FATF, 26 November 2020 – Today, the Financial Action Task Force concluded the four-day annual Joint Experts’ Meeting, attended by approximately 400 experts from both public and private sector around the world.
The FATF attaches great importance to effective information sharing, which is one of the cornerstones of a well-functioning AML/CFT framework. Ensuring that countries have strong tools to fight money laundering, terrorist financing or the financing of proliferation, requires an in-depth understanding of the evolving risks and the latest detection, investigation and prosecution techniques.
To share the latest risks findings, find solutions and inform ongoing FATF projects, the FATF holds annual Joint Experts’ Meetings. These meetings bring together experts from various governments agencies from around the world as well as international bodies such as the United Nations, IMF, World Bank and Interpol.
During the four-day meeting, experts discussed and advanced various priority projects under the FATF German Presidency for 2020-2022. Participants exchanged views, shared insights, and learnt about current good practices on issues that included:
-Financing of ethnically or radically motivated terrorism - Participants discussed the financing of recent ethnically or racially motivated terrorist attacks and groups, as well as national experiences in countering this risk. The session also focused on transnational links and the evolving threat environment.
-Environmental crime - Experts shared their experience and findings from money laundering cases linked to illegal logging and land clearance, mining related crimes and waste trafficking. Participants noted the important role of export companies, refiners, logistics and other non-traditional sectors in detecting anomalies and illicit financial flows from these crimes.
-Illicit arms trafficking and terrorist financing – Experts presented the international legal framework on preventing terrorist access to arms and broader provisions covering illicit arms trafficking. Participants also focused on the linkages between illicit arms trafficking and terrorist financing and the need for national risk assessments to address these risks.
-Digital transformation – Experts shared their experiences of using advanced analytics such as text mining, privacy preserving technology, online analytical processing and social network analysis in the fight against money laundering and terrorist financing; and how technology could increase operational efficiency in identifying and disrupting suspicious activities.
In his opening remarks, FATF President Marcus Pleyer highlighted that during these unprecedented times, it is more important than ever for AML/CFT experts to keep up to date with the evolving risk landscape and to enhance their international co-operation.
The fight against illicit finance also includes those on the front line. This week’s meetings welcomed representatives from private sector and civil society. Their insights allow the FATF to better understand the challenges they are facing and to then design the tools and mechanisms that will be most effective in the fight against money laundering and terrorist financing.
This week’s discussions will inform FATF’s ongoing work, which will be discussed further at the February 2021 Plenary.
23/11/2020 _ Officials from the United Arab Emirates (UAE) and the United Kingdom (UK) participated in a joint workshop on Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). Held virtually, the workshop aimed to bolster bilateral efforts to counter financial crime through cross-border cooperation and public-private sector coordination.
UAE participants included representatives from the Ministry of Foreign Affairs and International Cooperation, Ministry of Economy, Ministry of Interior, Ministry of Justice, the Central Bank, Federal Customs Authority, the Executive Office of the National Anti-Money Laundering and Countering the Financing of Terrorism and Illegal Organisations Committee, and other Emirate- and Federal-level law enforcement bodies. The UK side included representatives from Her Majesty’s Revenue and Customs, Her Majesty’s Treasury, the Home Office, the National Economic Crime Centre, the UK Central Authority, and the Crown Prosecution Service, among others.
During the workshop, participants discussed a number of key issues of mutual interest, including an update on the progress and priorities of the UAE’s Higher Committee Overseeing the National Strategy for Anti-Money Laundering and Countering the Financing of Terrorism, the UK’s strategy on tackling money laundering and terrorist financing, and areas of future collaboration and information exchange.
In her opening remarks, Director of the Ministry of Foreign Affairs and International Cooperation's Economic and Trade Affairs Department Amna Fikri stated: “From the very highest level of the UAE Government there is a strong recognition of the crucial need to bolster and improve our AML/CFT framework, which aligns with our country’s specific risk profile.”
“We believe there is much we can learn from the UK’s experience on AML/CFT, and significant scope for our two countries to share experiences and best practice, while exploring the potential for greater operational and technical alignment,” Fikri continued.
The workshop comes as part of the UAE’s national commitment to countering money laundering and terrorist financing in all its forms. Efforts to enhance AML/CFT activities have intensified in recent years in line with the country’s position as a regional hub of banking, trade, and investment.
Earlier this week, the bitcoin community was shocked when a digital wallet containing roughly $1 billion in bitcoin — thought to be proceeds from the now-shuttered dark web drug marketplace Silk Road — was emptied by an unknown individual. Now, those responsible for cleaning out the funds have revealed themselves: it was the US government.
The Department of Justice announced on Thursday that it had seized the wallet’s contents as part of a civil forfeiture case targeting the Silk Road. The government said it retrieved the roughly 70,000 bitcoins with the help of an unnamed hacker, whose identity is known to the government but who is simply referred to as “Individual X” in court documents.
“Individual X” allegedly hacked the Silk Road’s payments system some time in 2012 or 2013. The government says that the Silk Road’s creator Ross Ulbricht, who is currently serving a double life sentence plus 40 years for his role in the site, “threatened Individual X for the return of the cryptocurrency,” but the unknown hacker refused. On November 3rd, Individual X agreed to forfeit the bitcoin to the US government and helped transfer the money. It’s unclear if Individual X has been arrested or how their cooperation was attained.
“Where did the money go? Today’s forfeiture complaint answers this open question at least in part”
In a press statement, US Attorney David L. Anderson celebrated the operation as a big success for the government. “Silk Road was the most notorious online criminal marketplace of its day,” said Anderson. “The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go? Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession.”
Silk Road was “the most sophisticated and extensive criminal marketplace” on the internet, said the Department of Justice, operating between 2011 and 2013 before it was taken offline by the FBI. The US government estimates that the website generated around 600,000 bitcoins in commissions during this period. Around 175,000 of these were seized when Ulbricht was arrested and the website shut down in October 2013.
The Department of Justice did not say what it plans to do with the $1 billion in newly-seized bitcoins, but in the past it has auctioned off similar hauls of cryptocurrency. Such sales are processed like any other civil forfeiture, reports The Wall Street Journal, with profits kept by the agency and added to its budget.
