Britain’s Financial Conduct Authority (FCA) now monitors anti-money laundering (AML) and counter terrorist financing (CTF) for companies carrying out cryptocurrency-related activities.
According to an official announcement published on Jan. 10, FCA will supervise whether United Kingdom-registered businesses engaged in crypto asset-related operations are compliant with relevant regulations and requirements.
List of requirements to crypto businesses
Further in the announcement, FCA set forth a list of requirements for cryptocurrency-related businesses, which includes the identification and assessment of risks in regards to AML and CFT, development of policies and controls to eliminate risks associated with AML and CFT, conduction of customer due diligence, and others.
“We will proactively supervise firms’ compliance with the new regulations, and will take swift action where firms fall short of desired standards and cause risks to market integrity,” the announcement said.
Britain’s crypto drama
Back in July 2018, FCA warned that cryptocurrencies pose a huge risk to consumers who are generally misinformed about them, and recommended that products such as derivatives and exchange-traded notes that reference crypto-assets were “ill-suited” to small investors.
Although the FCA is still considering the restriction of crypto derivatives for retail investors, it concluded last summer that major cryptocurrencies are “exchange tokens” which are “usually decentralized and primarily used as a means of exchange.”
At the time, the regulator emphasized that such digital currencies do not fall under the regulatory scope of the FCA and are outside its regulatory purview.
In late November of last year, Piers Ridyard, CEO of the Radix decentralized ledger, told Cointelegraph that U.K. authorities are actually relatively open to crypto innovation, and noted:
“The FCA has been progressive on its views on crypto for years; including monitoring and permitting trials of the technology in sandbox environments before regulatory licenses are needed. The UK generally sees itself as a Fintech leader, and the FCA sees part of its job as not getting in the way of innovation.”
The new rules will disrupt the culture of confidentiality in the art market.
Art dealers around the UK returning from their holiday breaks this week are in for a rude awakening. A new set of regulations designed to combat money laundering snuck through parliament just before Christmas, and are taking effect today.
The new rules involve a slew of onerous administrative requirements, enhanced due diligence checks on clients, as well as the reporting of any suspicious transactions to the government. Amid the scrum, fears are mounting that the new requirements could disproportionately affect small businesses and make the London art market less attractive.
“There is going to be quite a significant change in the way that business is done in a number of organizations that is contrary to a lot of the current market practices,” Kenneth Mullen, a partner at the Withers law firm, tells Artnet News.
In essence, the new rules require anyone participating in an art-market transaction worth €10,000 or more (£8,500 or $11,000) to carry out the same due diligence checks on clients that banks, accountants, and lawyers do before taking on new business.
Regulated participants—which include not just gallery owners but also their senior managers and newly appointed money laundering compliance officers, who will be charged with reporting suspicious activity—will be given a grace period of one year to register with HM Revenue and Customs.
An Unexpected Shift
The timing of the new regulations came as a surprise to many in the industry. “The directive was always due to be implemented by the 10th of January but there was an expectation that, because there was a consultation launched by the treasury last April, there would at least be either a response or guidance published in light of that,” Mullen says.
It is unclear why the regulations slipped through without an official response to the industry consultation, which asked art market participants to weigh in on the directive and saw several objections to the proposed rules. (One possibility is that all hands were on deck for the general election and the management of Brexit.)
The regulations are part of a wider international move to combat money laundering that may soon become the norm. The directive is an EU-wide piece of legislation, and in the US another bill is making its way through Capitol Hill that will introduce anti-money laundering legislation there, too.
The new rules, officially called “The Money Laundering and Terrorist Finance Amendments Regulations 2019,” are implementing the EU’s Fifth Money Laundering Directive in the UK. They will make the UK art market one of the sectors that is officially regulated for anti-money laundering and counter-terrorist financing compliance.
While they are taken from an EU directive, the regulations will remain in force regardless of Britain’s exit from the union, not least because the UK is one of the founding members of the Financial Action Task Force, the intergovernmental group behind the anti-money laundering push. “It would have looked a bit odd if the UK didn’t also take on board rules which it was a protagonist of,” Mullen says.
A Culture Change for the Industry
The new regulations could force significant changes to the way galleries, as well as intermediaries and agents, do business.
Dealers are used to being able to protect their clients’ identities for a number of reasons that don’t always have to do with dodgy financial dealings. When consigning work to an auction house, for example, a dealer might not want to give away the identity of a client to a specialist who could then compete for their business. And a seller might want to keep their identity secret for reasons of personal security or privacy concerning sales triggered by sensitive circumstances such as death, divorce, or debt.
A number of market players have been speaking out against the regulations, including the International Confederation of Art and Antique Dealer Associations. “We have been very clear with the policy makers in the EU and UK that the directive is disproportionate and will be very difficult and burdensome for both collectors and dealers,” Erika Bochereau, the secretary general of the confederation, tells Artnet News. “The €10,000 threshold is very low and we are very skeptical that it will actually catch criminals, but we fear that it will deter some people from purchasing artworks.”
