Risk Intelligence Roundup for August 2024

Welcome to our Risk Intelligence Roundup newsletter, where we focus on delivering curated compliance insights and solutions to empower your risk management strategy.

The summer of 2024 has provided plenty of intrigue and controversy, with major changes in the political, financial, and technology sectors leading to more than a few surprising headlines. In this roundup, we will look at the most noteworthy of these stories, focusing on the changes within the spheres of technology and cyber security.

News from the Crypto Sector

New Chinese AML Laws Target Cryptocurrencies

On August 19, China announced a series of new anti-money laundering (AML) regulations that were set to take effect the following day. Over the last few years, the country has seen a significant rise in the use of cryptocurrencies in corruption and bribery cases, and it seems that the government is now fighting back.

The new law means that people who use cryptocurrencies to convert or transfer criminal proceeds will face significant fines or jail time.

While it could reduce the use of crypto in criminal transactions, it has also raised concern among Chinese companies and investors, with some arguing that it will place an unfair onus of responsibility on the average user, as they could find themselves embroiled in a money-laundering case if they unwittingly receive funds derived through criminal endeavours.

News from the Technology Sector

Telegram Founder and Boss Under Investigation

One of the biggest breaking stories from the tech world over the last month concerns Pavel Durov, the founder and current boss of Telegram. The Russian-born billionaire and French national was detained on arrival in Paris earlier this month and is now under investigation by French authorities.

Prosecutors claim that Durov is being investigated for complicity in using an online platform to facilitate illegal transactions, as well as refusing to communicate with authorities and being complicit in the distribution of illegal sexual images.

Some of the charges levied against Mr Durov carry penalties of up to 10 years in prison, as well as substantial fines.

Russia called the investigation an act of intimidation while seemingly pointing fingers at France and its President, Emmanuel Macron. The French leader responded by stating that the move was not political and the case was being handled by the relevant authorities.

What Does it All Mean?

The aforementioned charges are damning, but they seem to be the culmination of an issue that is inherent with the Telegram app and one that has concerned authorities for a number of years.

Laure Beccuau, a Parisian prosecutor, told The Telegraph that Telegram has appeared in multiple criminal cases relating to online hate, transmission of illegal sexual images, and drug trafficking. It is not uncommon for messaging services to find themselves embroiled in such controversial topics, but what makes Telegram unique is that it has all but refused to cooperate with authorities on these cases.

Telegram responded to say it was “absurd” to suggest that a messaging service could be held responsible for the abuse on its platform. Several entrepreneurs have reacted with indignation at the arrest, including X-owner Elon Musk, who tweeted "POV: It’s 2030 in Europe and you’re being executed for liking a meme”.

News from the Financial Sector

TD Bank Sets Aside Another $2.6 Billion for AML Penalties

TD Bank Group, a Canadian banking and financial services corporation, announced that it would put aside a further $2.6 billion to cover regulatory probes into AML failings, adding that it would sell shares in Charles Schwab, a US multinational financial services company, to fund the move.

It means TD Bank has now put aside $3 billion in response to US regulatory probes relating to allegations that the company allowed drug traffickers to launder over $650 million between 2016 and 2021. The probe includes allegations that an employee of the organisation took a bribe from criminals.

The bank has also invested heavily in its AML processes, including a $500 million investment in 2023 that saw it train staff members on AML regulations, hire new executives, and improve risk management.

A statement released by Bharat Masrani, the CEO of TD Bank, announced that they recognize the seriousness of their AML deficiencies and acknowledge that they need to do a lot of work to improve their practices in this area. Masrani added that “remediation is underway” and the bank has already strengthened its processes.

Sanctions News

August 6

The US sanctioned Tabacalera del Este S.A., a Paraguayan tobacco company, for allegedly providing financial support to Horacio Manuel Cartes Jara, a former Paraguayan president previously sanctioned for corruption.

August 23

Nearly 400 entities were sanctioned by the US after being accused of “enabling Russia’s prosecution of its illegal?war in?Ukraine”. This includes a number of companies in China. The Chinese government expressed its anger at these sanctions in a response.

August 28

The US announced new sanctions against Hashomer Yosh, an Israeli nonprofit organisation established to support settlers in the West Bank. The move was announced following an escalation of conflict in the region, with the group being accused of preventing Palestinian residents from returning to the village of Khirbet Zanuta.

Did You Know…

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