Coordinated by INTERPOL and the World Customs Organization (WCO), Operation Thunder 2020 rallied 103 countries against environmental crime.
A month-long police and customs cross border operation (14 September - 11 October 2020) resulted in large seizures of protected wildlife and forestry specimens and products, triggering arrests and investigations worldwide.
Focusing on pre-identified routes and hotspots, Operation Thunder 2020 resulted in more than 2,000 seizures of wildlife and forestry products. In total, 699 offenders were apprehended and at least one INTERPOL Red Notice has already been requested based on information gained during the operation. Further arrests and prosecutions are anticipated as ongoing global investigations progress.
Participating countries focused on particularly vulnerable species protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), an international agreement aimed at ensuring the international trade in wild animals and plants does not threaten their survival.
In Cameroon, customs officers seized 187 raw elephant tusks (856 kg of ivory) from a truck crossing the border from Gabon.
Mexican law enforcement rescued an adult female white tiger, a jaguar and a four-month old lion cub in Sinaloa.
Police in Zimbabwe thwarted the transfer of 32 live chimpanzees from the Democratic Republic of Congo.
India Customs intercepted an 18-tonne shipment of red sandalwood destined for the UAE.
The total seized contraband included:
-Over 1.3 tonnes of ivory
-Over 1 tonne of pangolin scales, representing approximately 1,700 killed pangolins
-56,200 kg of marine products
-87 truckloads of timber (950 tonnes)
-15,878 kg of plants
More than 45,500 live animal and plant specimens were recovered during the operation, including:
-1,400 turtles and tortoises and 6,000 turtle or tortoise eggs
Fourth largest illegal trade
“Wildlife and forestry crime is the world’s fourth largest illegal trade – a lucrative illegal business with far-reaching and devastating consequences not just for the environment but also for society, public health and global economics,” said Jürgen Stock, INTERPOL Secretary General.
“Wildlife and forestry crime often occurs hand in hand with tax evasion, corruption, money laundering and even murder, with organized crime groups using the same routes to smuggle protected wildlife as they do people, weapons, drugs and other illegal products,” added Secretary General Stock.
“This Operation clearly shows that success of law enforcement efforts lies in active cooperation amongst all stakeholders,” said WCO Secretary General, Dr. Kunio Mikuriya. “In support of the 2020 Customs community’s commitment to strive for “Sustainability for People, Prosperity and the Planet”, fighting wildlife and forestry crime is not only vital for the preservation of our planet but also for the long-term prosperity of national economies and populations.”
“The results of Operation Thunder 2020 show that the vital work of Parties to respond to wildlife crime collectively continues unabated despite the challenging global context,” said Ivonne Higuero, CITES Secretary General. “Strong, coordinated responses at all levels are needed to address the activities of transnational organized crime groups involved in wildlife crime and to impact on and disrupt illegal trade chains across range, transit and destination states.”
The global COVID-19 pandemic posed a series of challenges to the Thunder 2020 operations, with law enforcement officers needing to comply with a variety of new restrictions and protection protocols. The WCO Environment Programme and INTERPOL’s Environment Security Programme coordinated Operation Thunder 2020 entirely virtually, facilitating law enforcement efforts via secured communication and reporting channels.
Moreover, field officers are regularly attacked by poachers and crime syndicates. During this operation, five police officers and three forestry police officers in North Macedonia were attacked – two of them seriously injured – while attempting to prevent illegal logging activities.
In this context, the operation’s results demonstrate both the extent to which wildlife and forestry crime has continued throughout the pandemic and the ability of law enforcement to continue to successfully coordinate their actions in global operations.
A collective commitment
Thunder 2020 is the fourth in a series of ‘Thunder’ operations carried out annually since 2017, which have resulted in significant seizures and the arrest of thousands of suspects engaged in the illegal trade of wildlife and timber species. Such coordinated global operations give impetus to a positive feedback loop. Customs can continuously update and refine their risk indicators for improved profiling while police can both investigate new leads that have been generated and build on cooperation with other agencies.
Together with the United Nations Office on Drugs and Crime, the World Bank, WCO, INTERPOL, and the CITES Secretariat make up the International Consortium on Combating Wildlife Crime (ICCWC), which, through its multi-sector membership, tackles wildlife crime holistically, globally, and throughout the supply chain, from detection to arrest, investigation and prosecution. The ICCWC initiative and its activities are financially supported by the European Commission’s Directorate General for International Cooperation and Development (DG DEVCO), the European Commission’s Directorate General for Migration and Home Affairs (DG HOME), through their Internal Security Fund for police, the Department for Environment Food & Rural Affairs (DEFRA), UK, the United States Department of State Bureau of International Narcotics and Law Enforcement Affairs (INL), the Norway's International Climate and Forest Initiative (NICFI) and the United States Agency for International Development (USAID).
INTERPOL is celebrating 10 years of tackling organized environmental crime. Follow us on Twitter and www.interpol.int over the next six weeks to learn more about our efforts to tackle wildlife, forestry, fisheries and pollution crime.
EUROPOL Press Release.
The alleged leaders of this cell feature among those arrested.
On 28 October, Europol supported the CGI of the Spanish National Police (Comisaría General de Información de la Policía Nacional) in arresting three suspects linked to a terrorist cell actively recruiting and indoctrinating young people. The individuals, among which feature the alleged leaders of the cell, were arrested as a result of house searches carried out in San Sebastian and Pasaia in northern Spain. They are believed to have created the terrorist structure to carry out jihadist terrorism in support of the so-called Islamic State.
10 000 FOLLOWERS ON SOCIAL MEDIA NETWORKS
This terrorist cell was very active online, disseminating a large amount of jihadist propaganda with the purpose of recruiting and indoctrinating young people. The content included a variety of violent visuals displaying minors involved in Islamic State jihadist combats and promoting them as role models. The suspects used social media accounts to disseminate propaganda. They created multiple profiles on social media networks, which counted numerous followers. Two of the accounts created accumulated over 10 000 followers
PHYSICAL TRAINING AND MENTAL CONDITIONING OF MINORS
During planned meetings, the youngest members received physical training and mental conditioning to carry out jihadist terrorism. The terrorist cell enabled the regular practice of contact sports and provided handbooks on the use and handling of weapons such as knives and firearms.
