Anti-Financial Crime Newsletter
In this edition
1. Upcoming Events
2. Regulations and other key happenings
3. White papers, studies and articles
4. Let’s get personal – WIACON's short interview
5. Interesting facts
1. Upcoming Events
12th Annual European Compliance & Ethics Institute in Amsterdam on the 18-20 of March, 2024
The annual European Compliance and Ethics Institute brings together professionals for in-person collaboration, providing a platform to discuss the distinctive challenges of European compliance management. Participants gain insights into the latest best practices and emerging trends from industry leaders during this 3-day conference. The event features a diverse range of breakout sessions, allowing attendees to focus on topics tailored to their specific needs. Key themes covered include Mergers & acquisitions, Anti-corruption, Building a culture of compliance & ethics, Conflict of interest, Third-party risk & due diligence, Multinationals, EU Whistleblowing Directive, ESG, AI tools, Supply chain, and Data privacy.
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AMLFC Institute Anti-Money Laundering & Financial Crimes Prevention Hybrid Conference in Miami on the 17-19 of April, 2024
The upcoming conference offers a platform for experts to share practical insights on executing AML/CFT/CFP/FCP/ABC procedures. Attendees will have a unique chance to engage directly with regulators and other experts, gaining a deeper understanding of enforcement approaches in various jurisdictions. The conference's learning objectives cover a spectrum, including country-specific issues, trends, threats, and insights into processes and technologies. (US, Hybrid)
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Economic Crime Prevention Switzerland in Zurich on the 5-6 of March, 2024
Switzerland has served as the premier hub for international globalization, but the evolving geopolitical landscape requires organizations to stay on top of regulatory compliance and sanctions considering the surge in AI/ML adoption, increased use of Cryptocurrency, and the ever-changing enforcement landscape. At ECP Switzerland, senior government officials, industry executives, and practitioners will converge to share updates, innovative strategies, and collaborative solutions for economic crime prevention. Join the conversation to navigate the complexities of compliance in an increasingly dynamic global environment.
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2. Regulations and other key happenings
INTERPOL’s 2023 Global Crime Report
INTERPOL's 2023 Global Crime Report serves as an update to the volume released in 2022, offering an analytical overview of global data contributed by member countries. It highlights the persistence of symbiotic criminal networks engaged in various forms of crime, with a heightened emphasis on innovation, sophistication, and complexity. Key trends include:
The report, accessible exclusively to law enforcement, identifies eight crime areas witnessing notable growth over the past twelve months:
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Basel AML Index 2023: Action on money laundering more urgent than ever
The Basel AML Index is an independent ranking that evaluates countries' risks related to money laundering and terrorist financing, along with their capacity to combat these risks. Utilizing 18 indicators across five domains, the index measures different factors contributing to high ML/FT risks. According to the 12th Public Edition of the Basel AML Index, the global average risk level for money laundering and terrorist financing increased from 5.25 in 2022 to 5.31 in 2023, with 10 representing the maximum risk. Similar to the previous year, risks escalated in four out of the five domains assessed: corruption and bribery, financial transparency and standards, public transparency and accountability, and political/legal risks. Scores related to the quality of anti-money laundering and counter-financing of terrorism (AML/CFT) frameworks remained unchanged.
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EU Policy.?EU’s plan for money-laundering checks on football inflamed by Chelsea claims
Recent revelations about financial misdealings at Chelsea FC have intensified efforts within the European Union to subject football to anti-money laundering measures. Allegations involving complex financial transactions by former Chelsea owner Roman Abramovich have fueled the argument among Members of the European Parliament (MEPs) advocating for football to fall under the purview of anti-money laundering regulations. MEPs view football clubs, agents, and associations as potential targets for illicit finance and are pushing for them to be obligated to report suspicious activities to authorities, aligning them with sectors such as banks, art dealers, and diamond traders that already adhere to similar reporting requirements.
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BELENOS: €18 million of illicit cash flows uncovered across Europe in two weeks
In a major customs operation led by French Customs authorities across 25 EU Member States, illicit movements of €18 million in cash were uncovered, raising concerns about potential connections to money laundering, transnational criminal activities, and terrorism financing. Operation BELENOS, in air traffic, road transport, sea transport, and postal shipments, detected approximately 400 cases of illicit cash flows. Customs authorities identified at least 64 cases with potential links to money laundering , 20 cases with potential links to sanctions against Russia for aggression against Ukraine, and 34 cases involving amounts below €10,000 suspected of being connected to criminal activity. The operation also revealed violations such as 6.5 kilograms of ecstasy, 4 kilograms of methamphetamine, and €25,500 in counterfeit money. Nearly 420 individuals were involved in total.
