KYC/AML/CFT information for 15/January-14/February/2023

Here is the most relevant KYC/AML/CTF information for the period 15/January/2023 - 14/February/2023.

??1/[18/January/2023] The European Public Prosecutor’s Office (EPPO) is investigating suspicions regarding an international tax evasion mechanism, also known as ‘tax inversion’. According to the investigation??, an Italian company marketed its products in Italy, fraudulently claiming that the goods were destined for other EU member states and therefore exempt from VAT, abusing the fictitious foreign headquarters of the company. The investigation showed that the real headquarters of the company – i.e., the so-called ‘place of effective management’ – were in fact in Italy, and not in the Netherlands, as declared. It is believed that the company ostensibly based in the Netherlands created a complex corporate system, by which it was controlled by a holding company registered in the Netherlands Antilles, and in turn by another company, also apparently based in the Netherlands –?a scheme known as a ‘Dutch sandwich’, a form of tax evasion technique that involves using parent companies in different countries to shift profits to tax havens. The investigation established an effective turnover in Italy of approximately €50 million, and unpaid VAT of over €10 million, amount frozen on 11/January/2023.

??2/[19/January/2023] FinCEN identifies?? virtual currency exchange Bitzlato as a “Primary Money Laundering Concern” in connection with Russian illicit finance. Bitzlato plays a critical role in laundering Convertible Virtual Currency by facilitating illicit transactions for ransomware actors operating in Russia, including Conti, a Ransomware-as-a-Service group that has links to the Government of Russia.??Bitzlato Limited is a virtual asset service provider registered in Hong Kong that operates globally. ??Please note that the last similar nomination was in 2018.

??3/[24/January/2023] The briefing "Anti-Money Laundering Authority (AMLA): Combating Money Laundering and Terrorist Financing" was published?? on the European Parliament Think Tank. The document summarizes the position of the involved EU authorities & stakeholders and also the steps taken so far for the adoption of the "Proposal for a regulation of the European Parliament and of the Council establishing the Authority for combating money laundering and the financing of terrorism". The document is prepared and addressed to Members of European Parliament and the staff of the European Parliament as background material to assist them in their parliamentary work. It is also a very useful summary for all staff interested in AML subject.

??4/[25/January/2023] UK FIU published 2022 SARs Annual Report?? . Some relevant figures: 1?? 901,255 total SARs received, 21% increase vs 2021 2?? 24,032 PEP SARs received, decrease 13% vs 2021 3?? 71% of SARs submitted by banks, 16% increase vs 2021.

??5/[26/January/2023] Ireland Central Bank issued (the well-known) Dear CEO letter for Payment and E-Money firms. The letter?? indicates 5 key areas where deficiencies have been identified and where there are expectations from firms to address them : ?1?? safeguarding? 2?? governance, risk management, conduct and culture? 3?? business model, strategy and financial resilience?4?? operational resilience and outsourcing? 5?? anti-money laundering and countering the financing of terrorism. ?? The main vulnerabilities identified in AML/CFT area are related to: ① risk-based approach ② distribution channels ③ simplified due diligence.

??6/[26/January/2023] FinCEN published?? an alert regarding potential investments in the US commercial real estate sector by sanctioned Russian elites, oligarchs, their family members, and the entities through which they act. The alert highlights: ?1?? 4 typologies associated with possible money laundering and?sanctions evasion 2?? 8 financial red flags.

??7/[27/January/2023] Eurojust, Italian and Hungarian judicial and law enforcement authorities have carried out an operation?? against the ‘Ndrangheta criminal organization for mafia-type criminal association, international money laundering and fraudulent transfer of values. The action focused on the group’s money laundering activities, which were facilitated by a number of companies ??that had previously been fictitiously registered in the name of third parties under Italian, Hungarian and Cypriot law. ?Investigators seized assets worth approximately EUR 3 million, including bank accounts, real estate, vehicles and a yacht.?

??8/[31/January/2023] The 2022 Corruption Perceptions Index (CPI) was published?? by Transparency International. The global average remains unchanged for over a decade at just 43 out of 100. More than two-thirds of countries score below 50, while 26 countries have fallen to their lowest scores yet. 155 countries out of 180 have made no significant progress or have declined since 2012. Here is the score for some relevant countries from each risk class : Denmark 90(88in2021); Austria 75(74in2021); Lithuania 62(61in2021); Malta 51(54in2021); Romania 46(45in2021); Moldova 39(36in2021); Pakistan 27(28in2021); Somalia 12(13in2021). ??The average score of Western Europe&EU is 66, with max90 Denmark and min42 Hungary. ??The most significant movers in the last 5 years are : ? Angola+14 to 33 and ? United Kingdom -7 to 73.

??9/[01/February/2023] FATF issued?? the Annual Report 2021-2022 that summarizes the activity from [01/July/2021] to [30/June/2022] under the German Presidency. The main topics in the 62 pages are: 1??beneficial ownership transparency 2??RBA for real estate 3?? migrant smuggling 4??environmental crimes 5?? digital transformation for operational?agencies.

??10/[03/February/2023] According to a Chainalysis report?? , 2022 is the biggest year for crypto hacking ever, with $3.8 billion stolen. ?? DeFi protocols were by far the biggest victims, accounting for 82.1% of all cryptocurrency thefts, followed by Centralized service. ?? North Korea hackers from Lazarus Group cybercriminal syndicate, the most prolific cryptocurrency hackers in recent years, in 2022 broke their own theft records and stole about $1.7 billion(45%) worth of cryptocurrency.

