Old news is
still good news: 2007
This page contains news stories from
2007.
News from October - December
2007
News from July - September
2007
News from April - June 2007
News from January - March 2007
Canadian FIU given powers to fine for non-compliance -
30
December 2007
Canada's FIU, FinTRAC, has been given new powers to levy
fines on individuals and reporting entities for a variety of
offences, ranging from the "minor" failure to convert
foreign currency transaction figures into Canadian funds, to
the "very serious" failure to send a report to FinTRAC
within the prescribed 30-day period. Previously, all
FinTRAC could do in cases of non-compliance was refer them
to law enforcement for possible criminal investigation, but
now the agency can have a more proportionate response to
cases where there is non-compliance but not criminal intent.
The fines will range from up to C$1,000 [about £500] for a
minor violation, to C$10,000 [about £5,000] for a serious
violation and as much as C$500,000 [about £250,000] for a
very serious violation.
Under the current regime in Canada, financial
institutions, insurance companies, estate agents and other
professionals who handle high-value transactions are
required to report to FinTRAC any suspicious transaction,
and all transactions over C$10,000 [about £5,000.
From 23 June 2008, foreign exchange dealers and money
services businesses will be required to register with FinTRAC and comply with reporting requirements, while the
obligations on estate agents will expand on that date to
include verifying the identity of people involved in a
transaction and keeping records of that information.
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Swiss close one money laundering case and keep
another open -
27
December 2007
A Swiss
investigation
into alleged
money
laundering
involving
Benazir
Bhutto and
her husband
Asif Ali
Zardari has
been
formally
declared
closed after
the
assassination
of the
Pakistani
opposition
leader in a
shooting and
suicide
bombing
attack on 27
December.
Some US$13
million
[about £6.5
million] is
frozen in
bank
accounts in
Geneva,
relating to
suspected
kickbacks
from Swiss
cargo
inspection
companies in
the 1990s.
Bhutto and
Zardari were
convicted in
Geneva in
2003 of
having
laundered
funds
through
offshore
companies,
but the
investigation
was reopened
after the
couple won
an appeal
against that
conviction
in 2004.
However, the
Swiss
Federal
Court has
ruled that
more than
US$130
million
[about £65
million] in
Swiss bank
accounts
linked to
Raul
Salinas,
brother of
former
Mexican
president
Carlos, will
stay frozen,
despite an
appeal by
Raul's wife.
This
decision
enables the
Mexican
authorities
to
confiscate
the assets,
frozen since
1995, if
they present
a legal
order to
their Swiss
counterparts.
Raul claims
that the
money is
legitimate,
and not the
proceeds of
political
pay-offs as
suggested by
prosecutors.
His lawyer
argued that
keeping the
money frozen
for twelve
years was
excessive
and
disproportionate,
but the
court
referred to
the
complexity
of the case
and said
that the
length of
proceedings
was not the
fault of
Switzerland,
which handed
over the
case to
Mexican
officials in
2002.
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Singer and son charged with money laundering -
21
December 2007
The
lead singer of a
popular band and
his son have been
indicted on money
laundering
charges.
Adalberto Gallegos
Jr, lead singer
for Tejano band
The Latin Breed,
is believed to
have received more
than US$270,000
[about £136,000]
from the sale of
marijuana between
February 2004 and
July 2006.
It is alleged that
he deposited the
money in a Bank of
America account in
Tampa, Florida,
and then later
withdrew the funds
in Tucson,
Arizona. His
son Adalberto
Gallegos III
allegedly handled
US$61,800 from
drug sales in the
same manner,
depositing the
funds in a Tampa
account and then
withdrawing them
in Tucson.
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Schengen zone extends eastwards -
21
December 2007
Nine new states have
joined the European border-free zone.
The Schengen agreement, which allows
passport-free travel across the area,
now embraces 24 nations and 400 million
people, with the addition of the Czech
Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia and
Slovenia. Initially the lifting of
internal controls involves just land and
sea borders, but that will be extended
to airports at the end of March 2008.
The European Commission says that one
billion euros [about £720 million] has
been spent on beefing up security on the
new EU frontiers, including establishing
missions along the Polish and Slovak
borders. As Slovak Prime Minister
Robert Fico said, "[Now] you can travel
4,000km from Tallinn in Estonia to
Lisbon in Portugal without any border
controls."Although the enlargement
allows passport-free travel throughout
the area, travellers can be asked to
carry documents by any of the countries
concerned. For non-EU nationals, a
Schengen visa allows travel across all
the participating countries.
Thirteen existing EU states have already
been part of the Schengen accord as well
as two non-EU countries, Norway and
Iceland. The UK and Ireland are
not involved in the zone but they have
signed up to agreements on security, and
Switzerland is expected to sign up to
Schengen in 2008. A significant
element of the Schengen agreement is the
Schengen Information Service (SIS) which
features an enormous database in the
French city of Strasbourg. The SIS
database enables police in any Schengen
state to find out whether a suspect has
been involved in any kind of crime
across the EU.
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Canada to broaden its "regulated sector" -
20
December 2007
Canada's
Minister of Finance, Jim
Flaherty, has announced
changes to his country's
anti-money laundering regime
which will take effect from
26 December 2007: "We are
stepping up our regime by
casting our net wider to
detect illicit transactions,
in line with international
standards." The legal
profession will be required
to meet the client
identification and
record-keeping requirements
of the
Proceeds of Crime (Money
Laundering) and Terrorist
Financing Act. In
addition, new sectors, such
as British Columbia notaries
and dealers in precious
metals and stones, will be
required to meet client
identification,
record-keeping and reporting
requirements under the Act.
To better ensure compliance
with the requirements of the
Act by all sectors covered
by the regime, the new
regulations will introduce
an administrative penalty
scheme. This is
intended to bring the
Canadian
anti-money-laundering and
anti-terrorist-financing
regime into line with the
revised international
standards of the Financial
Action Task Force.
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Grand Rabbi held on charges of money laundering -
19
December 2007
The leader of an Orthodox
Jewish sect has been arrested in Los
Angeles after being charged in
connection with operating a decade-long
tax fraud and money laundering scheme
stretching from Israel through New York
to the jewellery district in downtown
Los Angeles. Grand Rabbi Naftali
Tzi Weisz, head of the Spinka religious
group, and his executive assistant,
Gabbai Moseh Zigelman, are accused of
soliciting "tens of millions of dollars"
in contributions to Spinka charities
while secretly promising to refund up to
95% of contributors' donations.
The contributors then illegally claimed
tax deductions on their bogus donations.
It is estimated that Zigelman alone
solicited nearly US$9 million in 2006
[about £4.5 million], netting a $700,000
profit [about £350,000] for Spinka after
donors were repaid. Spinka Jews
are members of the Hasidic group within
Orthodox Judaism; the sect originated in
Romania and has a large population in
Israel, continental Europe and Brooklyn,
NY, where Weisz and Zigelman reside.
The indictment charges
Weisz and Zigelman with conspiracy to
defraud the IRS and to launder money.
They also face 19 counts of mail fraud,
11 counts of international money
laundering and one count of operating an
illegal money-remitting business.
Additionally, Zigelman is accused of
helping to prepare fraudulent income tax
returns. The indictment alleges
that beginning in 1996, the pair
reimbursed contributors through several
channels. One involved cash
payments transferred through an
underground network that included
jewellery businesses in Los Angeles.
It is alleged that the scheme also
allowed donors to pay a money laundering
fee in order to have access to funds
through wire transfers that started at
Spinka organisations and ended in secret
accounts at an Israeli bank.
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HM Treasury approves JMLSG Guidance Notes -
18
December 2007
HM Treasury
has approved the guidance
issued by the Joint Money
Laundering Steering Group
(JMLSG) on "Prevention of
Money Laundering/Combating
Terrorist Financing".
This means that this
document can now be
considered by industry to
represent best practice, and
that courts will consult it
when considering whether an
individual or a company
acted as they should have
done in trying to prevent
money laundering or the
movement of terrorist funds.
To read the
letter sent by Chancellor
Alistair Darling to the
JMLSG,
click here.
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Amsterdam to clean up red light district -
17
December 2007
The mayor of
Amsterdam, Job Cohen, has
announced plans to clean up
the city's red light
district in an effort to
fight human trafficking,
money laundering and drug
abuse. Cohen wants to
clamp down on the organised
criminals whose growing
influence has corrupted the
historic city centre: "The
romantic picture of the area
is outdated if you see the
abuses in the sex industry
and that is why the council
has to act," he said.
"We don't want to get rid of
prostitution but we do want
to cut crime significantly."
The aim is to
partially reverse the full
legalisation of prostitution
introduced in the
Netherlands in 2000, because
it had not achieved its aim
of bringing the profession
out of the shadows and
protecting sex workers.
Brothel owners, escort
agencies and those who
protect prostitutes will
have to apply for permits,
and the minimum age for
prostitutes will be raised
from 18 to 21. The
neon-lit boudoirs that earn
about 70 million euros a
year will be limited a few
streets, while the rest are
replaced by chic apartments,
upmarket shops, designer
galleries and boutique
hotels.
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New Guernsey AML legislation comes into force -
17
December 2007
The Criminal Justice
(Proceeds of Crime) (Financial Services
Businesses) (Bailiwick of Guernsey)
Regulations, 2007 and the accompanying
Handbook for Financial Services
Businesses on Countering Financial Crime
and Terrorist Financing (containing
Commission Rules and guidance) have come
into force. The Disclosure
(Bailiwick of Guernsey) Law, 2007 and
the Disclosure (Bailiwick of Guernsey)
Regulations, 2007 have also come into
force.
For links to all of
these, including versions of the
Criminal Justice Regulations and the
Handbook with changes highlighted,
click here
to go to the relevant page of the
Guernsey Financial Services Commission
website.
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Money Laundering Regulations 2007 (and amendment)
come into force -
15
December 2007
The Money Laundering
Regulations 2007 have now come into
force in the UK. A small amendment
to them has also come into force.
To download the Money
Laundering Regulations 2007,
click here.
To download the Money
Laundering (Amendment) Regulations 2007,
click here.
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Roofer jailed for allowing laundering through his
account -
14
December 2007
A roofer in Stevenage who
laundered cash for a gang who were
fleecing elderly people out of thousands
of pounds for shoddy work has been
jailed for 21 months. The gang
charged inflated sums for inadequate or
inappropriate roofing and guttering work
on houses in north London occupied by
elderly people living alone.
Payment by cheque would be made payable
to roofer Paul Allen, who would bank the
cheques and later withdrew cash to hand
over to the gang, retaining a
commission. Over a three year
period, he allowed the gang to run
cheques for £50,000 through his two
accounts. He was arrested in June
2006 after his bank became suspicious.
At first he denied the money laundering
charges but later changed his plea to
guilty, saying that he had met the gang
during legitimate roofing work and did
not initially appreciate the methods
they were using to get the money.
However, as his defence lawyer
explained, "At some stage he did suspect
that everything was not right and
blinded his eyes to the consequences of
that. He should have gone to the
police but he did not. He
continued to accept the payments and is
contrite about that."
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Aleman ordered to serve twenty years for laundering
in Nicaragua -
13
December 2007
A Nicaraguan appeal court
has ordered ex-President Arnoldo Aleman
to serve out his twenty-year prison
sentence for money laundering,
overturning an earlier decision granting
him parole. Judge Ileana Perez
said it will be up to prison officials
to determine whether Aleman serves the
time at his hacienda outside the capital
Managua or in jail. Aleman was
convicted in 2003 for money laundering
and embezzlement and sentenced to twenty
years in prison, but was later freed
under a parole that restricted his
movements to the capital. That
parole was loosened earlier this year by
Nicaragua's National Penitentiary
System, which granted Aleman free rein
to travel throughout the country.
His whereabouts are currently unknown.
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New Australian AML requirements come into force -
12
December 2007
Tougher anti-money laundering
rules have come into effect for the Australian
financial sector. The Anti-Money Laundering
and Counter-Terrorism Financing Act 2006 requires
stricter checks on customer identities when
establishing bank accounts, purchasing travellers'
cheques, or winning big at a casino. The new
regime is being policed by the Australian
Transaction Reports and Analysis Centre (AUSTRAC).
AUSTRAC CEO Neil Jensen says the new regime is
based on global standards. "The standards as
they apply generally are twofold. One
requirement is to know your customer: is your
customer really the person that you believe them
to be? The other side of it is reporting
suspicious financial transactions to AUSTRAC.
We then analyse those transactions and make that
information available to law enforcement, revenue
and national security agencies."
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Jersey announces new implementation timetable -
11
December 2007
The Jersey Financial Services
Commission (JFSC) has issued an update to the
implementation timetable for new AML legislation
and guidance. Owing to legislation delays,
the revised Money Laundering Order 2008 is now
expected to come into force on 1 February 2008.
According to the JFSC's news release, "the
Commission does not anticipate any changes to the
substance of the requirements that were published
in the Handbook for the Prevention and Detection
of Money Laundering and Terrorist Financing on 2
July 2007", and the Handbook will also come into
force on 1 February 2008. Moreover, the
proposed amendment to Schedule 2 of the Proceeds
of Crime (Jersey) Law 1999 will come into force on
19 February 2008 - this is the amendment that will
bring lawyers, accountants, estate agents, high
value dealers and others into the sector covered
by the Money Laundering Order 2008.
To read the full 4-page explanation from the JFSC,
click here.
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Conrad Black sentenced to 78 months for fraud and
obstructing justice -
10
December 2007
Former media tycoon Conrad Black has been jailed for 6½
years by a Chicago court after stealing millions of dollars
from shareholders. He has been told to report to
prison in 12 weeks, but will remain free until then on
payment of bail of $21 million [about £10.3 million].
He was also fined $125,000 [£61,000], but professes his
innocence and plans to appeal. Ex-Daily Telegraph
owner Black was convicted of three counts of fraud and
another of obstructing justice.Black will also have to
forfeit $6.1 million [about £3 million] - the amount that a
pre-sentencing report sent to Judge Amy St Eve calculated
had been stolen from shareholders of Hollinger
International. "Frankly I cannot understand how
someone of your stature, on top of a media empire, could
commit such acts," said the judge.
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New AML guidance issued for UK accountancy sector -
10
December 2007
The Consultative Committee of Accountancy
Bodies in the UK has issued its final "Anti-Money Laundering
Guidance for the Accountancy Sector". This is guidance
for all entities providing audit, accountancy, tax advisory,
insolvency or related services, such as trust and company
services, by way of business, on compliance with the law
(including the Money Laundering Regulations 2007) from 15
December 2007. Although some aspects of the law
are still subject to change, the CCAB (and, by extension,
the ICAEW) recommends firms should use this Guidance (which
will shortly be submitted to the Treasury for approval) to
implement the new requirements. This guidance is the
final version of that which was released as an exposure
draft on 12 October, and has been updated to reflect and
accommodate comments received.
To download the guidance,
click
here.
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RBSI to sue employee convicted of money laundering -
8
December 2007
In a follow-up to a story dated 29 October
2007 (see below), convicted Guernsey money launderer Emma Le
Sauvage is to be sued by her former employer Royal Bank of
Scotland International (RBSI). Le Sauvage was sent to
prison in October for stealing £277,335 from the bank
between February 2003 and October 2006. At the time,
although it was accepted that Le Sauvage had £34,156 of
realisable property, no confiscation order was made against
her because it was anticipated that RBSI would pursue a
civil case against her, and this is now going ahead.
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Blairs' friend Foster jailed for money laundering -
7
December 2007
Australian conman Peter Foster has been
jailed for 4½ years after pleading guilty in Brisbane to
money laundering. Foster forged documents to obtain a
loan of A$300,000 [about £120,000] from the Bank of the
Federated States of Micronesia. He claimed the money
would be used to develop land in Fiji, but instead he used
it to settle rent arrears and repay credit card debts.
When the bank asked how the work was going, he provided
false documents and photographs to suggest that the land
development project was progressing as planned.
Defence barrister Brad Farr told the court that his client
genuinely intended to complete the development and repay the
money but had over-committed himself financially.
Foster hit the headlines in 2002 when he helped Cherie Blair
buy two flats in Bristol - despite being a convicted
fraudster.
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Cape Verde announces formation of its FIU - 6
December 2007
The government of Cape Verde has announced that it will be
setting up a financial intelligence unit. The
Financial Information Unit (CIF) will operate under the
country's central bank, the Bank of Cape Verde (BCV), and
will be entrusted with collecting, analysing and
disseminating information on money laundering and the
financing of terrorist activities. A government
spokesperson, Cristina Fontes Lima, said that the
initiative was part of efforts to strengthen Cape Verde's
financial system, as this is expected to serve as a
driving force for the country's development. "For
this to happen," said Lima, "it is necessary to guarantee
all the levels of credibility required by the
international community towards the fight against
organised crime and terrorism. We are in the process
of containing money laundering and creating better
conditions for the enforcement of law." The CIF will
comprise representatives of the ministry of justice, the
attorney's office and the criminal department of the
police force. Cape Verde's current AML legislation
requires reports to be made to the BCV of all deposits or
withdrawals involving amounts over the equivalent of
£4,500.
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Launch date announced for Mozambique's FIU - 6
December 2007
Mozambique's Office of
Financial Information (GIFIM) is to start operations on 9
January 2008. The Mozambican government spokesman
Luís Covane said that "GIFIM is an office that will work
for Mozambique not to be a stage for illegal money
laundering operations. It will collect and analyse
information and make it reach the relevant institutions
for controlling and combating money laundering.
Therefore, it is a police-type institution, which will
operate on a national level and will also act outside
Mozambique." GIFIM was created by an act of
parliament passed in May 2007, which stated that
that GIFIM will be run by a Coordinating Council chaired
by the Prime Minister. The Council's other members
will be the Finance, Interior and Justice Ministers, the
Attorney-General and the Governor of the Bank of
Mozambique.
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London lawyer jailed for 14½
years for money laundering - 5
December 2007
Naveen Sagar, a solicitor at Mehra & Co in Wembley, has
been sentenced to 14½ years in prison for his part in
helping a west London criminal network that sold heroin
and used firearms. The Metropolitan Police's
Operation Pauldings was set up in late 2004 to target a
criminal network run by Ahmed Osman Hersi, but as the
investigation continued the importance of Sagar became
increasingly apparent. He represented many of the
individuals the officers arrested and as the
investigation reached a crucial juncture he constructed
elaborate delaying tactics to undermine the police
investigation. As a result, one man entered
protracted negotiations to provide evidence against
Hersi and Sagar. Sagar then had the conversations
between officers and the defendant recorded and edited
to indicate police corruption. Ultimately his efforts
failed, and Hersi's gang have all been convicted.
Met officers will now seeks to use the Proceeds of Crime
Act to recover assets worth approximately £1 million
from Sagar, while inquiries into the finances of others
continue. Mehra & Co has now ceased trading.
Hersi's network primarily operated from the Southall
area, but over the course of the investigation officers
seized drugs and guns in Hackney, Leicester Square and
Shepherds Bush. Operation Pauldings resulted in 35
arrests and nine convictions, as well as the recovery of
4kg of heroin, 280 rocks of crack cocaine, two machine
guns, five semi-automatic handguns, a revolver, 67
rounds of ammunition and £300,000 in cash.
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Isle of Man millionaire charged with money
laundering - 4
December 2007
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New Czech money laundering legislation passes first
hurdle - 4 December 2007
The Czech government has approved a new
money laundering law which may require banks to ask for ID
documents from customers conducting transactions of 1,000
euros or more. If it is passed by the legislature,
the law will take effect in mid-2008. Under current
legislation, ID checks are required only on customers
conducting transactions of 100,000 koruna [about £2,725]
or more. The new law would also widen the
requirements for banks and other financial institutions to
enquire into the purpose of, and source of funds for,
transactions over 15,000 euros. "According to
official statistics, the damage from the crime has so far
amounted to approximately 50 billion crowns [about £1.36
billion]," said Simona Cigankova, spokeswoman for Cyril
Svoboda, head of the government legislative team.
However, unofficial estimates put the damage about four
times higher. The new law is intended to make it
difficult for those who might try to pay in their criminal
cash before the euro is adopted in the Czech Republic in
2013. The Czech FIU receives about 3,000 suspicious
activity reports a year, mostly from the banking sector,
and 100-150 criminal lawsuits are filed each year.
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Russia amends its money laundering law - 29 November 2007
Russian President Vladimir Putin has
signed into effect amendments to Article 5 and Article 7 of
the federal law on money laundering and terrorist financing.
The State Duma approved the law on 9 November and the
Federation Council on 16 November. The amendments are
intended to bring the legislation into line with Russia’s
international commitment to the fight against corruption.
The amendments enlarge the list of organisations that are
obliged to combat money laundering and terrorist financing
to include commercial organisations that conclude factoring
agreements as fiscal agents. They also require
additional measures aimed at tougher controls on PEPs,
clearing settlements and money transfers without opening an
account.
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SOCA publishes first SARs annual report - 28 November 2007
The UK's FIU, the Serious Organised Crime Agency (SOCA)
has published its first Annual Report on
the Suspicious Activity Reports (SARs) regime. The
report highlights substantial progress since Sir Stephen
Lander’s review of the regime in March 2006. The
publication of an annual report to Ministers on its
operation was a recommendation of Sir Stephen’s review,
and this first report indicates that the regime
participants - SOCA, law enforcement and reporting
institutions - have addressed all 24 recommendations
contained in the review and that SOCA is performing well.
