Texas Court Puts a Halt to Corporate Transparency Act: Government Challenges the Decision12 December, 2024 3 minutes read On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction staying enforcement of the reporting requirements of the Corporate Transparency Act (CTA). The court’s decision was a preliminary injunction and not a permanent one; thus, this decision is only temporary until further orders by the court. The government wasted no time in filing an appeal, which came on December 5, 2024, indicating that the litigation around the CTA is far from over.Meanwhile, all eyes watched the move of the Financial Crimes Enforcement Network, FinCEN – the enforcement agency behind the BOI reporting requirements, for further developments. Finally, it spoke with an official alert: businesses currently are not obliged to submit a report according to BOI and will not be subject to any penalty for violation in filing while such a court order is standing. Meanwhile, FinCEN clarified that an enterprise may also submit the report on a voluntary basis if desired.It further stated:On December 3, 2024, in the case of Texas Top Cop Shop, Inc. v. Garland, a federal court in Texas issued a nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA) and pausing all reporting deadlines. The Department of Justice, representing the Treasury, appealed the decision on December 5.This case is one of several challenges facing the CTA nationwide. While some courts have upheld the Act, including rulings in Virginia and Oregon, the government maintains that the CTA is constitutional.Until the litigation has been sorted out, FinCEN will comply with the Texas court’s order. For now, companies are not obliged to report their ownership structure, and thus, no fines against them in this respect would be levied. Nevertheless, if they wish to, companies can file reports voluntarily.The FinCEN statement doesn’t address what would occur if the injunction is removed. Companies need to choose to file their BOI report based on the deadline of January 1, 2025, or wait it out and see how events unfold over the coming weeks. If nothing has changed by the end of the year, they will need to decide whether to file for security or rely on the injunction and FinCEN statement.With FinCEN’s statement, reporting companies would be able to choose to wait and see how the court case evolves. If the injunction is lifted, it is expected that companies will be given a reasonable period to comply, although it may be shorter than preferred. Until FinCEN gives more specific guidance, the companies will need to decide whether to file now or hold off.The consequences for willful non-filing of the BOI reporting requirements are severe: up to $500 per day in civil fines, up to two years of imprisonment, and a $10,000 fine in criminal penalties. Because of the Texas court order, however, reporting companies are presently not obligated to file BOI information with FinCEN and will not be subject to liability for non-compliance during the duration of the order.Read More:Corporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOsCorporate Transparency Act: Congress Members Request for Delay
UK Commits to Public Beneficial Ownership Registers By Overcoming Territorial Barriers21 November, 2024 2 minutes read On 17th November, the British Parliament had session in which the declaration by UK Foreign Office was made about the implementation of fully public beneficiary registers. The Secretary of State for Commonwealth, Foreign and Development Affairs was questioned by a member of Parliament, Phil Brickell, about the establishment of fully public registers.MP Phil Brickell sought clarification about the ultimate expectation of the department regarding the minimum standards for access to the beneficial owners’ public registers in the overseas territories. The UK government re-affirmed its commitment to make public beneficial ownership registers even more accessible despite the privacy concerns of the Overseas Territories (OT) that brought this issue before it. The main objective of publishing such registers is to show the actual owners of the company and deter money laundering cases.The focus on the decision was sparked after the backlash received from UK Overseas Territories. The UK government has estimated that such territories are actually engaged in enabling a lot of illicit funds across borders.During the said session, the members of parliament reported the territory’s insignificant approach in introducing public registers by the end of the previous year, 2023. However, almost all those overseas territories have failed to do so. During the session, parliamentarians voiced their serious concerns over the failure of overseas territories to establish beneficial ownership registers. According to sources, up to 40% of global illicit funds are traded through these territories. Therefore, a coalition of 40 members of parliament called upon Foreign Secretary David Lammy to ‘pressurize’ the overseas territories and the crown dependencies on making the beneficial ownership registers public.These registers play a very crucial role in unmasking the real owner of a company. Additionally, analysis of these databases is also required to prevent the crossing of unauthorized monies across borders. The conclusion of this session was declared by the Minister of State, Stephen Doughty, who suggested that engagement with several OTs is in progress, and this will briefly be discussed with the Joint Ministerial Council leaders next week. In the near future, further progress by other territories is anticipated as well. Suggested Read: Urgency Builds as New Guidance Releases on UK’s ‘Failure to Prevent Fraud’ OffenseCorporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOs
Corporate Transparency Act: Congress Members Request for Delay14 November, 2024 3 minutes read The Financial Crimes Enforcement Network (FinCEN) has received a request from more than 40 members of Congress to postpone the Corporate Transparency Act (CTA) by one year. According to the act, companies must submit a corporate transparency report by January 1.The request, led by Rep. Lisa McClain (R-MI), highlights concerns that many small businesses are unaware of the new requirements.“Without a delay, millions of small business owners could face fines up to $250,000 and possible jail time for non-compliance,” the letter stated.While the CTA aims to prevent shell companies from engaging in illegal activities, in the broader language, it would impact nearly all small U.S. businesses with under $5 million in revenue and fewer than 20 employees.The letter further stated that the CTA has complex reporting rules that may put sensitive personal data at risk, primarily including critical business data such as the UBO’ names, addresses, birthdays, and ID numbers.The Congress Members also highlighted that FinCEN expects over 32 million businesses to be impacted by the new requirements this year, with an additional 6 million affected each following year as new businesses will be formed. As per FinCEN’s report, only about 10% of required submissions for the Corporate Transparency Act (CTA) have been received so far. Regarding this, the letter further raised concern that this low compliance rate is due to a widespread lack of awareness among small businesses.It further stated that more time would be required for regulators and other stakeholders to continue reaching out to impacted small firms in light of this enormous education gap.The email from an S Corporation said lawmakers are urging a delay to give businesses more time to understand and comply with the new reporting rules. It also emphasized that they make themselves heard more by learning more about the new requirements.For an in-depth insight into the Corporate Transparency Act, The U.S. Chamber of Commerce released an article for businesses. This is due to the looming deadline for filing the corporate transparency reports with UBO data. Different groups have made attempts to hinder the CTA ever since it was enacted in 2021.Regarding the unconstitutional nature of the CTA, the Alabama U.S. District Court also made a decision. Even though it was designed to safeguard National Small Business Association (NSBA) members, 32 million additional small businesses nationwide still had to comply with filing requirements.A number of other small businesses have also requested different bills that would delay the legislation; however, none of them have passed through Congress.Suggested Read: Corporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOsFinCEN Issues New Guide on Corporate Transparency Act Compliance