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Bitcoin Group Addressing "Serious Deficits" in Money Laundering measures Flagged by German Regulators
Germany's financial regulator, BaFin, has instructed Futurum Bank, a subsidiary of Bitcoin Group (ADE), to rectify deficiencies in internal anti-money laundering (AML) measures. In a public notice issued in October, BaFin highlighted "serious deficits" in internal security measures, due diligence obligations, and the suspicious-activity reporting system at Futurum Bank. Despite being an early adopter of a comprehensive approval program for digital assets, BaFin has maintained a stringent approach to cryptocurrency, granting licenses to only a few companies in the sector.
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Combating the Terrorist Financing Abuse of Non-Profit Organizations
The non-profit sector plays a crucial role in society by offering aid and assistance to those in need, particularly during crisis and in challenging situations. However, instances of charitable fundraising being exploited for terrorist financing have raised concerns. In response, at its October 2023 Plenary, the FATF approved amendments to Recommendation 8, focusing on safeguarding Non-Profit Organizations (NPOs) from potential terrorist financing abuse through the implementation of effective risk-based measures. The FATF has updated its Best Practices to guide countries, the non-profit sector, and financial institutions in understanding how to protect NPOs from such abuse while avoiding unnecessary disruption to legitimate activities. Additionally, the best practices paper introduces examples of bad practices, explaining how not to implement FATF requirements.
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The latest publication of FATF in November: Illicit Financial Flows from Cyber-enabled Fraud
Cyber-enabled fraud has surged in recent years, evolving into a major transnational organized crime with a global impact. FATF has recently published a joint report in partnership with Egmont group and Interpol to analyze how the cyber-enabled fraud landscape has evolved, its links to other crimes and how criminals may exploit vulnerabilities in new technologies. The report identifies three priority areas for jurisdictions to effectively tackle this crime: enhancing domestic coordination, fostering international collaboration, and strengthening detection and prevention through awareness promotion and streamlined reporting mechanisms. Additionally, the report provides risk indicators and essential anti-fraud requirements and controls to assist public and private entities in detecting and preventing this fraud and associated money laundering.
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EU Russian sanctions stymied by complexity, poor enforcement
The enforcement of economic sanctions by the European Union against Russia faces challenges due to uneven enforcement, trade diversion, and the existence of complex financial structures. Despite a significant decrease in Russia's oil and gas revenues to half of pre-war levels, the impact of sanctions is being dulled by creative circumvention methods. Moscow continues to receive substantial resources from Europe, showcasing the limitations of the sanctions' effectiveness. The acquisition of European high-tech goods by Russia persists, albeit through longer and riskier supply chains, highlighting the resilience of the country's efforts to navigate and mitigate the impact of the imposed economic restrictions.
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The Fifth Bafin Symposium
The fifth BaFin symposium, held digitally on December 7, 2023, centered on crucial aspects of preventing money laundering and terrorist financing. The event featured presentations, a panel discussion, and an interactive session for participants to pose questions to the supervisory authority. Key topics covered included:
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For those seeking comprehensive information on these critical areas, presentation documents from the symposium are available for download, offering valuable resources on the forefront of anti-money laundering efforts.
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AML Regulations and the Art Market
The Center of Art Law released "Anti-Money Laundering Regulations and the Art Market" on December 6, 2023. Focused on the diverse AML practices across EU member states and the UK post the enforcement of the 5th AML Directive, this comprehensive overview serves as a valuable resource. The first edition, featuring insights from over a dozen contributing experts, provides a crucial overview of AML due diligence obligations, beneficial ownership registration, and potential civil and criminal sanctions in each covered jurisdiction. Against the backdrop of evolving global legal frameworks, the Center's dedication to addressing AML issues emerges as a crucial asset for diverse stakeholders in the art industry.
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FATF Follow up Report on Germany′s progress 2023
FATF in its Follow-up Report published on December 6, acknowledged Germany's progress in addressing technical compliance deficiencies highlighted in its Mutual Evaluation concerning Recommendations 6 and 7. Both recommendations focus on obligations related to targeted financial sanctions. Germany has been re-rated on these Recommendations, moving from Partially Compliant to Largely Compliant.
Currently, Germany is rated in 20 Recommendations as Compliant and 17 as Largely Compliant, with three Recommendations still categorized as Partially Compliant. The country is set to provide a progress update on the implementation of its AML/CFT measures to the FATF in October 2024.
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3. White papers, studies and articles
Money laundering prevention in practice
This whitepaper offers practical guidance on fulfilling due diligence obligations under the Money Laundering Act, covering essential topics like definition of money laundering and terrorist financing, obliged entities, due diligence obligations, reporting obligations, transparency register, function of FIU. With its multitude of obligations, the GWG demands a high degree of attention. This whitepaper can provide a comprehensive set of information to serve that purpose.