SAR success stories are reported, including:
 |
Operation Overt was a long term operation
which culminated in the arrest on 10 August 2006 of 24
people for suspected terrorist offences. SOCA
provided operational support for the National Terrorist
Finance Investigation Unit (NTFIU) and counter-terrorism
agencies. In total, 153 SARs were linked to the
investigation and passed to NTFIU. |
|
A
SAR on a relatively minor financial transaction earlier
this year led to the arrest of an individual for money
laundering and drug trafficking. An investigation
into the subject of the SAR identified a property
portfolio which was inconsistent with the subject's
status. The subject was subsequently arrested and
searches revealed suspected criminal property valued in
excess of £1.5 million and several hundred thousand pounds
worth of controlled drugs. |
To download the full 36-page report,
click here.
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Spain closes money laundering case against Benazir
Bhutto - 28 November 2007
The Spanish authorities have ordered the closure of
investigations on charges of money laundering against
Pakistani former prime minister Benazir Bhutto since
allegations could not be proved for want of credible
evidence. The Prosecutor of the High Court of
Valencia has asked for the provisional dismissal of the
case against Bhutto, her husband and several others for
the alleged laundering of money allegedly acquired through
kickbacks. After more than three years of
investigation, the prosecutor has concluded that “it has
not been possible to prove the illicit origin of the
assets for which it was held that came from money
laundering”. Ms Bhutto is still under investigation
for money laundering in Switzerland and the UK.
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ARA recovers assets of eBay fraudsters - 28 November 2007
The UK's Assets Recovery Agency (ARA) has obtained a
Civil Recovery Order for £60,000 against two students who
sold counterfeit designer Tiffany jewellery and high-value
designer handbags on Internet auction site eBay. Miao
Cui and Xi Lin, both Chinese nationals, were living in
Stockton-on-Tees and were arrested in February 2006 for
offences against the Trademarks Act and Proceeds of Crime
Act; a search of the premises revealed Hermes and Tiffany
trademark packaging boxes, counterfeit Chanel, Louis Vuitton
and Mulberry handbags, Fendi and Chloe handbags, Hermes ties
and Tiffany jewellery. The suspects were bailed to
return to Stockton Police Station on 30 May 2006 but failed
to appear and are believed to have returned to China.
The case was then referred to the ARA, who discovered that
between October 2004 and January 2006, some £90,000 was
received into numerous accounts in the names of Mr Cui and
Miss Lin, directly from online payment companies Nochex and
Paypal, and a further £75,000 was paid in in cash. The
agency was granted a Property Freezing Order on 14 February
by the High Court to prevent assets being dissipated during
the ongoing investigation which has now led to a successful
recovery action.
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Police confiscate £500,000 from Irish fraudster
operating in Canada - 22 November 2007
Businessman Dennis Clarke of Antrim, Northern Ireland has
been forced to hand over £500,000 to the Police Service of
Northern Ireland (PSNI) after one of their biggest-ever
money laundering investigations. The money is believed
to be the proceeds of a £2 million fraud involving
Belfast-based aerospace company Shorts. The Canadian
authorities are also keen to speak to Clarke in connection
with alleged tax evasion running into several million
dollars. Clarke received a two-year suspended jail
sentence earlier this year for money laundering after he was
caught transferring hundreds of thousands of pounds of cash
- illegally gained in Canada where he was working at the
time - into the bank account of elderly relatives back home
in Antrim. It is understood that Clarke used laundered
money to purchase several properties across Northern Ireland
and Spain.
It was claimed in court at the time that the laundered
money had been swindled from Belfast plane makers Shorts
after Clarke made false claims for payment of invoices.
Clarke allegedly doctored time sheets for contractors who
were doing work for the company at their plant in Montreal.
At the time of the alleged scam he was living in Montreal
where he had set up a company called Nathan Air which looked
after the contractors in Canada.
The Clarke case was one of the biggest investigations
launched by the PSNI's Financial Investigation Unit to date
with several officers travelling to Canada on a number of
occasions to work on the case alongside the Royal Canadian
Mounted Police and the tax authorities there.
Suspicions about Clarke were first brought to the PSNI's
attention in 2002 after the bank where his elderly relatives
had an account contacted officers to say that large sums of
money were being transferred into it from Canada.
The Senior Investigating Officer in the case, Detective
Inspector Sam Sittlington, today said that the money has now
been handed over by Clarke and will be used to catch other
criminals. "Although we think Clarke benefited from £1
million to £2 million, he only had half a million pounds
worth of assets left which has been handed over to the PSNI.
A total of £150,000 of that will be handed over to Shorts in
compensation. The money that we received from Clarke
will now be put straight back into the unit to help us go
after others like him."
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Detroit drug kingpin pleads guilty to money
laundering - 20 November 2007
Demetrius
Flenory, leader of Detroit's “Black Mafia Family” (BMF) has
pleaded guilty today to running a large scale drug
organisation and to money laundering. Flenory admitted
that from 1990 to 2005, he was the leader of a criminal
enterprise involving the large scale distribution of
controlled substances, mainly cocaine. He admitted obtaining
millions of dollars in cash from the sale of cocaine, which
he laundered by buying real estate, vehicles and jewellery
(the latter through the infamous Jacob the Jeweller).
Under the terms of the plea agreement, Flenory faces a
sentence of 30 years to life in prison, and also agreed to a
money judgment in the amount of US$270 million [about £131
million]. A date has yet to be set for sentencing.
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Guernsey to pass cash declaration law - 20 November 2007
The Cash Control (Bailiwick of
Guernsey) Law 2007 will come into effect on 15 December
2007. Mimicking a piece of EU legislation designed to
thwart the flow of criminal money, this law will require
anyone intending to carry the equivalent of €10,000 or more
in cash (or cash equivalents, such as bearer instruments or
travellers' cheques) into or out of the Bailiwick of
Guernsey to complete a declaration form beforehand.
Compliance with the new law will be policed by Customs
officers.
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NY judge sentenced to 33 months for money
laundering - 16 November 2007
David Gross, a former county court judge in
Nassau County, New York has been sentenced to 33 months in
prison for money laundering. He conspired with members
of the Genovese family to launder nearly US$ 400,000 of cash
and stolen diamonds, watches and jewellery. He was
arrested after being caught by an FBI-organised sting
operation. Gross had a reputation for being quirky,
and once wrote a book entitled "If the Robe Fits: A View
from the Bench". After sentencing, Gross apologised to
his family for letting them down, and told the court, "For
all my adult life, I loved the law. And now I violated
the very law that I was sworn to uphold, and in doing so
have irrevocably destroyed my life." His term in
prison will start in January.
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JMLSG publishes revised UK Guidance Notes - 13 November 2007
Following industry consultation over the
summer, the Joint Money Laundering Steering Group has
published revised guidance on "Prevention of Money
Laundering/Combating Terrorist Financing". Much
remains as suggested in the draft guidance, but some changes
have been made:
|
monitoring has been given its own section
in the guidance, to make it clear that it applies even
when simplified due diligence is used |
|
there is more detailed definition of
beneficial ownership |
|
the transfer of responsibility for the
sanctions regime from the Bank of England to HM Treasury |
|
use of source of funds as an exception
from standard CDD. |
The new guidance has been submitted to HM
Treasury for approval, and will take effect from 15 December
2007. To download the new guidance,
click here.
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NY money transfer business closed down for money
laundering - 7 November 2007
Following a two-year investigation by the Manhattan
District Attorney and the Secret Service, New York-based
money transfer business Western Express International has
finally been shut down for identity theft and money
laundering. Western Express International acted as a
front company for two Web sites, Dengiforum.com and
Paycard2000.com, which it used to help harvest credit card
information. In total, the company trafficked 95,000
stolen credit card numbers, which brought in over US$35
million [about £17 million] in criminal proceeds.
Seventeen of the company's employees were indicted in the
investigation, and face prison sentences of up to 25
years. Two corporate officers of the company
(married couple Vadim Vassilenko and Yelena Barysheva)
pleaded guilty in September 2006 to running an unlicensed
money transfer and cheque-cashing business and to money
laundering, and are already in prison.
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Ghana passes new AML law - 2 November 2007
The Ghanaian parliament has passed
the Anti-Money Laundering Bill, which criminalises money
laundering, establishes a Financial Intelligence Centre and
provides for various related matters.
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Office of Fair Trading issues AML guidance - 1
November 2007
The UK's Office of Fair Trading has today published
guidance to business on their obligations under the new
anti-money laundering regulations. The OFT will become
a Supervisory Authority on 15 December 2007, and will assume
supervision of consumer credit lenders who are not
authorised by the FSA and estate agents. Monitoring
and enforcement powers will be shared with local authority
Trading Standards Services (TSS) under arrangements to be
negotiated in coming months. Ray Hall, OFT Director of
Markets and Projects, said: "Our key aim at this stage is to
ensure that businesses we supervise are aware of their
obligations under regulations. Although these
businesses already have to comply with anti-money laundering
legislation until now they have not been supervised.
We are happy to share monitoring and enforcement powers with
local authority Trading Standards Services and will continue
to work closely with them, to implement a supervisory regime
which is effective."
To download the OFT's 45-page AML guidance,
click here.
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Serious Crime Bill receives Royal Assent
- 31 October 2007
The Serious Crime Bill has received Royal
Assent and is now the Serious Crime Act 2007. The Act
contains a number of measures designed to improve the
processes used by police and other authorities to identify,
find, arrest and prosecute serious offenders, including:
| giving new power to police to stop
and search for weapons in areas where violent crime has
occurred |
| allowing courts to impose
restrictions on those proven to be involved in serious
crime |
| smoothing the way for more
information sharing between public and private sectors
|
| making encouraging or assisting
somebody committing a crime an offence |
| merging key elements of the Assets
Recovery Agency with the Serious Organised Crime Agency
|
| facilitating seizing proceeds of
crime |
| extending HM Revenue and Customs
surveillance powers to combat organised tax fraud. |
These measures are designed to make
life difficult for serious criminals, disrupting their
operations and ensuring that they don't benefit from the
harm they cause.
To download the Serious Crime Act
2007,
click here.
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Taipei bun shop used for money laundering
- 31 October 2007
Taipei police have uncovered a money laundering operation
that has processed an estimated five billion RMB [about
£325,000] over the past two years. Police raided a
popular barbecue steamed bun store in Hsinchu, suspected
of being used as a front for money laundering, and found a
large amount of cash, 42 bank cheque-books, an operation
manual, a fax machine and a computer. Police
arrested six suspects at the premises but the ringleader
(a man surnamed Huang, also known as 'Black Dragon') and
his accomplice (surnamed Lo), a Taiwanese business man in
China, are still at large. Huang reportedly opened
the famous barbecue steamed bun store in Hsinchu and then
recognised an opportunity to provide underground financial
transactions between China and Taiwan. He visited
Guangdong province in China, where he made contact with
Lo, and started the money laundering operation, retaining
0.02% to 0.04% from currency exchange spreads and charging
a 1.5% to 3% service fee (5% if the transaction involved
criminal proceeds). The pair were known for their
speedy service; reportedly, transactions made through them
were faster than wiring through banks, and they were just
a phone call away.
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Two plead guilty to embezzling and laundering 9/11
money
- 30 October 2007
Two employees of the New York medical
examiner's office have pleaded guilty to running an
elaborate scheme to embezzle millions of dollars sent by the
Federal Emergency Management Agency to identify the victims
of the World Trade Center attacks. Natarjan Venkataram
and his girlfriend Rosa Abreu pleaded guilty to charges of
embezzlement, money laundering and conspiracy. Abreu
faces up to 75 years in prison, and Venkataram could spend
the rest of his life behind bars when they're sentenced in
January 2008.
"It was a very complex scheme," said
Department of Investigations Commissioner Rose Gill Hearn
said. Abreu was the director of records at the medical
examiner's office, and Venkataram was her boss until they
both resigned in September 2005. The scheme was
uncovered in 2004 when other staff in the medical examiner's
office became suspicious about Venkataram's procurement
practices. Abreu was responsible for supporting
computer systems used to track and identify forensic
evidence, including DNA, from crime scenes. After the
9/11 attacks, the office needed more computer services to
identify victims through evidence collected at ground zero,
and Venkataram and Abreu steered more than US$13 million in
computer service contracts and purchase orders between 1999
and 2004 in exchange for cash payments to companies that did
little or no work. Investigators tracked much of the
money to India, where the pair stashed it at Venkataram's
direction. "We are trying to get back as much of the
money as we can," said Hearn. "We traced a great deal
of it to India. We are hoping to get it all back but
one never knows with these things."
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Thai bird's nest industry used for money laundering
- 30 October 2007
The bird's nest industry in Thailand is a conduit for
money laundering and could be funnelling more than 100
million baht [about £1.5 million] a year, according a
study by the Thailand Research Fund. Kasem Jandam,
who conducted a research project on the bird's nest
business in southern Thailand, found illegal collecting of
bird's nests at sites on 66 islands located off the Gulf
of Thailand and in the Andaman Sea. These areas are
outside the 104 islands that were deemed as legal
concession areas for the collecting of bird's nests in
Thailand under the 1942 Swiftlet Bird's Nest Tax Act.
The government could be losing tax revenue of more than
100 million baht per year per site in eight provinces in
southern Thailand.
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Guernsey secures first money laundering conviction
- 29 October 2007
The first conviction for money laundering
under Guernsey legislation has now been made public.
Royal Bank of Scotland International (RBSI) employee Emma Le
Sauvage admitted stealing £277,335 from the bank between
February 2003 and October 2006, and also pleaded guilty to
four counts of money laundering. She stole money from
accounts at the bank - often dormant accounts, and including
accounts belonging to her relatives - and transferred the
money elsewhere. Much of the money is still missing.
Le Sauvage joined NatWest – which was taken over by RBS in
2000 – as a 16-year-old school leaver, and in 2002 she was
promoted to business adviser. She and her line manager
were responsible for more than 500 client accounts and her
role gave her access to other accounts. In October
2006, an investigation was launched by the bank’s
London-based group security and fraud department after
concerns were raised about the defendant misappropriating
funds. Le Sauvage was sentenced to two years and three
months in prison on each of the five counts, to run
concurrently. RBSI has reimbursed all affected
customers.
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Senior corporate lawyer forced to resign in New York
- 26 October 2007
International law firm Baker & McKenzie has
forced its New York corporate partner Martin
Weisberg to resign on the day he was charged
with participating in a US$55 million fraud
and money laundering operation. In a
statement the firm said it had requested and
received Weisberg’s resignation, adding:
“Effective immediately, he is no longer
associated with our firm in any capacity.”
Weisberg was indicted by federal prosecutors
and the US Securities and Exchange Commission
and turned himself in on 22 October. He
paid a US$1.5 million bond.
The corporate lawyer is accused of helping
cover up a number of private investments made
in companies Ramp and Xybernaut.
According to the charges, Weisberg and three
former executives from the companies did not
disclose the discounted stock sales they made
to two investors based in Israel. The
investors later sold the stocks short,
allegedly paying kickbacks from their profits
to the defendants. Weisberg was
reportedly tried and acquitted on similar
charges in 1991 in Texas. At that time
he was accused of participating in a Ponzi
scheme involving the Mexican peso.
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First convictions under new Chinese AML legislation
- 23 October 2007
Four people have been sentenced to between 15 and 24
months' imprisonment in Shanghai in the first convictions
since new anti-money laundering legislation took effect in
January. The Shanghai Hongkou District People's Court
sentenced Pan Rumin to two years in jail and fined him
60,000 yuan [about £4,000]. Accomplices Zhu Suzhen, Li
Daming and Gong Yuan were sentenced to between 15 and 16
months in prison and fined 20,000 yuan [about £1,300] each.
The four had laundered more than 1 million yuan [about
£65,000] by withdrawing money and transferring funds over
the Internet, through ATMs and over the counter at bank
branches. The Shanghai branch of the Industrial and
Commercial Bank of China eventually grew suspicious, and
police arrested the suspected launderers in Hongkou in July
2006. The convictions are the first for the new
offence of money laundering; before this new law took
effect, suspects in money laundering cases were charged with
operating illegal businesses or disordering financial
markets.
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Northern Irish police warn about stained banknotes
- 22 October 2007
A campaign to increase awareness of
stained banknotes, particularly among retail and pub
staff, has been launched by the Police Service of Northern
Ireland. Police, banks and cash-in-transit companies
say that if notes are stained, then they were probably
stolen. The campaign will see posters displayed in
banks, businesses and police stations as well as on
sponsor group websites. The posters have been
produced by the Northern Ireland Bankers’ Association in
partnership with cash-in-transit companies and the Police
Service under the auspices of the Organised Crime Task
Force. They show sample notes from the four main
banks in Northern Ireland and highlight differences with
stained and cleaned notes. Banknotes become stained
with a dye when cash boxes stolen during cash-in-transit
robberies are opened. Frequently, criminals try to clean
the notes but this process damages the foil features on
them.
To download the poster mentioned,
click here.
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Russia seeks nine-year jail term for Berezovsky
- 22 October 2007
Russian prosecutors have asked a court to hand a
nine-year prison term to Boris Berezovsky, a Russian
tycoon and Kremlin opponent being tried in absentia on
charges of embezzlement and money laundering.
Berezovsky, who lives in London, was charged earlier this
year with embezzling funds from the Aeroflot airline,
whose shares he held in the mid-1990s, and with laundering
the proceeds of that embezzlement. He is being tried
in absentia in a Moscow district court but has rejected
all the charges and refused to cooperate with the court,
saying the trial is politicised. The UK has
repeatedly rejected Russia's demands to extradite
Berezovsky to stand trial in Moscow, but prosecutors
decided to go ahead with his trial nonetheless.
Berezovsky, one of a handful of magnates who made
fortunes in the turmoil of post-Communism reforms, was an
influential political figure in Russia until he fell out
with President Vladimir Putin. From London, Berezovsky
accused Putin of dismantling democracy in Russia. The
Kremlin, in turn, accuses him of attempting to undermine
Russia's political stability and says that he has close
links with separatist rebels in Chechnya.
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Bhutto money laundering case nearing resolution
- 19 October 2007
A long-running investigation into charges of money
laundering against former Pakistani prime minister Benazir
Bhutto and her husband is near completion, a Swiss
magistrate has said. "I will transmit the case at the
end of next week to the prosecutor," said Geneva
investigating magistrate Vincent Fournier. The
regional prosecutor for Geneva, Daniel Zappelli, will then
have to decide whether to proceed with the case against Ms
Bhutto. Ms Bhutto's lawyer, Alec Reymond, said that a
recent reconciliation agreement between Ms Bhutto and
President Pervez Musharraf was likely to have an impact on
the Swiss case, if an amnesty for Ms Bhutto is endorsed by
Pakistan's supreme court. "If it is validated the
agreement specifies that Pakistan will drop legal
proceedings in Pakistan and here [in Switzerland]," Mr
Reymond said.
Pakistan is a plaintiff in the Swiss case. Ms Bhutto
and her husband, businessman Asif Ali Zardari, were
suspected of using Swiss bank accounts to launder about
US$12 million in alleged bribes paid by companies seeking
customs inspection contracts in Pakistan in the 1990s.
The couple were formally sentenced by decree on the charges
in Geneva in 2003 after a first investigation, but the
ruling was overturned when they lodged an appeal, prompting
Magistrate Fournier's more recent probe since 2004.
The magistrate has questioned Ms Bhutto several times in
Geneva. Ms Bhutto has repeatedly denied the charges.
Under Swiss law, money laundering can only occur if the
assets involved are proven to be the product of a criminal
act, such as corruption.
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Lloyds TSB charged with money laundering in the US
- 15 October 2007
The US Attorney for the Southern District of Manhattan
has charged Lloyds TSB with "knowingly assisting" its client
Lycourgos Kyprianou, former chairman of Cypriot software
maker AremisSoft, to launder millions of dollars.
Kyprianou was indicted in 2002 for securities fraud and
money laundering in connection with alleged insider trading
at his company. The Attorney's office is seeking
US$130 million in fines from Lloyds TSB, which - if paid -
would total more in anti-money laundering fines than those
levied on all other US banks combined over the past six
years. A spokesman for Lloyds TSB said, "We do not
believe there is any basis for this action so we are
disappointed that the US government has commenced
proceedings in this case. We intend to defend the
action vigorously and are confident the bank’s stance will
be vindicated." The Bank of Cyprus has also been
charged in connection with the same client and also denies
any money laundering.
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HM Treasury to launch Asset Freezing Unit and take
on sanctions responsibility - 10 October 2007
In February 2007, HM Treasury announced that
it would be setting up a dedicated Asset Freezing Unit to
increase resources for and operational focus on asset
freezing. The Treasury’s Asset Freezing Unit will
become operational on 24 October 2007.
The Bank of England has historically acted
as the Treasury’s agent for the purpose of administering
financial sanctions and has maintained its own Financial
Sanctions Unit. With the setting up of the new Asset
Freezing Unit, the Bank of England’s role in financial
sanctions will be transferring to the Treasury to
consolidate functions and enable the new unit to act as a
single point of contact on financial sanctions. From
23 October, the financial sanctions pages on the Bank of
England’s website will no longer be updated, and will be
removed. From 24 October, the
consolidated list of sanctions targets, and other
information on financial sanctions, will be published on new
financial sanctions pages on the Treasury’s public website.
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New US ambassador to Chile prioritises AML - 10
October 2007
It is being reported in the Chilean press that Paul
Simons, the next US ambassador to Chile, will make money
laundering legislation one of his top priorities. In
information submitted to the Senate Foreign Relations
Committee as part of his confirmation process, Simons said
that his plans to fight money laundering include promoting
strong legislation and more regulation of certain
financial institutions. “From the time I am
confirmed,” he said, “I will emphasise to Chile’s
government the importance of creating legislation that
complies with all international standards, and does
everything possible to facilitate investigations.”
