to support the eventual outcome.

Sanctions could include freezing assets, restricting foreign exchange transactions, limiting access to U.S. financial institutions, and prohibiting U.S. citizens from investing in companies involved, coming during or after an election based on intelligence evidence. To read the full executive order, click here. To read more analysis, click here.


DOJ penalizes Brazilian energy firm PDVSA more than $850 million for broad corruption failings, bribes to PEPs

U.S and Brazilian authorities have entered in a joint settlement penalizing a graft-gilt energy firm for more than $850 million due to extensive and longstanding corruption failings, including the top officials of the operation willingly bribing top political officials for the company’s gain.

The U.S. Department of Justice (DOJ) along with other U.S. and Brazilian authorities has penalized Petróleo Brasileiro S.A., a Brazilian state-owned and state-controlled energy company, a total of $853.2 million to resolve investigation into violations of the Foreign Corrupt Practices Act (FCPA) in connection with Petrobras’s role in facilitating payments to politicians and political parties in Brazil, as well as a related Brazilian investigation. To read the full DOJ release, click here.

Foreign bribery rages unchecked in more than half of global trade: special TI report 

Global counter-corruption watchdog group Transparency International illuminates a further terrifying vulnerability in the world’s anti-financial crime framework – the gaping holes for both corruption, in addition to the already known issue of money laundering, in international trade.

There are many losers and few winners when companies bribe foreign public officials to win lucrative overseas contracts. In prioritizing profits over principles, governments in most major exporting countries fail to prosecute companies flouting laws criminalizing foreign bribery.

What is missing is active enforcement. Transparency International’s new report, Exporting Corruption, finds that only 11 major exporting countries – accounting for about a third of world exports – have active or moderate law enforcement against companies bribing abroad in order to gain mining rights, contracts for major construction projects, purchases of planes and other deals.

Crypto corner

NYDFS approves ‘BitLicense’ for two USD-pegged cryptocurrency tokens

One of the strictest cryptocurrency regulatory regimes in the United States has approved proposals from two companies under its oversight to issue cryptocurrency tokens whose values are pegged to the U.S. dollar.

In a statement published Monday, the New York Department of Financial Services (NYDFS), creator of the “BitLicense” framework for cryptocurrency companies, confirmed that it had given two chartered companies, Gemini Trust Company and Paxos Trust Company, permission to begin issuing these so-called “stablecoins” to clients.

To read more, click here. To read further analysis, click here.


NYAG’s office finds AML, fraud control gaps at crypto exchanges in virtual market integrity report as U.S. grapples with how best to regulate nascent sector 

The New York Attorney General recently issued a report reviewing major cryptocurrency exchanges as a part of its Virtual Markets Integrity Initiative – a move presaging more forceful regulation for the space, though regulators the world over are still grappling with how to craft compliance and exam structures for operations that can transact anywhere with customers they may have never even met.

While crypto exchanges have become very tech savvy, employing anti-money laundering (AML) tactics and even artificial intelligence to gauge risk and monitor transactions, the report still found deficiencies in practices at the major exchanges relative to best practices found at traditional exchanges. This isn’t surprising, one might imagine, perhaps given the emerging nature of the space, but does highlight some of the issues virtual value operators will likely need to rectify in the future.

Some of the key findings of the report are:

  • KY(See-ya): Platforms that have implemented a Know Your Customer (KYC) program will engage in various measures to confirm a new customer’s identity before permitting certain types of trading. The OAG nonetheless found that virtual asset trading platforms differ significantly in how they confirm identity and enforce their site access policies. Most participating platforms require customers to submit a range of personal identifying information and government-issued identification before allowing new customers to trade. Bitfinex and Tidex do not, requiring little more than an email address to begin trading virtual currencies.
  • Role play: The various roles the crypto exchanges play can create potential conflicts of interest.
  • Tempting trades: Efforts to stem abusive trading are generally insufficient to date.
  • Audit not it: Protection for customer funds is limited, with lack of common auditing standards highlighted in particular, (via the NYAG).


Global AML watchdog levels harsh criticism against Saudi Arabia in countrywide review, noting significant weaknesses in terror finance tracking, investigating, prosecuting large, complex laundering cases

Saudi Arabia has been strongly criticized for its failure to tackle money laundering and international terrorism financing in a new report which will make uncomfortable reading for the authorities in Riyadh. A report published on September 24 by the Financial Action Task Force (FATF) – an intergovernmental body based in Paris – said “Saudi Arabia is not effectively investigating and prosecuting individuals involved in larger scale or professional [money laundering] activity” and is “not effectively confiscating the proceeds of crime”.