Urgency Builds as New Guidance Releases on UK’s ‘Failure to Prevent Fraud’ Offense11 November, 2024 3 minutes read On November 6, 2024, the UK published guidance on the new ‘Failure to Prevent Fraud’ offense provided for by the Economic Crime and Corporate Transparency Act 2023, which will be affected September 1, 2025 onwards. Large organizations will be held liable under this new legislation if they fail to take necessary measures to avoid fraud on the part of any employee or associate.An organization will be held liable if it fails to prevent fraud on its behalf carried out by any of its employees, agents, or subsidiaries for organizational or client gain. It is interesting to note that prosecutors would not have to prove that the senior managers were aware of or conducted the fraud.Critical Points of FTPF OffenseThe new offense of ‘Failure to Prevent Fraud’ has been aimed at companies, yet individuals who commit or facilitate fraud may still be prosecuted separately from the company.Two of the following criteria will be met by the offense that applies to major organizations: a turnover of over £36 million, a balance sheet total of over £18 million, or more than 250 workers. These limits are based on the organization and group, including subsidiaries, and whether they are in the United Kingdom.The ‘Failure to Prevent Fraud’ offense applies to UK and non-UK organizations where fraud occurs in the UK or impacts UK parties. Non-UK firms may be prosecuted if fraud happens in the UK, but UK firms’ overseas fraud is not covered. By demonstrating that they had appropriate fraud protection measures in place at the time, fraud organizations can defend themselves.The Guidance gives organizations six flexible and outcome-focused principles to use when designing fraud prevention frameworks. It emphasizes that the procedure needs to be proportionate to the risks the organization is exposed to; this allows for adjustment depending on particular operational needs and circumstances. These include:Top Level CommitmentRisk AssessmentProportionate Risk-based Prevention ProceduresDue diligenceCommunication (including training and whistleblowing)Monitoring and reviewIn Summary: FTPF Offense Aims to Reform the Corporate Culture WhereProsecutors will no longer have to prove involvement by individuals who represent the “directing mind and will” of the company but instead by a larger population of “senior managers,” most notably the ECCTA’s overhaul of the “identification doctrine,” which is anticipated to increase the likelihood and efficacy of corporate prosecutions compared to the past.Authorities and regulators in the UK will be paying more attention to company culture. The importance of business culture has been emphasized in the Guidance, and the UK government has made it clear time and time again that it wants the FTPF offense to lead to a significant change in corporate culture in order to reduce fraud.Suggested Read:Corporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOsUK Law Society Ensures Solicitors Complying With AML Measures
Corporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOs23 October, 2024 2 minutes read Effective as of 2024, the U.S. Corporate Transparency Act will enforce new regulations that necessitate many domestic U.S. corporations to file reports to the Financial Crimes Enforcement Network, divulging details about their Ultimate Beneficial Owners (UBOs). This proactive measure is expected to curb illicit financial activities worldwide, such as money laundering and terrorist funding, by removing the veil of anonymity from shell companies.This is a new law that took effect after the 1st day of January 2024, making it compulsory for U.S. companies, including government contractors, tribal entities, and commercial businesses, to present their beneficial ownership to the Financial Crimes Enforcement Network, commonly referred to as FinCEN. Businesses that were established prior to that will have up to January 1, 2025, to make their Beneficial Ownership Information Report, BOIR. For those established after this date, it is a bit more stringent: reports must be filed in strict timelines set according to the date when each of these was formed.Only entities that meet specific exemption requirements, such as ‘large operating companies,’ are exempted from the reporting requirements. There’s been a fair share of confusion-mostly this time around, of course, and especially that which pertains to the Corporate Transparency Act office requirements, at least so far at least in showing whether a home office qualifies, thereby making it necessary to be separate and regularly used for business purposes. The other businesses are confusingly unsure of which to apply for the $5 million gross receipts requirement. Only U.S. sales are included; when they no longer have an exemption, a BOIR is filed within 30 days.Things get even more complicated with dissolved entities and tribal entities; rules depend on formation, date of dissolution, and the type of legal jurisdiction.In case of failure to comply with the CTA regulations, stakeholders will be exposed to heavy civil penalties, criminal fines, and even imprisonment. FinCEN aims to release UBO information in five phases, but until April 18, 2024, it did not accept any request for accessing UBO data. Moreover, it is not yet clear when it will give a new update regarding accepting requests to access UBO information. Suggested Read: FinCEN Issues New Guide on Corporate Transparency Act Compliance
FinCEN Tightens Real Estate Rules: New Reporting Mandates for Title Companies18 October, 2024 2 minutes read A new set of regulations has been implemented by the Financial Crimes Enforcement Network, or FinCEN, a U.S. bureau, regarding its Geographic Targeting Orders (GTOs). It mandates that title insurance providers disclose the true people who operate the shell corporations used in unfinanced residential real estate transactions. The renewed GTOs will be in place from October 16, 2023, through April 14, 2025, and will continue to assist FinCEN in tracing illicit funds and combatting financial crimes. This will give FinCEN much-needed updating of data that the agency is gathering as part of its ongoing regulatory efforts at targeting money laundering in real estate markets.According to the release:FinCEN renewed GTOs covering key metropolitan areas in California, Florida, New York, and Texas, as well as Washington, D.C.To the great majority of covered areas, the purchase price threshold stays at $300,000, but an exception is made for Baltimore, where it is lowered to $50,000.It will specifically target shell companies in non-financed deals in real estate, which is targeted to crack down on illicit financial activity, making it possible to track suspect transactions and money laundering attempts in high-value markets.Additionally, the agency also said: “FinCEN appreciates the continued assistance and cooperation of title insurance companies and the American Land Title Association in protecting real estate markets from abuse by illicit actors”A new rule requiring professionals to record non-financed residential real estate transfers to trusts or legal organizations was implemented by FinCEN in August 2024. This nationwide rule will be applicable from December 1, 2025 onwards, to replace the existing Geographic Targeting Orders (GTOs).Also Read: Canada’s Financial Authority Imposes $7.4m Fine on Royal Bank of CanadaUS Announces Enforcement Actions to Regulate Cryptocurrency Businesses
FinCEN Issues New Guide on Corporate Transparency Act Compliance18 September, 2024 2 minutes read Effective from January 1, 2024, the Corporate Transparency Act requires filing concerning certain domestic and foreign entities operating within the United States with respect to disclosing information concerning their beneficial owners to FinCEN.It was enacted to prevent the abuse of anonymous shell companies for illegal financial activities, among other things, such as money laundering and terrorist financing. Despite FinCEN’s efforts to clear up confusion with a Small Entity Compliance Guide and over 100 FAQs about BOI, much remains unclear. Violating the Corporate Transparency Act can result in harsh penalties or even imprisonment. This update shall outline some of the pending challenges arising in 2024, particularly about those matters for which there seems to be no clear guidance by FinCEN.On March 1, 2024, the United States District Court for the Northern District of Alabama held that the CTA was unlawful because it was not included in Congress’s authority. However, FinCEN maintains that all other reporting entities are still obligated to follow the law until ongoing litigation is resolved.There are a total of 23 exclusions for businesses that are already heavily regulated by either the federal or state governments, in addition to the “large operating company” exemption. Nevertheless, the exemption does not apply to single-member LLCs that are considered disregarded entities for tax purposes since they cannot file their own tax return or consolidate employees or gross receipts with affiliated entities.According to the Corporate Transparency Act, any reporting firm whose ownership stakes are fully controlled or held by an exempted body is spared. However, FinCEN has not explained the meaning of “control” in this respect, which is vaguely comprehended. Primarily, it affects entities with management incentive interests or joint ventures with non-exempt entities. In order to avoid falling into a potential trap, the reporting company may file CTA reports even in cases where it is not quite sure whether it is exempt or not.More importantly, it is the call of the hour to ensure that rules do not violate existing agreements. An extremely fast fact-sensitive approach is required to comply with the Corporate Transparency Act, and FinCEN guidance is still in development. The entities falling under the purview of the Corporate Transparency Act shall remain vigilant and get professional advice to keep themselves compliant.