Simons also proposed expanding government regulations to
include non-bank institutions such as currency exchange
businesses and mail courier companies, which he says
currently operate in Chile with no oversight.
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Icelander arrested in India for money laundering - 28 September 2007
Police in India have arrested an Icelandic man for
laundering the proceeds of drug trafficking. The man
was hiding out in India and has been wanted by the US Drug
Enforcement Administration (DEA) for four years. He is
accused of laundering on behalf of a US drug producer up to
US$3 million in money derived from drug sales in Russia and
Estonia. The drug producer for whom the Icelander
allegedly worked was sent to prison in Kansas in 2003 for
manufacturing LSD. The cover story for the money
movement was that the drug producer held a research position
at the University of California in Los Angeles (UCLA) and
received what the university authorities believed was
research sponsorship from Russia. But the money
allegedly came from criminal activities in Estonia and
Russia, and the Icelander was responsible for sending that
money to the US. He will probably be extradited to the
US to stand trial.
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Former defence minister of Georgia accused of
corruption and money laundering - 27 September 2007
The General Prosecutor's Office of Georgia has accused
Irakli Okruashvili, the former Minister of Defence, of
extortion, money laundering, misuse of power and
negligence. Nika Gvaramia, Deputy Prosecutor
General, stated that on the basis of joint work, the
Prosecutor's Office and the Investigation Department of
the Revenue Service of the Ministry of Finance has
discovered that Okruashvili, while serving as Minister of
Defence in January 2005, agreed with his friend Kiber
Khalvashi to set up a construction company, International
Building Company, that eventually became the exclusive
contractor for defence ministry construction projects.
"A total of three contracts with worth of GEL 140 million
[about £39 million] were signed between the defence
ministry and the International Building Company," said
Gvaramia. Okruashvili had also had extorted shares
worth US$10 million in a company called Geocell from
another shareholder, Jemal Svanidze. This has been
confirmed by Dimitri Kitoshvili, former Parliamentary
Secretary of the President of Georgia, who is currently in
custody. Finally, Okruashvili is accused of money
laundering – he obtained government funding of US$1.8
million to build a new head office for his political
party, but can now show only US$250,000 of that money.
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Turkey signs more MOUs to prevent money laundering - 24 September 2007
Turkey
has signed memorandums of understanding (MOUs) with
several countries to strengthen the international fight
against money laundering and financing terrorism.
Turkey's Financial Intelligence Unit or FIU (Finance
Ministry Financial Crimes Investigation Board - MASAK) has
signed MOUs with the FIUs of the Turkish Republic of
Northern Cyprus, Indonesia and Sweden. Most
recently, MASAK Deputy Chairman Genc Osman Yarasli and the
chairman of NFIS (Sweden's FIU) signed the MOU which will
enable Turkey and Sweden to rapidly and easily exchange
information on people involved in money laundering and
terrorist financing. MASAK is also negotiating MOUs
with the FIUs of Albania, Georgia, Japan, Poland,
Portugal, Romania, Singapore, Serbia, South Korea, Syria
and the Ukraine.
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Fujimori is extradited to Peru - 22
September 2007
Former Peruvian President Alberto Fujimori is being
extradited from Chile to face two charges of human rights
abuses and five of corruption in his home country. He
has been put on a Peruvian police plane to Lima, a day after
Chile's Supreme Court approved his repatriation.
Fujimori denies the allegations, which date back to the
early 1990s, and has fought extradition since 2005, but now
says that extradition to Peru will give him an opportunity
to clear his name. Peruvian Prime Minister Jorge del
Castillo has said that his government would not politicise
the case and has pledged that Mr Fujimori will be given a
fair trial and treated with dignity.
The human rights charges against the former Peruvian
leader date back to the early 1990s, when his government was
allegedly responsible for killing civilians in the fight
against Shining Path Maoist guerrillas. After the
extradition ruling, Mr Fujimori told Peruvian radio that he
had always tried to do what was best for the country: "I
governed Peru for ten years, through one of its worst
periods, and solved most of the problems the country faced
such as terrorism and hyperinflation." However he
acknowledged that "some crass errors" had been made by his
administration.
Mr Fujimori - the son of Japanese immigrants - led Peru
from 1990 to 2000, and fled the country as his term in
office drew to a close amid a corruption scandal. He
initially flew to Japan, where he holds dual nationality and
is immune from extradition. Five years later he
travelled to Chile in a failed attempt to return to Peru to
run in last year's presidential elections and was detained
there to await extradition. While in prison in Chile,
he married his Japanese girlfriend, hotel magnate Satomi
Kataoka.
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Sheffield-based Jamaican drug gang imprisoned for
money laundering - 20 September 2007
A gang of ten Jamaicans who laundered more than £1
million in drugs money through a newsagent's shop have
been sent to jail for a total of 26 years after a
five-year investigation. Rajia Iqbal, who ran Spital
Hill News in Spital Hill, Sheffield, was jailed for 11
years for conspiracy to launder the proceeds of drug
trafficking. Judge Patrick Robertshaw said the men
were guilty of "offending on a massive scale" and had
brought misery to many. He told Iqbal: "You were the
lynchpin. Without your agency this could not have
happened. Your breach of the responsibility for
which you were entrusted was flagrant, calculated and
chronic. Is it possible to envisage a worse case?
It is, but only just." Proceeds from the sale of
drugs were sent via money transfer to relatives of the
gang in Jamaica, where it funded a lavish lifestyle.
Iqbal had allowed more than 1,500 payments to go to
Jamaica through the money transfer service he operated
from his newsagents. Drug dealer Carl Hinds was
jailed for eight years for money laundering and drugs
supply offences, while Richard Blake received a five-year
sentence for similar offences.
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Singapore stiffens its money laundering penalties -
19 September 2007
The Singaporean parliament has passed two bills aimed at
strengthening the island nation's counter-terrorism and
anti-money laundering measures. With the passing of
the Corruption, Drug Trafficking and Other Serious Crimes
(Confiscation of Benefits) Bill and the Monetary Authority
of Singapore Bill, acquisition, possession and use of the
proceeds of crime are now considered money laundering
offences. The fine for money laundering offences has
been raised, from S$200,000 to a maximum of S$500,000 [about
£165,000] for individuals, and a maximum of S$1 million
[about £330,000] for institutions or corporations. At
the same time, the penalty for non-disclosure under the
Suspicious Transaction Reporting Section has been doubled
from the current S$10,000 to S$20,000 [about £6,600].
Also, anyone carrying currency, travellers' cheques, money
orders, cheques, bonds or promissory notes worth S$30,000
[about £9,900] or more into or out of Singapore will have to
make a declaration. The same goes for those who send
or receive the same amount through the postal and cargo
system. The new offences, penalties and requirements
will take effect from 1 November 2007.
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Guernsey issues new money laundering regulations and
guidance -
18 September 2007
The Guernsey Financial Services Commission (GFSC)
has now issued the Criminal Justice (Proceeds of Crime
(Financial Services Businesses) (Bailiwick of Guernsey)
Regulations, 2007, and the Handbook for Financial
Services Businesses on Countering Financial Crime and
Terrorist Financing. The 2007 Regulations have not
yet been signed by the Policy Council, and neither the
Regulations nor the Handbook is yet in force.
The GFSC anticipates that they will come into force on 15
December 2007 (to coincide with the date on which three
related pieces of legislation on the transfer of funds come
into force). By issuing the Regulations and
Handbook now, the GFSC hopes to provide financial
services businesses with an opportunity to put in place
policies, procedures and controls before they have effect.
Other new legislation is also required to be in place in
December as part of the changes to the AML/CFT
framework. The Disclosure (Bailiwick of Guernsey) Law, 2007
and the Criminal Justice (Proceeds of Crime) (Bailiwick of
Guernsey) (Amendment) Law, 2007 have both been agreed by the
States of Guernsey and are being considered by the Privy
Council.
To download the Regulations,
click here. And to download the Handbook,
click here.
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Transparency International welcomes StAR initiative -
17 September 2007
Transparency International (TI - the world
anti-corruption agency) has welcomed the Stolen Asset
Recovery (StAR) Initiative of the World Bank and United
Nations. StAR, which will provide resources to help
countries locate and repatriate assets lost through illicit
acts, is a wake-up call to those who steal and to those who
facilitate or harbour stolen assets.
Corruption’s drain on resources
available to alleviate poverty, disease and illiteracy is
profound. The annual cross-border flow of proceeds
from criminal activity, corruption and tax evasion is
estimated by the StAR report at between US $1 trillion and
US $1.6 trillion. Furthermore, bribes received by public
officials from developing and transition countries are
estimated at US $20 to $40 billion annually. Indeed,
these estimates are roughly equivalent to the World Bank’s
total annual lending portfolio. TI also encourages all
countries to ratify the United Nations Convention against
Corruption, the global legal framework essential for the
success of initiatives such as StAR. To date, four of
the Group of Eight countries have not yet ratified: Canada,
Germany, Italy and Japan.
To download the full 56-page document
"Stolen Asset Recovery (StAR) Initiative: Challenges,
Opportunity and Action Plan",
click here.
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Union Bank of California forfeits US$21.6 million
for laundering lapses -
17 September 2007
Union Bank of California NA (UBOC), a wholly-owned
subsidiary of UnionBanCal Corporation, based in San
Francisco, has entered into a deferred prosecution agreement
on charges of failing to maintain an effective anti-money
laundering programme and will forfeit US$21.6 million to the
US government. The bank is charged with failing to
maintain an effective anti-money laundering programme.
UBOC waived indictment, agreed to the filing of the
information, and accepted and acknowledged responsibility
for its conduct in a factual statement accompanying the
information, and will pay $21.6 million to the US to settle
forfeiture claims held by the government. “Banks that
knowingly disregard their legal obligations under the Bank
Secrecy Act are easily exploited by drug cartels and other
criminals,” said Assistant Attorney General Alice Fisher.
“The Department of Justice will continue to work to make
sure banks follow the law and put these vital anti-money
laundering programmes in place.”
The charge arose out of transactions conducted between
May 2003 and April 2004 by and through certain accounts at
UBOC held by licensed Mexican casas de cambio (currency
exchange houses). Several US and international
undercover operations documented the export of multi-ton
quantities of cocaine out of Colombia to Mexico, for
trans-shipment to the US and Europe. Investigators
then traced the flow of the resulting drug proceeds in the
form of bulk shipments of US dollars and euros to a few
Mexican casas de cambio working in concert with one another,
or to the direct deposit of drug proceeds to accounts held
by the casas de cambio in Spain. In either case, once
the drug proceeds were successfully placed with the Mexican
casas de cambio, the proceeds were then either wire
transferred or, after being converted to other negotiable
instruments, directly shipped to UBOC in California for
deposit to certain of the casas de cambio bank accounts.
UBOC failed to detect, identify and report the suspicious
transactions in the accounts, as required by the Bank
Secrecy Act, due to deficiencies in its anti-money
laundering programme.
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Police crack another Nigerian/Japanese laundering
ring -
17 September 2007
In a case similar to that reported below on
2 September, police in Chiba (near Tokyo) have arrested a
man from Nigeria, a known senior member of a group
affiliated with the Sumiyoshi-kai crime syndicate and two
other Japanese on suspicion of illegally opening bank
accounts used in money laundering operations for overseas
crime syndicates. The four opened about a hundred bank
accounts in the names of dummy companies to launder the
money. Between December 2004 and October 2006,
accounts were opened in the cities of Funabashi and Chiba.
1.3 billion yen [about £5.6 million] was transferred in from
the US, Germany, Canada, the UK, Australia and Switzerland;
about 260 million yen [about £1.12 million] was later
transferred to accounts in Canada, China and the UK.
Police suspect the accounts were used as the "entrepot" for
money laundering by crime syndicates around the world.
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Head of Russian FIU confirmed as new prime minister -
14 September 2007
President Vladimir Putin
has confirmed Viktor Zubkov as the new prime minister of
Russia. Zubkov was until yesterday the head of
Russia's FIU (the Financial Monitoring Service). He
was a surprise nomination, who had worked for Putin in the
St. Petersburg mayor's office in the early 1990s and is
seen as a loyal supporter of Putin. He has
pledged to wage a war on corruption.
"What could ruin Russia is lack of professionalism and
corruption," Mr Zubkov told MPs in the Russian state Duma
this morning. "Corruption permeates our society.
That is why of course measures need to be taken, and the
sooner the better." Zubkov has not ruled out running
for the presidency next March to succeed Mr Putin.
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Former Philippine President jailed for life for
corruption -
12 September 2007
Joseph Estrada, who was President of the Philippines from
1998 to 2001, has been found guilty of corruption and jailed
for life. Estrada, who was once a film star and once
had a great deal of popular support in the Philippines
(indeed, he was elected in 1998 by the biggest margin ever),
was accused of embezzling four billion pesos [about £42
million] before he was forced from office in an army-backed
revolt in 2001. His vice-president Gloria Arroya then
took over, and remains in power. Estrada denounced the
verdict as a "political move" and said he had been tried in
a "kangaroo court". Following a six-year trial, the
special anti-corruption court ruled that Estrada was guilty
of plunder, having received four billion pesos from illegal
gambling, tax kickbacks and bribes while in power. He
was found not guilty of a separate charge of perjury, and
his son Jinggoy was acquitted of the charge of plunder.
Estrada was ordered to remain under house arrest on his
country estate (where he is building a museum dedicated to
his life on screen and in politics) "until further orders".
He is expected to appeal.
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Former Pakistani PM arrested for money laundering
and then deported -
10 September 2007
Former Pakistani Prime Minister Nawaz Sharif has been
arrested and then deported back to Sudi Arabia very shortly after returning home from
exile. Mr Sharif, who was ousted by President Pervez
Musharraf in a military coup in 1999, has been charged with
money laundering and corruption. Mr Sharif was
returning to Pakistan to challenge Mr Musharraf ahead of
elections and to help restore the rule of law. "It's
democracy versus dictatorship," said Mr Sharif.
Pakistan's Supreme Court had affirmed Mr Sharif's right to
return, but when his plane landed in Islamabad early this
morning, it was surrounded by paramilitary troops.
There was a stand-off on board as Mr Sharif refused to hand
over his passport to military officials, but after ninety
minutes an agreement was reached and Mr Sharif was escorted
to the VIP lounge in the airport. He was then
arrested, and put on board a plane bound for Jeddah in Saudi
Arabia.
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Three London-based Nigerians sentenced for money
laundering -
6 September 2007
Three Nigerians living in London have been sentenced for
laundering more than £15 million in drug money through the
British bank account of a Nigerian company. Timothy
Felder, his wife Ann Felder, and Ray Orah were caught by
Scotland Yard officers exchanging bags stuffed with ten of
thousands of pounds in cash. £377,000 was seized and
found to be heavily contaminated with heroin.
Orah and a fourth suspect, who has since died, regularly
deposited money into the British account of Nigerian company
Milla Holdings. More than £15 million was paid into
the account in 2006 and 2007, and then immediately moved
abroad. Police said they could find no evidence that
Milla Holdings, ostensibly involved in the importation of
spare car parts, had ever conducted any legitimate business
in Britain.
Orah was sentenced to three and a half years in prison,
while Felder was imprisoned for two and a half years.
Ann Felder received a 12-month suspended sentence.
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Another US judge imprisoned for money laundering -
4 September 2007
Former federal prosecutor and North Carolina state judge
Sam Currin has been sentenced to 70 months in prison for his
role in a securities fraud scheme, and must also serve three
years on probation. Currin was the US attorney for the
Eastern District of North Carolina from 1981 to 1987 and was
a Superior Court judge from 1987 to 1990; he has been in
private law practice since then and has been a leading
figure in the state Republican Party.
Currin pleaded guilty in November 2006 to money
laundering and obstruction of justice, admitting that he had
laundered about US$1.4 million [about £700,000] in proceeds
from a securities fraud scheme run by a spam e-mail company.
A group that included one of Currin's legal clients engaged
in the scheme to manipulate the stock prices of several
publicly traded companies through the use of spam e-mail,
mass unsolicited faxes, Internet search optimisation and
voicemail broadcasting. Currin received more than
$240,000 [about £120,000] for his involvement.
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Several arrested in Japanese money laundering
investigation - 2 September 2007
Police in Japan have arrested five Japanese citizens and
a Nigerian on suspicion of illegally opening bank accounts
that are alleged to have been used by organised crime
syndicates in Canada and the US to launder at least 700
million yen [about £3 million] that was deposited with
financial institutions in Saitama Prefecture (in the centre
of Japan). It is unusual for laundering to take place
in Japan outside Tokyo. Using false names, the
Japanese members of the group allegedly opened accounts at
branches of a bank and several credit unions; according to
police, since summer 2005 more than 30 accounts have been
opened, to which sums of money from the US and Canada
amounting to between 1 million yen and 10 million yen were
deposited on more than 100 occasions every month. They
gave the Nigerian (who runs a restaurant locally) a total of
about 700 million yen and received about 300,000 yen each as
payment every month. Through a Nigerian friend in
Tokyo, the Nigerian suspect then sent money from other banks
to the US, Canada and China. After a joint
investigation with the FBI, Japanese police confirmed that
about 23 million yen - profits from selling fake stocks and
bonds in the US - had been channelled back to the US.
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Gambling Act 2005 comes into force in the UK - 1
September 2007
The Gambling Act 2005 has come into effect in the UK.
Overhauling pieces of legislation dating back to 1845, the
Act covers all forms of gambling from high-end casinos to
arcades (but not the National Lottery or spread betting),
and aims to tighten industry regulation and ensure the young
and vulnerable are not exploited. "The Gambling Act
will give the Gambling Commission and local authorities
unprecedented powers to ensure gambling is conducted fairly,
children and vulnerable people are protected and crime is
kept out," said Sports Minister Gerry Sutcliffe.
All gaming operators based in Britain will be required to
show they can meet strict conditions to win a license from
the new regulator - the Gambling Commission - to trade.
Failure to uphold the Commission's licensing conditions,
which includes the prominent display of information about
responsible gambling and anti-money laundering procedures,
will result in steep fines and even prosecution.
The main changes introduced by the Gambling Act 2005
include:
| new codes governing TV and radio advertising in a
socially responsible way |
| Internet gaming to be regulated for UK-based firms |
| local authorities can impose sanctions on operators |
| the membership requirement on casinos will be lifted |
| poker clubs will be limited to a stake of £10 per game |
| betting firms will have to display gambling helpline
information online and in shops |
| betting shops will be able to open from 0700 to 2200
all year round. |
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Nigeria to name and shame non-compliant banks - 27 August 2007
Speaking at an anti-money laundering conference in Abuja,
Nuhu Ribadu (Chairman of the Economic and Financial Crime
Commission - EFCC) confirmed that the commission would name
and shame those banks that have failed to comply with
Nigeria's AML/CFT regime. Ribadu observed that new
schemes for committing financial crimes and laundering the
proceeds have been been discovered. He went on to
discuss the problem of non-compliant banks: "While we
appreciate efforts by a number of banks to develop and
implement robust AML/CFT compliance programmes, a few are
yet to comply. We plan to start naming and shaming
these banks shortly. While Politically Exposed Persons
(PEPs) and 419ers have remained high on the list of
potential launderers, banks and the securities markets have
remained the most vulnerable platforms for laundering funds
in Nigeria. We have kept track, reviewed our
strategies midstream and quickly built capacity to address
the changing nature of financial criminals and money
launderers."
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Judge refuses to block extradition of Noriega to
France - 26 August 2007
In a follow-up to a story of 17 July 2007 (see below), a
judge in Miami, Florida has refused to block the extradition
of former Panamanian dictator Manuel Noriega to France,
where he is accused of laundering millions of dollars in
drug proceeds through French banks. Judge William
Hoeveler rejected arguments by Noriega's lawyers that his
status as a US prisoner of war negated the French request
under the Geneva Convention and required his return home to
Panama. The decision, which could be appealed, means
that a hearing before another judge will take place on
Tuesday 28 August on the extradition request.
Hoeveler's decision said his designation of Noriega as a
prisoner of war following his 1992 conviction was meant to
ensure that he was treated as one while incarcerated.
"This court never meant for the proclamation of defendant as
a POW to shield him from all future prosecutions for serious
crimes he is alleged to have committed," Hoeveler wrote.
"It appears that the extradition proceedings should proceed
uninterrupted."
Noriega is to be released from a US prison on 9 September
2007 after serving 15 years for drug trafficking and
racketeering. He faces up to 10 more years in prison
in France, where authorities want him to face charges of
laundering more than US$3 million in drug proceeds through
five French banks. Noriega was convicted in absentia
of those charges and sentenced to 10 years, but the French
agreed to hold a new trial if Noriega is extradited from the
US. A French Justice Ministry spokesman said it was
too early to say what would happen if Noriega is again
convicted — whether he would serve his term in France or be
sent back to Panama.
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Palestinian Authority considering ML law to tackle
Hamas funding - 22 August 2007
The government of the Palestinian Authority is
considering introducing a law to tackle money laundering
and terrorist financing. To bypass an international
embargo, Palestinian
merchants and importers have been
serving as couriers for Hamas, acquiring funds from abroad
in exchange for a cut - sometimes as much as 20%.
