Friday's Final Word | week 8
Welcome to Friday's Final Word! Today, we report on simultaneous developments in the fight against financial crime and money laundering. Enjoy the read!
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?? America's war on money laundering
?? Judge accepts Binance's $4.3 billion plea deal
?? UK banks closed more than 140,000 accounts in 2023
??? Frankfurt to host EU's new dirty money watchdog
?? Full-scale action against Lithuanian money laundering network
?? FCA to start naming and shaming companies under investigation
The turning tide in America’s war on money laundering
Finally, America is making progress on the anti-money laundering front. This is how Casey Michel from the Human Rights Foundation has described the country’s latest efforts, which have led to an expanding list of announced or implemented reforms. These new regulations are part of the Biden administration’s focus on countering corruption and range from a new online registry for beneficial ownership to transparency requirements for American residential real estate. Additionally, the Treasury has proposed new AML requirements for the investment sphere, forcing investment advisors to conduct due diligence on the foreign investments entering the country. Collectively, these new rules hint at an evolving reality where America’s role as a 'central vector for global money laundering' is slowly decreasing.
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Judge accepts Binance’s $4.3 billion settlement for sanctions violations and money laundering
A federal judge has approved Binance’s plea deal, requiring the crypto exchange to pay fines totaling over $1.8 billion and forfeit property worth $2.5 billion. This development follows Binance and its former CEO, Changpeng Zhao, admitting to anti-money laundering (AML) violations and unlicensed money transmitting in a plea agreement finalized in November 2023. While Zhao’s sentencing is still pending, originally scheduled for February 23 but postponed to April 30, he faces a potential prison term of up to 18 months, with prosecutors seeking a longer penalty. Regardless of the April verdict, Zhao has already stepped down as chief executive and must pay a $50 million fine as part of the plea deal.
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UK banks closed more than 140,000 business accounts last year
It was Nigel Farage’s case which made it to the headlines last year – mainly thanks to his own marketing tricks - but it turns out that the battled conservative politician was not the only one to fall victim to banks’ overzealous de-banking spree. Based on a Treasury Committee inquiry that requested information from major UK banks such as NatWest and Barclays, UK financial institutions closed more than 140,000 business accounts in a year. While bank account closure is often a reasonable step when the business seems fishy, the inquiry found that lenders would often do so without much going against the company. The committee is hence publishing these figures, hoping that in the future there will be more scrutiny because while caution in the financial sphere is much needed, the goal is not the unfair treatment of legitimate businesses.
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EU to clamp down on dirty money with new agency based in Germany
Frankfurt continues to cement its role as Europe’s center for financial services and compliance after winning the bid to host the EU’s new dirty money watchdog. The new anti-money laundering agency, known as AMLA, is slated to begin operations in mid-2025. Its main aim is to curb illicit financial flows and improve coordination between financial intelligence authorities within the bloc. The watchdog is hailed as a powerful tool that will ensure all member states comply with the EU’s anti-money laundering rules. Now that AMLA’s hosting city has been chosen, the European Parliament can move on to adopting a wider legislative package intended to take the fight against financial crime to the next level.
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Full-scale action against €2 billion money laundering network via Lithuanian financial institution
In a coordinated action supported by Eurojust and Europol, judicial and law enforcement authorities in Italy, Latvia, and Lithuania have conducted a concerted investigation against a €2 billion money laundering network facilitated by a Lithuanian financial institution. The company offered money laundering as a service and was established in Lithuania in 2016 by an Italian-based OCG. The investigation into the fraudulent institution began in 2021, leading Lithuanian authorities to revoke the electronic payment institution’s license by 2022. The later stage of the investigation focused on identifying main suspects and freezing confiscated assets. During the latest action day that took place on 27 February, 18 people, including the main three suspects, were arrested.
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FCA plans to name firms under investigation in UK deterrence drive
The UK’s financial regulatory agency, the Financial Conduct Authority (FCA), is adopting a new technique to boost efficiency. It plans to publicly name companies under investigation, arguing that such a move would provide much-needed transparency and prompt other companies to rectify their erroneous behavior more quickly. These measures are part of the FCA’s efforts to expedite enforcement action and increase accountability. However, some industry insiders fear that naming companies could damage their reputation before they are even found guilty of any wrongdoing. Fortunately, the plan is not yet final, and consultation on it is open until April 16th.
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