Stung by reputation, Taiwan looks to turn corner on money laundering

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fter Taiwan’s state-run Mega Financial Holding Co was fined $180 million by U.S. authorities for lax enforcement of anti-money-laundering rules at its New York branch, the bank started a rigorous training program for its staff.

Now, like Mega Financial, companies across Taiwan are working to get staff and systems up to speed after the island passed laws to meet international standards on combating money laundering and was taken off a watchlist by the Asia Pacific Group on Money Laundering (APG).

“Unfortunately, Taiwan has earned a name for itself as a paradise for money laundering,” Deputy Justice Minister Tsai Pi-chung told Reuters.

Money laundering and cybercrime connections to Taiwan, which is also in the process of pushing through a cyber security bill, have grabbed global headlines.

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FATF – Guidance on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion

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On Thursday, 7 September 2017, the Financial Action Task Force (“FATF”) released a Mutual Valuation Report on anti-money laundering (“AML”) and counter-terrorist financing (“CTF”) measures in Ireland (the “Report”). This report comments on the AML / CTF measures in place in Ireland during the course of FATF’s on-site visits from 3 to 17 November 2016 and analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Ireland’s AML / CTF system. The report also provides recommendations on how the Irish AML / CTF system could be strengthened.

The Report notes that Ireland has a “generally sound legislative and institutional AML / CTF framework” and praised Ireland for putting measure in place to improve its understanding of risk and national coordination and cooperation. However, it notes that further measures and resources are required for a fully effective AML / CTF system.

The report recognised Ireland’s importance as a regional and international financial centre, as it is amongst the IMF’s 29 systematically important financial centres. In particular, FATF have noted that Ireland’s funds and insurance sectors are well developed with strong international links. However, the report also notes that Ireland faces money-laundering and terrorist financing threats from organised crime groups and former local paramilitary organisations.

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Photographer: Graham Barclay/Bloomberg Big Chinese Cash Bets Put Vancouver Casino in Laundering Probe

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A casino south of Vancouver favored by wealthy Asian gamblers is under scrutiny for potential money laundering as large amounts of cash flow through the Pacific Coast city’s thriving real estate and gaming industries.

The British Columbia government released on Friday a previously confidential July 2016 report that had investigated the River Rock Casino Resort after it accepted C$13.5 million ($11 million) in C$20 bills in just one month in July 2015, capturing the attention of B.C.’s Gaming Policy and Enforcement Branch.

“I received a series of briefings that caused me to believe that our province could do more to combat money laundering at B.C. casinos,” B.C.’s new Attorney General David Eby, whose New Democratic Party-led government took office in July, told reporters. “I am making that report public today.”

Great Canadian Gaming Corp., the owner of River Rock, said in a statement late Friday that it strictly adheres to all regulatory requirements.

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Protiviti Releases Updated Edition of U.S. Anti-Money Laundering Guide: Frequently Asked Questions

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Global consulting firm Protiviti has published the 2017 edition of its Guide to U.S. Anti-Money Laundering Requirements: Frequently Asked Questionswhich serves as a tool for organizations as they navigate requirements around anti-money laundering (AML), combatting financial terrorism (CFT) and sanctions compliance.

First published in 2003, the Protiviti guide is a practical resource for financial institutions and professionals such as attorneys, regulators, members of law enforcement academics and companies interested in and challenged by AML/CFT and sanctions compliance. The seventh edition of the guide features new and updated sections, including:

  • Recent changes to U.S. AML/CFT regulations and industry standards
  • Detailed coverage of current U.S. sanction requirements
  • A significantly expanded discussion of how technology enables AML/CFT and sanctions compliance and regulators’ expectations for the selection and use of this technology
  • Increasing convergence between AML/CFT and other regulatory and operational mandates, such as anti-bribery compliance, fraud detection and cybersecurity protection
  • A look forward to how RegTech may change the future of AML/CFT compliance through the use of digital technologies, robotics and artificial intelligence
  • More in-depth discussion of international developments
  • A special supplement on the New York State Department of Financial Services’ Part 504, the first-of-its-kind regulation requiring certification of AML/CFT and sanction screening programs

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Banking and Blockchain: Why We Need an AML/KYC Safe Harbor

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In 1970, legislators supporting the Bank Secrecy Act (BSA) emphasized that the new law would not be a burden to financial institutions because they already kept most of the records required and the Secretary of the Treasury would have broad latitude to provide exemptions in cases where regulatory costs exceeded benefits.

Since then, each of the 11 additional laws has added more requirements for banks and money transmitters. Today, this compendium of regulation is generally referred to as the anti-money laundering (AML) and know-your-customer (KYC) rules.

In addition to reporting transactions above certain levels, banks are now required to know who their customers are, and to report any ‘suspicious activity’. Ask any financial institution today what its largest burden is, the answer is invariably “compliance”.