This has been one of the most popular ways of bringing
money into the Gaza Strip since the Rafah border crossing
was closed following the Hamas takeover in June. And
after local banks stopped transferring money, fearing
American sanctions, Hamas officials are believed to have
used their diplomatic immunity as government officials to
smuggle suitcases stuffed with money across the border
with Egypt. Raising money through its charitable
wing, Hamas (which runs a huge social welfare network in
the occupied territories) has an annual estimated budget
of US$50 million. The proposed AML/CFT law will be
ratified by the Palestine Monetary Authority, which serves
as the central bank.
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First-ever case of money laundering in the Solomon
Islands - 21 August 2007
Police in the Solomon Islands (a group of almost a
thousand islands, east of Papua New Guinea) have arrested
an African couple in the country's first-ever money
laundering case. The couple were arrested in a hotel
in the capital Honiara after they cashed a stolen
traveller's cheque. A search of their room uncovered
eight passports in different names, 25 credit cards, a
large amount of cash in various currencies and more stolen
traveller's cheques. Police say the couple had also
tried to exchange Solomon dollars for US dollars, New
Zealand dollars and pounds sterling. The couple have
been charged with money laundering and false pretences.
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Report published on the effects of corporate fraud
- 20 August 2007
A report published by the Centre for Crime and Justice
Studies at King's College London concludes that the
devastating consequences of corporate fraud on victims
remain largely hidden and the lessons ignored.
"Knowledgeable consumers? Corporate fraud and its
devastating impacts" is based on interviews with victims of
corporate fraud and shows that the harms caused are
equivalent to, and often more devastating than, those
usually focused on by the criminal justice system.
Victims express a range of emotional and health problems,
long-term financial difficulties and other impacts that are
not fully appreciated by government policy. One victim
of the BCCI scandal said, "Street crime can involve you
being physically assaulted but with white-collar crime you
are physically and mentally assaulted."
Following analysis of interviews with the victims of the
scandals relating to Robert Maxwell and the closure of the
Bank of Credit and Commerce International (BCCI), the report
concludes that:
| Victims of white-collar and corporate harms do not
feature highly on victim policy agendas as they are not
considered to be useful to the efficient running of the
criminal justice system within the terms of current
targets and objectives set by government |
| Financial abuses impact upon victims in multiple ways,
producing emotional, psychological, behavioural, physical
and financial reactions that can be severe and
long-lasting |
| The harms caused by corporate fraud are equivalent to,
and often more devastating than, those usually focused on
by the criminal justice system |
| Economic liberalisation since the 1980s has created
many "sites of trust" that are open to crimes and abuses
such as false accounting, fraud, conspiracy and the
decimation of company pension schemes |
| There is little that employees and customers of
deviant or unethical companies can do to avoid being
victims of a wide range of abuses. |
To download an 8-page briefing on the report,
click here.
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Vietnam Airlines pilot jailed for 4½
years for money laundering - 18 August 2007
In a follow-up to a story dated 10
October 2006 (see
Old news page), a Vietnam Airlines pilot
who took part in a multi-million dollar money laundering
scheme has been jailed in Australia for up to four and a
half years. Van Dang Tran transferred a total of
AUS$6.5 million [about £2.6 million] from Australia to
Vietnam between July 2005 and June 2006. He collected
the money when he arrived in Sydney, and flew back to
Vietnam with the cash to avoid taxes and bank fees. He
told the court that he took fees of AUS$38,000 [about
£15,300] for his involvement, and that he wanted the money
for a housing project for the poor in Vietnam. Tran
pleaded guilty to a charge of dealing with money where there
was a risk it would become an instrument of crime. He
has been jailed for four and a half years, with a non-parole
period of two years and six months.
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German pizzeria murders linked to Mafia money
laundering - 16 August 2007
The killing of six Italians in the German city of
Duisburg has been linked with the 'Ndrangheta or "Honoured
Society", whose tentacles have spread far beyond their rural
origins in Calabria, in southern Italy. The six men
were killed by machine gun moments after they left a
pizzeria.
Carmelo Petralia, acting director of Italy's National
Anti-Mafia bureau, said that the Italian authorities had
been aware for some time of how the 'Ndrangheta was using
its business activities in Germany to launder the proceeds
of its criminal activities at home, far from the prying eyes
of the Italy's mafia investigators. "We knew that the
'Ndrangheta had deep links to Germany and that these were
connected to money laundering," Mr Petralia said. The
criminal organisation has a virtual stranglehold on the
drugs trade into Italy; the bulk of Europe's cocaine is
reported to pass though the channels it controls and the 'Ndrangheta
has offshoots and links with crime groups in South America,
Canada, Australia and eastern Europe. "The 'Ndrangheta
began with the trafficking of contraband after the war and
then this developed into kidnapping. There was a
series of high-profile kidnaps in the 1970s. These
were very lucrative and these funds were reinvested in drug
trafficking," said Mr Petralia.
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AmEx Bank International fined US$65 million for AML
failings - 6 August 2007
American Express Bank International of Miami (an
international agency office of New York-based American
Express Bank) is to pay US$65 million to the US federal
government after agreeing that it had failed to maintain an
effective anti-money laundering program. A criminal
information affidavit filed by FinCEN (the American FIU)
charged American Express Bank International with one count
of failing to maintain an effective anti-money laundering
programme.
According to FinCEN, "the bank repeatedly failed over the
course of multiple regulatory examinations dated June 2,
2003, July 6, 2004, July 11, 2005, and September 12, 2006,
with increasing adverse findings, to implement effective
account monitoring controls or ensure compliance with the
Bank Secrecy Act." This raises questions about why the
bank's executives failed to deal with the problems as they
were found, although FinCEN also noted that the bank had
insufficient internal audit training and ineffective
independent testing of its AML procedures.
Specifically, FinCEN found that American Express Travel
related Services Co. failed to timely file more than 1,000
suspicious activity reports involving more than $500 million
in transactions. The 1,639 reports filed in the twelve
month to 7 May 2007 contained more than 2,000 errors, such
as blank spots on forms.
During a lengthy investigation, Department of Justice
investigators found a number of American Express bank
accounts that they believed were used to launder about $55
million in payments for distributors in the South American
black market. Money brokers, from apparently
legitimate South American businesses using offshore shell
companies, exchanged US dollars from those accounts for
currency from countries such as Venezuela, Colombia, and
Brazil to make the payments. Undercover law
enforcement agents working as go-betweens for Colombian drug
traffickers discovered the money laundering.
The bank opted not to fight the charge. Despite the
hefty forfeiture and fines, the government will recommend
the dismissal of the charge in twelve months, provided the
bank fully implements significant anti-money laundering
measures. The $65 million penalty is made up of $55
million in restitution and $10 million in penalties.
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Retired bank manager charged with theft and money
laundering - 4 August 2007
Brian Lewis, a retired bank manager,
has been charged with theft from two churches and a Rotary
club, and money laundering. He faces twenty sample
charges which were read to him at a special court at
Llandudno; eighteen relate to theft and two to money
laundering (by making payments to companies with which he
was associated). Lewis allegedly stole money between
2002 and 2007 while he served as treasurer to St Michael’s
Church and St Mary’s Church in Betws-y-Coed and Conwy Valley
Rotary Club. The prosecution said that the total
amount involved was about £110,000. Lewis made no plea
and magistrates ruled the case should go to the crown court;
Lewis was bailed until October.
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Uruguay holds an "international day against money
laundering" - 2 August 2007
Uruguay is holding an "international day against money
laundering". The government has
unveiled an initiative to
create a national committee to fight money laundering,
partly by increasing state transparency. Roberto
Gossi, head of the civilian organization "Transparent
Uruguay," said that the international day against money
laundering would help to increase international exchanges
in technical information, and that the democratic system,
freedom and government institutions must be protected from
illegal practices. Meanwhile, the Uruguayan
president's pro-secretary Jorge Vazquez reminded people
that the government had passed a law in 2004 that brought
about the first arrest in 2005 for money laundering and
drug trafficking. He also said that financial
investigations and the capabilities of the central bank
have been beefed up. Vazquez said it is important
for Uruguay's citizens to have a concept of a safe nation
in which investments and tourism are protected, and this
could not happen without greater transparency.
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Home Office publishes consultation on form of SARs
- 30 July 2007
The UK Home Office has published a consultation paper
entitled "Tackling Money Laundering Suspicious Activity
Reports: Prescribed Form and Manner".
The purpose of the consultation
is to seek stakeholder views on whether proposals to
prescribe the form and manner for reporting suspicious
activity under section 339 of the Proceeds of Crime Act 2002
(PoCA) are acceptable and would not cause significant burden
to industry. Comments are invited from all interested
parties, and should be submitted in writing by 22 October
2007.
To download the 67-page consultation paper,
click here.
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Nigerian ex-governors freed early from prison -
28 July 2007
In a follow-up to a story dated 13 July (see below),
Diepreye Alamaieyeseigha (the former governor of Nigeria's
Bayelsa state) has been released from prison two days after
receiving a two-year sentence for money laundering.
His early release is reported to be the result of a plea
bargain, after he pleaded guilty to six charges of
corruption. He had been in custody since being
arrested in Nigeria in December 2005, so he had served most
of his two-year sentence. Despite the short jail term
and the early release, analysts say his conviction is a sign
that President Umara Yar'Adua is serious about continuing
Olusegun Obasanjo's anti-corruption drive. Five other
former governors are currently facing charges of corruption,
theft and money laundering in courts in Abuja and Lagos.
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China widens its AML net - 27 July 2007
The People's Bank of China (PBOC - the Chinese central
bank) has directed insurance and securities institutions to
put in place AML policies and procedures. "We need the
insurance and securities sectors to set up an (internal) arm
and devise rules against money laundering this year," said
Tang Xu, head of the anti-money laundering department of the
PBOC. The banking sector is already covered by the
requirements, and future target sectors include
non-financial institutions such as law and accounting firms
and auction houses. As of 1 October 2007, securities
and insurance companies will have to report suspicious
transactions to the PBOC.
In a related initiative, the PBOC and the Ministry of
Public Security have set up a network to check the identity
of banks' customers. The system went into force in
late June, and all the country's banks have joined it.
If a bank official wants to check a customer's identity, he
can quickly access a scanned image of the customer's ID
documents on screen.
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UK businesses surveyed about new Regulations - 26 July 2007
A survey carried out by LexisNexis asked UK regulated
businesses what they thought of the new Money Laundering
Regulations 2007. Some key findings were:
| 52% believe the new regulations will require
additional financial investment |
| 50% believe the Regulations will undermine the
competitiveness of UK PLC |
| 68% have started to invest in training resources to
bring staff up to speed with the changed |
| 48% have started to invest in personnel to perform due
diligence checks |
| 50% believe the new Regulations will mitigate the
business risk of being exposed to the threat of money
laundering and other financial crime |
| the principal risk facing 38% is the reputational risk
if found to be non-compliant |
| the second most important concern for 33% is the
financial risk if fined due to non-compliance |
| 40% see no benefit to the new Regulations. |
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Dunstable market found guilty of money laundering
- 25 July 2007
Wendy Fair Markets, the company appointed to run the
market in Dunstable in Bedfordshire, and its directors
Sally Ward and Nick Hobday have been found guilty of two
counts of money laundering after an eight-week trial in St
Albans. Prosecutor David Groome said, "Wendy Fair
Markets and its directors permitted [the trade in
counterfeit goods] and turned a blind eye to it. It
is estimated that as many as 20% of the stalls on
Bovington market were selling counterfeit goods.
[The directors] must have been aware that counterfeit
goods were being openly sold - they didn't care as long as
they were taking money from the stallholders. They
gave the traders premises, customers, car parking, pitches
and security." Four traders also pleaded guilty to
selling counterfeit stock.
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UK publishes Money Laundering Regulations 2007 - 25 July 2007
After last-minute deliberations with the lawyers about
the definition of beneficial ownership, and making it just
before Parliament breaks for the summer on 26 July, HM
Treasury has published the final text of the Money
Laundering Regulations 2007. The new Regulations come
into effect on 15 December 2007, and:
| extend supervision to all businesses in the regulated
sector to secure greater compliance with anti-money
laundering controls including, for the first time, estate
agents, trust and company service providers and consumer
credit businesses |
| include strict tests to ensure money services business
and firms that help set up and manage trusts and companies
are not run for criminal purposes |
| require extra checks on customers that pose a higher
risk of money laundering (for example foreign heads of
state and non face to face customers). |
They also reduce regulatory burdens in low risk areas.
For example:
| firms will be able to make fewer checks in low risk
situations, such as occupational pension funds and child
trust fund administration |
| the number of identity checks will be reduced with
firms being able to rely upon checks done by certain other
firms (for example solicitors and FSA authorised financial
advisors) |
| greater flexibility will be introduced to record
keeping rules so that firms can keep only the important
details rather than whole documents. |
To download the Money Laundering Regulations 2007,
click here.
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Goldfinger arrested in Tenerife - 23 July 2007
John Palmer, the English fraudster nicknamed "Goldfinger"
by the press, has been arrested by Spanish police in
Tenerife. Palmer was charged in 1983 with melting down
three tons of gold stolen from the Brink's Mat warehouse at
Heathrow, but was later acquitted. He subsequently
built up a property empire in the canary Islands, but in
2001 was convicted of defrauding 17,000 timeshare clients
and jailed for eight years. Released from prison in
2005, he now faces charges of "multiple criminal
activities", including timeshare and credit card fraud, drug
trafficking and money laundering.
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JMLSG issues draft guidance notes - 20 July 2007
The UK's Joint Money Laundering Steering Group has issued
draft money laundering guidance notes, in anticipation of
the Money Laundering Regulations 2007 being laid before
Parliament sometime soon. The guidance notes (entitled
"Prevention of Money Laundering/Combating the Financing of
Terrorism: Guidance for the UK Financial Sector") come in
two parts: Part I is general and applies to all parts of the
financial sector, while Part II contains additional
sector-specific guidance. This is part of a
consultation process, and comments on the draft are invited
by 7 September 2007.
To download the draft JMLSG guidance notes,
click here.
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UK police officer jailed for money laundering -
18 July 2007
A woman who served as a police officer with the Thames
Valley Police has been jailed for two years after admitting
using police data to help her drug dealer boyfriend launder
money. Emma Wheatcroft, whose home in Milton Keynes
home was bugged by police, was heard telling Matthew Nyack
about sensitive police techniques. She pleaded guilty
to offences relating to misconduct in a public office,
obtaining personal information from a police computer
system, concealing criminal property (money laundering) and
possession of a Class A drug. Nyack admitted
conspiracy to supply Class A drugs, concealing criminal
property (money laundering) and aiding and abetting
misconduct in a public office, and has been jailed for six
years.
Thames Valley Deputy Chief Constable Alex Marshall
branded Wheatcroft, who resigned during the investigation,
as a "corrupt officer" who had created a link between the
force and serious crime. "I am very pleased with the
outcome of this case and it should send a very clear message
that Thames Valley Police can and will deal decisively with
any criminality within the Force," he said.
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Noriega to be extradited to France to serve money
laundering sentence - 17 July 2007
Former Panamanian dictator Manuel Noriega will be
extradited to France in September to serve a ten year
sentence for money laundering. A French court
convicted and sentenced Noriega in absentia in 1999: he
was charged with unlawfully depositing millions in drug
money in several French bank accounts and laundering the
cash partly by purchasing three Paris apartments.
Accused of racketeering and cocaine smuggling in
association with Colombia's Medellin drug cartel, Noriega
was deposed by the US invasion of Panama in December 1989.
He surrendered the next month and was convicted in Miami
in 1992 on eight counts of drug trafficking and
racketeering - he was alleged to have accepted millions of
dollars in payoffs from the Medellin cartel to ease
passage of US-bound drugs through Panama. Witnesses
against Noriega included his personal pilot, who flew to
and from Colombia, and convicted Colombian drug lord
Carlos Lehder, who was extradited from Colombia to the
United States in 1987. Noriega was sentenced to 40
years in prison and after spending more than 17 years in
custody in Florida, he will be released in early
September, with time off for good behaviour.
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Ex-judge pleads guilty to money laundering - 13 July 2007
Former Florida District Judge David Gross, who once wrote
in a book about the "pure menace" of the organised crime
members who appeared in his courtroom, has admitted that
he conspired with an accused mobster to launder more than
US$400,000 [about £197,000] in proceeds from stolen
jewellery. The scheme was uncovered by the FBI
during an investigation into illegal gambling operations
involving the Genovese and Gambino crime families.
In January 2005, while Gross was running for re-election,
Genovese crime family member Nicholas Gruttadauria
introduced Gross to an undercover FBI agent posing as a
jewel thief. Gross agreed to help the agent launder
$130,000 in cash from stolen diamonds and watches through
Caf é
by the Sea, a restaurant. He also agreed to help
sell $280,000 worth of stolen jewellery. In a
recorded conversation, Gross told the undercover agent, "I
know which rules not to break and I know how to get around
everything else. ... You know, so cash is not a problem".
Gruttadauria and the restaurant's owner, Kim Brady Land,
both pleaded guilty to money laundering conspiracy and
other charges and are awaiting sentencing.
Gross faces a maximum of 20 years in prison when he is
sentenced on 26 October; however, federal prosecutors are
recommending 37 to 46 months in prison. Gross also
agreed to surrender a 1999 Chrysler 300 automobile that he
used to transport the laundered money, a pair of 1.7 karat
diamond earrings given to him by an undercover federal
agent, and US$7,000 - his cut from the scheme. With
his guilty plea, Gross also faces disbarment.
"I wouldn't characterize him as the top legal mind, but he
worked hard at what he did," said Michael DerGarabedian,
an attorney who worked closely with Gross for years.
"I would characterize him as a person who talked too much,
and probably talked himself into something that he
shouldn't be involved in. That's just the way he was
... He never shut up."
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Four Nigerian ex-governors charged with money
laundering - 13 July 2007
Four former state governors have been charged with money
laundering by a court in Abuja, Nigeria. The
government's economic and financial crime agency arrested
the four men this week for looting state treasuries during
their time in office in the last decade. The
ex-governors are: Saminu Turaki of Jigawa State (north-east
Nigeria); Joshua Dariye of Plateau State (central Nigeria);
Orji Kalu of Abia State (south-east Nigeria); and Jolly
Nyame of Taraba State (north-west Nigeria). Turaki is
charged with laundering more than US$281 million [about £138
million], while Kalu was alleged to have laundered more than
US$234,000 [about £115,000]. Turaki and Dariye were
denied bail and are to be held in custody until the next
hearing on 16 July. Nyame was remanded into custody
and will have a bail hearing on 19 July.
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"White Whale" judge suspended on charges of
corruption - 13 July 2007
Judge Francisco Javier de Urquía,
best known for heading the "Ballena Blanca" investigations
into a money laundering ring allegedly run from the Cruz-Conde
lawyers' offices in Marbella, has been suspended from his
duties as the head of Marbella's Court Number 2. He
is being investigated by the Andalusian High Court (TSJA)
for alleged bribery and corruption as part of a case
involving corruption in the planning department in
Marbella (a case codenamed "Malaya"). Juan Antonio
Roca, the alleged mastermind behind the Malaya case who is
currently in prison, was questioned after deeds to de Urquía's
house were found in Roca's papers.
De Urquía appeared in court
this week. He is suspected of accepting "certain
payments to cover personal expenses" in exchange for
making decisions in favour of certain people involved in
the Malaya case. The TSJA enquiry was opened after
Miguel Angel Torres, the judge in charge of the Malaya
case, informed the High Court of the police investigation
that connected de Urquía with
the Malaya suspects.
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FATF publishes guidance on a risk-based approach to
AML/CFT - 12 July 2007
The Financial Action Task Force has published a paper
entitled "Guidance on the Risk-Based Approach to Combating
Money Laundering and Terrorist Financing: High Level
Principles and Procedures". This guidance was
developed by the FATF in consultation with representatives
of the international banking and securities sectors.
The guidance supports the development of a common
understanding of what the risk-based approach involves,
outlines the high-level principles involved in applying
the risk-based approach, and indicates good public and
private sector practice in the design and implementation
of an effective risk-based approach.
To download the 47-page guidance paper,
click here.
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Online gambling sites implicated in terrorist
finance investigations - 11 July 2007
Three
men found guilty in London in early July for using the
internet to incite terrorism are said to have laundered
money through at least twelve online gaming sites in order
to fund terror activities. According to a report in
the Washington Post, investigators in the UK and the
US tracked the financial activities of the three men across
thousands of merchants in more than a dozen countries.
It is alleged that one of the men, Tariq Al-Dour, laundered
money through online gambling sites including AbsolutePoker,
Betfair, BetonBet, Canbet, Eurobet, NoblePoker and
ParadisePoker, using accounts set up with stolen credit card
numbers and victims' identities. In total, it is
alleged that the group conducted 350 transactions at 43
different online gambling sites, using more than 130
compromised credit card accounts. Winnings were
withdrawn and transferred to online bank accounts that the
men controlled.
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FATF publishes three more mutual evaluations - 6 July 2007
The Financial Action Task Force has published mutual
evaluation reports on the state of the AML/CFT regimes in
China, Greece and the United Kingdom.
To download the report on China,
click here.
To download the report on Greece,
click here.
To download the report on the UK,
click here.
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Bangladesh approves new AML legislation - 5 July 2007
The army-backed interim government of Bangladesh has
approved an act to prevent money laundering and terrorist
financing. At the same time, the Bangladeshi tax
authority the National Board of Revenue (NBR) has launched
a major drive to boost revenue, aiming to add new
taxpayers and reach the tax revenue target of 438.5
billion taka [about £3.2 billion] in the current fiscal
year (which started on 1 July). The aim is to boost
domestic resources and thereby reduce dependence on
foreign aid. "We have fixed a target of 365,000 new
taxpayers in the current fiscal year," said Alamgir
Hossain, additional commissioner of taxes at the NBR.