Canada’s Financial Authority Imposes $7.4m Fine on Royal Bank of Canada07 December, 2023 3 minutes read The Canadian anti-money laundering regulatory body levied a C$7.4m penalty on the Royal Bank of Canada (RBC) for not reporting suspicious activities and failing to comply with AML measures. The Financial Transactions and Reports Centre (FINTRAC) disclosed that RBC did not report suspicious transactions to the agency involved in money laundering and terrorist financing. It showed reasonable deficiencies in its alerting and real-time monitoring system. The regulatory body investigates by electronically shifting the bulk of information yearly from banks, insurance, financial service providers, etc. After verifying various data the bank did not report, the agency disclosed to the country’s police and legislative agencies the RBC’s inadequate business verification system and loopholes in their compliance measures. The agency’s $7.4m penalty is the largest fine ever imposed on any bank. Moreover, the agency claimed they investigated 136 suspicious transactions, of which 16 indicated ties with money laundering and terrorist financing, which the bank did not report. These are the transactions in which the bank assists the clients but fails to report the significant amount they transact by breaching the AML policies. The regulatory body also revealed the deficiencies in the RBC risk assessment process, including noncompliance with the latest obligations to combat money laundering and terrorist financing. The FINTRAC director stated in a statement the agency will continue to work with businesses to comply with international standards and enhance their AML measures to secure the integrity of the global economy. The Director stated, “We will also be firm in ensuring that businesses continue to do their part, and we will take appropriate actions when they are needed.”In a circular, Royal Bank Canada’s spokesperson, Gillian McArdle, asserted,” We chose not to appeal but believe the fine is not commensurate with an administrative matter where there is no connection to money laundering or terrorist financing offences. Equally important, no finding exists that anyone exercised judgment in bad faith or knowingly contributed to violations.” The financial crime prevention expert, Garry Clement, stated, “What we’re seeing is FINTRAC taking a different approach, and they have in the past… I don’t think there are going to be any more free passes.”According to the FINTRAC, around May 2021, RBC was not reporting various suspicious transaction reports for each branch location, and the company lacked investor protections as well as compliance audits for putting AML procedures into place. Paquet had made public in a recent speech that Fintrac was concerned that certain companies were falling in compliance with user onboarding measures. The government also stated that administrative and financial penalties are not intended to penalize firms but rather to motivate them to alter their behaviour. The FINTRAC imposes 125 penalties across various sectors that are not complying with obligations to secure the country’s financial industry since it receives regulatory implementation authority to do so for 15 years. Suggested Reads:US Announces Enforcement Actions to Regulate Cryptocurrency Businesses UK Discloses Final Proposal to Regulate Crypto Trading BusinessesFATF Endorses Latest AML Regulations in the Final Plenary Meeting
US Announces Enforcement Actions to Regulate Cryptocurrency Businesses24 November, 2023 3 minutes read The DOJ will launch a series of enforcement actions to regulate virtual asset service providers (VASPs) in the upcoming week. These actions are against the individuals and entities that are using crypto businesses in illegal terms. The department collaborates with US federal agencies to supervise virtual assets and crack down on their involvement in ransomware attacks, tax evasion, and other crimes. They investigated significant cryptocurrency platforms, wallets, and trading companies to monitor AML compliance system loopholes. The US government also conducted extensive investigations into the use of cryptocurrency in money laundering. In addition, the DOJ has strengthened its partnerships with other countries to regulate cryptocurrency activity.Moreover, to investigate criminal activity and hold offenders accountable, the DOJ established a special task force dedicated to investigating Ransomware and Digital Extortion. This task force coordinated with other regional agencies and foreign partners. Previously, the DOJ arrested two Chinese nationalists due to laundering $100 million around the globe. They are also involved with North Korean hackers to steal cryptocurrency from various virtual asset platforms. The DOJ task force also recovered $2.3 million from hackers in March 2021 after they hacked the US gasoline and disrupted their system for days. Most of these criminals faced civil and jurisdiction charges. Some shell companies conduct settlements with the governing bodies. However, the DOJ did not reveal the names of these scammers and companies’ shareholders. The DOJ’s enforcement measures against cryptocurrencies demonstrate the administration of Governor Biden’s dedication to the fight against money laundering. Concerns about consumer safety, the state of the economy, and financial stability have prompted some significant nations to enact new regulations governing cryptocurrencies and to support penalties for wallets that operate illegally. The DOJ’s enforcement will significantly impact the cryptocurrency market and assist regulatory bodies in conducting investor due diligence and individual users who are involved in illicit activities. They also emphasized other nations to impose additional regulations or outright ban the trade and mining of cryptocurrencies, claiming issues about national security, consumer protection, the environment, and financial stability. The US government has also implemented rules that require crypto exchanges to report suspicious activity to authorities. In addition, the government has tightened its security measures to prevent cryptocurrency fraud and criminal activity. Finally, the government is actively working to create a legal framework to regulate the cryptocurrency industry.Suggested Reads: UK Discloses Final Proposal to Regulate Crypto Trading BusinessesEuropean Union Introduces MiCA Laws to Regulate Opaque Crypto FirmsUS Charges Chinese Companies to Leverage Crypto For Illicit Activities
Turkey Purposes New Rigid Regulations to Register Crypto Businesses21 November, 2023 3 minutes read Turkey’s regulatory authorities are designing strict measures to regulate crypto service providers to combat money laundering and terrorist financing.The new regulations are proposed by Turkey’s regulatory authorities to safeguard them from various financial crimes and assist them in complying with international Financial Action Task Force (FATF) standards. The FATF added Turkey to increase the jurisdiction monitoring list in July 2021, which damaged the global reputation of the country and broke investors’ confidence. According to regulatory authorities, these latest legalisations will assist in convincing global financial watchdog to get off the grey list. These crypto business verification regulations will show the interest of Turkey’s government in developing a secure environment for virtual asset users and investors. Turkey’s government claimed last month that crypto supports the country’s economy and, in the fight against inflation as well as the Lira, demands alternative assets to maintain its international position. The director at BlockchainIST, a research and development center for blockchain technology, Bora Erdamar, stated, “Introducing certain licensing standards will be one of the top priorities in the new regulation. It will prevent abuse of the system.” These regulations ensure authorities that crypto service providers comply with the latest Ultimate Beneficiary Owners (UBOs) measures. The director also claimed the regulations would be proactive by utilizing robust technology to prevent money laundering and terrorist financing as well as detect the source of income and reserved virtual assets in crypto wallets. The chief executive of the cryptocurrency exchange platform in Turkey, Mucahit Donmez, stated, “We have been observing that the interest in crypto assets in Turkey is on a continuous rise. There is currently a lack of regulation in this area. We think that ensuring the security of users’ assets and setting up certain criteria regarding minimum capital requirements, listings and custody, and requirements for platforms to obtain operation licenses will contribute positively to the sector.” Previously, Finance Minister, Mehmet Simsek, stated in October that Ankara would introduce new crypto asset laws as soon as possible in order to comply with the final recommendation of the FATF. This proposal would enable Turkey to remove itself from the grey list, a status that can impact a country’s image and open new doors to international investments. Suggested Reads: Turkey Plans to Introduce Strict Regulations to Secure Crypto BusinessesEuropean Union Introduces MiCA Laws to Regulate Opaque Crypto FirmsUK Discloses Final Proposal to Regulate Crypto Trading Businesses