Investigators identified the existence of a hierarchy within the organisation structuring the relationship between its members. The suspects used various measures to conceal from the police the criminal activities taking place online and in physical environments.
The arrests of the primary suspects of this terrorist cell was a result of a two–year-long investigation and an exhaustive analysis of information gathered throughout multiple operations conducted in the Spanish province of Guipuzcoa.
Europol’s European Counter Terrorism Centre (ECTC) supported the investigation by providing long-term analytical and operational support. During the action day, ECTC experts enabled real-time information exchange and analysis.
To ensure an effective response to the challenges posed by the terrorist threat, Europol created in 2016 the European Counter Terrorism Centre, an operations centre and hub of expertise that reflects the growing need for the EU to strengthen its response to terror.
Designed as a central hub in the EU in the fight against terrorism, the ECTC focuses on operational support to Member States in terrorist investigations. It cross-checks live operational data against the data Europol already has, quickly bringing financial leads to light, and analyses all available investigative details to assist in compiling a structured picture of the terrorist network.
Large denomination notes allow individuals to carry large values of money anonymously, and can facilitate money laundering and other illicit activities, MAS says.
MAS (Monetary Authority of Singapore) has announced that it plans to discontinue the issuance of the SGD 1,000 note from 1 January 2021, as a pre-emptive measure to mitigate the higher money laundering and terrorism financing risks associated with large denomination notes.
Large denomination notes allow individuals to carry large values of money anonymously, and can facilitate money laundering and other illicit activities, the regulator said, adding that major jurisdictions have already stopped issuing large denomination notes.
From now until December 2020, MAS will make available a limited quantity of SGD 1,000 notes each month.
Existing SGD 1,000 notes in circulation will remain legal tender and can continue to be used as a means of payment, and banks can continue to recirculate existing SGD 1,000 notes that are deposited with them.
MAS says it will make available sufficient quantities of other denominations, in particular the SGD 100 note, to meet demand.
The regulator encourages the use of electronic payments such as PayNow and FAST.
Singapore discontinued issuing SGD 10,000 notes in 2014, also citing the risk of money laundering.
The Ministry of Financial Services of the Cayman Islands Government announced that it has commenced a regulatory framework for virtual asset service providers, or VASPs.
In an Oct. 31 press release, the ministry claimed that the move had strengthened the country’s “ability to regulate and attract persons and entities that deal with virtual assets as a business.”
The first phase of the implementation, which is already underway, focuses on compliance with and enforcement of Anti-Money Laundering and Countering the Financing of Terrorism rules.
The new framework incorporates the updated recommendations which the Financial Action Task Force adopted in 2019.
As Cointelegraph reported at the time, these recommendations included the controversial “travel rule”, which requires VASPs to collect and share personal data on the originator and beneficiary of transactions.
Existing VASPs and newcomers to the market will need to register with the Cayman Islands Monetary Authority in order to demonstrate their compliance with global AML/CFT standards.
Cayman’s AML/CFT regime is currently under review by both the FATF and the Caribbean Financial Action Task Force following a recent Mutual Evaluation Report.
The VASP framework will be submitted for consideration prior to the CFATF re-rating, due in November. The findings of the FATF review are expected by the end of Q1 2021.
The second phase of the framework implementation will include “licensing requirements and prudential supervision,” and is expected to come into force in June 2021.
Last month the Cayman Islands was removed from the EU’s tax haven blacklist and would appear to be making serious efforts to improve its image in financial circles.
Hong Kong intends to set up a licensing regime to regulate virtual asset service providers, given the risks related to virtual assets such as fraud, money laundering, and terrorism, according to Secretary for Financial Services and the Treasury Christopher Hui Ching-yu.
The government will conduct public consultations on the regime, Hui said.
Meanwhile, Financial Secretary Paul Chan said the Faster Payment System had an average of 426,000 transactions a day last month, a seven-fold increase since its launch two years ago, while the number of users rose to 6.2 million.
He said Hong Kong is home to more than 600 start-ups, including eight unicorns.
On October 19, 2020, the Financial Crimes Enforcement Network (FinCEN) released its assessment of a $60 million civil monetary penalty against the operator of two cryptocurrency “mixers” for violations of the Bank Secrecy Act (“BSA”). The action marks the first effort by FinCEN to target the use of these “mixers” to facilitate money laundering and demonstrates FinCEN’s ongoing commitment to regulate entities that transmit cryptocurrencies as money service businesses (“MSBs”) under the BSA.
The action concerned Larry Dean Harmon (“Harmon”), a vendor on the “dark web” who operated a search engine, Grams. Grams allowed users to access and search the onion router network, commonly known as Tor. Grams aggregated dark web content and allowed users to search for illegal drugs, firearms, and Personally Identifiable Information.
In 2014, Harmon expanded his business to cryptocurrency. He founded a virtual currency exchanger, Helix, and linked Helix to Grams. Helix charged customers a fee to transfer bitcoins from a personal account to a designated address without identifying the source or owner of the bitcoin, a process known as “tumbling.”
Harmon offered users two options for transferring bitcoin. Users created a virtual “wallet” in Helix associated with a Grams account, and transferred bitcoin to that wallet. The customer would complete a withdrawal form that designated the destination address for the bitcoin. Helix would then break up the bitcoin, sending portions to accounts it held at cryptocurrency exchanges. Helix would concurrently transfer bitcoin from its own account to a different bitcoin address and ultimately to the destination address desired by the customer, minus a fee. Once the withdrawal was complete, Helix allowed customers to delete all records of the transaction.
Alternatively, Harmon offered customers a service, “Helix Light,” that did not require creating a Grams account. For this service, customers provided a destination address for the bitcoin, and then sent the desired amount of bitcoin to an address provided by Helix Light. Helix Light would transmit the bitcoin deposited in its wallet to one of its own accounts at various cryptocurrency exchanges. It would then transfer bitcoin from a different account to yet another account. From that account, Helix Light would transmit bitcoin to the destination address provided by the customer, minus a small fee. Harmon never registered Helix or Helix Light as money service businesses with FinCEN. FinCEN ultimately traced more than $121 million in bitcoin transfers through Helix and Helix Light.