"Some 100 inspectors have been asked to identify at least
10 new taxpayers per day. No harassment of
honourable taxpayers will be tolerated." The NBR has
also vowed to take tough action against tax evaders.
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New member, new president and reports due at the
FATF -
29 June 2007
In a statement issued at the end of its plenary meeting
in Paris, the Financial Action Task Force has announced that
it has accepted China as a member. The FATF statement
says that "although much work
remains to be done in key areas, China has made remarkable
progress in implementing measures against money laundering
and terrorist financing". This brings the number of
FATF members to 34; South Korea and India are currently FATF
observers and are working towards becoming FATF members.
In other developments, the FATF is to publish various
papers:
| guidance for the public and private sectors on
implementing a risk-based approach to combating money
laundering and terrorist financing |
| evaluations of the AML/CFT regimes of China, Greece
and the United Kingdom |
| a report on money laundering and terrorist financing
through the real estate sector |
| a report on laundering the proceeds of illegal drug
trafficking in the Eurasian region |
The presidency of the FATF has now been passed from
Canada to the United Kingdom.
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Scottish MP's son sent to prison for money laundering
-
28 June 2007
In a follow-up to a story covered on 29 April 2006, 8
November 2006 and 24 May 2007 (see below), the son of Scottish millionaire businessman and
Labour MP Mohammed Sarwar has been sent to prison for three
years for
laundering nearly £850,000 derived from VAT fraud. Athif Sarwar, a cash-and-carry
managing director, laundered the money in a couple of months
through the United Wholesale (Scotland) headquarters in
Glasgow. On delivering the sentence, Judge Lord Carloway
said that Sarwar had committed a crime which did
considerable damage to the UK Treasury and therefore
required a sentence with a deterrent element. Mohammed
Sarwar was in court to hear his son's sentence; he announced
last week that he is to leave parliament at the next
election, as he has received death threats from people
linked to a gang of racist murderers he helped extradite
from Pakistan.
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Russia releases updated money laundering statistics
- 27 June 2007
Yevgeny Shkolov, director of
the Economic Security Department (ESD) under the Russian
Interior Ministry, has revealed that more that 850 people
have been charged with
money laundering this year. The ESD tracked down
some 2,680 money laundering incidents between January and
May of this year - a 14% increase on the same period last
year. Other agencies tracked down almost as many
cases, said Shkolov: “Some 4,390 crimes related to money
laundering were tracked in the Russian Federation in the
first five months of this year, including 1,257 on a large
scale,” Shkolov said. "More than 3,500 criminal
cases have been sent to courts; 854 people have been held
criminally responsible." He also confessed that
Russia lost 413 million roubles [about £8 million] in the
same period as a result of money laundering.
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Filipino general charged with 165 counts of money
laundering - 22 June 2007
The Anti-Money Laundering Council (AMLC) of the
Philippines has filed 165 charges of money laundering
against retired Major General Carlos Garcia, his wife
Clarita Depakakibo and their sons Ian Carl, Juan Paolo and
Timothy Mark. In its statement, the AMLC
charged the family with plunder for allegedly amassing
ill-gotten wealth amounting to about 303.27 million pesos
[about £3.3 million].
AMLC records shows that Garcia declared in his 2003
Statement of Assets, Liabilities and Network that his net
worth was P2.765 million, but it was found out that his
family's bank balances for that year totalled P66.77
million and US$ 623,057.34. The records further show
that between July 2002 and October 2004, the family
"either individually or jointly, made at least 165
Anti-Money Laundering Act-defined transactions consisting
of bank deposits, withdrawals, local and foreign fund
transfers and a purchase of real estate", while the
family's total bank withdrawal over three days in October
2004 amounted to more than P73 million and US$ 967,215.99.
The AMLC statement said that "the Garcias were aware that
the funds they transacted were proceeds of the unlawful
activity of plunder." In particular, Depakakibo's
involvement in the money laundering activities can be
established "among others, by her own 6 April 2004
typewritten and handwritten declarations that respondent
Garcia received cash and other gifts from businesses and
companies who benefited from Garcia's 'favourable
actions'." The sons' participation can be
demonstrated by "several large bank withdrawals
immediately after the news article came out showing that
their father was being investigated by the Office of the
Ombudsman for possible graft charges".
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Vietnam steps up its AML efforts - 21 June 2007
Vietnam has recently taken measures to improve its
anti-money laundering regime. Firstly, on 20 June
its Ministry of Public Security signed an agreement with
the United Nations Office on Drugs and Crime (UNODC) to
set up a joint programme to combat money laundering.
UNODC will help the
Vietnamese police and other agencies hone their
capabilities in detecting, investigating, prosecuting and
trying money launderers, and Deputy Minister of Public
Security Le The Tiem said this project showed the
Vietnamese government’s determination to fight money
laundering.
Secondly, a Vietnamese delegation, led by a director of
the State Bank of Vietnam, will attend the annual
Asia-Pacific Group on Money Laundering (APG) conference in
Australia in late July. The delegation will include
representatives from the Ministries of Public Security,
Finance and Justice, Foreign Ministry, and the People's
Supreme Procuracy. Vietnam is hoping to join the APG
as a full member.
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Jersey accountant jailed for six years for
laundering £27 million - 18 June 2007
Jersey accountant Peter Michel has been jailed for six
years on nine counts of laundering a total of £27 million
for his clients through what prosecutors called "a complex
web of accounts and hidden payments". The prison
sentence was handed down after the second of two lengthy
trials; Michel has been in custody since he was convicted
of one count of laundering in August 2006, and he will
return to court in September for a seizure hearing
(prosecutors estimate that he has assets totally £14.5
million).
Police officers first raided the office of Michel & Co
in 2001, and found on his client files instructions to
call those clients only from public telephone boxes, and
not to mention Michel's name or the fact that the call was
coming from Jersey. Michel's assistant, Simone
Gallichan, was found guilty on one count and ordered to
complete a community service order. Commissioner Sir
Geoffrey Nice, handing down the sentence to Michel, said
that the accused was "a man of ability and indeed charm"
who had been overcome by greed. Had it not be for
"exceptional mitigation" (which has not been made public),
the sentence would have been longer.
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Law Society publishes online directory of AML
experts - 18 June 2007
Solicitors needing legal advice on anti-money
laundering (AML) compliance can now access an online
directory of solicitors who practise in this area,
launched by the Law Society of England and Wales.
The Law Society already provides AML guidance online, but
if further legal advice is needed, the solicitors in this
directory will provide their fellow solicitors with thirty
minutes of free legal advice on money laundering issues.
To view the directory,
click here.
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EU cash declaration requirement comes into force -
15 June 2007
From 15 June 2007, people who travel between EU and
non-EU countries and carry
€10,000
(about £6,800) or more in cash (or easily convertible
assets such as uncrossed cheques) will have to declare it
on departure from or arrival into the EU. This move
complements
the existing monitoring of transactions made through
credit and financial institutions.
Under the new rules customs authorities are empowered to
undertake controls on people and their luggage and detain
cash that has not been declared.
In the UK, travellers will face a penalty of up to £5,000
if they fail to comply with the obligation to declare or
provide inaccurate information.
"The new rules will make it more difficult for
terrorists to enter or leave the Community with the cash
required to finance their illegal actions while at the
same time it will not put disproportionate administrative
formalities on the majority of travellers and traders
given that the €10,000 threshold is high enough," said
Taxation and Customs Commissioner László Kovács. "A
single uncomplicated system of this type will also be
fairer to legitimate travellers who will no longer be
faced with control measures that vary depending on where
they enter or leave the Community."
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Malaysia cracks down on Internet investment scams
- 12 June 2007
Malaysian authorities have cracked down
on illegal Internet-based investment schemes, blocking
several websites and raiding the offices of one firm on
suspicion of money laundering. Raids were made on
the offices of AB Fund, an unlicensed firm that runs
investment websites www.abfund.us and www.abfundtrader.biz,
and investigators confiscated documents, cash and computer
equipment. Bank Negara, the central bank, issued a
statement saying, "[We are] investigating AB Fund for
suspected illegal deposit taking and money laundering
activities. Members of the public are advised not to
fall prey to unscrupulous parties who promise investors
seemingly high-return investments." The Securities
Commission said it had blocked six sites, including the
two run by AB Fund, and would continue to track other such
sites promoting illegal investment activities, having
received many complaints from members of the public who
had fallen victim to such sites. This activity
follows major raids in May in and around Kuala Lumpur,
during which police arrested more than 30 foreigners for
operating Internet and other scams that snared victims
across the Asia-Pacific region.
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Further arrests and freezings in Operation White Whale - 11 June 2007
In a follow-up to the story of 17 April (see below),
there have been yet more arrests and seizures in Operation
Hidalgo in Spain. Operation Hidalgo is part of a
larger money laundering investigation code-named Operation White Whale (Ballena Blanca).
So
far, €92
million has been frozen in 632 accounts in 22 banks. Embargos have also been
placed on 553 properties, mostly on the Costa del Sol but
some in other parts of Europe. Sixty luxury cars
have also been impounded by the police, along with
top-of-the-range jewellery which is thought to be key to
the money laundering operation allegedly run from the
offices of Marbella lawyers Cruz Conde. There have
now been 23 arrests, the latest being that of a Swiss man
earlier this month.
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Swiss to get new financial super-watchdog -
8 June 2007
The Swiss parliament has approved
plans for a new financial regulator to combine the
activities of three existing watchdogs. But the launch
of the proposed Federal Financial Market Supervisory
Authority (Finma) has been delayed for a year, and the new
agency has already been criticised in some quarters for
lacking full autonomy from government.
From the beginning of 2009, Finma will combine the
regulatory work of the Federal Banking Commission, the
Federal Office of Private Insurance and the Money Laundering
Control Authority. It will investigate suspected cases
of money laundering and corruption to help Switzerland
finally shake off its old reputation as a soft touch for
criminal money. The International Monetary Fund
broadly welcomed the plans but voiced concerns about the
fact that the Swiss finance ministry will retain full powers
to impose financial penalties, fearing this may compromise
Finma's independence. Swiss finance ministry spokesman
Dieter Leutwyler rejected the criticism, saying that Finma's
powers of confiscation, issuing bans and naming and shaming
gave it enough teeth to operate effectively.
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Another US congressman charged with money laundering -
8 June 2007
The US democrat congressman William Jefferson (from
Louisiana) has been charged under the Foreign Corrupt
Practices Act with several counts of bribery,
racketeering, money laundering and obstruction of justice.
It is alleged that Jefferson accepted approximately
US$500,000 [about £250,000] in bribes from companies in
the US and Africa. He denies all charges - if found
guilty, he faces a maximum sentence of 235 years in
prison. The trial is scheduled to begin on 16
January 2008 and should take about four weeks.
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Australia and Lebanon share fruits of seizure -
7 June 2007
Australia and Lebanon
have shared more than AUS$1 million [about £425,000]
confiscated as the proceeds of tobacco excise fraud.
Australian Federal Police Commissioner Mick Keelty handed
over Lebanon's share Central Bank Governor Riad Salameh
during a small ceremony in Beirut. From July 1999 to
September 2001, more than 93 million cigarettes were sold in
Australia by a Melbourne-based crime syndicate, which
purchased the cigarettes duty-free over the Internet,
claiming they were intended for overseas suppliers, before
diverting them for sale through a number of retail outlets
in Melbourne. The proceeds were then laundered through
Hong Kong, Belize and Lebanon to be brought back to
Australia, thus evading about AUS$14.9 million [about £6.36
million] in excise duty was avoided.
An Australian
investigation resulted in eight people being arrested.
"The Lebanese authorities played a key role in the
identification, restraint and forfeiture of the criminal
proceeds. Cooperation between countries in criminal
investigations is vital and I am pleased that Lebanon was
able to assist in this case," Commissioner Keelty said.
Governor Salameh responded that Lebanon would not hesitate
in responding to any matter related to money laundering or
any suspicious financial deal.
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UK Treasury agrees to redraft ML Regulations 2007 -
4 June 2007
Following representations from the Law
Society and others, Ed Balls, Economic Secretary to the
Treasury, has agreed that the definition of beneficial
ownership in the current draft Money Laundering Regulation
2007 needs to be amended. He has written to the
President of the Law Society with a proposed new definition
and has asked for a response within a fortnight.
To see the full text of the letter,
containing the amended definition,
click here.
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"Spam King" charged with money laundering - 3 June 2007
Top spammer Robert Soloway of Seattle
has been charged with mail fraud, wire fraud, email fraud,
aggravated identity theft and money laundering, and has
pleaded not guilty to all charges. Soloway pleaded not
guilty to all charges. "Spam is a scourge of the
Internet, and Robert Soloway is one of its most prolific
practitioners. Our investigators dubbed him the Spam
King because he is responsible for millions of spam
e-mails," said Jeffrey Sullivan, US Attorney for the Western
District of Washington.
Soloway allegedly spammed the masses in
email fraud since 2003 by using hijacked computers from
around the world, and covered his tracks using Chinese
servers, fabricated websites and stolen identities.
Soloway's company, Newport Internet Marketing, defrauded its
customers by offering to send a high volume of legitimate
e-mail marketing messages or to sell software that could be
used in mass mailings. Neither approach performed as
advertised but generated a torrent of spam. When
customers complained, Soloway allegedly refused to provide
assistance or refund the sales, instead threatening to
charge them with additional fees and refer them to
collections agencies.
Anti-spam campaigners named Soloway in
their top ten list of worst offenders, and in 2005,
Microsoft won a US$7.8 million judgment against him for his
spoofing of MSN and Hotmail email addresses.
Unfortunately, the money could not be collected because
Soloway’s funds and bank accounts remained elusive.
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Egmont Group decides to set up secretariat - 1 June 2007
At the
Bermuda Compliance Summit, attended by 217 delegates
representing 92 countries and 12 non-governmental
organisations, the decision has been taken for the Egmont
Group of financial intelligence units to have a permanent
secretariat. Bermuda's Governor, Sir John Vereker,
said, "No one could be prouder than we in Bermuda that
this agreement is being reached here. I hope it will
be called the Bermuda Charter. The financial
intelligence units or agencies established under the
Egmont umbrella must have the capacity to receive,
collate, analyse and disseminate information in a timely
manner." These units must also be independent of
political control and have "ring-fenced" budgets in order
to ensure "there can be no interference in their role,
whether directly or through budgetary pressure," he said.
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Saudi Arabia imposes requirement on travellers to
declare cash - 1 June 2007
Travellers to and from the Kingdom of Saudi Arabia will
now be required to declare if they are carrying more than
60,000 riyals [about £8,000] in cash or jewellery.
The move is part of measures drafted four years ago to
combat money laundering.
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Romanian AML official involved in money laundering
case - 31 May 2007
The former Romanian prime minister, Adrian Nastase, has
been charged with appointing Ion Melinescu as the head of
the country's financial intelligence unit in exchange for
Melinescu ending an investigation into Nastase's accounts.
Nastase, who was in office from 2000 to 2004, was under
investigation by an anti-corruption department regarding
the deposit of US$400,000 into his wife Dana's bank
account. According to prosecutors, Melinescu was
working at the financial intelligence unit in a junior
capacity when he contacted Nastase in November 2000 and
warned him that a money laundering investigation was
underway. A month later, two days after Nastase
became prime minister, he promoted Melinescu to head of
the FIU and the investigation was halted. Melinescu
has been charged with divulging confidential information
and accepting a bribe. Both men have denied any
wrongdoing.
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Jersey launches public consultation on the
prevention of money laundering - 31 May 2007
The States of Jersey has launched a public consultation
on extending its AML requirements to additional business
sectors such as estate agents, solicitors and businesses
which deal in high value goods (e.g. boats, cars and
jewellery). This is in anticipation of an inspection
visit from the IMF early next year, to assess Jersey's
compliance with international standards. The Council
of Ministers has set up a group to oversee the
preparations for the visit: the AML/CFT Strategy Group has
issued two consultation papers.
The first sets out proposals which would require a
number of business sectors to comply for the first time
with laws which prevent Jersey businesses being used by
people seeking to launder money or finance terrorists.
The business sectors that would be affected are:
| estate agents (when involved in transactions for
their clients concerning the buying and selling of real
estate) |
| high value goods dealers (when accepting payment in
cash above a set level - expected to be about £10,000) |
| lawyers, notaries and other independent legal
professionals (when participating or assisting in the
planning or execution of financial or property
transactions) |
| accountants, auditors, tax advisors and insolvency
practitioners. |
The second consultation paper proposes a legal framework
which would establish a mechanism for the supervision of
those businesses who would be required to comply with the
regulations but whose compliance is not currently overseen
by a supervisory authority. These businesses include:
| money service businesses (bureaux de change, money
transmitters and cheque cashers |
| issuers of electronic money |
| lenders |
| certain traders in financial instruments |
| money brokers |
| persons who provide safe custody services. |
To download the first consultation paper,
click here.
To download the second consultation paper,
click here.
Responses to both are invited by 27 July 2007.
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Egmont Group admits six new members - 30 May 2007
At its annual plenary meeting held this year in Bermuda,
the "trade body" for financial intelligence units, the
Egmont Group, admitted six new FIUs to its membership.
The new member FIUs are based in Armenia, Belarus, India,
Nigeria, Niue and Syria. This brings the total number
of member FIUs to 106. The Egmont Group recently
established a permanent secretariat in Toronto.
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Scottish MP's son found guilty of money laundering
-
24 May 2007
In a follow-up to a story covered on 29 April 2006 and 8
November 2006 (see
Old News
page), the son of Scottish millionaire businessman and
Labour MP Mohammed Sarwar has been found guilty of
laundering £850,000. Athif Sarwar, a cash-and-carry
managing director, laundered the money in a couple of months
through the United Wholesale (Scotland) headquarters in
Glasgow. His co-accused, Mansoor Khan, the assistant
manager of the cash-and-carry, was found not guilty of any
involvement.
The high court in Glasgow was told how Sarwar received
criminal proceeds into the firm's account by electronic
transfer. The money was then transferred as either
cash or goods to an unknown person. Sarwar denied the
allegations, saying he would not do anything like that
because of his father's public profile. He told the
jury that since his company had split off from his father's
business United Wholesale Grocers in 2002, he had built it
up into one of the leading wholesalers in the UK, with a
turnover of £100 million in 2007 - he claimed that he
concentrated on marketing and left the accounting and
banking to subordinates. The prosecution claimed,
however, that cash from six shell companies was laundered
through the cash-and-carry business, and that the laundering
started a year after Athif Sarwar was appointed managing
director.
The laundered money came from a complex scam involving
mobile phones imported VAT-free from Europe and then passed
through a number of specially set-up companies. Each
claimed input and output tax, the last one reclaiming VAT
before disappearing with the cash. The six shell
companies opened accounts with United Wholesale (Scotland),
injecting them with thousands of pounds allegedly to pay for
goods to be delivered in the future.
Judge Lord Carloway deferred sentence on Sarwar until
next month for background reports and allowed him bail.
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Assets Recovery Agency reports bumper year -
24 May 2007
In the year 2006/2007, the UK's Assets Recovery Agency (ARA)
disrupted criminal assets worth £73.6 million and recovered
£15.9 million of criminal wealth last year, Interim Director
Alan McQuillan has reported. This brought the total
value of assets under active litigation to £145.8 million in
143 live cases. Launching ARA's Annual Report for
2006/07 and its Business Plan for 2007/08,
McQuillan confirmed that the Agency is already on course to
make a similar impact this year: "This is not just about
meeting targets and recovering money from criminals.
Our aim is to help reduce crime in communities across the UK
by seizing assets from those who often prey on the most
vulnerable in society. We are pursuing the assets of
those involved in a wide range of crime including drug
dealing, people trafficking, fraud, extortion, smuggling,
control of prostitution, counterfeiting, benefit fraud, tax
evasion and environmental crimes such as illegal dumping of
waste and illegal fishing."
To download the ARA Annual Report2006/07 and
Business Plan 2007/08,
click here.
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Laundering car dealer jailed for 27 months -
21 May 2007
In a follow-up to a story covered on 21 January 2007 (see
Old News page), three car
dealers from Berkshire have been jailed for their part in a
£2.3 million bank swindle. Neil Kynoch was jailed for
27 months after admitting conspiracy to launder money; he
used his company, Berkshire Motor World in Winkfield, to
assist the main players in the year-long operation.
Brett Hilton was jailed for 14 months and Wesley Rossitter
for twelve.
Southwark Crown Court
heard how bank insiders at the Halifax, HSBC and Barclays
stole the details of dozens of wealthy account holders to
pass on to outside accomplices, who used the details to move
money to new accounts set up using false identities.
From there, the money was transferred into 'friendly' third
party accounts belonging to the car dealers. Shuaid
Ade Adesanya, a Nigerian prince, lost tens of thousands of
pounds in the scam masterminded by Oluwasegun Adekunle, who
received a five-year jail sentence. The gang also
stole £114,664 from the bank account of a dead woman.
Shana Campbell, who worked
at Halifax in Bexley Heath, was one of two bank insiders
jailed for their part in the scam. Police believe that
several other bank insiders remain undetected.