UK Discloses Final Proposal to Regulate Crypto Trading Businesses08 November, 2023 3 minutes read The UK treasury has launched its anticipated regulations to supervise crypto firms and prevent the virtual asset sector from money laundering and terrorist financing crimes. The UK regulatory authorities published a legal framework to regulate the crypto industry and stablecoins. The latest regulations show the determination of UK law enforcement agencies to create a “safe, transparent, and innovative” crypto sector that protects customer investment and global financial stability. The regulations aim to create a balance between protecting investors from fraud and allowing innovation in the sector. The UK crypto laws also seek to ensure global financial stability by establishing clear standards for crypto asset service providers. Implementing these strict obligations will enhance the security of virtual assets and assist financial institutes in business verification during onboarding. According to the new regulations, “stable tokens” will be introduced, which are crypto coins, to stabilize their value with the crypto basket. These tokens could include stablecoins and fiat currencies as well as contracts to adjust their demand and supply. In the published papers, they claimed that cryptocurrencies pose significant threats to the country’s financial system, mainly when it is used as a store value. The new regulations claimed that stablecoins and other cryptocurrencies that contain any values and are used in trading should be regulated according to traditional payment services. They also mentioned the KYB compliance system and controls in the crypto trading firms. The crypto laws will mitigate risk for consumers and investors, including compliance with anti-money laundering and counter-terrorism financing. The UK regulatory organization will issue stablecoins, the Financial Conduct Authority (FCA), and guide investors clearly and accurately about the nature and risk of their tokens. The paper also emphasizes the government’s intentions to develop a rigid system and uphold international standards to protect the crypto industry from financial crimes. They also added the supervision of emerging trends in the visual assets sector to conduct risk assessment. The UK’s government also proposed that other digital businesses and platforms such as crypto exchange, trading, and intermediaries must comply with international AML standards. Moreover, these entities also have to uphold the FCA rules according to their services. These UK perimeters are only enforced on fait-backed stablecoins, while it did not cover the other coins backed by commodities, cryptoassets, or algorithms. However, the UK government claimed that they will keep these stablecoins under review and notice their activities to combat money laundering. Additionally, they may extend the obligations in the future for these coins. The authority stated the legislation of these rules will be implemented as soon as the parliament approves it. In the papers, the UK’s government threatened the crypto firms that they could face hefty fines and jurisdictions for non-compliance with these virtual asset regulations. Suggested Reads: European Union Introduces MiCA Laws to Regulate Opaque Crypto FirmsUK Law Society Ensures Solicitors Complying With AML MeasuresUS Charges Chinese Companies to Leverage Crypto For Illicit Activities
Turkey Plans to Introduce Strict Regulations to Secure Crypto Businesses03 November, 2023 3 minutes read Turkey is preparing new regulations for virtual asset service providers to regulate crypto trading platforms and prevent them from money laundering and terrorist financing. Turkey’s government is implementing strict laws on crypto assets to ensure they comply with the international watchdog, Financial Action Task Force (FATF), standards to delist them from the increased AML monitoring list. Turkey’s finance minister claimed they had overcome almost all 40 recommendations from the FATF, but the remaining issue is in the latest crypto transaction laws, and after complying with laws, they may exit from the gray list. Finance Minister of Turkey, Mehmet Simsek, stated, “the only remaining issue within the scope of technical compliance is the work related to crypto assets. We will submit a law proposal on crypto-assets to the parliament soon. After that, there will be no reason for Turkey to stay on that gray list if there are no other political considerations.”The FATF added Turkey to the gray list in 2021 due to the inadequate money laundering and terrorist financing system. According to the FATF report on Turkey’s compliance process, the annual plenary meeting at Paris headquarters on Oct 30th determined that Turkey adhered to all of the 40 recommendations set by the watchdog except the technical compliance in crypto assets. Simsek stressed that the new regulations are solely about the crypto assets and their link to money laundering and terrorist financing but do not specify the legal changes in the existing laws. He also emphasized the essential need for a money laundering prevention system in the country’s financial system. It will improve the country’s reputation and international investors, raising its economy. However, the country’s law enforcement agencies still have shortcomings that damage the global financial ecosystem, including the loopholes in their crypto registering platforms. Turkey needs to meet international standards to prevent being used by bad actors for money laundering and terrorist financing. The compliance system will create a positive image in the global market and raise investors’ interest in the country’s economy. The international community also demands that the Turkish government plan a legal framework for crypto assets service providers and prevent terrorist financing and money laundering. Once Turkey fully complied with all the regulations, FATF had no reason to keep it on the “gray list.”Suggested Reads: FATF Endorses Latest AML Regulations in the Final Plenary MeetingUK Law Society Ensures Solicitors Complying With AML Measures
FATF Endorses Latest AML Regulations in the Final Plenary Meeting31 October, 2023 3 minutes read Financial Action Task Force (FATF) conducted its annual plenary meeting of 2023 at the headquarters in Paris to strengthen the global financial ecosystem and prevent businesses from crimes related to money laundering. The fourth plenary meeting of FATF concluded under the supervision of President T. Raja Kumar. In the three-day meetings, members from international organizations and law enforcement agencies participated to discuss the latest innovations in AML compliance for businesses and entities. During three days of meetings, members discussed key points to protect organizations from money laundering, terrorist financing, and growing financial crimes. In the plenary meeting, members also discussed the rising money laundering cases in the Middle East. The FATF agreed to disclose data about crowdfunding for terrorism financing. Furthermore, delegates endorsed amendments to enhance measures to verify the businesses and non-profit organizations (NPOs). Additionally, Financial Action Task Force (FATF) works on the country’s criminalization-prevention system and controls. FATF senior officials discussed the loopholes in the global AML measures to fully and adequately protect companies from financial crimes. This includes analyzing the onboarding system and Know Your Business (KYB) derivatives to secure organizations. They also urged member countries to strengthen law enforcement authorities to break the financial sources of the terrorist groups and destroy their landscape to accomplish a secure economic ecosystem.The significant amendments are approved by the member states, which will create strict policies to verify businesses and users. It will raise the bar for criminals to process their illicit activities and provide real-time monitoring to report suspicious transactions of the customers. To further enhance security, they empowered the asset recovery networks (ARINs) and enforced collaboration with other financial authorities to accelerate asset-seizing procedures in money laundering cases.The FATF added Indonesia as the 40th member of the delegation. The country passed a strict FATF investigation process, and after that, they got approval from all plenary meeting members. The delegation emphasized the Indonesian government’s compliance with strict regulations and resolved the remaining key points for a secure economic system. Members also stressed the evolving technology and proliferation of financial crimes through digital platforms. Effective and efficient AML measures are needed to secure the latest fintech industry. The amount of transactional organized crimes, including cyber-enabled fraud, has increased rapidly in recent years as digitalization reached worldwide. These kinds of crimes have the potential to cause enormous financial losses and damage confidence in digital verification platforms, which can have a terrible effect on people, organizations, and economies all around the world.Suggested Reads: FinCEN Intends to Utilize Digital Streaming Platforms to Spread Beneficial Ownership Reporting MeasuresEuropean Union Introduces MiCA Laws to Regulate Opaque Crypto FirmsCFATF Successfully Concludes 4th Round Mutual Evaluation of Guyana