After three years operating Helix, Harmon formed an additional cryptocurrency service, CoinNinja. Unlike Helix, CoinNinja was readily accessible by ordinary retail customers, and expressly operated as a money service business. CoinNinja’s website advertised bitcoin “mixing” services, and provided a service, “Dropbit”, that allowed customers to transmit and accept bitcoin through social media services and text messages. Harmon also advertised CoinNinja as a tool for sidestepping Know Your Customer procedures.
The FinCEN Determination:
FinCEN’s investigation resulted in three determinations. First, FinCEN found that Harmon willfully violated the MSB registration requirements of the BSA. Harmon operated Helix and Helix light for more than three years and never registered either entity with FinCEN. Similarly, Harmon never registered CoinNinja or its associated service, DropBit, as an MSB.
Second, FinCEN found that Harmon failed to implement an effective anti-money laundering (“AML”) program, as required by the BSA and its implementing regulations. The BSA regulations require all MSBs to develop and implement an effective, written AML compliance program, targeted to reduce the risks posed by the MSB’s operations. Harmon never developed policies, procedures, or internal controls, or designated a chief compliance officer for either Helix or CoinNinja Helix failed to maintain files on its customers, provided no AML training to its employees, and conducted no independent testing. In fact, FinCEN determined that Harmon “actively aided cybercriminals” to avoid the “internal controls in place at U.S.-based convertible virtual currency exchanges.” Harmon also advertised his service as a vehicle for “break[ing] the blockchain taint” and preventing effective transaction tracing.
Third, FinCEN found that Harmon failed to file mandatory Suspicious Activity Reports (“SARs”) on highly questionable transactions processed by Helix, Helix Light, and CoinNinja FinCEN identified nearly 2,500 transactions where Harmon should have filed a SAR, and failed to do so. Many of these transactions involved “illicit markets” on the dark web where, according to FinCEN, “individuals bought and sold illicit services” using Bitcoin. Harmon also failed to file SARs on transactions between Helix and convertible virtual currency mixing services—services that, according to FinCEN, impede effective transaction tracing.
The FinCEN Penalty Calculation
For these violations, FinCEN calculated a potential maximum penalty of more than $209 million. The BSA permits FinCEN to impose a maximum penalty of $100,000 for each willful BSA violation. The BSA also authorizes a fine of up to $5,000 for failure to register as an MSB. In accordance with the Federal Civil Penalties Inflation Adjustment Act of 1990, FinCEN may then adjust these penalties by applying a penalty adjustment table, found at 31 C.F.R. § 1010.821, for each offense that occurred after November 2, 2015.
The inflation-adjusted penalties in effect at the time of Harmon’s misconduct allowed FinCEN to fine Harmon up to $57,317 for each willful violation of the BSA AML requirements, including Harmon’s failure to adopt an adequate AML compliance program. For willfully failing to file SARs, the penalty adjustment table allowed FinCEN to fine Harmon the greater of the amount of the transaction (up to a maximum of $229,269) or $57,317. The penalty adjustment table further allowed FinCEN to fine Harmon $8,457 for each violation of the MSB registration requirements. Each day the violations continued constituted a separate offense.
FinCEN then considered ten factors in determining the final penalty. Notably, these factors closely parallel the so-called “Filip Factors” – the criteria set forth by the Department of Justice (“DOJ”) for determining whether to file charges in a corporate investigation. The factors are:
-The Nature and Seriousness of the Offense and the Resulting Harm to the Public
-The Impact of the Violations on the FinCEN Mission of Safeguarding the Financial System
-The Pervasiveness of the Wrongdoing
-The History and Duration of the Violations
-Financial Gain from the Violation
-The Systemic Nature of the Violations
-Timely and Voluntary Disclosure of Violations
-Penalties by Other Governmental Entities
Applying these factors, FinCEN arrived at a final penalty of $60 million. FinCEN found that Harmon’s conduct was serious and egregious, particularly given that Helix and CoinNinja operated in a high-risk industry. FinCEN also found that Harmon and his entities “openly flouted existing regulatory requirements” and facilitated money laundering, hindering the efforts of law enforcement. FinCEN criticized Helix’s failure to invest “any resources” in compliance, and emphasized that its failure to file SARs “denied potentially critical information to the BSA database” for at least three years. FinCEN noted that rather than adopting policies to comply with the BSA, Helix “instead instituted policies and procedures that allowed customers of darknet marketplaces to launder bitcoin.”
FinCEN’s action suggests three pertinent takeaways. First, between the recent charges filed by the Department of Justice against BitMEX and this action, it is clear that FinCEN and law enforcement are increasingly focused on cryptocurrency businesses with willfully deficient AML compliance programs, as well as cryptocurrency businesses that facilitate money laundering and other crimes.
Second, cryptocurrency businesses that currently fail to invest in effective AML programs as a way to reduce compliance costs, or that prioritize revenue and marketing over BSA compliance, should quickly implement and maintain effective AML and sanctions compliance programs to avoid regulatory scrutiny and corresponding penalties.
Third, traditional financial institutions and AML-compliant cryptocurrency businesses that seek to do business or partner with other cryptocurrency businesses should ensure that their due diligence efforts are robust and focus on obtaining proof of effective AML compliance programs. “Proof” may include site visits and walkthroughs that focus on financial crime compliance, close reviews of AML and sanctions policies and procedures, and reviews of sample BSA-AML alerts and the disposition of those alerts.
INTERPOL - Hundreds of stolen cars recovered and suspected people smugglers intercepted in international operation
An international operation supported by INTERPOL has highlighted the scale of motor vehicle crime in Europe, including the smuggling of stolen vehicles, spare parts and document fraud.
The two-week (12 – 23 October) Operation Mobile 3 was undertaken in the framework of the European Multidisciplinary Platform Against Criminal Threats (EMPACT), as part of the Joint Action Day (JAD) Mobile initiative led by Frontex, the European Border and Cost Guard Agency.
Experts from INTERPOL’s Stolen Motor Vehicle unit were deployed to the Coordination Centre at Frontex headquarters in Warsaw, Poland, to help officers from participating countries exchange, analyse and act on operational data.
INTERPOL supported the operation by crosschecking in real time the information collected in the field against its international databases, with Europol also supporting the operation remotely.