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Adams ordered to pay £4.7 million for his own
defence -
18 May 2007
Terry Adams, leader of the Adams crime family from north
London, has been ordered to pay a £4.7 million bill for
defence costs. He was sent to prison for seven years
in March 2007, having made so much money from crime that he
was able to retire at the age of 35. At the Old Bailey
in London, Judge Timothy Pontius ordered Adams to pay his
defence team’s costs, covering four years of legal
representation. Passing sentence in March, Judge
Pontius had said that the public would be shocked to know
that such a wealthy man had had his defence paid for by the
British taxpayer.
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New Caymanian law to be enacted concerning transport
of money -
18 May 2007
The Legislative Assembly of the Cayman Islands has passed
a bill to enable regulations to be issued governing the
transportation of money to and from the Cayman Islands.
The new regulations aim to tackle the threat of
international money laundering, and require CI$15,000 [about
£9,300] or more being transported into or out of the Cayman
Islands to be declared on a Customs declaration form - as is
already required in the US. The regulations are
necessary to enable the Cayman Islands to meet standards set
by the Financial Action Task Force (FATF) and the Caribbean
Financial Action Task Force (CFATF), and are expected to be
in place before the CFATF conducts an on-site evaluation of
the Cayman Islands in early June.
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BoNY sued by Russian government over laundering loss
-
18 May 2007
Russia's Federal Customs Service (the country's
currency control agency) has filed a suit against the Bank
of New York in Moscow's Arbitration Court for US$22.5
billion - equivalent to more than two-thirds of the bank's
market capitalisation. The suit demands damages
related to a $7 billion money laundering scheme conducted
by former BoNY vice president Lucy Edwards and her husband
Peter Berlin, from 1996 to 1999. The pair
pleaded guilty and served six
months of house arrest in the US. In 2005, BoNY
entered into a deal with the US Attorney’s office to
resolve criminal prosecutions against the bank and paid
$38 million in fines and restitution. A statement
from BoNY said, "The company was previously approached by
lawyers purporting to represent this agency who claimed to
be able to dispose of the matter for a tiny fraction of
the amount now claimed."
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Swiss launch laundering investigation into BAE -
12 May 2007
The Swiss federal prosecutor's
office in Bern has opened an investigation into allegations
of corruption surrounding arms deals by the British firm BAE
Systems. A spokeswoman, Jeannette Balmer, said the
investigation concerns suspicions of money laundering and
was instigated by a report prosecutors had received from the
Swiss money laundering authority (MROS - Money Laundering
Reporting Office Switzerland).
In December 2006, the UK government
called off an inquiry into a multi-billion dollar arms deal
between BAE Systems and Saudi Arabia, saying it was acting
to protect national security and British jobs. PM Tony
Blair said that continuing the Serious Fraud Office
investigation "would do enormous damage to our relationship
with Saudi Arabia". The SFO had been investigating
allegations that BAE ran a GBP 60 million "slush fund"
offering sweeteners to Saudi officials, reportedly via Swiss
bank accounts, in return for lucrative contracts - BAE has
denied any wrongdoing.
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Israel to extend AML legislation to cover diamond
trade -
10 May 2007
At a meeting of the World Diamond Council in Jerusalem,
Israel's Minister of Industry, Trade and Labour, Eli Yshai,
announced that his office is working to amend the
country's money laundering legislation to include money
traded through the diamond industry. Yshai
commissioned the ministry's diamond controller Shmuel
Mordechai to work towards extending the law so that
"Israel would be among the first countries in the world to
prevent money laundering through the diamond industry".
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FSA fines BNPP Private Bank for weak anti-fraud
controls -
10 May 2007
The Financial
Services Authority (FSA) has fined BNP Paribas Private
Bank (BNPP Private Bank) £350,000 for weaknesses in its
systems and controls which allowed a senior employee to
fraudulently transfer £1.4 million out of clients'
accounts without permission. The 13 fraudulent
transactions were carried out between February 2002 and
March 2005 using forged clients' signatures and
instructions and by falsifying change of address
documents. During its investigation, the FSA found
that BNPP Private Bank did not have an effective review
process for large transactions, over £10,000, from
clients' accounts. It also found that the bank's
procedures were not clear about the role of senior
management in checking significant transfers prior to
payment. As a result, a number of fraudulent transactions
were not independently checked.
Margaret Cole, FSA Director of Enforcement,
said: "BNPP Private Bank's failures exposed clients'
accounts to the risk of fraud. This is unacceptable
particularly with the overall increase in awareness around
fraud and client money risks. Senior management must make
sure their firms have robust systems and controls to reduce
the risk of them being used to commit financial crime."
BNPP Private Bank's
failings were serious because they enabled significant fraud
to take place and failed to detect subsequent transfers to
cover it up for a long period of time. The bank also failed
to improve its procedures for monitoring large transactions
or carry out remedial action on a timely basis. This was
despite the bank being aware that certain of its procedures
required improvement as a result of an FSA visit in relation
to money laundering systems and controls in August 2002 and
subsequent internal reviews.
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BenQ executives charged with money laundering in
Taiwan -
10 May 2007
Five of the most senior executives
at BenQ, a Taiwanese consumer electronics manufacturing
firm, have been charged with insider trading and money
laundering. Those indicted by prosecutors in Taiwan
include the company's chairman and chief executive, K Y
Lee, and its president, Sheaffer Lee. The chief
financial officer, Eric Yu, who was also charged, is
already in detention.
The charges appear to be linked to BenQ's disastrous
investment in Siemens' mobile handset division, which cost
the Taiwanese manufacturer more than US$1 billion in
losses in little more than a year. Prosecutors
allege that BenQ employees sold millions of dollars worth
of shares and transferred the funds raised to a small
Malaysian company, CREO Ventures. The money was
allegedly later reinvested in BenQ shares after the price
fell following news of problems with the Siemens Mobile
acquisition. BenQ announced that it was "shocked and
baffled" by the charges and has denied the charges,
claiming that the Malaysian company was part of a
legitimate accounting scheme to help employees sell their
share bonuses.
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New Australian AML advisory group is launched -
7 May 2007
A new Australian ministerial advisory group that will
help to implement legislation to detect and deter money
laundering and terrorism funding is meeting in Canberra.
The Anti-Money Laundering and Counter-Terrorism Financing
Council will provide high-level advice on implementing
existing legislation to protect financial institutions and
upcoming legislation regarding industries. “The laws,
which were passed in December, are essential to protect our
financial institutions from being used by criminals to clean
the dirty profits of their offences,” Minister for Justice
and Customs David Johnston said. “They also bring
Australia into line with international standards so we can
retain our place in the global financial market.”
“We developed these laws through extensive consultation
with industry and we will continue that through the new
council,” Johnston said. The second tranche of
anti-money laundering reforms will tighten controls in
industries including real estate, precious stones and metals
dealing, and accounting and legal services.
“Representatives of these industries have been invited to
participate in the council, along with those of industries
affected by first-tranche reforms,” said Johnston.
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Jordan passes new AML legislation -
6 May 2007
The Jordanian parliament has passed a new anti-money
laundering bill; the 110-seat elected lower house passed
the bill and has sent it to the 55-seat upper house
(appointed by the King) for its approval.
The bill seeks to
preserve the banking system and to protect the national
economy and, when implemented, will require the formation
of a new agency to draw up policies on combating money
laundering and to facilitate the exchange of intelligence
with other countries. The bill is the latest in a
series of laws adopted by the Jordanian parliament in the
wake of the 2005 suicide attacks against Amman hotels that
killed 60 people.
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US authorities seize US$5.6 million of laundered
money - 3 May 2007
US authorities have seized more than US$5.6 million from
sixteen New York City bank accounts used by an accused
Dubai-based drugs money launderer. US Attorney Michael
Garcia said that the money was seized after law enforcement
authorities in Italy, the UK and the United Arab Emirates
learned that Naresh Jain Kumar Patel of Dubai admitted that
he had laundered the proceeds of an Albanian drugs
trafficking organisation operating in Italy. Patel and
thirty-nine accomplices had been arrested in the UAE in
February. Police in Dubai recovered banking and wire
transfer records from Patel's office showing that he held
accounts at Man Financial Inc. in Manhattan. "Some of
the activity in the Man Financial accounts demonstrated that
Patel engaged in sham commodities trades in which Patel and
his nominees would always suffer losses and other entities
... would enjoy profits - all with no real change in trading
position for either party," explained Garcia.
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SocGen and its CEO to go on trial for money
laundering - 29
April 2007
French newspaper Journal du Dimanche has reported that
French bank Soci été
Générale
and its chief executive Daniel Bouton will go on trial from
4 February 2008 on charges of 'serious money laundering'.
This is part of the Sentier II case, which relates to
allegations of money laundering involving cheques issued by
foreign banks, mainly Israeli ones, that were cashed in
France. Formal investigations have been underway since
2001, and SocGen has denied knowingly participating in any
such activity. The case also involves Barclays France,
the National Bank of Pakistan and the Société
Marseillaise de Credit, which will also face trial at the
same time. Four other banks have been cleared of all
charges.
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UFOs spotted over Alderney - 27
April 2007
Two pilots flying in
separate planes have reported seeing a large UFO hovering
over the Channel Island of Alderney. Captain Ray Bowyer, of
local airline Aurigny, described the UFO: "It was a very
sharp, thin yellow object with a green area. It was 2,000
feet up and stationary. I thought it was about 10 miles
away, although I later realised it was approximately 40
miles from us. At first, I thought it was the size of a
[Boeing] 737. But it must have been much bigger because of
how far away it was. It could have been as much as a mile
wide." As he continued his approach into Guernsey he
spotted a second object further to the west, “identical” to
the first. "It was exactly the same but looked smaller
because it was further away. It was closer to Guernsey. I
can't explain it. At first, I thought it might have been a
reflection from a vinery in Guernsey, but that would have
disappeared quickly. This was clearly visual for about nine
minutes. As I got closer to it, it became clear to me that
it was tangible. I was in two minds about going towards it
to have a closer look but decided against it because of the
size of it. I had to think of the safety of the passengers
first. I'm certainly not saying that it was something of
another world. All I'm saying is that I have never seen
anything like it before in all my years of flying."
The captain described the sightings to Air Traffic Control,
and duty officer Paul Kelly said that he had had a similar
report from a pilot with Blue Islands, another airline.
"The description was very similar to Captain Bowyer's and
they described it as being in exactly the same place. But
they were looking at it from opposite sides." The objects
did not appear on ATC radar, but had they been stationary
then the radar would have filtered them out.
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Digital currency firms indicted for money laundering
- 27
April 2007
A grand jury in Washington, DC has indicted two digital
currency companies and their owners on charges of money
laundering, accusing the companies of helping to fund
illegal activities such as child pornography and identity
theft. The four-count indictment mentions the
companies EGold Limited and Gold & Silver Reserve Inc.,
and their owners Douglas Jackson, Reid Jackson (both of
Florida) and Barry Downey (of Maryland). The
defendants face charges on one count of conspiracy to
launder monetary instruments, one count of conspiracy to
operate an unlicensed money transmitting business, one
count of operating an unlicensed money transmitting
business under federal law and one count of money
transmission without a license under state law.
The case is being investigated by the US Secret Service
with the assistance of the Internal Revenue Service and the
Federal Bureau of Investigation, and the Department of
Justice has
obtained a restraining order to prevent the defendants from
unloading their assets, as well as 24 seizure warrants on
more than 55 accounts believed to be involved in money
laundering and the operation of an unlicensed money
transmitting business.
EGold’s digital currency, called EGold, functioned as
an alternative payment system and was purportedly backed by
stored physical gold. Customers wishing to open an
E-Gold account were required to provide only a valid e-mail
address, and no other contact information was verified.
Customers could fund their accounts in a number of ways and
convert currency into EGold, and then access their accounts
through the Internet and conduct anonymous transactions with
other parties anywhere in the world.
The indictment alleges that EGold has been used by
operators of investment scams, credit card frauds and
identity frauds, and by sellers of online child pornography.
The Department of Justice claims that the defendants
conducted funds transfers on behalf of their customers,
knowing that the funds involved were the proceeds of illegal
activity.
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Notorious California criminal gets 40 years for
money laundering - 27
April 2007
The leader of the notorious
Sacramento gang known as "The Company" has been sentenced to
40 years in prison for money laundering crimes stemming from
a series of armed robberies more than a decade ago.
Huy Chi Luong, also known as "Jimmy" Luong, was convicted of
19 counts of money laundering and one count of conspiracy to
commit money laundering. Luong and other gang members
were also convicted in 2000 of racketeering and other
charges for organising 31 robberies of computer component
and memory chip businesses between 1994 and 1996. In
just one of these robberies, they stole US$10 million worth
of computer chips from a manufacturer near Los Angeles.
Luong's latest convictions were for using the stolen
proceeds to make extravagant purchases, including at least
five luxury cars, a boat, two homes and electronic
equipment.
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FSA publishes paper on the future of regulation in
the UK - 23
April 2007
The Financial Services Authority (FSA) has published a
paper called "Principles-based regulation - Focusing on
the outcomes that matter". This paper sets out the
FSA's current thinking on its move towards a
more-principles-based regulatory regime. John Tiner,
Chief Executive of the FSA, said: "Financial services
markets are dynamic and innovative. To be effective,
regulators must be able to adapt their regimes to keep
pace with market changes. We believe principles
which focus on an outcome are more enduring while at the
same time better foster innovation and competition.
More principles based regulation is the natural next step
in the evolution of our regulatory system. It will give
firms more choice over how they meet our requirements
bringing for many a closer fit with their business
processes and more clearly placing the responsibility for
key regulatory decisions at more senior levels in firms."
To download the full 28-page paper,
click here.
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Bank continues to launder in India by masquerading
as a software firm - 22
April 2007
It has emerged that a bank that was forced to close in
Europe because of its connection with money laundering was
able to continue its laundering in India by masquerading
as a software company. An Anglo-Dutch investigation
revealed that Bermuda-based First Curacao Bank had been a
conduit for money launderers around the world; launderers
in Europe and India used the bank to send money to many
destinations including the UK, the UAE, Cyprus, Turkey,
Spain and Belgium. It was a gigantic operation, with
transactions averaging £98 million a week just before it
was busted by the authorities.
While a crackdown by investigators forced the bank to go
out of business in Europe, it continued to work from
Bangalore by assuming the guise of a software company called
Transworld ICT Solutions Pvt Ltd, owned by Dutch national
John Deuss, a director of First Curacao. This appeared
to be a typical software concern (Bangalore being the centre
of the Indian IT industry), with the First Curacao
connection completely camouflaged. It was only when
Indian investigators seized the company's computer server
after a routine investigation into Hawala transactions that
they discovered that Transworld ICT was the "fig-leaf" for a
money laundering operation. Further investigations
revealed the scale of that operation: one Delhi-based
businessman alone laundered US$1.4 billion between January
and July 2006, describing the money as "proceeds of software
business" and sending the money abroad through Transworld
ICT Solutions, which essentially worked as an illegal
clearing house.
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Further arrests in Operation White Whale - 17
April 2007
Twenty-one further arrests have been made in Malaga as
part of an on-going money laundering investigation
code-named Operation White Whale (Ballena Blanca).
The most recent raid (code-named Operation Hidalgo)
involved 230 officers searching twelve properties,
including the luxurious Marbella Club Hotel, where some of
the arrests were made, and a local law firm
which is believed to have set up
front companies to launder proceeds from drug trafficking
and prostitution. Three of the nineteen
people arrested are public notaries and several others are
lawyers.
Operation White Whale is a massive investigation that hit
the headlines in March 2005. So far, it has seen the
arrest of more than fifty people of various nationalities
who are accused of laundering more than €250 million.
More than 250 properties have been seized as well as other
assets worth around €350 million.
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Costa Rica makes biggest-ever seizure of criminal
cash - 11
April 2007
The Drug Control Police (PCD) in Costa Rica have
arrested two Guatemalans for money laundering after
seizing US$ 2.1 million - the largest amount ever seized
by Costa Rica. The PCD found $1,130,435 on Cabrera
Torres and $969,600 on Leon Matta at Juan Santamaria
International Airport. The cash was wrapped in
carbon paper to avoid being detected by X-rays. The
seizure followed increased security at the airport after a
tip-off from the police in El Salvador, who had recently
arrested a Guatemalan with $319,000 hidden in his luggage
at San Salvador's International Airport - he had planned
to fly to Panama via Costa Rica.
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Major Scottish gangster imprisoned for money
laundering - 10
April 2007
James "The Iceman" Stevenson, one of
Scotland's major gangland figures, has been jailed for
more than twelve years for money laundering. He and
his stepson Gary Carbin used the proceeds from drug sales
to buy luxury watches and set up a taxi firm; Carbin has
been jailed for five and a half years. The
sentencing judge at the High Court in Glasgow, Lord Hodge,
described Stevenson as a major figure in the world of
serious crime.
Stevenson and Carbin were caught after a
massive police surveillance operation, during which officers
from the Scottish Crime and Drug Enforcement Agency used
listening devices and hidden microphones to listen to
conversations in the men's homes. Investigators were
able to this information to trace nearly £600,000 in cash,
55 luxury watches and ten Skoda cars, as well as record an
attempt to set up a taxi firm for laundering purposes.
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Chileans crack large MSB laundering ring - 4
April 2007
The Chilean authorities have vowed to more strictly
oversee their currency exchange sector after the
uncovering of a massive money laundering operation.
The scheme funnelled over US$ 280 million of Colombian
drug money through Santiago, involving exchange houses in
Chile, Peru, and Colombia and one bank in the US.
The operation was exposed when Chilean national Mauricio
Mazza Alaluf was arrested in Los Angeles on 31 March 2007
by the US Drug Enforcement Agency (DEA) with more than 2.5
million euros in his possession. Mazza Alaluf’s
cousin, Mexican national Luis Mazza, is believed by the
DEA to run the laundering ring - he has lived in Chile
since 2003, and his "Mazza Clan" is used by Colombian drug
lord
Jorge Jiménez Urrego.
Exchange houses in Santiago were used to “clean” Colombian
money received for drugs sold in Europe. The money
was first smuggled to Colombia in 500 euro notes carried
by human mules. It was then using human “mules,”
people who physically transported the cash to Colombia in
their carry on luggage or by hiding it in their clothing.
The fund were then directed to the Fimesa currency
exchange in Colombia, but euros are not widely circulated
in the country and so were shipped to Chile (again, by
human mules) to be converted into US dollars at exchange
houses controlled by the Mazzon cousins in Santiago, Viña
del Marand Valparaiso. The money was then wired to
Harry’s Bank in Los Angeles and finally wired back, in US
dollars, to Colombia. Mazza Alaluf, Luis Mazza and
Daniel Mazza are now all under arrest in Chile, with their
personal bank accounts frozen.
The operation has received widespread press interest in
Chile, and the country’s Ministry of the Interior has
promised to better oversee the way exchange houses do
business in the country. According to current law,
all financial instructions are required to report
transactions that show signs of money laundering.
Between May 2004 and September 2006, 376 such reports were
filed, but only 39 of them came from exchange houses.
Financial institutions are also required to report all
transactions over US$15,000, but according to Chile’s
Financial Analysis Office (UAF), exchange houses submit
only 2% of the 200,000 such reports filed a month.
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Austria launches money laundering investigation into
Croatian former minister - 3
April 2007
A money laundering investigation into former Croatian
Assistant Defence Minister, General Vladimir Zagorec, and
his Austrian business partners has been launched by the
Office of the Prosecutor in Klagenfurt. Carmen
Riesinger from the Office of the Prosecutor explained that
her office would investigate "the business operations of
Zagorec and his partners in the Hypo Alpe Adria bank, the
headquarters of which are in Klagenfurt, and some other
financial institutions". The Hypo Alpe Adria bank
has denied any involvement; in a press release, it says
that it can prove that its business relationship with
Zagorec began only in 2004, and that it has never been
involved in any transaction involving funds belonging to
the Croatian state or funds stemming from the war.
Zagorec, who has been living in Austria for several years,
was arrested in Vienna in mid-March following an
international warrant for his arrest issued by Croatia,
demanding his extradition. In Zagreb, court
proceedings have been launched against him on suspicion of
white collar crimes, including taking jewellery worth US$
5 million from a Ministry of Defence safe when he retired.
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Third Myanmar private bank linked with money
laundering - 2
April 2007
A third private bank in Myanmar has been linked with
money laundering. U Tin Sein, owner of Universal
Bank, has been charged under the Narcotic Drugs and
Psychotropic Substances Law and the Control of Money
Laundering Law. Universal Bank was sealed by the
Myanmar government in August 2005, while two other private
banks (Myanmar
Mayflower Bank and Asia Wealth Bank) were closed in March
2005 for having facilitated money laundering.
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HMT announces UK President of the FATF - 2
April 2007
The UK will assume presidency of the Financial Action
Task Force from July 2007 to June 2008, and it has been
announced that the man who will serve as president is
James Sassoon. He is currently the Chancellor's and
the Treasury's Representative for Promotion of the City, a
part-time role he has held since December 2005 and in
which he will continue. From 2002 to 2005, he served
as a member of the Treasury Board and Managing Director of
the Treasury's Finance and Industry Directorate. And
from 1985 to 2002 he worked at UBS Warburg, having first
qualified as a chartered accountant with KPMG.
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UK Customs assets seizures exceed target - 2
April 2007
The Asset Forfeiture Division of the UK's Revenue and
Customs Prosecutions Office (RCPO) has exceeded its
2006/07 target for the recovery of criminal assets.
More than £23 million has been seized so far from
convicted criminals by lawyers from RCPO over the last
year, exceeding their original goal of £22.7 million.