CySEC Warns Non-AML Compliant Cyprus Investment Firms27 October, 2023 3 minutes read Cyprus Securities and Exchange Commission (CySEC) alerted the non-compliant AML firms, stressed board members to obligate their duties, and uphold international standards.CySEC reminds the board members and investment firms of the regulatory policies and their vital role in the country’s financial growth. They threaten non-compliant firms to face hefty fines and sanctions if they do not respond promptly and enhance their AML compliance system. According to the commission announcement, Cyprus Securities and Exchange Commission (CySEC) stated investment firms should “enhance their performance and promote a culture of integrity and high ethical standards” because the last supervision review of investing firms disclosed various loopholes in the compliance system. The commission issued this warning to alert the investing firms because from now onward, there would be no tolerance for non-compliance in financial institutes. CySEC chairman, George Theocharides, stressed compliance with the legal framework in investing organizations, “Cyprus is open for business, but only to the ones that take into consideration the best interest of their clients by fulfilling at all times their regulatory requirements. This is the basis for a healthy, strong market, with new products and services deploying financial technology and innovation.”The chairman also emphasized that they will arrange meetings and workshops for investment firms and small businesses to guide them about international standards. It will also highlight the importance of company verification and investor protection. CySEC also outlines rigid regulations as well as the European Securities and Markets Authority (ESMA) to follow the steps of the international regulatory authority, the Financial Action Task Force (FATF). It will strengthen cross-border retail financial service providers. Investment firms and other financial institutes should prepare for the rigid regulations that are on the way. Organizations that are adequately complying and utilizing robust AML measures will survive the strict non-compliance penalties. Theocharides also explained that “CySEC takes any misconduct by supervised entities seriously and firmly believes that through intense supervision and continuous monitoring, investors’ protection and market integrity will be enhanced.” He also stated that international retail businesses, primarily those that deal in high-risk products, are continuously vulnerable to the country’s financial ecosystem. For violations of the Financial Services and Activities and Regulated Markets Law of 2017, CySEC has fined CIFs a total of €5.3 million over the previous three years, including a €1 million penalty against a sole company. According to the chairman, Cyprus is an open market for all those businesses that comply with rigid regulations, secure KYB measures, and bolster the market. CySEC is also investing in human resources and technology to enhance the strength of its supervisory structure to effectively and efficiently monitor the regulatory framework of investment firms. The commission underlined in a warning statement, “CySEC has also moved to reject applications for acquiring a CIF license, withdraw licenses, and suspended licenses until specific actions were taken to remediate weaknesses or omissions identified during supervisory checks.”Suggested Reads: FinCEN Intends to Utilize Digital Streaming Platforms to Spread Beneficial Ownership Reporting MeasuresUK Law Society Ensures Solicitors Complying With AML MeasuresEuropean Union Introduces MiCA Laws to Regulate Opaque Crypto Firms
FinCEN Intends to Utilize Digital Streaming Platforms to Spread Beneficial Ownership Reporting Measures23 October, 2023 3 minutes read International law enforcement FinCEN is all set to deploy online streaming platform campaigns to spread awareness for financial institutes to guide them about beneficial ownership reporting requirements. FinCEN plans vast educational videos to teach companies and businesses about the new amendments in the beneficial ownership reporting measures to combat money laundering and terrorist financing. They designed a campaign to broadcast the videos on YouTube and other digital streaming platforms. Financial Crimes Enforcement Network (FinCEN) will also arrange meetings with small businesses, host webinars, and confront other legal entities about their upcoming rigid regulations to report information about companies’ real owners. During the recent press conference, the FinCEN director stated, “In short, we are going to hit all forms of media to educate about beneficial ownership information reporting. Not only will we be leveraging the web and a YouTube series but also leveraging every other type of outreach through our website [and] through a partnership with different public affairs outfits, we are definitely trying to get the message out.”Referencing a new FinCEN publication to clarify the obligations for reporting Beneficial Ownership Information (BOI), the director added, “Gone on the road, so far, to engage with small businesses in different congressional districts. You can expect we will continue that and partner with stakeholder organizations, especially at the Secretary of State level.” The head of the global sanctions and risk in the Association of Certified Anti-Money Laundering Specialists (ACAMS) appreciated FinCEN for using digital platforms and said that small businesses would be excited to watch FinCEN take charge of spreading the latest regulation in business verification. He stated, “I think that’s going to be a relief to a lot of people in this room because I think the feeling, the worry, was that financial institutions would be the ones having to communicate that.” Many businesses established in the United States or registered to conduct business there must report FinCEN documentation about their shareholders or the people who ultimately own or control the corporation. This latest UBO verification rule will be implemented at the beginning of 2024. Parliament has criticized FinCEN because of this, stating that there hasn’t been enough public education about the new rule. To consider these allegations, Gacki stated, “Even if verification is not part of the rulemaking and people have not been shy about letting us know their views about verification, I just want to assure you that we’re taking all that in. As we pull together this database, I think there is something we have to work through. We feel very strongly that a way to test the validity of the information is a very important part of our job.” Suggested Reads: European Union Introduces MiCA Laws to Regulate Opaque Crypto FirmsUK Law Society Ensures Solicitors Complying With AML MeasuresUS Charges Chinese Companies to Leverage Crypto For Illicit Activities
European Union Introduces MiCA Laws to Regulate Opaque Crypto Firms19 October, 2023 3 minutes read The European Securities and Markets Authority (ESMA) warned opaque and complex crypto firms to disclose their business shareholders’ details. They stated that the EU doesn’t want shell companies to operate from overseas in the member states. It also stressed companies can’t work in the EU with affected landmark Markets in the Crypto Asset (MiCA). ESMA urges major global crypto firms to start preparation for the strict regulation and be ready to comply with MiCA. Furthermore, the national regulators are also designing procedures that will promptly allow crypto exchanges and wallet platforms to get registered. Companies that are not compliant with MiCA rules and regulations can be fined or prosecuted for non-compliance. The EU regulations will also provide greater fraud protection by ensuring that crypto asset service providers are held accountable for their actions.MiCA license rules will be implemented in December 2024, but the companies can operate till July 2026, until they get full license registration from the authority. This can be accepted when the crypto firms are registered under existing business verification regulations and comply with the national AML measures. It is also concerning for the ESMA officials that the temporary regulation changes will confuse the customers. MiCA is the most suitable regulatory body for preventing crypto firms from exploiting compliance audits. ESMA stated, “Opaque group structures may also render it difficult for clients of service providers to know which entity they are dealing with and its regulatory status may lack a strong compliance culture and their large scale and geographic scope allow them to maintain a high level of agility in terms of where they can operate, increasing the risk of conflicts of interest, regulatory arbitrage, and an unlevel playing field.” The MiCA will establish uniform regulations for the whole crypto platform and allow businesses to operate under a single license. However, it also gives national regulators considerable discretion over temporary measures and the definition of exceptions for decentralized networks. This will also enhance the European Union’s security and prevent threats from other members of states to undercut the obligations to boost their rivalry. Nevertheless, final MiCA rules are not issued by the regulatory department therefore, the crypto firms can not apply for a license yet. However, ESMA is ready to publish in journals to inform the regulators and clients about their new rigid regulations and also urge regulators for collaboration to finalize the crypto verification procedure as a matter of urgency. ESMA also stated to National Authorities, “establish authorization procedures and foster dialogue with potential applicants as soon as possible.” They also added a formal screening process for the companies before accepting license applications. Companies that pass the scrutiny will be eligible for the crypto license. Suggested Reads:UK Law Society Ensures Solicitors Complying With AML MeasuresUS Charges Chinese Companies to Leverage Crypto For Illicit Activities Deutsche Bank Pledges Taking Convenient Steps to Rebuild Trust on Postbank’s Services