Involving checks at border crossing points and in-land activities in 16 EU countries and five countries in the Balkan region, the international operation resulted in the following:
-44,000 checks against motor vehicles, with the authorities detecting 352 stolen vehicles and 1,077 stolen vehicle parts on lorries and in chop shops, leading to new investigations against criminal gangs involved in car crime.
-The arrest of 17 suspected people smugglers. The smugglers were allegedly transporting the migrants via land routes in trailers, as well on small boats, often stolen ones, via the Adriatic Sea.
-Dozens of forged or falsified ID documents and vehicles documents were also discovered.
-The seizure of illegal drugs and arrests of suspected drug smugglers. In Portugal, Policia de Seguranca Publica arrested six people with a tonne of Marijuana and 10 kg of heroin. Spain’s Guardia Civil seized 666 kg of hashish and arrested 22 suspected drug smugglers. Latvian authorities also detected 400,000 illegal cigarettes during the operation.
-In Greece, the police seized 15 rental cars which suspected criminals attempted to smuggle out of the European Union.
The operation facilitated crucial information-gathering and analysis, in order to detect potential links to transnational organized crime, including drug trafficking and migrant smuggling.
It also allowed European officers to establish a stronger law enforcement network and to familiarize themselves with INTERPOL’s Stolen Motor Vehicles database, which contains 7.4 million records.
“Organized crime groups use stolen vehicles to generate profits and facilitate other crimes such as people smuggling and drug trafficking,” said Matthias Marth, Criminal Intelligence Officer with INTERPOL’s Stolen Motor Vehicle unit.
“INTERPOL’s involvement in this initiative underlines our continuous commitment to supporting our European partners in their actions.”
The operation brought together:
-INTERPOL member countries: Albania, Austria, Bulgaria, Bosnia & Herzegovina, Croatia, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Hungary, Latvia, Lithuania, Luxembourg, Moldova, Montenegro, Netherlands, North Macedonia, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Ukraine, United States.
-Third parties: Kosovo.
-EU Agencies: Eurojust, Frontex and Europol.
INTERPOL’s programme against stolen motor vehicles is made possible with funding from the INTERPOL Foundation for a Safer World.
Singapore’s financial regulator is prioritizing its crack down on disclosure breaches, the misselling of financial products and anti-money laundering this year and next as the city state looks to cement its status as a regional financial hub.
The Monetary Authority of Singapore will focus on financial institutions which lack rigorous systems and processes for combating money laundering and countering terrorism financing and will seek to better detect and take action against misconduct, the MAS said in a report published Wednesday. It will also enhance its focus on senior management accountability for breaches, it said.
The regulator imposed S$11.7 million ($8.6 million) in civil penalties, and S$3.3 million for money laundering-related control breaches in the 18 months to June, according to the report that covers the period. It convicted nine people for market misconduct or related offenses and issued 25 prohibition orders against unfit representatives, it said.
“Investigations and enforcement against financial misconduct will only become more challenging, as technology rapidly evolves, financial products grow in complexity and cases become increasingly multi-jurisdictional in nature,” said Peggy Pao, the MAS’s executive director of enforcement. “A robust enforcement regime will be critical in sustaining Singapore’s reputation as a trusted financial center.”
The coronavirus pandemic also “poses various operational and market risks,” Pao said, and the MAS will increasingly use technology in its probes to improve effectiveness and efficiency.
Singapore is consolidating its position as a global financial hub for wealth management and digital services, but the island state has recently faced a number of high-profile financial cases. Authorities have launched investigations into companies such as disgraced German payments business Wirecard AG’s operations in the city. The local unit of Goldman Sachs Group Inc. last month agreed to pay $122 million to the Singapore government for its role in Malaysia’s 1MDB scandal.
The regulator in November 2019 imposed a S$11.2 million fine on UBS Group AG for deceptive trades by its client advisers, it said. It also fined Asiaciti Trust Singapore Pte S$1.1 million in July for “serious breaches” of MAS requirements on anti-money laundering and countering financial terrorism.
Other highlights from the report:
-Almost all of the S$3.4 million in financial penalties were for breaches of controls in illicit funds.
-There were 25 prohibition orders and three license revocations during the period.
-The average time taken to complete reviews and investigations fell to 24 months from 33 months for criminal cases; 26 months from 30 months for civil cases.
Combatting child sexual abuse and exploitation: The IEWG Project Report is now available
The Egmont Group is pleased to report that the Information Exchange Working Group (IEWG)’s “Combatting child sexual abuse and exploitation through financial intelligence: Project report” and the corresponding public bulletin are now available.
About the CSAE project
The online streaming of child sexual abuse and exploitation (CSAE) is a horrific crime that causes significant harm to individual children, and the wider society in which it pervades. Supported by technological advancements and the reach of global networks, CSAE is a crime that targets the most vulnerable members of societies – children. Noting that online streaming of CSAE is a crime often underpinned by financial transactions, this positions Financial Intelligence Units (FIUs) as key partners for law enforcement agencies (LEAs) to fight CSAE.
The IEWG’s CSAE project sought to develop and consolidate the strategic intelligence picture associated with payments relating to the online streaming of CSAE. The data from Egmont Group member FIUs and other sources, including private sector entities, provided the project team with an understanding of financial transactions suspected to be linked to online CSAE.
The resulting financial indicators and keywords produced within the CSAE project can be used by FIUs to proactively identify financial transactions likely to be linked to the online streaming of CSAE within their datasets. The key findings of this project will enable FIUs to better contribute to efforts to tackle online streaming of CSAE, including options for more effective handling of intelligence and the types of information exchanged with the private sector. Building on the findings of the reports, FIUs will be able to provide LEAs with more actionable intelligence relating to the movement of funds and the identification of both offenders and facilitators of CSAE.
Jointly-led by AUSTRAC, Australia, UKFIU, United Kingdom and AMLC, Philippines, this project is the result of collaboration with INTERPOL and the FIUs from:
Isle of Man
The following private sector entities were involved in the project:
The Lithuanian government has approved the the establishment of the Centre of Excellence in Anti-Money Laundering, a public-private project initiated by the Bank of Lithuania.