It also pointed to the lack of attention paid to financing of terrorist groups outside the country. While acknowledging that prioritizing domestic concerns is “understandable,” the report also said “the almost exclusive focus of authorities on domestic [terrorist financing] offences means the authorities are not prioritizing disruption of [terrorist financing] support for threats outside the kingdom.” To read the full report, click here. To read more analysis, click here.


Canada looking to strengthen domestic, foreign accords to better tackle human trafficking: report

Canada is looking to create stronger domestic partnerships between investigative agencies, the country’s financial intelligence unit and banks, and bolster international communication, coordination and information sharing in a bid to better tackle the soaring scourge of human trafficking.

Those are some of the key goals detailed in a just-released Public Safety Canada discussion paper, which aims to help ensure that the country’s new national strategy, slated to be finalized and in place by late 2019, is evidence-based, informed by banks and law enforcement, sustainable and supports the prevention of this crime and the protection of its victims.

The report covered a bevy of strategies and revealed new incoming tactics and overarching recommendations to improve Canada’s processes to uncover, report on and prosecute offenders that would directly address previously identified gaps, including:

Strategies, recommendations:

  • Coordination: Develop, implement a coordinated approach to fully combat all areas of human trafficking
  • Cooperation: Strengthen partnerships with other levels of government, Indigenous communities, civil society, private sector, as well as bilateral and multilateral partners
  • Connections: Implement a mechanism to connect victims with access to dedicated services and facilitate reporting of human trafficking
  • Collections: Improve capacity to collect national data on human trafficking

To read ACFCS coverage of the report, click here.

Quebec facing harsh criticism for risky program that allows wealthy investors to pay for citizenship as many applicants have lied about ownership, assets

In yet another slight to Canada’s counter-crime countermeasures, some rich foreigners seeking Canadian residency under a special Quebec program for wealthy investors couldn’t point to the province on a map, while others submitted fake documents or disguised their assets — yet many of them were still accepted for immigration, former civil servants say.

The officials, charged with administering the Quebec Immigrant Investor Program (QIIP), say they were sometimes pressured into ignoring signs that applicants’ fortunes were founded on corruption or other ill-gotten gains. To read more analysis, click here.

European Union

EU strengthens AML rules, with a more rigorous focus on investigating, enforcing compliance failures

This month, the European Commission proposed a host of amendments to current AML laws, with the goal to better communicate, cooperate and share information among member states, bolster the oversight of the EU banking authority and more readily investigate compliance failings and levy appropriate penalties. The intended upgrades include:

  • Ensure AML breaches are consistently investigated: the EBA will be able to request national AML supervisors to investigate potential material breaches and to request them to consider targeted actions – such as sanctions;
  • Provide that the national anti-money laundering supervisors comply with EU rules and cooperate properly with prudential supervisors. The EBA’s existing powers will be reinforced so that, as a last resort if national authorities do not act, the EBA will be able to address decisions directly to individual financial sector operators;
  • Enhance the quality of supervision through common standards, periodic reviews of national supervisory authorities and risk-assessments;
  • Enable the collection of information on anti-money laundering risks and trends and fostering exchange of such information between national supervisory authorities (so-called data hubs);
  • Facilitate cooperation with non-EU countries on cross-border cases;
  • Establish a new permanent committee that brings together national anti-money laundering supervisory authorities.

To read more click here.

German regulator takes ‘unprecedented’ step to improve Deutsche Bank AML controls, orders compliance monitor

Germany’s top bank, even after boosting spending and talent to strengthen financial crime compliance controls in recent years is still being chastised by regulators, with the rare step of its home country authority assigning a dedicated, on-the-ground sentinel: the corporate monitor. In the latest reprimand, the German markets regulator, BaFin, on this month ordered Deutsche Bank to improve its AML controls, and took the nigh unprecedented step of appointing a monitor to oversee the efforts.

The move is a further reminder of the scale of the steep challenges Deutsche Bank faces in improving compliance and oversight of its businesses after spending some $17 billion on fines for misconduct and to resolve other legal claims over the past decade. To read more, click here. To read more analysis, click here.


Finma chides browbeaten Credit Suisse on AML, graft gaffes

Swiss regulator Finma this month chastised Credit Suisse on broad AML, corruption failures related to FIFA, PDVSA, noting that bank juggled an array of risky relationships with politically-exposed persons and rewarded, instead of punishing, a relationship manager for willfully flouting compliance rules. To read more, click here.