The Director of RCPO, David Green QC, said: "This is a
terrific achievement. The Asset Forfeiture team has
worked extremely hard over the last year. Ensuring
that criminals do not benefit from their dishonesty is a
major priority across the criminal justice system, and I
am delighted that RCPO has made such a significant
contribution to that effort."
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Indian government approves international sharing of
AML information - 29 March 2007
The Indian government has approved the exchange of
information on money laundering activities between the
Indian financial intelligence unit (FIU) and its foreign
counterparts. This paves the way for the Indian FIU
to join the Egmont Group. Indian authorities will
now be able to elicit information on money laundering
activities from other countries.
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Maltese woman sent to prison for money laundering
- 29 March 2007
In the conclusion to the case reported on 27 March 2007
(see below), Maria Abela has been sentenced to six years
in prison for money laundering. Although Abela
pleaded guilty, she told the court that when she initially
entered into the business, she believed it to be a
legitimate venture. Once she found out its
illegality, she explained that she did not report the
matter to the authorities because she had been threatened.
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Surrey man sentenced to six years for money
laundering - 28 March 2007
Danny Williams has been
sentenced to six years in prison for his part in
laundering more than £5 million through UK bank accounts.
Customs officers observed Danny Williams visiting banks in
Croydon and other parts of south London banks and
depositing large amounts of cash, split into small amounts
to avoid suspicion. Forensic tests carried out on
cash found in Williams's home revealed unusually high
levels of heroin on the notes. Williams denied money
laundering and claimed that he was operating a legitimate
international money transfer business. However, he
could not explain the enormous amounts of cash which were
often handed to him in carrier bags in supermarket
car-parks by people he claimed not to know.
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First Maltese money laundering criminal prosecution
- 27 March 2007
In the first case of money laundering to be heard in the
Maltese Criminal Court, Maria Abela has pleaded guilty to
involvement in the laundering of about Lm71,000 [about
£113,000]. However, according to presiding judge Mr
Justice Joseph Galea Debono, the relatively new
legislation on money laundering is rather ambiguous.
According to the indictment, Abela received an amount of
money through Bank of Valletta in May 2004. This
money was transferred into an account held in Abela's
name, on behalf of Alasram Holdings Limited (through which
Abela was involved in the import and export of
merchandise). Previous transactions through the
account dated back to January 2002. Police
investigations showed that Abela, together with a number
of foreigners, was involved in illegal money transactions
carried out by means of falsified documents. Abela
was allegedly paid 10% of the money that was transferred
into her account.
Money laundering in Malta carries a maximum prison
sentence of 14 years or a maximum fine of Lm1 million
[about £1.5 million].
While the prosecution argued that the reputation of the
country’s financial institutions had to be protected,
Abela's defence lawyer Martin Fenech insisted that the
punishment should be commensurate with the amount of money
involved, “which was not such a huge amount”.
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First Malaysian money laundering prosecution -
18 March 2007
A woman doctor has been charged in Kuala Lumpur with
laundering RM34.2 million [about £5 million] under the
Anti-Money Laundering Act 2001 - the first such case in
Malaysia under the act. Dr Hamimah Idruss has been
charged with seven counts of receiving the money, alleged
to be proceeds from unlawful activities overseas, and has
pleaded not guilty to all seven charges. Dr Idruss
is accused of having received RM2.3 million through her
daughter's bank account, RM6.8 million through the company
bank account of Azam Rahmat Sdn Bhd (where she is a
director) and a total of RM18.6 million through other
company bank accounts - all in June 2006.
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US Treasury confirms that Banco Delta Asia is barred
from US financial system -
18 March 2007
The US Department of the Treasury has finalised its rule
against Banco Delta Asia SARL (BDA) under Section 311 of
the USA PATRIOT Act. When the final rule takes
effect in 30 days' time, US financial institutions will be
prohibited from opening or maintaining correspondent
accounts for or on behalf of BDA. This action bars
BDA from accessing the US financial system, either
directly or indirectly.
"Our investigation of BDA confirmed the bank's
willingness to turn a blind eye to illicit activity, notably
by its North Korean-related clients," said Stuart Levey, the
US Treasury Under Secretary for Terrorism and Financial
Intelligence. "In fact, in exchange for a fee, the bank
provided its North Korean clients access to the banking
system with little oversight or control."
The Treasury's Financial Crimes Enforcement Network
(FinCEN) in September 2005 found BDA to be of "primary money
laundering concern" under Section 311 and issued its
proposed rule, citing the bank's systemic failures to
safeguard against money laundering and other financial
crimes. The US Treasury has since been engaged in an
on-going investigation of BDA with the cooperation of
Macanese authorities. The information derived from
that investigation and the failure of the bank to address
adequately the full scope of concerns described in the
proposed rule has laid the groundwork for this latest
action.
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Canadian investment banker sentenced to four years
for money laundering - 14 November 2006
Following on from a story dated 16 November 2006
(see
Old news page),
Canadian investment banker Martin Tremblay has been
sentenced by a Manhattan court to four years in prison for
money laundering. He will spend 34 months in prison
as he has already served 14 months since his arrest.
Tremblay is also required to pay a US$12,500 court fine
and a US$220,000 forfeiture penalty.
Before sentencing, Tremblay said, "I'm
sorry. I apologize to my family and the court.
I just ask for forgiveness." Martin Auerbach,
Tremblay's lead defence lawyer, said outside the
courthouse that the sentence was acceptable: "I understand
the judge's reasoning. As a person, as Mr.
Tremblay's lawyer, knowing him as a human being, would I
like to see him go home sooner? Absolutely.
But do I think the judge was fair and reasonable? I
do."
In 2005, Tremblay was the target of an undercover sting
operation carried out by the New York Organized Crime Drug
Enforcement Strike Force. He confessed that in March
2005 he met with undercover agents he thought were drug
traffickers and agreed to help them to hide their illicit
profits. He also admitted that in May 2005 he
received a wire transfer of US$20,000 to an account in New
York with the intention of laundering the money. The
original indictment alleged that Tremblay laundered US$1
billion for numerous clients between 1998 and December
2005 through his Bahamas-based investment services company
Dominion Investments Limited. But in November 2006,
Tremblay reached a plea agreement in which he admitted in
court to offering to launder US$220,000 in illicit funds
on behalf of federal agents he thought were drug
traffickers. In exchange, the government dropped all
charges relating to the alleged US$1 billion in laundered
money and recommended a much shorter prison term.
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India proposes to extend its AML requirements -
13 March 2007
The Indian government is planning to enhance the coverage
of its Prevention of Money Laundering Act (PMLA), perhaps
even in the current session of Parliament. Under the
current PMLA, banks, financial institutions and
intermediaries are required to keep records and report
suspicious and large cash transactions. The proposed
amendment will extend these requirements to money
changers, casinos (including those operating offshore in
Goa) and offshore banks. This will bring India into
line with FATF requirements, and hopefully will restrict
the use of these entities for money laundering.
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Israel launches joint AML/CFT centre - 13 March 2007
The Israeli Money Laundering Authority (MLA), police and
tax authorities have opened a joint intelligence centre at
the national police headquarters in Jerusalem. The new
centre is intended to co-ordinate the fight against money
laundering and terrorism financing. Yehuda Shaffer,
head of the MLA, said that the new centre would enable law
enforcement agencies to share information while safeguarding
the privacy of clients of banks, insurance companies,
investment managers and other institutions that are required
to submit financial reports. Of the 410,000 reports
received by the MLA each year, 1.7% are forwarded to the
police or the Shin Bet (Israel's security agency).
These yield a few dozen court cases per year, which is all
that the law enforcement system can handle, Shaffer said.
He added that the MLA wants to improve and standardise the
reports submitted by other institutions (such as the stock
exchange, traders in precious stones and other financial
institutions) so that they are as detailed as those provided
by the banks. The MLA has also prepared a bill to
extend the obligation to submit financial reports to members
of the diamond industry.
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Terry Adams jailed for money laundering - 10 March 2007
In a follow-up to the story of 6 February
2007 (see below), notorious London gang leader Terry Adams
has been sent to prison for seven years for money
laundering, after pleading guilty last month to conspiracy
to launder his income from crime between 1997 and 2003.
In addition to the jail term, Adams was ordered to pay
£750,000 compensation for the £1 million he laundered or
face another four years in jail.
The Adams family, known as the A team or
The Firm, dealt mainly in drugs and was rumoured to have
been connected to a number of gangland killings. But
despite being one of the country's most prominent gangsters,
Adams considered himself virtually untouchable, as he kept
away from the dirty end of the business. Andrew
Mitchell QC said of Adams that "a hallmark of his career was
his ability to keep his evidential distance from any of the
violence and other crime from which he undoubtedly profited.
By the early 1990s he had been so successful that he was
able to retire, content that the wealth and status he had
accumulated by the age of 35 would allow him and his family
to live in the manner they were accustomed to for the rest
of their lives." This manner included owning a mansion
full of antiques, staying in the most exclusive hotels and
indulging a passion for expensive jewellery. Yet
despite a net worth estimated at £11 million, Adams had no
work history and paid no tax or national insurance.
Mr Mitchell said: "Terry Adams has always
thought he was above the law and his attitude to this
prosecution is some proof of that. He has sought
throughout these proceedings to play the system, delay and
to try as hard as possible to make this case and himself
unprosecutable." He was charged nearly four years ago,
but sacked his solicitors three times, demanded transcripts
of MI5's 21-month bugging operation and even claimed mental
illness before bargaining a guilty plea.
Handing down the sentence, Judge Timothy
Pontius said: "Your plea demonstrates that you have a
fertile, cunning and imaginative mind capable of
sophisticated, complex and dishonest financial manipulation.
It is obvious that the cost to the taxpayer overall has been
colossal and, perhaps, unprecedented." Adams's
four-year legal battle to avoid prison has probably cost the
taxpayer at least £4 million, and a hearing in April will
decide whether Adams should make a contribution to the
costs.
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Jail for Croydon gang who laundered £100 million -
9 March 2007
Three members of a gang who laundered more than £100m
in cash have been jailed for a total of 15 years.
The Croydon-based laundering scheme used links with
companies in Pakistan to launder money for criminal
organisations throughout the UK between June 2003 and
September 2005. Ringleader Zaka Ud Din pleaded
guilty to 19 charges relating to money laundering and was
sentenced to nine years in prison. He was also
disqualified as a company director for 10 years. His
uncle Ghafoor Ud Din pleaded guilty to one charge and was
sentenced to four years imprisonment and disqualified as a
company director for 10 years. Cash courier Sabz Ali
Khojo was jailed for two years. Stephen Giles Parker
was sent to prison for 18 months for his links to the
gang.
The money laundering operation centred on Zaka Ud Din's
money services bureau Deans Exchange in Croydon. He
was arrested in a supermarket car-park in September 2005,
along with Parker, who had just handed over £117,000 cash
concealed in shoe boxes. Ghafoor Ud Din, who owned the
money services business Dollar East in Tooting, was linked
to the disposal of £3 million and later arrested at his
home.
Cash from criminal organisations would be delivered in
large holdalls to the MSBs. The money would be taken
for counting to nearby flats, rented in false names, and
then used to pay off the legitimate debts of Pakistani
companies to UK firms. Companies in Pakistan would
deposit what was owed with an MSB in Pakistan which in turn
would get Ud Din to settle the debt. In this way, the
gang laundered £105 million. Before passing sentence,
Judge Peter Thompson told the four men: "You were deeply
involved in disposing of criminal cash on a massive scale
and you have brought disgrace and humiliation to both
yourselves and your families."
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Former mosque leader sentenced for money laundering
- 9 March 2007
Yassin Muhiddin Aref, the former leader of New York
mosque, has been sentenced to 15 years in prison for his
part in a money laundering scheme that also involved an
FBI agent working undercover as an arms dealer. Aref
was found guilty of money laundering, conspiracy and
attempting to provide material support and resources to a
terrorist organisation. The organisation concerned
was Jaish-e-Mohammed, a Pakistani Islamic extremist group
that features on the US State Department's list of
designated foreign terrorist organisations.
The FBI agent approached Mohammed Mosharref Hossain, the
owner of a pizzeria in Albany, New York, and asked him to
launder money from the sale of a shoulder-fired missile
that the agent said would be used to kill a Pakistani
diplomat in New York City. Aref acted as a witness
to the transactions. Although the assassination plot
was fictional, Hossain and Aref were both found guilty in
October 2006 of supporting terrorism.
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Indian authorities uncover large money laundering
scheme - 7 March 2007
The income tax authorities in Mumbai and Delhi have
stumbled upon a large money laundering scheme whereby
significant sums are sent to Mauritius through the hawala
system and then come back to India as investments in the
stock market, real estate and other business sectors made
by a dummy corporation based in Mauritius. It is
suspected that Rs 20,000 crore [about £2.4 billion] has
been processed in this way over the past few years.
The scheme was uncovered when tax officials raided a stud
farm in Pune. Their search uncovered details of
Swiss bank accounts in various names (rumoured to be those
of influential people in Indian politics and industry),
with deposits totalling Rs 20,000 crore. Further
investigations revealed that the money had been earned by
misusing the “double taxation avoidance treaty” between
India and Mauritius. As per the treaty, the capital
gain earned from investments from Mauritius is not taxed
in India, and the ‘investor’ benefits as in Mauritius
there are no tax on capital gains. Tax authorities
suspect that this profit was then routed to Swiss banks.
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Russian former UN official charged with money
laundering - 7 March 2007
Vladimir Kuznetsov, a former Russian diplomat who once
chaired the United Nations' powerful budget oversight
committee, has been convicted in New York of conspiring
with a UN procurement officer to launder hundreds of
thousands of dollars from foreign companies seeking UN
contracts. Kuznetsov was charged in 2005 after an
internal UN investigation of Alexander Yakovlev, a Russian
who worked in the UN procurement office. Yakovlev
pleaded guilty in 2005 to soliciting a bribe, wire fraud
and money laundering. Yakovlev admitted accepting
nearly US$1 million in bribes from UN contractors, and
testified against Kuznetsov.
Prosecutors said Kuznetsov established an offshore
company in 2000 to hide criminal proceeds from Yakovlev,
who received secret payments from foreign companies
seeking contracts to provide goods and services to the UN.
Yakovlev provided the companies with confidential
information about the contracts. In
2005, the Independent Inquiry Committee headed by former
US Federal Reserve chairman Paul Volcker said it found
"persuasive evidence" that Yakovlev took kickbacks from
companies that had won some US$79 million in UN contracts,
and had found that US$1.3 million had been wired to a bank
account in Antigua, West Indies, in the name of Moxyco
Limited.
Former UN Secretary-General Kofi Annan had waived
Kuznetsov's immunity at the request of US authorities.
Both men face up to the 20 years in prison; sentencing has
been scheduled for 25 June.
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Israeli court seizes US$4.9 million from Arcadi
Gaydamak - 6 March 2007
In a follow-up to the story of 23 March 2006
(see
Old news page),
the Tel Aviv District Court has ordered
the temporary seizure of US$4.9 million from Russian-born
billionaire Arcadi Gaydamak as part of a money laundering
investigation. Judge Uri Shoham said there was enough
evidence to seize the money but he was not expressing an
opinion on whether there should be an indictment of Gaydamak.
An investigation was
launched into the financial activities of Gaydamak and
others in 2002, on suspicion that they had laundered US$50
million through Bank Hapoalim in Tel Aviv. Gaydamak
was released on bail in November 2005.
With regard to the seizure
of Gaydamak's funds, his lawyer
argued that the money should not be taken
because funds that had been taken as bail under the
provisions of one law were now being held under money
laundering law. Judge Shoham ruled that the state
could seize the money temporarily, and that as opposed to
property seized due to criminal activity, there was no need
to determine if a crime had been committed before seizing
it.
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Spanish authorities uncover another money laundering
ring - 4 March 2007
Spanish police have broken up a money laundering operation
believed to have processed more than 20 million euros of
drug proceeds. "Operation Lotus" was launched in
November 2006, and so far seven Colombians and two
Dominicans have been arrested in Madrid. Police
suggest that drug traffickers divided the money into small
amounts and sent it to third parties, who would deliver it
to Colombian drug dealers. The money laundering gang
has allegedly carried out 25,000 illegal transactions.
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US government publishes International Narcotics
Control Strategy Report 2007 - 1 March 2007
The US Department of State has published its
"International Narcotics Control Strategy Report" (INCSR) -
dated 2007, it covers 2006. The INCSR is a
country-by-country two-volume report that describes the
efforts to attack all aspects of the international drug
trade: Volume I covers drug and chemical control activities,
while Volume II covers money laundering and financial
crimes.
To download both volumes and related material,
click
here.
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UK government publishes its AML/CFT strategy - 28 February 2007
The UK Home Office, HM Treasury, Foreign & Commonwealth
Office and Serious Organised Crime Agency (the UK's FIU)
have jointly published "The financial challenge to crime
and terrorism". The document shows that the
financial measures taken in recent years are already
helping to deter, detect and disrupt crime and terrorism.
To build on this progress, the strategy sets out the key
priorities for increasing the financial challenge to crime
and terrorism in the future, and announces new proposals
that exemplify the Government's commitment to their
delivery.
To download the full 68-page document,
click here.
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Money laundering arrests in Dubai - 26 February 2007
Dubai Police have arrested several
foreign nationals (from Asia, Europe and the US) for money
laundering. According to police sources, the
criminals
“misused
financial institutions - assisted by some of their staff
to conceal such crimes, against commissions paid to them".
The eighteen-month investigation has also revealed the
involvement of nine companies. The Central Bank of
the UAE has issued an alert notice to all banks and money
changers operating in the country, instructing them to
immediately freeze the bank accounts of all the main
suspects, all those who assisted them and the nine
companies, and to prohibit any bank transfers in their
names.
The Dubai
Police Chief, Lieutenant General Dhahi Khalfan Tamim, said,
"All necessary measures taken in this case fall within the
purview of UAE’s policy of combating crime - including
money laundering and terrorism. Our main aim is to
protect our society and financial institutions from falling
victim to any such criminal activity.”
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Indonesian man pleads guilty to supplying terrorists
and money laundering - 23 February 2007
Erick Wotulo, an Indonesian citizen and a retired
Indonesian Marine Corps General, has pleaded guilty in a
Maryland (US) court to conspiracy to provide material
support to a designated foreign terrorist organisation and
money laundering. From April 2006, Wotulo
conspired with others to export state-of-the-art firearms,
machine guns and ammunition, surface to air missiles,
night vision goggles and other military weapons to the
Liberation Tigers of Tamil Eelam (Tamil Tigers) operating
within Sri Lanka, to be used to fight against Sri Lankan
government forces. Wotulo aided in the acquisition
and proposed delivery of military technology to the Tamil
Tigers, requesting price quotes, negotiating the purchases
and providing details of ocean routes for the transfer of
the arms to the Tamil Tigers. On 2 August 2006, a
transfer of US$250,000 was made to a bank account in
Maryland; this was a down-payment for the arms. A
further transfer of $452,000 was made on 28 September
2006. On 29 September, Wotulo arrived in Guam to
meet with other conspirators and undercover agents to
discuss the ship-board loading of the arms and munitions -
he was arrested. He now faces a maximum sentence of
15 years in prison for conspiracy to provide material
support and a maximum sentence of 20 years in prison for
money laundering; sentencing will take place on 25 May
2007.
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Man sentenced for laundering through Texas
supermarket - 23 February 2007
The manager of a family-owned supermarket in Brownsville,
Texas has been sentenced to two years in prison and must pay
more than half a million dollars in restitution for
laundering the proceeds of stolen US Treasury cheques
through the supermarket's bank account. Jaime Miguel
Lopez pleaded guilty to bank fraud in June 2004, admitting
that from 1999 to 2000 he acquired stolen US Treasury
cheques from an individual in Mexico and imported the
cheques into the United States. He fraudulently
endorsed the cheques and co-mingled the proceeds with
legitimate receipts from his family's supermarket,
depositing them into the supermarket's Texas State Bank
account. He then withdraw cash from the account and
split the proceeds with the individual in Mexico. The
bank lost US$1.2 million in "charge-backs" as a result of
the scheme. The scheme was discovered in early 2000
when the intended recipients of the US Treasury cheques, who
live in Mexico, filed claims saying that they hadn't
received their cheques.
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Finnish FIU receives record number of SARs - 21 February 2007
Finland's financial intelligence unit, the National
Bureau of Investigation (NBI), received 10,000 suspicious
activity reports in 2006 - up from 4,000 in 2005.
The NBI annual report explained that the rise in reporting
was probably a result of the introduction of an electronic
form for submitting reports. 1,000 of the SARs led
to an investigation, and the vast majority involved white
collar crime. The largest number of reports came
from bureaux de change.
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Russian banks process 800 billion roubles in
fictitious deals each year - 20 February 2007
Sergei Ignatyev, chairman of the Russian Central Bank (CBR),
has declared that Russia loses 500-800 billion roubles
[about £10-16 billion] a year through fictitious banking
operations. Giving evidence at a hearing at the Duma,
the lower house of Russia's parliament, Mr Ignatyev
revealed that operations to debit cash for allegedly legal
purposes are the most widespread of the fictitious banking
transactions; in reality, the cash is used to pay "grey"
wages, offer bribes and carry out other illegal deals.
Money transfers to the accounts of offshore foreign
companies allegedly for the purpose of paying for goods or
services without customs border crossing are also common,
totalling about £1.5-2 billion a month. "The real
purpose of such operations is to pay for 'grey' imports,
smuggle drugs, offer bribes, etc.," Mr Ignatyev said,
adding that such operations are carried out with the
involvement of "shell" companies.