Uncertainty and de-risking

Regulatory burdens on financial institutions are expensive, and growing bank fees and service charges have reflected this. However, after the financial crisis of 2008, regulators added uncertainty to the mix.

They began to use the broad authority granted them by Congress to impose large fines, levying $321bn in penalties on banks between 2009 and 2016. The perceived randomness of who might be fined next and how much, added enormous uncertainty to the world of banking.

In addition to the financial impact of nine- and 10-figure fines, being singled out as a supporter of terrorism and organized crime carries an enormous reputational risk for any company.

Banks got the message. Their response was to sever ties with virtually any foreign correspondent bank with customers that regulators might deem ‘suspicious’ using 20/20 hindsight.

They are also careful not do business with customers or industries that might later turn out to be ‘suspicious’. It’s a rational course of action with devastating results.

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Residence and Luxury Vehicle Seized in Ottawa Area

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A joint forces police operation involving the Ottawa Police Service (OPS) and the Royal Canadian Mounted Police (RCMP) “O” Division Ottawa Detachment Financial Crime unit has resulted in one property being restrained, and a 2016 Chevrolet Corvette being seized. The property and the vehicle which belonged to Peter Pavlovich Jr., are valued at approximately $900,000.00. Peter Pavlolich Jr. was a subject of this investigation which resulted in charges being laid against him and eleven other individuals, and the dismantling of an Ottawa-based drug trafficking network in 2016. This media release is a follow up to a news release issued by Ottawa Police Service, December 14, 2016 at 4 pm titled “Project STEP results in 12 people charged with drug offences”. These matters are presently before the courts. Reports provided by FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) assisted in this proceeds of crime investigation.

The RCMP plays an active role in the fight against proceeds of crime by identifying, assessing, seizing, restraining and dealing with the forfeiture of illicit wealth accumulated through criminal activities. Criminal network groups such as this one, seek to profit from their illegal activities. Illicit profits undermine the social and economic well-being of Canadians and increase the power and influence of organized criminals and their illegal enterprises.

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Anti-money laundering: Diamonds in Dubai

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Money laundering is surely one of the most persistent and pervasive risks faced by banks. The practice is said to be just as common in the Middle East as anywhere else. So how do financial institutions there train their staff to deal with this threat?

The firm’s employees eventually arrive. They explain that staff received anti-money laundering training the previous day and did not clear the table after the session. They also describe the answer one of the board members gave: “I’d convert the money into diamonds; that way it’d be easier to ship out of Dubai.” A joke, Euromoney is certain. When the tale is repeated to the chief executive of a Kuwaiti bank, he rolls his eyes and sighs. “That’s not money laundering training, that’s just basic ethics!” He is astonished anyone would need to be taught what to do in such a case.

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AIB Slapped With Fine for Compliance Failures as IPO Looms

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Allied Irish Banks Plc, preparing for what could be one of the biggest share sales in London this year, was fined more than 2 million euros ($2.2 million) by the Irish central bank over compliance failures in relation to anti-money laundering and terrorist financing laws.

The central bank fined AIB about 2.3 million euros and reprimanded it for six breaches of the law, which the lender has admitted to, the regulator said in an emailed statement Tuesday. AIB said separately that the settlement related to issues occurring between July 2010 and July 2014.

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South Africa president signs anti-money laundering law

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South African President Jacob Zuma signed the anti-money laundering Financial Intelligence Centre Amendment (FICA) [text, PDF] on Saturday to combat tax evasion and money laundering in the country. The global Financial Action Task Force (FATF) [official website] organization had threatened to oust South Africa if the amendment had not been passed before June 20. Supporters say the law is a tool against international financial crime, making it easier to identify the actual owners of accounts around the world and would apply to Zuma and other prominent figures in South Africa. The legislature passed the bill last year, but Zuma originally refused to sign it, citing concerns about its constitutionality [Bloomberg report]. In February the Legislature approved changes to the bill to meet Zuma’s concerns.

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AML’s Silver Bullet

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As banks and payments companies endeavor to meet anti-money laundering (AML) regulations to avoid hefty fines for non-compliance, easily identifying customers in the digital channel becomes paramount to their success. Some “old school” methods that worked in the past aren’t working anymore. Sarah Clark, GM of identity at Mitek, joined Karen Webster to discuss what process and technology can do to help meet AML requirements to truly authenticate who people are.

Though money laundering is a dangerous and enormous aspect of fraud, it’s often overshadowed by high-profile data breaches and other cybercrime activities.

However, both regulators and authorities around the globe are cracking down on businesses who are failing to adequately prevent money laundering activities. Despite the fact that many institutions are investing heavily in their anti-money laundering activities, bad guys are still slipping through.

Clark explained that many businesses continue to fall short in this area because the status quo of AML solutions are no longer cutting it.

 

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