The Centre of Excellence in Anti-Money Laundering is set up to mobilise public and private efforts in combating money laundering and terrorist financing (AML/CTF) as well as to strengthen the prevention framework. The Centre was established by the Ministry of Finance of the Republic of Lithuania, the Bank of Lithuania, and the country’s commercial banks, while other financial market participants will also be invited to join its activities in the future.
The Financial Crime Investigation Service, the Police Department of the Republic of Lithuania, the State Tax Inspectorate and the Prosecutor General’s Office are expected to take joint action with the Centre of Excellence in Anti-Money Laundering as well, according to the official press release.
The convicted couple were residents in Holland and both are facing two years in prison following their conviction on money laundering charges.
Dutch police have reportedly seized over 2,500 Bitcoin worth approximately $33 million. The seizure follows the conviction of a Dutch couple by the Rotterdam District Court on money laundering charges.
The Dutch couple had laundered nearly $19 million within the last two years, the Dutch Public Prosecution Service revealed.
According to a press release by OpenBaar Ministerie, the seizure of Bitcoin was not all that was taken from the couple. The Dutch authorities also confiscated cell phones, hard drives and other computer equipment, jewelry, and a vehicle.
In addition, the couple also had a business, where €138,000 and €40,000 have been confiscated. Both relevant companies have been requested to pay a fine of €45,000 each.
The couple were residents of Hilversum, in Holland. It is reported that both individuals bought Bitcoin and traded the cryptocurrency without notifying the tax authorities. In addition, the couple came into contact with customers through a dark web marketplace, where most of the Bitcoin was inevitably traded.
Neither individual reportedly ever asked clients to show identification or carry out KYC, despite some deals being worth millions of euros.
The individuals are facing two, and two and a half years in prison respectively, and both individuals will begin with a 6-month custodial period.
Authorities focus on crypto money laundering
Authorities are increasingly turning their attention to money laundering via cryptocurrency. In recent months, regulators in the UK and Switzerland have sought to tighten crypto regulations in order to curb money laundering, with exchanges such as Binance working with the authorities to track money launderers.
Meanwhile, a leaked FBI intelligence report has revealed how the agency tracks Bitcoin laundering on the dark web. For cryptocurrency firms, new AML rules are proving onerous—while a recent report has highlighted that the majority of money laundering is still carried out through traditional channels.
INTERPOL and the Council of Europe, in the framework of the GLACY+ Project, cooperate in publishing the Guide for Criminal Justice Statistics on Cybercrime and Electronic Evidence
SINGAPORE – While many governments recognize the need to take action against cybercrime, they face difficulties in defining the problem at hand.
To effectively tackle the multifaceted and imperceptible nature of cybercrime, criminal justice authorities need a good understanding of the scale, types and impact of the crime. For this reason, the Council of Europe and INTERPOL have jointly developed the Guide for Criminal Justice Statistics on Cybercrime and Electronic Evidence to support countries develop a clearer vision of the global problem.
The key goal of this joint effort is to help criminal justice authorities worldwide acquire the statistics on cybercrime and electronic evidence by providing good practices and recommendations. Statistics enable the authorities to shape effective policies and operational responses. This guide lays out the agenda for compiling criminal justice statistics with key steps for data collection, analysis and cooperation among multiple stakeholders.
“Well-defined statistics produced in collaboration with criminal justice authorities will not only provide valuable insights into the changing environment, but also strategic indicators for measuring the effectiveness of policies and activities,” said Alexander Seger, Head of the Cybercrime Division of the Council of Europe.
“How countries approach cybercrime and electronic evidence at the national level has a real impact on available options on global cooperation. It also serves as the cornerstone for developing tailored operational responses to reduce the global impact of cybercrime,” said Craig Jones, INTERPOL’s Director of Cybercrime.
INTERPOL and the Council of Europe will continue to cooperate to enhance the ability of criminal justice authorities worldwide to tackle cybercrime and encourage international cooperation in collecting and analyzing electronic evidence.
Across the globe, terrorists and criminals are leveraging cryptos in what is gearing up to be a significant national security threat to the United States.
That’s according to the U.S. Department of Justice, which said in a report that rogue nations and other risks loom as exchanges are lightly (or not at all) regulated – making it difficult to, as the maxim goes, follow the money.
In the report from the U.S. Attorney General’s Cyber-Digital Task Force, the “Cryptocurrency Enforcement Framework,” the authors noted that “cryptocurrency is increasingly used to buy and sell lethal drugs on the dark web (and by drug cartels seeking to launder their profits) … rogue states like Russia, Iran and North Korea may turn to cryptocurrency to fund cyberattacks, blunt the impact of U.S. and international sanctions, and decrease America’s influence in the global marketplace. And, while terrorist use of cryptocurrency is still evolving, certain terrorist groups have solicited cryptocurrency donations running into the millions of dollars via online social media campaigns.”
The report also found that the fact that regulation is piecemeal and inconsistent across peer-to-peer exchanges and kiosks is detrimental to the safety and stability of the international financial system.
The terrorist threat, in particular, represents what the report termed “the first raindrops of an oncoming storm.” Cryptos also help bad actors avoid sanctions. The report relays a series of anecdotes, such as Ponzi schemes and other fraudulent methods, and points out that in 2019, over $4.5 billion of cryptocurrency reportedly was lost to theft or fraud – double that of the previous year.
The report also provided a summary of actions and investigations into various cases involving crypto. But to spotlight how hard it can be to catch criminals, the report noted that some of them engage in what is known as “jurisdictional arbitrage,” which means they look to exploit the lack of standard legal and anti-money laundering (AML)- focused rules and regulations.
The problem is felt right here at home, stated the report: “In the United States, AML/CFT standards have been in place for [money services businesses, or MSBs] engaged in virtual asset activities since 2011, and yet many [virtual asset service providers, or VASPs] still are operating in ways that do not comply with the [Bank Secrecy Act, or BSA] and other regulatory requirements.”
In fact, there exists a complete lack of consistent AML and other regulatory schemes elsewhere in the world – leaving cross-border and global transactions vulnerable.
“This inconsistency also impedes law enforcement’s ability to investigate, prosecute and prevent criminal activity involving or facilitated by virtual assets,” the report added. Past recommendations of the Financial Action Task Force (FATF) have stated that “to manage and mitigate the risks emerging from virtual assets, countries should ensure that virtual asset service providers are regulated for AML/CFT purposes, and licensed or registered and subject to effective systems for monitoring and ensuring compliance with relevant measures.”