Netherlands’ largest bank to pay nearly $1 billion to Dutch authorities in Historic AML settlement

Earlier this month, ING Groep, the Netherlands’ largest financial institution, stated it would pay Dutch authorities 775 million euros, or $900 million, in a historic settlement for broad failures in its financial crime compliance controls that allowed illicit groups to launder an estimated hundreds of millions of dollars for years. To read ACFCS coverage of the action, click here.

ING Groep admitted to “serious shortcomings” in its anti-money laundering (AML) programs that allowed criminals to launder money “for years,” according to bank statements and government documents. In the settlement agreement with the Dutch Public Prosecution Service, ING has agreed to pay a fine of €675 million and €100 million for disgorgement.

The bank violated laws created to stop terror groups and illicit financiers “structurally” by failing to adequately investigate aberrant transactions highlighted by monitoring systems and by giving short-shrift to source of funds and beneficial ownership obligations chiefly through poor customer due diligence (CDD) policies between 2010 and 2016, according to the actions.

To read the official release and related documents from the Public Prosecutions office, click here. To read the official release from ING, click here.

More Dutch banks are not taking money laundering seriously: central bank

Banks in the Netherlands are still too lax when it comes to spotting and preventing money laundering, the Dutch central bank has told finance minister Wopke Hoekstra. The central bank was responding to questions about the €775 million out of court settlement reached by ING with the public prosecution department for allowing money laundering to go on unimpeded for several years. The central bank said in a briefing to Hoekstra that ING is not the only bank to get it wrong.

In particular, the central bank said executives should become more involved in anti-money laundering strategy and that they should give a “personal commitment” to making sure the bank was not involved in fraud or economic crime. Hoekstra, in his note to MPs, said he agreed with the recommendation. “Culture begins at the top, with the management board,” he said. To read more analysis, click here.


Danske Bank reveals Estonian Branch May have laundered $230 billion as CEO steps down

Denmark’s largest bank admitted that a Baltic branch has potentially laundered hundreds of billions of dollars in a widening financial crime probe that has risen larger each month, with the latest twist being that the head of the entire bank has stepped down in disgrace.

Danske Bank has made headlines in recent months as the scope of potential money laundering through its Estonia branch tied to risky regions such as Russia, Azerbaijan and Ukraine has soared from an initial estimate of $80 billion, then to $150 billion and, now, in an 87-page report released this month, to an estimated $234 billion – leading to the bank’s Chief Executive Officer, Thomas Borgen, to say he is stepping down.

As a point of context in this battle in the Baltics, the suspicious financial flows equate to nearly the size of the entire gross domestic product of Denmark, currently pegged at just more than $300 billion. Danske Bank has total assets of $472.5 billion and revenues of $7.6 billion. To read ACFCS coverage, click here.


EU looking to yank bank’s license after chairman arrested on money laundering charges

In a further showing that not just regulators in the U.S. are cracking down on bank compliance breakdowns, Europe’s banking watchdog, the European Banking Authority, has supported a recommendation by the Maltese financial regulator to pull Pilatus Bank’s banking license after the indictment of its chairman for alleged money laundering. To read comments from the EBA, click here. To read more analysis, click here.

Asia, MENA


MAS updates enforcement policies, guidelines with more detail, clarity on failures, punishments

The Monetary Authority of Singapore stated in an enforcement monograph this month it is working to update its enforcement policies for financial crime and other compliance failures, with the goal if delivering “fair and robust enforcement outcomes to deter misconduct and preserve investor confidence.” MAS’ enforcement approach has three aims:

  • early detection of misconduct and breaches of law;
  • effective deterrence; and
  • shaping business and market conduct.

When these fail, MAS also laid out it has a bevy of enforcement tools, including everything from warning letters and bans to monetary penalties and pulling of the license to operate. These depend on the length of the offense, depth of funds involved and how much the economy or consumers were harmed. To read more, click here.


India allowing oil refiners to use Iran tankers, in direct defiance of stepped up U.S. sanctions pressure

India is allowing state refiners to import Iranian oil with Tehran arranging tankers and insurance after firms including the country’s top shipper Shipping Corp of India (SCI) halted voyages to Iran due to US sanctions, sources said. New Delhi’s attempt to keep Iranian oil flowing mirrors a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC).

The moves by the two top buyers of Iranian crude indicate that the Islamic Republic may not be fully cut off from global oil markets from November, when US sanctions against Tehran’s petroleum sector are due to start. To read more analysis, click here.