Mr Ignatyev went on to say that the CBR will continue to
withdraw licenses from banks for the violation of money
laundering law. He was answering a proposal by some
deputies to deprive the country's chief bank of the right to
revoke banking licenses for money laundering violations.
Since early 2005, the CBR has revoked the licenses of 70
banks, or 6% of the total number of Russia's banks, for
money laundering violations. The CBR is also seeking
to empower banks to deny dubious clients the right to open
accounts, to correspond with the recommendations of the
FATF.
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Man charged in Jersey with laundering US$44 million
- 13 February 2007
Raj Arjandas Bhojwani, a
native of India, has been charged in Jersey with the
laundering of US$43.9 million [about £22.5 million].
Bhojwani was arrested in London on 8 February 2007 and
taken to Jersey the next day. He appeared in the
Royal Court and reserved his plea to three charges
relating to the laundering of the money, which is alleged
to be the proceeds of government corruption in Nigeria.
The laundering is alleged to have taken place in October
2000.
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Khodorkovsky charged with money laundering - 10 February 2007
Mikhail Khodorkovsky, former boss of the Yukos oil
empire in Russia, and his former business associate Platon
Lebedev have been formally charged with laundering more
than US$23 billion [about £12 billion]. An official
statement confirmed that "the prosecution service has
charged Khodorkovsky and Lebedev with illegal acquisition
of shares belonging to the State, as well as theft of oil
and laundering of the money accruing from the sale of that
oil". The statement further elaborated that the two
men had acted in an organised criminal conspiracy in
acquiring shares of the Vostochnaya Neftianaya oil company
in November 1998 and putting them into foreign offshore
companies. Furthermore, prosecutors allege that
"between 1998 and 2003 Khodorkovsky and Lebedev stole oil
from the Samaraneftegaz, Yuganskeneftegaz and Tomskneftgaz
companies worth more than 850 billion roubles [about £16.5
billion]". This oil was then allegedly sold on and
the profits laundered.
The statement detailed for the first time the charges
laid against the jailed former tycoon which prompted
Khodorkovsky to criticise the politicised court system in
Russia. "What will follow is clear," he said.
"Falsified evidence, testimony by perjurers who have been
frightened or tricked, and a quick guilty verdict - a
shameful farce that has nothing in common with justice."
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Major UK criminal admits money laundering - 6 February 2007
Terry Adams, head of a notorious north London crime
family for more than thirty years, has pleaded guilty to
money laundering. With his brothers Tommy and Patsy,
Adams ran a criminal empire that included a West End club,
a restaurant in Smithfield and a Hatton Garden jewellery
shop. A flamboyant dresser described as a cross
between Liberace and Peter Stringfellow, Adams pleaded
guilty to conspiracy to conceal criminal property.
His last-minute guilty plea saved the need for
round-the-clock police protection for the jury at
Blackfriars Crown Court; 2-meter screens had already been
installed in the courtroom after fears were expressed that
the jury might be intimidated during the trial.
Prosecutors claimed that Adams laundered money from his
criminal activities (ranging from protection rackets
against market stallholders to armed robbery and drug
dealing) with the help of diamond merchant Saul Soloman
Nahome, who was shot dead in a contract killing in 1998.
Nahome was said to have laundered £25 million through
property deals and offshore accounts. Adams has
pleaded guilty to laundering £750,000, and will be
sentenced on 9 March 2007 - he faces up to fourteen years
in prison.
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FSA publishes Business Plan 2007/2008 - 6 February 2007
The Financial Services Authority has
published its "Business Plan 2007/2008". With regard
to financial crime, the plan says: "The risk of financial
crime is increasing.
Our financial crime
strategy for the next three years is to:
|
gain a better understanding of the
scale and incidence of financial crime and its impact in
the UK and financial institutions; |
|
target poor performing firms and
sectors; and |
|
encourage risk-based implementation of
financial crime policy domestically and internationally." |
The FSA also promises that "in Q1 2007,
we will announce the results of our first survey on
financial crime. We will use the results of this
survey of firms and other stakeholders to inform our
priorities and improve our work on financial crime."
To read the full 55-page plan,
click here.
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Peter Foster charged with money laundering - 6 February 2007
Australian businessman Peter Foster has
been remanded in custody after being charged with money
laundering. He was arrested at Brisbane
International Airport only a day after being released from
prison in Vanuatu. The laundering of an amount
between AUS$ 200,000 and AUS$ 250,000 [about
£79,000-£99,000] was allegedly committed against the Bank
of the Federated States of Micronesia. If convicted,
he faces up to 20 years in prison. Foster has been
described in the past as "Australia's greatest conman",
and is best known in the UK for buying two Bristol flats
on behalf of Cherie Blair in 2002.
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Trujillo sentenced to 40 years for money laundering
- 1 February 2007
Joaquin Mario Valencia-Trujillo has been sentenced by a
judge in Miami to 40 years in prison and ordered to
forfeit US$110 million. In a trial that took four
months, the court heard that Trujillo had supplied more
than 100 tons of cocaine annually to the US market between
the early 1990s and his arrest in Bogota in January 2003.
Trujillo was extradited from his native Colombia in March
2004 to stand trial in the US, and in October 2006 he was
found guilty of all the drug, conspiracy and money
laundering charges against him.
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Ex-US official in Iraq sent to prison for money
laundering - 30 January 2007
A
court in Washington has sentenced Robert Stein, a former
official of the US
Coalition Provisional Authority (CPA) in Iraq, to nine
years in prison and a fine of US$ 3.6 million for money
laundering. Stein pleaded guilty in February 2006 to
charges of corruption, fraud and money laundering, and
admitted that he had rerouted money from Iraq
reconstruction funds while he served as treasurer for the
CPA in the Al-Hillah region south of Baghdad. With
the help of other CPA officials, he transferred over US$ 2
million to an account belonging to Philip Bloom, an
American businessman established in Romania, who then
laundered the money through a network of Iraqi, Romanian
and Swiss accounts. Stein admitted that he and his
accomplices took bribes amounting to more than US$ 1
million in the form of luxury cars, jewels, computers,
plane tickets and other valuable goods in exchange for
fictional contracts. Philip Bloom pleaded guilty in
March 2006 to charges related to Iraq contracts amounting
to over US$ 8.6 million, and a verdict in his case is
expected in February 2007.
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NASD fines Banc of America for AML failures -
29 January 2007
NASD [formerly known as the National Association of
Securities Dealers, and responsible for the regulation of
the US securities industry] has fined Banc of America
Investment Services, Inc. (BAI) US$ 3 million [about £1.5
million] in connection with the firm's failure to obtain
customer information for certain high-risk accounts and
for failing to have adequate communication with its parent
bank to ensure that BAI's suspicious activity report (SAR)
filing obligations were met. NASD Head of
Enforcement James Shorris said, "BAI fundamentally failed
to meet its obligations with these high risk accounts by
failing to adequately investigate and pursue red flags,
especially in the face of repeated requests for additional
information about the accountholders from its own clearing
firm."
The 34 accounts at issue involved trust and private
investment corporations domiciled in the Isle of Man and
apparently affiliated with one family. The offshore
entities located in the Isle of Man collectively held from
US$ 79 million to US$ 93 million in assets and engaged in
multi-million-dollar wire transfers across international
boundaries. When the accounts were opened in August
2003, BAI had established AML procedures designed to address
certain customer account risks by requiring additional
information from the accountholders, specifically, the names
of the beneficial owners, before conducting substantial
transactions in the accounts. However, from August
2003 to October 2004, BAI did not require the names of the
beneficial owners and never restricted the activities in the
accounts, allowing them to engage in large wire transactions
- even in the face of advice from a senior lawyer at BAI in
March 2004 that BAI should obtain the names of the
beneficial owners, and a determination by the BAI risk
committee in May 2004 that the information must be obtained.
In addition, NASD also found that BAI had an inadequate
compliance programme for reporting suspicious transactions.
While BAI relied on its parent, a bank with its own
independent reporting obligations, to determine whether a
suspicious activity report (SAR) should be filed, BAI did
not have sufficient procedures in place to ensure that there
was adequate communication between BAI and its parent as to
whether a SAR should be filed and whether a SAR had in fact
been filed. Consequently, BAI did not make certain
that its independent obligations regarding the filing of a
SAR were met. BAI was also unable to reliably
incorporate the information that a SAR had been filed into
an ongoing risk assessment of its customers and to evaluate
account activity going forward.
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Hong Kong tightens KYC requirements -
26 January 2007
Remittance agents and money changers in Hong Kong are
now required to
verify customer identity and keep records for all
transactions of HK$ 8,000 [about £525] or more. The
enhanced requirements are found in the amended Organised
and Serious Crimes Ordinance, and have been designed to
meet new international standards (in particular, FATF
Special Recommendation VII). Customers will be
required to produce proof of identity (e.g. Hong Kong
Identity Card, passport) to the remittance agent or money
changer for verification, and also provide their address
and telephone number when remitting, receiving or
exchanging HK$8,000 or more. Remittance agents are also
required to record and retain the particulars of the
sender and the instructor of any remittance transaction if
the two are not the same person. "We strongly
encourage remittance agents to take an additional step to
include the sender's information in the message
accompanying the remittance. This will facilitate
remittance agents to conduct remittances smoothly to
countries that require such information to be attached,"
said Ms Sally Wong, the Hong Kong Commissioner for
Narcotics.
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Noriega to be freed in September 2007 -
24 January 2007
Former Panamanian dictator Manuel Noriega will be
released from prison in Miami on 9 September 2007 and
hopes immediately to board a plane for Panama, his
attorney Frank Rubino has announced. Noriega's
eight-year rule over Panama ended after when the US
invaded Panama on 20 December 1989 to force him from
power. He is in prison on charges of drug
trafficking and money laundering charges; he was sentenced
to a 30-year term for protecting Colombian cocaine
shipments through Panama in the 1980s, but has had his
sentence reduced for good behaviour. Noriega has
also received two 20-year sentences in Panama for the
killings of dissident leader Hugo Spadafora, but Rubino
said Noriega will fight the charges: "When he goes back to
Panama, that case will be able to be reopened. Then
he'll be able to adequately defend himself on that case."
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FSA launches new division to tackle financial crime
-
23 January 2007
Speaking at the Financial Services Authority's Annual
Financial Crime Sector Conference, John Tiner, the FSA's
Chief Executive, unveiled a new division to tackle the
risks posed by the evolution of financial crime. The
new Financial Crime and Intelligence Division will be a
centre of excellence providing the leadership, tools and
expertise needed to meet the increased challenges ahead
and maintain the integrity of the UK's financial sector.
The new division has brought together all of the financial
crime expertise that was previously spread throughout the
FSA; it was created on 1 January 2007 and it is led by
director Philip Robinson. Among its tasks will be
examining the risks facing consumers from increasing
information security and hi-tech crime. The division
will work closely with other regulators, and co-operate
with economic experts from inside and outside the FSA to
create an effective means of measuring the real scale of
the problem posed by financial crime.
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UK publishes draft Money Laundering Regulations 2007
- 22 January 2007
The UK's Treasury has published draft Money Laundering
Regulations 2007. The proposals include:
| extended supervision so that all businesses in the
regulated sector comply with money laundering
requirements, including estate agents, trust and company
service providers and unsecured lenders |
| strict tests to ensure people running money services
businesses and those who help set up trusts and
companies are fit and proper |
| extra checks on customers that firms identify as
posing a high risk of money laundering |
| a requirement to establish the source of wealth for
those in high risk situations, for example those
involving deals with high ranking public officials
overseas |
| a strengthened and risk-based regime in casinos, in
line with, but stricter than, international standards |
| reduced regulatory requirements in low risk areas,
such as employer-led pension funds and child trust fund
administration |
| the ability to rely upon identity checks done by
other firms in certain situations, and |
| greater flexibility in record keeping so that firms
can keep important details rather than whole documents.
|
Ed Balls, Economic Secretary to the Treasury, said:
"These regulations will strengthen further the UK's defences
against money laundering and terrorist finance. By
taking tough new measures where the risks are greatest, we
will crackdown on illegal activity and help force criminals
and would-be terrorists out of the shadows."
Comments on the draft are invited - responses should be
sent to the Treasury by 2 April 2007.
To see the full text of the draft Money Laundering
Regulations 2007,
click here.
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Nigerian former oil minister charged with money
laundering -
18 January 2007
Dan Etete, a former Nigerian oil minister, is to stand
trial in France for money laundering. The trial is a
result of investigations into suspected kickbacks paid by
major oil companies (including France's Elf-Aquitaine -
now part of Total - and Canada's Addax Petroleum) for
drilling rights in Nigeria. Etete served between
1993 and 1998 under the regime of the late Sani Abacha,
and now lives in England. Between 1999 and 2000, he
purchased several luxury properties in France, with a
total value of 15 million euros, and investigators suspect
that he paid for them with the proceeds of bribery.
No trial date has yet been set.
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Stars called to testify at laundering trial of
jeweller -
18 January 2007
Jacob Arabo, jeweller to the stars
and known as "Jacob the Jeweller", wants his celebrity
customers to testify for the defence at his trial.
Arabo was arrested in June 2006 and is accused of
laundering profits for a Detroit-based drug gang by
accepting cash for jewellery without reporting the
transactions properly.
Arabo, who makes
huge gold and diamond-encrusted watches and pendants, is
accused of laundering the equivalent of £140 million.
His lawyer, Benjamin Brafman, says that Arabo wants
footballer David Beckham,
rappers Sean “Diddy” Combs and
Jay-Z and singer Mariah Carey, among others, to testify as
to the jeweller’s good character and how “they themselves
made substantial purchases in cash from Mr Arabo and all
the money was handled properly“. Arabo denies all
charges.
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Dying ARA still has a sharp bite -
18 January 2007
The Assets Recovery Agency (ARA) has frozen an
additional £11.8 million worth of property in the
Manchester area as part of an ongoing investigation into
large scale mortgage fraud and money laundering. The
ARA alleges that 77 properties in the Manchester area have
been funded by the proceeds of financial crime and used to
launder money. The property portfolio, with an
equity value of around £4.7 million, consists largely of
tenanted flats and houses owned and operated by property
companies in Manchester. The allegation is that Paul
Dermot Craven and Brian Pepper established the property
portfolio through the proceeds of unlawful conduct,
including money laundering, tax evasion, false accounting,
mortgage fraud and benefit fraud. This is the latest
phase of an ongoing ARA investigation which last November
and December saw 15 Manchester properties worth around
£1.2 million made the subject of Property Freezing Orders
(PFO) granted by the High Court.
Jane Earl, Director of the ARA, said: "This is a further
demonstration of the power of the Proceeds of Crime Act and
the way in which it is being used to attack crime at all
levels across the UK. The Government has recently
announced proposals to merge ARA with the Serious Organised
Crime Agency. For ARA it is still a matter of business
as usual and we will continue to pursue all current cases as
well as develop new cases. With our partners in the
asset recovery community we will continue to make the
climate as hostile as possible for those who seek to profit
from crime and cause harm to communities."
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UK issues Serious Crime Bill -
17 January 2007
The UK Home Office has
published the Serious Crime Bill - proposed legislation
that, if passed, will grant strong new powers to tackle
serious crime. Proposals include:
|
the introduction of new
civil serious crime prevention orders that can be used
against individuals and organisations |
|
the creation of new
offences to outlaw encouraging or assisting someone to
commit an offence [which will encompass money laundering],
and |
|
improving data-sharing. |
The bill targets those who
operate around organised crime gangs - including money
launderers - and will ensure that anyone connected even
loosely with serious crime groups will face prosecution.
To see the full text of
the Serious Crime Bill,
click here.
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Russian banker charged with murder of Andrei Kozlov
-
17 January 2007
Alexei Frankel,
the head of a private bank in
Moscow, has been charged with the murder of Andrei Kozlov,
the deputy head of the Russian Central Bank. Frankel
is accused of hiring gunmen to assassinate Kozlov in one
of the most high-profile contract killings of recent
years. Prior to his murder on 13 September
2006, Andrei Kozlov had headed a campaign to clean up the
banking sector; the Central Bank revoked the licences of
dozens of private banks, accusing them of many forms of
criminal activity including money laundering. One of
the banks affected was Frankel's VIP Bank, which was
forced to close down last June. Frankel denies the
charges.
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Directors of money transfer firm charged with
laundering -
15 January 2007
Two former directors and founding shareholders of
NETeller, an online money transfer company registered in
the Isle of Man, have been charged in the United States
with laundering billions of dollars in illegal gambling
proceeds. Canadians Stephen Lawrence and John
Lefebvre were charged in Manhattan with conspiring to
transfer funds with the intent to promote illegal
gambling, and face a maximum sentence of 20 years in
prison.
Money transfer companies like NETeller allow gambling
companies to transfer money collected from US gamblers to
bank accounts outside the United States. When Lawrence
and Lefebvre helped take NETeller public in the UK in 2004,
they "conceded that they were risking prosecution by the
government of the United States under existing or future
federal laws," according to US Attorney Michael Garcia.
Prosecutors said that NETeller processed more than US$7.3
billion [about £3.7 billion] in transactions in 2005, and
more than 95% of its revenue from transfers involved
Internet gambling companies.
NETeller's shares have fallen 60% since September 2006,
following the arrests in the US of executives from British
companies involved in online sports betting and the passage
in October of a US law barring banks from transactions
involving Internet gambling.
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Car dealer admits laundering proceeds of fraud -
12 January 2007
A car dealer has
admitted using his business to help launder the proceeds
of a million pound bank fraud. Neil Kynoch, owner of
Berkshire Motor World in Winkfield, was part of a
conspiracy in which bank insiders at HSBC, Barclays and
the Halifax allegedly hacked into the accounts of wealthy
customers to fleece them out of GBP 1.3 million.
Dozens of account holders had their identities stolen in
the year-long conspiracy; even a dead woman's account was
drained of GBP 114,000.
Kynoch's company was one
of a string of car dealerships used to launder GBP 400,000
of stolen cash. Under the pretence of having purchased
a car, the fraudsters transferred money into the dealer's
business account, and the dealer wrote a cheque back to the
gang's account, keeping a percentage for himself.
Kynoch initially denied his involvement but changed his
plea. He will be sentenced following the trial of the
other five accused.
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Assets Recovery Agency to be abolished -
11 January 2007
The Assets Recovery Agency, set up in 2002 to take
money from criminals, is to be abolished. The
problem seems to be that the ARA has seized only £8
million from criminals, but cost £60 million to set up.
However, although the ARA will cease to exist as an
agency, its work and investigations will continue.
It is understood that the Serious Organised Crime Agency
(set up in 2006 to tackle drug trafficking and other major
crime) will take over the assets recovery functions, and
there may be additional powers for prosecutors to seize
money, though this has not been confirmed.
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New UN chief publishes his personal financial
records -
10 January 2007
The new United Nations Secretary-General, Ban Ki Moon,
has released his personal financial records, making him
the first UN leader to do so publicly. In addition,
Ban also has encouraged other high-level UN officials to
disclose their finances publicly. UN guidelines call
for all high-level UN staff members to disclose their
personal financial records to an ethics unit, but they are
not required to make them public. The
Secretary-General, however, is an elected official, and
not a member of the UN staff, so he has no legal
obligation to file. Ban, a former foreign minister
of South Korea, was required to file disclosure statements
as a part of his role in the South Korean government.
Transparency International, the anti-corruption body,
applauded Ban's decision. “We celebrate this gesture
of open disclosure of information as a move toward greater
transparency and accountability within the UN,” said David
Nussbaum, Transparency International Chief Executive.
“Alongside Ban, we also urge others – inside and outside of
the UN – to follow this example.” The United Nations
Convention against Corruption (UNCAC), which was signed
three years ago and came into force in 2005, has extensive
provisions for preventative measures in the public and
private sectors. Article 52 of the convention makes
specific reference to this stating the need for “effective
financial disclosure systems for appropriate public
officials”.
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Arrest warrant issued for British mafia wife -
8 January 2007
The Italian authorities have confirmed that on 12
December they issued an arrest warrant for Ann Hathaway, a
British woman married to jailed "Godfather" Antonio
Rinzivillo. Ms Hathaway is accused in the warrant of
mafia association. Rocco Ligouri, the Italian
prosecutor in charge of the investigation, said: "The
charge that Ann Hathaway faces is one of Mafia
association. We believe that she was acting as the
messenger between her husband in prison and other jailed
members of the gang and people on the outside. We
believe that she was involved in money laundering through
pizzerias and building contractors." Ms Hathaway is
believed to have returned to the UK from Rome before
Christmas, and to have continued running the family crime
empire from her home in Lancashire. 88 people have
already been arrested in the Sicily-based operation, and
police have seized more than £14 million in family assets
including two building companies, a supermarket, a
pizzeria and two haulage firms as part of the operation -
codenamed Operation Choice Cuts because one of the
family's alleged money laundering fronts was a meat
wholesaler.
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IMF publishes detailed assessment of Denmark's AML
regime -
5 January 2007
The International Monetary Fund has published Country
Report 07/2 - "Denmark: Detailed Assessment of Anti-Money
Laundering and Combating the Financing of Terrorism".
The executive summary suggests that although Denmark has a
generally good AML/CFT regime, new legislation that came
into force in March 2006 needs more time to bed in, with
some key provisions still not implemented. Concern
is expressed about the low level of submission of SARs by
all sectors. There is also further work to be done
on improving the regimes in Greenland and the Faroe
Islands.
To download the full 252-page report,
click here.
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