The DOJ report stands as only the latest of warnings over the risks tied to cryptos. As recently noted by PYMNTS, Kenneth A. Blanco, director of the Financial Crimes Enforcement Network (FinCEN), said that banks need to be wary of risks associated with cryptocurrency, per remarks made to the ACAMS AML virtual conference.
"These risks are not unique to money services businesses or virtual currency exchangers; banks must be thinking about their crypto exposure as well," he said. And with a nod to the financial institutions (FIs), he said: "These are areas your examiners, and FinCEN, will ask you about when assessing the effectiveness of your AML program.”
GAFILAT (Financial Action Task Force of Latin America) published a Second Update to the Money Laundering Regional Threat Report (2017-2018) that includes: ANNEX VI: THREATS RELATED TO THE COVID-19 PANDEMIC. Considered to be a regional money laundering threat analysis, the report’s section related to Covid-19 highlights how criminals are taking advantage of this difficult situation in order to make profits and transfer illicit sourced funds across multiple borders and jurisdictions.
The banking sector remains the most vulnerable sector for money laundering in the region
Financial Institution continue to be susceptible to money laundering and terrorist financing threats.
The GAFILAT Report states that the most often used financial institution’s products are cash, bank accounts, as well as domestic and international money transfers. Consequently, the Report recommends that financial institutions establish preventive actions via a risk-based approach in order to effectively tackle the Covid-19 Pandemic caused increase in corruption-related crimes.
GAFILAT’s Covid-19 Emerging Threats in the LATAM Region
-Bribery, overpricing of products, and misappropriation of public funds.
-Increase in financial fraud and scams (trafficking in counterfeit medicines, and the offer of fraudulent investments in the form of Ponzi schemes).
-Cybercrime (remote or off-site financial transactions and purchase of products and services by electronic means or online) using methods such as:
--Phishing – Fraudulent emails that direct customers to fake websites that appear to be from the banking institution in order to extract information or steal funds virtually.
--Vishing -This threat combines a fraudulent phone call with information previously obtained from the Internet for fraud purposes. The offender identifies him/herself as bank personnel and, with particularly alarming messages, tries to get the customer to reveal the number of his/her SMS password or digital token, which are necessary to authorize transactions.
--Smishing – The use of text or WhatsApp messages where an issuer pretends to be the bank and informs the Individual that a suspicious purchase has been made with the Individual’s credit card in order to get hold of the Individual’s confidential financial information.
-The distribution of counterfeit or low-quality products (false Covid-19 home tests).
-Individuals may increase the use of pawn shops, moneylenders (susceptible to be used in illegal activities) and criminal organizations may recruit individuals to assist them in their criminal activities recruitment of people to support them in executing their criminal activities.
-Large cash movements and increases in the purchases of precious metals and gold.
-Misuse of Non-Profit Organizations.
Financial Institutions ought to strengthen AML/CFT risk-based approach
The Covid-19 Pandemic has created an additional operational and credit challenges for Financial Institutions. The implementation of risk-based adjustments in a Financial Institution’s AML/CFT system related to COVID-19 circumstances is critical to keeping up with compliance requirements. Financial Institutions are encouraged to inform Bank Examiners of any compliance issues ahead of time.
WASHINGTON, October 22, 2020 – UK and U.S. participants held the third meeting of the UK-U.S. Financial Regulatory Working Group (Working Group) virtually on October 20, 2020. The Working Group was formed in 2018 to deepen bilateral regulatory cooperation with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation in both jurisdictions. This Working Group meeting was the first since the United Kingdom left the European Union. Cooperation between the UK and United States continues to be important, particularly in light of COVID-19 and the UK’s withdrawal from the European Union.
Participants included officials and senior staff from the U.S. Department of the Treasury and HM Treasury, and from the U.S. and UK independent regulatory agencies, including the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of Comptroller of the Currency, Securities and Exchange Commission, the Bank of England, and the Financial Conduct Authority. U.S. and UK participants shared views on issues in their respective areas of responsibility.
The Working Group meeting focused on five key themes: (1) the economic response to, and potential financial stability impacts of, the COVID-19 crisis, (2) international cooperation and 2021 priorities, (3) cross-border rules and overseas recognition/equivalence/substituted compliance regimes, (4) sustainable finance, and (5) financial innovation.
At the meeting, UK and U.S. participants discussed the economic response to, and potential financial stability impacts of the COVID-19 crisis. Participants also discussed the outlook for financial regulatory reforms and future priorities, including possible areas for deeper bilateral and multilateral regulatory cooperation to further facilitate safe and efficient financial services activity between U.S. and UK markets, and provided updates on certain aspects of their respective domestic frameworks.
Participants took stock of ongoing public and private sector efforts in relation to benchmark transition, and provided updates on their respective cross-border rules, overseas recognition, equivalence, and substituted compliance regimes. Participants also welcomed the announcement of the signing of a Memorandum of Understanding between the Bank of England and CFTC regarding supervisory cooperation in relation to UK and U.S. central counterparties that operate on a cross-border basis. Participants also acknowledged the success of this summer’s UK-U.S. Financial Innovation Partnership meeting and discussed further actions to deepen UK and U.S. ties in financial innovation, their respective approaches to digital payments, and cross-border data issues.
On insurance, participants discussed implementation of the U.S.-UK Covered Agreement, next steps for the U.S.-UK Insurance Project, and the UK and U.S. insurance regulatory responses to the COVID-19 crisis. Sustainable finance was also a topic of discussion at the Working Group, with the UK discussing its future priorities, including its climate-related financial sector work and regulatory and supervisory approach to climate change, along with private sector-led disclosure efforts. U.S. participants outlined private sector efforts to mitigate climate-related risks.
Participants also took stock of the Working Group’s achievements to date and recognized that the UK-U.S. financial regulatory relationship and Working Group discussions will be entering a new phase after the UK’s transition out of the European Union is complete. Participants identified follow-up work for the Working Group on the above topics and other priority issues. Participants will continue to engage bilaterally on these topics, as well as other topics of mutual interest ahead of the next Working Group meeting, which is expected to take place in the first half of 2021.