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AI AI Captain: Divergent Jurisdictional Approaches to Artificial Intelligence Regulatory & Policy Development
The global audience, including the US, EU, and G7, acknowledges the progress in shaping AI regulatory frameworks; however, there are divergent trends in global jurisdictions regarding their approaches to AI regulation. This white paper offers a high-level overview of AI regulation in the US, UK, and China, excluding the proposed EU AI Act.
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Fine Prevention - Why financial crime and regulatory programmes fail and how to fix them
Financial institutions continually face evolving challenges posed by criminal activities like money laundering, coupled with dynamic regulatory responses. Consequently, institutions often grapple with the need to implement resource-intensive financial crime and regulatory change programs, which may involve extensive remediation projects. This paper explores the reasons why such programs are susceptible to failure and examines strategies to enhance their likelihood of success. By addressing the underlying issues contributing to program failures, financial institutions can better navigate the ever-changing landscape of financial crime and regulatory requirements.
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4. Let’s get personal – WIACON's short interview
How has the AFC topic been present in your personal daily life?
Andreas Winde: I am very interested in history, politics and naturally follow the daily news. In these times, you can't escape the news about terrorism, wars and criminal acts. You can read about it every day and a lot of money is needed for all these topics. Since I've been working in the anti-financial crime environment, I've been able to take away a lot more from the news, understand which ill-advised ways are being taken and how states, organizations and companies are fighting against financial crime. Outside of my professional life, I naturally try to protect as much personal privacy as possible and fall for criminal schemes as little as possible.
How have you refined your focus to the AFC field?
Andreas Winde: Many years ago, I was asked to take on the role of project manager for a global rollout of a sanctions compliance solution. I took the opportunity to dive deeper into this specific compliance topic and did not treat this compliance solution as just another tool rollout. Driving the implementation of a compliance solution is one challenge, but another is to keep such a sanctions solution effective and efficient. For this, I had to learn a lot about business processes, distribution channels, product risks, targeted and comprehensive sanctions, trade sanctions, data flows of internal and external data and more. Within a short period of time, I was able to acquire a lot of knowledge, especially about how a compliance solution can be integrated into a complex, business-oriented and cost-sensitive insurance company.
How does your AFC work contribute to the Social Responsibility?
Andreas Winde: Having grown up in AML/CFT, I realized two to three years ago that ESG compliance is very similar to AML compliance. You have to meet the regulatory requirements, you have to know your risks, implement processes, collect data and document everything. That is an important similarity. But I am also personally pleased to know that we are making a small contribution to improving the world by fighting financial crime and helping our clients to prevent environmental or human rights crimes.
5. Interesting facts
Private sector is best on health insurance
Qatar holds the highest per-capita health spending in the Gulf region. It has been challenging for state enterprises to create a healthcare service that could meet major private sector insurance companies standard in terms of service quality, cost management, and fraud detection. Established insurance firms, equipped with their own medical professionals, possess the ability to scrutinize the necessity of tests or treatments. Qatar, being a mature health insurance market, boasts at least five major providers with advanced expertise.
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US will be forced to curtail crypto if industry fails to act on illicit finance threats- official
The U.S. government is taking steps to cut off cryptocurrency companies from the broader U.S. economy if they do not adequately block and report illicit money flows. The Biden administration has requested a new legislation that would empower the Treasury to regulate crypto marketplaces used by entities considered illicit by the U.S. government. This move follows instances such as the funding of the Palestinian militant group Hamas by a Gaza-based cryptocurrency exchange and, Binance, the world's largest crypto exchange, has recently pleaded guilty to violating anti-money laundering (AML) laws.
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Top sources of information for risk and compliance officers
Do you know how risk and compliance officers keep up with regulatory and legislative changes and where do they find relevant information? Based on Thomson reuters 2023 Risk and Compliance survey 73% of respondents said their top source for the most up-to-date risk and compliance information was simply “general publications and newsletters”, followed by 65% who said attendance at conferences and events was one of their key sources of information. Government and regulatory websites (62%), External training programs (60%), Professional networks and associations (55%) ranked next.
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The annual extent of Money Laundering
The extent of money laundering is challenging to quantify, but it is widely acknowledged to be substantial. According to the United Nations Office on Drugs and Crime (UNODC), approximately 2 to 5% of the global Gross Domestic Product (GDP) is laundered annually. This translates to a sum ranging between EUR 715 billion and 1.87 trillion each year. The scale of these illicit financial activities highlights the significance and complexity of addressing money laundering on a global scale.
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AML related fines in 2022
In 2022 alone, credit and financial institutions faced fines amounting to nearly USD 5 billion due to issues related to anti-money laundering (AML), sanctions breaches, and deficiencies in their know your customer (KYC) systems.
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If you have any questions or thoughts, please comment or contact the Head of the AFC Team at WIACON - Zsófia Benke-Ruhl
Be compliant, stay compliant. Fight crime with us for a better world.
1 年I look forward to next one!