UK Law Society Ensures Solicitors Complying With AML Measures18 October, 2023 3 minutes read In response to allegations from the Treasury’s consultation on inadequate measures on anti-money laundering and counter-terrorist financing, Law Society England and Wales claimed that the lawyers are upholding government regulatory authorities’ standards to prevent illicit financial activities. The treasury consultation threatened the government to regulate lawyers’ firms. It urged the attorneys to adequately comply with the AML regulations in order to protect the integrity of the country’s financial ecosystem. In response to these allegations, the UK’s Law Society England and Wales claimed all the professional solicitors comply with national standards CFT/AML solutions and uphold the beyond-the-limit requirements, which they are not subject to. Nick Emmerson, the Law Society of England and Wales president, stated, “The solicitors’ profession is fully committed to tackling illicit finance and money laundering. This is demonstrated by the significant resources allocated to complying with its AML and financial crime obligations.”He also emphasized the vital role of customer and business verification for the government representative bodies, financial institutes and law enforcement. According to the Society’s President, the Law Society of England and Wales is committed to ensuring that solicitors remain vigilant and proactive in their fight against money laundering and terrorist financing. The Law Society will continue collaborating with the government representative bodies to ensure that solicitors meet their AML obligations. Emmerson stated, “The AML regime is highly complex, and it is vital for representative bodies, such as the Law Society, to be able to help draft and contribute to legal sector-wide guidance. We are concerned that legal sector-specific expertise could be lost in the current proposals, meaning the AML supervisory regime would be less, rather than more, effective in the short to medium term.”Emmerson stated against the latest model proposed by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) to strengthen the UK’s AML policies, “Giving OPBAS additional powers is unlikely to address the ongoing failings of the current supervisory regime, particularly around fragmentation and lack of consistency. There must be a greater focus on the overall effectiveness of the regime and outcomes rather than tick-box compliance, which satisfies overly prescriptive requirements.”Furthermore, he also claimed that the reforms in the AML regulations would be effective but damage the sole law firms. The UK’s law societies, such as England and Wales Law Society, can comply with these rigid regulations because of the robust verification process, which is challenging for other independent attorneys. He asserted, “Reforming the supervisory regime will play an essential role in achieving an effective AML regime, but it will only go so far without addressing the broader regulations that underpin the regime. A significant proportion of the money-laundering regulations (MLRs) are relevant to the financial sector. Consequently, the MLRs are demanding and difficult to implement across the legal profession.”Suggested Reads: Kenya Takes Over Leadership of the Eastern and Southern African Anti-Money Laundering GroupUS Charges Chinese Companies to Leverage Crypto For Illicit ActivitiesQatar Commercial Bank Harnessing Digital Platforms To Foster Innovations in Financial Sector
Kenya Takes Over Leadership of the Eastern and Southern African Anti-Money Laundering Group13 October, 2023 3 minutes read Kenya takes over the leadership of the Easter and South Africa Anti-Money Laundering Group (ESAAMLG). It will lead the group members in combating money laundering and terrorist financing. After the last meeting of the ESAAMLG in Kasane, Botswana, Kenya became a regional leader in the fight against financial crimes and assisted group members in compliance with strict international AML regulations to correspond with worldwide financial institutes. During the group’s last meeting, Njuguna Ndung’u, Kenya’s Treasury Cabinet Secretary, and Saitoti Ole Maika, the director general of the Financial Reporting Centre, were supposed leaders of the group as the chair of senior officials and chair of ESAAMLG council minister. Kenya’s team led the group in September 2023 for one year, and Prof. Ndung’u became the head of the decision-making body. The ESAAMLG was created as the region’s financial action task force to prevent fraud, money laundering, and terrorist financing. The group comprises Council Ministers, a Steering Committee, a Secretariat, and a Task Force of Senior Officials. The director-general of the Financial Reporting Centre, Mr. Saitoti, stated, “The Council is ultimately responsible for setting the strategic direction of the Group, including the approval of programs. It is chaired by a President who serves for a period of one year.”The group members stated they are complying with the rigid AML measures to combat money laundering and financial crimes as well as safeguarding the integrity of the region’s financial ecosystem. The group’s task force urges all the region countries to follow the latest robust technology to verify the customer and business identity. Utilizing advanced technology will assist regional financial institutes in complying with the international standards CFT and AML measures.The group’s task force operates every technical issue and submits guidelines to the Council for authorization. It is led by a chairman and is made up of senior government officials from the financial, legal, and criminal justice societies in the ESAAMLG region who are in charge of anti-money laundering and countering the financing of terrorism (AML/CFT). Kenya became a leader of the ESAAMLG after completing their one-year monitoring procedure from the international regulatory authority Financial Action Task Force (FATF) this month.Mr. Saitoti appreciated the efforts of Prof. Ndung’u in creating the current AML/CFT regime in Kenya and stated, “He was perfect to lead the region.” He added that Kenya is working on the 107 suggested changes included in last year’s Mutual Evaluation Report and believes a favourable assessment will be made in February 2024.Suggested Reads:US Charges Chinese Companies to Leverage Crypto For Illicit ActivitiesQatar Commercial Bank Harnessing Digital Platforms To Foster Innovations in Financial SectorEBA Reveals Final Date to Comply with Remote Customer Onboarding Regulations
US Charges Chinese Companies to Leverage Crypto For Illicit Activities11 October, 2023 3 minutes read Eight Chinese Companies and their employees are charged by the US regulatory authority Department of Justice (DOJ), accused of taking advantage of cryptocurrency to proceed with illegal activities. The DOJ accused these companies of laundering money through crypto transactions to facilitate the production of illegal substances in the US. These companies and their employees utilize cryptocurrency to launder money by disguising their identity and location. The US Treasury Office of Foreign Assets Control (OFAC) claimed at least 16 different crypto wallets are linked with the operation. The US department also sanctioned all Chinese nationals along with other criminal cases. The US Treasury and other law enforcement agencies are investigating the matter and tracking the individuals’ identities. Currently, the US Treasury has imposed sanctions on those connected to this operation. The US Attorney General Merrick Garland stated, “We are here today to deliver a message on behalf of the United States government. We know who is responsible for poisoning the American people with fentanyl. We know that this global fentanyl supply chain, which ends with the deaths of Americans, often starts with chemical companies in China.” The US Treasury Department also claimed they sanctioned 28 individuals, including Chinese-owned companies and residents. It should be noted, however, that none of the criminals have been arrested by the US, and the Chinese government has condemned the US allegations and has not provided support to the US authorities. Liu Pengyu, a spokesman from the Chinese embassy in Washington, China, declined the US decisions against Chinese Companies and also stated that the Chinese government takes a tough position towards counter-narcotics. Liu stated, “The US, disregarding China’s goodwill, has been scapegoating China through the tactics of sanctioning, smear, and slander. This has seriously eroded the foundation of China-US cooperation on counter-narcotics.” Previously, on May 31, 2023, US Senator, Elizabeth Warren, proposed a legislative approach to combat money laundering through digital assets platforms. According to Warren, AML regulations will enhance the security of the cryptocurrency platforms by promoting Know-Your-Customer (KYC) measures in the digital transactions wallets.The Treasury Deputy, Wally Adeyemo, stated, “Over a dozen virtual currency wallers have been identified to be associated with these actors… the blocked wallets have received millions in USD, and over hundred in deposits, illustrating the scope and scale of the illegal operation.” Cryptocurrency wallets are used in different illegal activities worldwide; adequate business verification steps through robust technology assist countries in protecting the integrity of the global financial ecosystem. Suggested Reads:EBA Reveals Final Date to Comply with Remote Customer Onboarding RegulationsCitigroup Agrees to Pay $2.9m Fine on Shortcomings in Record-Keeping RegulationsSpotify Becomes the Hub of Money Laundering for Scammers in Sweden
Qatar Commercial Bank Harnessing Digital Platforms To Foster Innovations in Financial Sector11 October, 2023 3 minutes read As the digital banking leader in Qatar, Commercial Bank (CB), visited the 15th MENA Regulatory Summit 2023 to promote the latest innovations in the Qatar financial sector and promptly assist them in complying with international obligations. The 15th MENA Regulatory Summit was hosted by the London Stock Exchange Group (LSEG) in collaboration with the Qatar Financial Information Unit (QFIU) in Doha. CB successfully took part in this summit as a digital banking leader in Qatar. The Summit is themed on using robust innovations in customer and business verification to combat money laundering and prevent the integrity of the financial ecosystem. Summit provides a great platform for the banking sector to showcase digital innovations in its legal framework to safeguard the finance industry.CEO of the Commercial Bank, Joseph Abraham, stated, “We are pleased to have been part of the 15th MENA Regulatory Summit as the Innovation Partner. At Commercial Bank, we recognize the importance of actively collaborating with regulatory bodies and our banking peers to support events that harness digital technology to promote innovation in the financial sector.”The summit’s most emphasized session was “Fintech and the Impact it Has on Financial Crimes.” This session provided insights into the innovations and how banks can utilize the latest machine learning and AI technology to streamline customer and business onboarding. They also added how digital technologies encourage the MENA region banks to fight against financial crimes. This event stressed regulators and businesses to take an advanced approach, with adequate robotic processing automation (RPA), machine learning, and artificial intelligence (AI) in enhancing traditional