Eight were arrested and six tonnes of cocaine seized
Europol supported a cross-border investigation, led by the Spanish Civil Guard (Guardia Civil), involving the Dutch Police (Politie) and US Homeland Security Investigations and Border and Protection that resulted in dismantling an organised crime group trafficking cocaine from South America to Europe.
SELF-DEVELOPED APPS TO ENCRYPT COMMUNICATIONS
On the action days, 1 and 2 October, law enforcement officers raided locations in the Dutch cities of Amsterdam, Papendrecht, Rotterdam, Utrecht and the Spanish cities of Valencia and Malaga. They arrested eight suspects (five in Spain and three the Netherlands), one of them believed to be a leader of the network.
During the operations, the officers from the Spanish police seized six tonnes of cocaine, jewellery, cash and encrypted devices. The suspects are believed to have used self-developed encrypted mobile applications to communicate with their counterparts. Individuals with military training and experience in war missions supported the logistical set-up of the criminal network.
Europol facilitated the information exchange and provided analytical support. On then action day, Europol supported the field activities by setting up a virtual command post. This enabled Europol to facilitate the real-time exchange of information between Spain and the Netherlands and support with operational analysis to provide clues to investigators on the ground.
EUROPOL - An unprecedented international law enforcement operation involving 16 countries has resulted in the arrest of 20 individuals suspected of belonging to the QQAAZZ criminal network which attempted to launder tens of millions of euros on behalf of the world’s foremost cybercriminals.
Some 40 house searches were carried out in Latvia, Bulgaria, the United Kingdom, Spain and Italy, with criminal proceedings initiated against those arrested by the United States, Portugal, the United Kingdom and Spain. The largest number of searches in the case were carried out in Latvia in operations led by the Latvian State Police (Latvijas Valsts Policija). Bitcoin mining equipment was also seized in Bulgaria.
This international sweep follows a complex investigation led by the Portuguese Judicial Police (Polícia Judiciária) together with the United States Attorney Office for the Western District of Pennsylvania and the FBI’s Pittsburgh Field Office, alongside the Spanish National Police (Policia Nacional) and the regional Catalan police (Mossos D’esquadra) and law enforcement authorities from the United Kingdom, Latvia, Bulgaria, Georgia, Italy, Germany, Switzerland, Poland, Czech Republic, Australia, Sweden, Austria and Belgium with coordination efforts led by Europol.
HOW THE QQAAZZ NETWORK CLEANED DIRTY MONEY
Criminal indictments returned by federal grand juries in Pittsburgh, United States, set forth allegations of how this criminal network operated. It is estimated that the QQAAZZ network laundered, or attempted to launder, tens of millions of euros in stolen funds since 2016.
Comprised of several layers of members mainly from Latvia, Georgia, Bulgaria, Romania, and Belgium, the QQAAZZ network opened and maintained hundreds of corporate and personal bank accounts at financial institutions throughout the world to receive money from cybercriminals who stole it from accounts of victims. The funds were then transferred to other QQAAZZ-controlled bank accounts and sometimes converted to cryptocurrency using ‘tumbling’ services designed to hide the original source of the funds. After taking a fee of up to 50-percent, QQAAZZ returned the balance of the stolen funds to their cybercriminal clientele.
The QQAAZZ members secured these bank accounts by using both legitimate and fraudulent Polish and Bulgarian identification documents to create and register dozens of shell companies which conducted no legitimate business activity. Using these registration documents, the QQAAZZ members then opened corporate bank accounts in the names of the shell companies at numerous financial institutions within each country, thereby generating hundreds of QQAAZZ-controlled bank accounts available to receive stolen funds from cyber thieves.
QQAAZZ advertised its services as a “global, complicit bank drops service” on Russian-speaking online cybercriminal forums where cybercriminals gather to offer or seek specialised skills or services needed to engage in a variety of cybercriminal activities. The criminal gangs behind some of the world’s most harmful malware families (e.g.: Dridex, Trickbot, GozNym, etc.) feature among those having benefited from the services provided by QQAAZZ.
INTERNATIONAL POLICE COOPERATION
International police cooperation coordinated by Europol was central in bringing the perpetrators to justice who were all located in different geographical locations around the world.
Europol’s European Cybercrime Centre (EC3) hosted operational meetings, provided digital forensic support and facilitated the information exchange in the framework of the Joint Cybercrime Action Taskforce (J-CAT) hosted at Europol’s headquarters in The Hague. Europol specialists were also deployed to Latvia and the United Kingdom to support the local authorities during the action days. The National Member for Portugal at Eurojust took part in a number of operational meetings.
-Edvardas Šileris, Head of Europol’s European Cybercrime Centre, said: “Cybercriminals are constantly exploring new possibilities to abuse technology and financial frameworks to victimise millions of users in a moment from anywhere in the world. Today’s operation shows how through a proper law enforcement international coordination we can turn the table on these criminals and bring them to justice.”
-Carlos Cabreiro, Director of the National Unit for Fighting Cybercrime and Technological Crime of the Polícia Judiciária, said: “Operation 2BaGoldMule has been a highly significant operation involving international law enforcement and prosecutors to tackle top-level cybercriminals who have laundered millions of euros for the world’s foremost criminals. This operation has shown that through this cooperation we can collectively tackle the global nature of cybercrime. This is the only way forward.”
-Scott W. Brady, United States Attorney for the Western District of Pennsylvania, said: “Cybercrime victimizes individuals and companies all over the world, so our work to identify and disrupt cybercriminals requires global collaboration. For the past several years, law enforcement from 16 countries has been conducting coordinated investigations of this criminal gang, and now parallel prosecutions will commence in the U.S., Portugal, United Kingdom and Spain. As this case demonstrates, we will be relentless in our pursuit of cybercriminals regardless of where they reside.”
-Michael Christman, FBI Pittsburgh Special Agent in Charge, said: “This was an extensive investigation that had implications around the world. Partnerships are essential, as no one agency can combat cybercrime alone. This case highlights the FBI’s strategy to target and dismantle the most significant cybercriminal enterprises through a global task force approach. I can assure everyone that the FBI and our partners will continue to work tirelessly to combat these cyber threats.”