??11/[04/February/2023] OFAC has published?? Guidance on Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin. ?? In short, the involvement in any related services is possible if the Russian oil or Russian petroleum products are purchased at or below the relevant price cap.??? Financial institutions must obtain and retain signed attestations from their downstream customers or subcontractors that for the service being provided, the Russian oil or Russian petroleum products were or will be purchased at or below the relevant price cap.? ??Reminder: 1?? EU,?US, G7 and Australia, agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin, and to implement a common policy in this respect, “the price cap policy.”??2?? the price?? was set at ? 45&100USD for low&high value products as of 05/February/2023 and 60USD for crude oil as of 05/December/2022; 3?? the EU guide was published?? on 03/December/2022 and updated on 04/February/2023 4?? FAQ regarding oil imports according to Reg.833/2014 was updated?? on 04/February/2023- see Q15 5??Council Reg.2023/250 & Commission Implementing Reg.2023/251 issued on 04/February/2023 amending ? Council Reg.833/2014.

??12/[06/February/2023] Global Financial Integrity?issued "Trade-Based Money Laundering: A Global Challenge". The report?? provides an in-depth analysis of the most common TBML methodologies: 1?? over- and under-invoicing of goods; 2??misrepresentation of goods being shipped; 3??multiple invoicing of goods; 4??over- and under-shipment or phantom shipments; 5??the black market peso exchange; 6?? informal value transfer systems. From 2011-2021, TBML amounted to over US$60 billion globally, occurred in or otherwise affected over 77 jurisdictions around the globe.???The jurisdictions with the most TBML cases include the United States (16%), Mexico (10%), Colombia (6%t), China (6%) and Hong Kong (3%). ??In terms of predicate offenses, the most common are: drug trafficking (43%), tax evasion/tax fraud (18%), other fraud or scams (7%) and corruption (6%). ???Mis-invoicing was the most common methodology (63%) followed by informal value transfer systems (23%).

??13/[07/February/2023] The Jersey FIU published?? Money Laundering Typologies 2023. The document is a very useful and interesting collection of typologies, red flags and learning points, divided into the following chapters: 1??tax evasion-3 typologies 2??drug trafficking-2 typologies 3??fraud-1typology 4??internet fraud-7 typologies 5??corruption-2 typologies 6??terrorism-2 typologies 7??insurance -1typology.

??14/[08/February/2023] EU 10th package of Russian sanctions is under development?? . The deadline is no later than 24/February/2023 and focuses on warfare technologies and cutting circumvention.

??15/[08/February/2023] The Wolfsberg Group and Institute of International Finance submitted comments?? to the EBA’s public consultation on ‘de-risking’. The joint comments highlight the importance of 1??alignment with the FATF definition of ‘de-risking’, 2??that financial institutions should have the ability to apply a risk based approach to NPOs in line with FATF Recommendation 8, recognition that have their own role in understanding the risks that they face and finally that commercial and risk management decisions also factor into financial institutions’ decisions on providing/maintaining banking services to customers.

??16/[09/February/2023] Transparency International published the report " Through the Keyhole - Emerging insights from the UK’s register of overseas entities". The report ?? analysis the information from the Register of Overseas Entities (ROE), a new database of the beneficial owners of offshore firms that hold UK property. ??The UK Government estimates that a total of 32,440 offshore companies hold almost 100,000 land titles across Britain. These companies were required to disclose their true owners on the ROE by January 31, 2023.? ?Those failing to comply with the rules face daily fines of up to ￡2,500 and potential custodial sentences alongside additional restrictions on their ability to buy, sell or lease property. ??The main conclusions are: 1??~14,500 offshore companies listed as owning property in the land registry could not be identified on the ROE 2?? ~ 3,000 firms listed other anonymous companies (which weren’t themselves on the ROE) in secrecy jurisdictions ?3??~4,000 companies indicate they are held by trust arrangements (? these opaque structures make it difficult to find out who is really behind them) ?4?? 12% of all companies (2,358) claim to have no beneficial owners.

??17/[11/February/2023] The US in coordination with the UK took action to counter systemic corruption in Bulgaria by designating ( ? OFACT SDN-Global Magnitsky Designations ??) 1??5 former Bulgarian government officials 2??5 entities registered in Sofia ? for acts of corruption that resulted in illicit personal gain, undermined democratic institutions of the country and perpetuated its corrosive dependence on Russian energy sources.

??18/[12/February/2023] OCCRP?? published a very interesting journalistic investigation about the person who was behind the restriction of public access to information on the beneficial owner in the European registers, following the decision of the EU Court of Justice last November. It is about Patrick Hansen, originally from Luxembourg, the CEO of a private aircraft company Luxaviation, about whom the following was discovered: 1??is, or has been, the director or/and owner of at least 117 companies registered in Luxembourg, the British Virgin Islands, Belize, Bahamas, Cyprus and other countries around the world; 2??most of the companies (90) he directed had prominent Russian owners; 3??his aircraft company got nearly 100 million EUR in loans from the Russian pipeline tycoons, fueling its expansion from a small European firm to a business with global reach.

??19/[14/February/2023] EU list of non-cooperative jurisdictions for tax purposes has been updated. The black list?? contains the following countries: 1/American Samoa; 2/Anguilla; 3/Bahamas; 4/British Virgin Islands??; 5/Costa Rica??; 6/Fiji; 7/Guam; 8/Marshall Islands??; 9/Palau; 10/Panama; 11/Russia??; 12/Samoa; 13/Trinidad and Tobago; 14/Turks and Caicos Islands; 15/US Virgin Islands; 16/Vanuatu. ??For the grey list see Annex II??.

?? The attached PFF file?? contains more information (139 records) organized by all categories of information (including mass-media) required for risk assessment at company level (EWRA) in accordance with EBA/GL/2021/02

Romanian version /Limba Romana???

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