procedures. Further, the summit also discusses preventing new techniques of criminals from laundering money, including trade-based crime, regulatory vigilance, strengthening investor due diligence, and fast-tracking crypto transactions through digital wallets. To emphasize the digital approaches of the Qatar banking organizations in the regulatory framework, the compliance officer of CB, Abdulla Al Fadli, asserted, “Our participation in this summit underlines our commitment to staying at the forefront of the industry, utilizing cutting-edge technologies to combat financial crime, by way of real-time monitoring, behavioural data analytics, enhanced authentication, pattern recognition, and predictive analytics to combat financial crime. As a result, contributing to Qatar’s financial landscape’s overall integrity and stability.”Commercial Bank is still dedicated to proactively participating in activities that improve innovation, teamwork, and regulatory developments in the Qatar financial sector. The Bank is eager to keep aiding these important projects. The Bank is also committed to providing banking services of the highest quality. This includes offering competitive products and services, as well as providing excellent customer service. The Bank’s goal is to continue to strengthen Qatar’s financial system and create a more prosperous economy.Suggested Reads:EBA Reveals Final Date to Comply with Remote Customer Onboarding RegulationsCFATF Successfully Concludes 4th Round Mutual Evaluation of GuyanaSpotify Becomes the Hub of Money Laundering for Scammers in Sweden
EBA Reveals Final Date to Comply with Remote Customer Onboarding Regulations28 September, 2023 2 minutes read The European Banking Authority (EBA) issued its guidelines on 22nd November 2022, to rely on remotely based onboarding solutions under Article 31(1). These guidelines will be implemented in the financial institutes from 2nd October 2023.The EBA designed these guidelines to uphold the EU standards in developing and implementing the safety, risk-associated with the initial enhanced due diligence (EDD) process while onboarding customers and businesses through remote verification solutions. The European Commission ordered EBA to create rigorous measures on the applications for anti-money laundering (AML) and counter-financing terrorism(CFT), where the customers can onboard remotely through applications, websites, or online institutes.Demand for digital onboarding increased during COVID-19. As the demand for fintech increased, remote customer verification proliferated promptly, unfortunately, as well as cyber crimes such as money laundering and terrorist financing. These guidelines ensure that the remote customer and business onboarding aligns with AML regulations and data protection. They also seek to common the use of remote onboarding applications by protecting the technology neutrality and not endorsing the latest robust inventions in AML compliance. Furthermore, these guidelines enhance the adoption of new technologies to support the remote onboarding process.These guidelines have four clear aims, including steps financial institutions should take before choosing digital onboarding tools, not totally depending on the verification tool, ensuring the relying tool is adequate and reliable, and constantly cross-checking the tool to comply with the latest AML measures. These latest obligations will affect all the financial institutes that rely on the remote business and customer verification process. To comply with the regulation, banks are also considering shifting their customer from face-to-face to online onboarding.Suggested Reads:Spotify Becomes the Hub of Money Laundering for Scammers in SwedenCFTC Crackdown on DeFi Platforms for Noncompliance with Trading RegulationsCitigroup Agrees to Pay $2.9m Fine on Shortcomings in Record-Keeping Regulations
Deutsche Bank Pledges Taking Convenient Steps to Rebuild Trust on Postbank’s Services26 September, 2023 2 minutes read The Deutsche Bank’s CEO promised customers that it is devoting additional employees and advanced technology in the Postbank unit to resolve customers’ complaints and develop their trust. Deutsche Bank customers were disappointed with the disturbance they experienced at the Postbank unit’s online platform, along with the issue in reaching their customer services and processing time. These problems damaged customers’ trust in Deutsche Bank. Germany’s top banker, Christian Sewing, also commented on these issues as “unacceptable” in this digital world. Previously, in 2017, Deutsche Bank was fined $7.2 billion in the United States for its role in money laundering. Unfortunately, this issue is a setback for all their efforts to restore its credibility, creating a positive impact in the market, and can topple their banks out of the business world. While the largest bank in Germany has previously expressed regret about the issues at Postbank, Sewing’s remarks show that most lenders are not complying with adequate regulation measures.During the 2008 global financial crisis, Deutsche acquired Postbank with its various branches in the country’s postal system, including its millions of clients. However, they are struggling to complete the integration of these branches to provide customers with a streamlined and convenient banking experience. In July, the bank reported that they resolved all the customer complaints and completed a final step of integration, but two weeks ago, BaFin, the German financial regulatory department, disclosed in the nonregular investigation that they noticed “considerable disturbances” at Postbank. At the financial conference in Frankfurt, Sewing mentioned that, “Customers had been disappointed very much, We have not lived up to our responsibility here – and now we have to work all the harder to fix the problems quickly and completely – and regain trust.” He also noted that this is a “clear mistake” by Deutsche Banks, underestimating the number of customer complaints the advanced robust IT integration would resolve. But according to Sewing, “This situation is anything but good, anything but nice,” adding that there are various improvements happening in the Postbank in the past weeks. Furthermore, he added that the board member briefed that the bank had onboarded 400-500 additional employees to adequate their online banking system and integrate compliance properly. Suggested Reads:CFATF Successfully Concludes 4th Round Mutual Evaluation of GuyanaCFTC Crackdown on DeFi Platforms for Noncompliance with Trading RegulationsSpotify Becomes the Hub of Money Laundering for Scammers in Sweden
CFATF Successfully Concludes 4th Round Mutual Evaluation of Guyana21 September, 2023 3 minutes read The Caribbean Financial Action Task Force (CFATF) visited Guyana on September 15th to supervise their compliance framework with the Anti-Money Laundering (AML) and Financial Action Task Force (FATF) regulations and methodologies. The CFATF successfully concluded its 4th visit to Guyana to analyze their compliance procedure with the rigid methods according to international regulatory authorities. Several financial institutes, government, law enforcement, and state agencies, including the private sector and professional organizations, participate in this assessment. The initial findings of the investigation were presented by the mission leader, Avelon Perry, and her team to the Attorney General and Minister of Legal Affairs, Mohabir Anil Nandlall, and the Countering the Financing of Terrorism (CTF), Anti-Money Laundering (AML), and National Coordination Committee (NCC). According to the initial high-level outcomes, Guyana has adequate coordination for the NCC to identify and reduce threats of money laundering as well as terrorist financing. From all reports, Guyana as a jurisdiction performed brilliantly and earned praise from regulatory bodies throughout the assessment. The CFATF group also acknowledged the risk assessment Guyana concluded, including the National risk assessment in 2021 and the various dissemination among the shareholders. They also attest to the coordination of National Policy and Strategy in these actions and determined that a number of policies were completed during these risk assessments, including the latest amendments in the AML/CFT regulations and the legislative creation of Guyana Compliance Commission and the Real Estate Authority. Some loopholes noted in the assessment are the need for Attorneys-at-law and Accountants to understand AML/CFT laws efficiently, which was passed by the Guyana compliance authorities. Furthermore, the investigation adds Guyana needs a unified approach to conclude money laundering cases because they have in-line cases, but delays in the administration of these cases, which may have contributed to Guyana’s low rate of money laundering.The team noted that the recent 2023 amendments have addressed some technical issues with targeted financial sanctions for financing terrorism and proliferation but that given the laws’ recent passage, internal processes for their implementation may need to be modified. The assessment team also appreciated Guyana and informed that these findings will be changed after the final review, which will conclude in May or June, at the CFATF 2024 Plenary, carried out in Trinidad and Tobago. Suggested Reads: CFTC Crackdown on DeFi Platforms for Noncompliance with Trading RegulationsSpotify Becomes the Hub of Money Laundering for Scammers in SwedenCitigroup Agrees to Pay $2.9m Fine on Shortcomings in Record-Keeping Regulations
CFTC Crackdown on DeFi Platforms for Noncompliance with Trading Regulations13 September, 2023 2 minutes read The United States virtual asset regulatory, Commodity Futures Trading Commission (CFTC), crackdown on 3 Decentralized Finance (DeFi) platforms, Opyn, ZeroEx, and Deridex, allegedly failing to comply with the regulations. In a recent development to combat money laundering, the US virtual assets regulatory authority CFTC repressed 3 Defi protocols. According to the CFTC, these platforms did not follow the Anti-Money Laundering (AML) regulations and failed to comply with business regulatory requirements. Primary allegations against Deridex and Opyn revolved around failing to register as trading commission merchants. Furthermore, both needed to comply with the business and customer verification rules under the Bank Secrecy Act (BSA). CFTC stated specified regulations, including swap execution facility (SEF), futures commission merchants (FCM) and an adequate Know-Your-Customer (KYC) and Know-Your-Business (KYB) to comply with the BSA. Decentralized Finance has increased rapidly because of its promise to provide transparency, financial inclusion, and accessibility. The DeFi services eliminate traditional banking regulations and limitations; that’s why they become vulnerable and raise concerns about financial crimes related to money laundering and terrorist financing. The CFTC’s decisions to initiate legal action against Opyn, ZeroEx, and Deridex emphasize the level of inspection that governmental authorities have given the DeFi companies. They also faced hefty fines of $250,000, $200,000, and $100,000, respectively.This case highlights the importance of complying with the Commodity Exchange Act (CEA) and CFTC regulations for the other DeFi protocols. Although DeFi supporters praise the industry’s decentralized structure, but this freedom also has drawbacks. Suggested Reads: Spotify Becomes the Hub of Money Laundering for Scammers in SwedenCitigroup Agrees to Pay $2.9m Fine on Shortcomings in Record-Keeping Regulations
Spotify Becomes the Hub of Money Laundering for Scammers in Sweden07 September, 2023 2 minutes read The new report disclosed that the scammers are using the online music streaming platform Spotify to clean their dirty money and organize illicit activities. The report claimed that crime networks related to money laundering and drug trafficking have been using streaming platforms for the purpose of their illicit activities. According to the report, an anonymous police officer from the money laundering investigators believed that “Spotify has become a criminal tool and suspect that the gangs launder millions of dollars each year from drug dealing, robberies, fraud and assassination missions via the platform.”The officer stated criminals proceeded with this scam by purchasing bitcoin “cash-in-hand deals” from the crypto trader, on Facebook. Then, use that to open a fake streaming channel for artists with criminal links. Afterwards, using money obtained from contracts, assaults, scams, contract killings, and bitcoin, they utilized those streams to pay for songs released by artists. Cop has quoted, “Spotify has become an ATM for them which is deadly violence because they have direct connection to the gangs.”The report also pointed to the French study that up to 3% of streaming artists on Spotify are fraudulent. Furthermore, the report also revealed that this is the only number which can not be detected by the platforms; it does not count those which they can not find. Spotify Nordics-based communication manager stated, “We have no evidence that money laundering occurred via Spotify.” Sir Lucian Grainge, the head of Universal Music Group, called out “bad actors” in January for utilizing illegal methods to steal royalties from music streaming services. Grainge claimed that these platforms’ prevalent “pro rata” distribution model needs to be reformed. Four months later, Spotify deleted the AI music app Boomy because of alleged streaming fraud. Spotify stated, “Manipulated streams are a challenge for the entire industry and a problem that Spotify is working hard to combat. It is important to know that Spotify does not make any payments directly to artists but to rights holders and distributors. It is equally important not to misunderstand the extent of the problem with manipulated streams. Thanks in part to the fact that our payouts are not real-time, our systems detect and address anomalies before they reach material levels.”Suggested Read:FATF Endorses Latest AML Regulations in the Final Plenary MeetingCySEC Warns Non-AML Compliant Cyprus Investment Firms
Citigroup Agrees to Pay $2.9m Fine on Shortcomings in Record-Keeping Regulations04 September, 2023 2 minutes read Citigroup Inc. has agreed with the Security and Exchange Commission’s (SEC) allegation of non-compliance with record-keeping regulations and consented to pay $2.9m as a civil penalty fine on the bank. The SEC accused Citigroup bank’s broker-dealer unit of breaking record-keeping measures to disguise certain expenses they experienced in the supporting businesses. The broker-dealer department has to store and maintain the records of all the company’s debts and properties. To comply with business regulations, companies must detailed records of everything and should disclose companies’ asset and liability position. According to the SEC’s investigation, Citigroup did not implement a proper system to maintain record-keeping, and they implemented an uncertified method from 2009 to 2019 to calculate the expenses in their supervision businesses. SEC also stated that Citigroup fixed the percentage of all indirect expenditures. At the end of the year, they divided the permanent “allocation grids” to divide the indirect amount of the expense into a certain price according to the specific categories. After calculating the indirect costs by unethical assessment were then added to a company’s official records.Sanjay Wadhwa, the director of the SEC’s Division of Enforcement, “Recordkeeping failures such as these, perpetuated over at least a decade, can undermine the viability of those functions. The SEC will continue to vigorously enforce the books and records provisions of the federal securities laws, which are crucial to well-functioning markets.” An investigation like this on companies enhances their operational system and leads to bolstered monitoring by compliance with regulatory authorities. Continue reading “Citigroup Agrees to Pay $2.9m Fine on Shortcomings in Record-Keeping Regulations”
Financial Firms Under Investigation for Money Laundering in Singapore25 August, 2023 2 minutes read Singapore police are waiting for documents from the nine financial institutes to conclude their investigation into one of the large-scale money laundering cases in the country. Singapore Police seized $736m worth of virtual assets, including luxury cars, properties, and cash, from nine financial institutes and arrested 10 foreigners involved in money laundering and other financial crimes. Officers claimed scammers laundered money through online gambling and crypto wallets, making it one of the largest money laundering cases in Singapore’s history. According to the police, they are awaiting various documents from nine financial institutions in order to proceed with the investigation, causing a delay in the detention of the criminals arrested so far.The number of Singaporean businesses being investigated indicates these criminals use various financial system loopholes for illegal purposes. The Monetary Authority of Singapore (MAS) stated that they are observing every step of the financial firms involved in the transfer of funding. The authority also ensures the firms that if they find breaches of Anti-Money Laundering AML laws, they will take action against them. According to authorities, police seized more than 100 buildings, including 19 commercial or industrial areas, 79 apartment units, and seven detached houses along the luxury seafront of Sentosa Cove. The police can not comment more about the case because the investigation is ongoing, and the court is awaiting essential papers.Till now, the investigation disclosed that these scammers illicitly used the holdings of CIMB Group Sdn Bhd and Citigroup Inc’s secondary branches to launder money. Two directors of the Signpore investment lender company, Deutsche Bank AG, were also arrested along with these scammers.
A trio is accused of stealing $1.5 million from a woman who was seeking Australian citizenship19 June, 2023 3 minutes read Following further investigation, a search was conducted at a residence in Turramurra on May 24. Mobile phones, laptops, hard drives, passports, and documents were seized, and a 42-year-old man and a 39-year-old woman were arrested. The 42-year-old man faces charges of obtaining property by deception, dealing with proceeds of crime, and participating in a criminal group. The 39-year-old woman is charged with multiple counts of using false documents to obtain financial advantage, obtaining property by deception, participating in a criminal group, and dealing with proceeds of crime. Both individuals were granted conditional bail and are set to appear in court on June 14.According to the police, the three accused individuals were employed at an immigration company in Sydney. In 2017, they were hired by the victim to assist in obtaining Australian citizenship for herself and her family, with a payment of $1.5 million. However, it is alleged that instead of providing the promised services, the trio transferred the funds into personal bank accounts. They are also accused of forging documents, including citizenship papers, without helping the woman secure an Australian visa.Three individuals have been charged in connection with an immigration scam involving $1.5 million and a woman seeking Australian citizenship. The investigation began in February 2021 after the 46-year-old woman reported being defrauded while attempting to arrange an Australian visa. On May 4, a 36-year-old man was arrested in Narwee and charged with various offenses, including obtaining financial advantage by deception and participating in a criminal group. He was granted conditional bail and is scheduled to appear in court on June 6.Highlights:The investigation highlights the alleged exploitation of individuals seeking immigration assistance and the subsequent financial loss suffered by the victim. The accused individuals are now facing multiple charges related to deception, fraud, and participating in a criminal group. The court proceedings, scheduled for June, will determine their legal accountability in this case.