But the rules aren’t new to everyone in the business. “This legislation broadly reflects practices which have been in place for some time at major auction houses,” Martin Wilson, the chief legal counsel at Phillips auction house, tells Artnet News. “I am confident that, just as banks have done, the art industry will find a balance between the legitimate need for discretion and confidentiality and the level of transparency necessary to ensure that the art market cannot be used for illicit purposes.”
Others say they don’t mind complying with the rules, especially since many legitimate customers are already accustomed to producing identity documentation when they do business in other industries. “The requirements seem to correspond with the sort of information now regularly requested from us by our bank, solicitor, accountants, and other advisors,” antiques dealer Martin P. Levy, the director of H. Blairman & Sons, tells Artnet News. “It is a matter of putting systems in place and then following through; we are already taking advice on how precisely to proceed.”
(Antiques dealers may be spared from the regulations, however, as the definition of art used in the law doesn’t include antiques and collector’s items; it instead covers “artist created pictures, collages and similar decorative plaques; paintings and drawings; original engravings, prints and lithographs; original sculptures; tapestries and wall textiles from original designs; individual signed ceramics; enamels on copper; and photographs taken or printed by the artist.”)
The biggest question on people’s minds is whether these new rules will make London less attractive to people storing works there or otherwise doing business in the UK. London accounts for 21 percent of the global art market and is home to some of the world’s leading experts. But as the UK faces another imminent Brexit deadline on January 31, other factors that impact the market will soon be in play.
Qatar's financial regulator has blocked any and all crypto asset services in the Gulf nation.
The QFC Regulatory Authority said in a statement that "Virtual Asset Services may not be conducted in or from the QFC at this time". It specified that the ban includes "anything of value that acts as a substitute for currency that can be digitally traded or transferred and can be used for payment or investment purposes".
Virtual Asset Services include exchange between virtual assets and fiat currencies; exchange between one or more forms of virtual assets; transfer of virtual assets; safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and participation in and provision of financial services related to an issuer's offer and/or sale of a virtual asset.
Digital forms of securities or of other financial instruments that are regulated by the Regulatory Authority, the Qatar Central Bank or the Qatar Financial Markets Authority are still allowed.
Cryptocurrency firms have been shutting down all over because of stricter anti-money laundering regulations.
Simplecoin, a Netherlands-based cryptocurrency 'mining pool' set up to enable collaborative discovery of new virtual currency coins, and Chopcoin, a Bitcoin gaming platform, announced they would be shutting down before the EU Fifth Anti-Money Laundering Directive (5AMLD), came into effect in all EU Member States on 10 January 2020.
The 5AMLD requires providers of crypto platforms and wallets to identify their customers for anti-money laundering purposes.
"Simplecoin will become subject to a large range of AML/KYC requirements. It is because under the new Directive, we would be considered a "custodial wallet provider", a broad definition that will apply to many cryptocurrency operations. When the laws come into effect, we would be forced to require you, the users, to identify yourselves for anti-money-laundering purposes. We have been searching for solutions for a while, but it has become apparent that there is no way around it.
"We believe in the power of cryptocurrency and its potential. Mining should to be available to anyone and we refuse to jeopardise our users' privacy. It remains to be seen what impact this will have on mining pools and the cryptocurrency space as a whole," the company said in its statement.
Both companies notified its users that they had a couple of weeks to withdraw their balances.
Although some EU Member States, including Germany, Italy and the Netherlands are expected to transpose the 5AMLD into law by the 10 January deadline, others are resisting the directive. The UK has undertaken to implement the 5AMLD, despite Brexit.
New research from the European Central Bank shows that it is possible to build a simplified payment system for central bank digital currencies, while safeguarding users’ privacy for low-value transactions and ensuring that higher-value transfers are subject to anti-money laundering checks.
That proof-of-concept boasts several novel features developed by the Eurosystem's EUROchain research network - with the support of Accenture and R3 - using distributed ledger technology.
It tackles the thorny issue of anonymity in digital currency transactions, and in particular how to strike a balance between allowing a certain degree of privacy in electronic payments while ensuring compliance with regulations aimed at tackling money laundering
Under the model, neither the user’s identity and transaction history can be seen by the central bank or intermediaries other than those chosen by the user. Instead, the enforcement of limits on anonymous electronic transactions is automated, and additional checks are delegated to an AML authority. This is achieved using 'anonymity vouchers', which allow users to anonymously transfer a limited amount of CBDC over a defined period of time.
"Although there is no immediate need to take concrete steps towards the issuance of CBDC in the euro area, the proof of concept will be instrumental in any assessment of (i) how CBDC could work in practice and (ii) how the specific technical features of such an initiative will affect its potential implications for the economy," states the ECB paper.
The central bank stresses that the work carried out is not geared towards practical implementation and does not imply any decision to proceed with CBDC. it says the research is geared towards exploring the benefits of new technologies for European citizens "in order to be ready to act should the need arise in future".
January 8, 2020: Moroccan Prime Minister Saad Eddine El-Othmani called Tuesday for developing the Conference of the States Parties to the Arab Anti-Corruption Convention and benefiting from international experiences.
He said this would give a greater impetus to the conference.
His comments were made on Tuesday during the opening of the third session of the two-day conference in the Moroccan capital, Rabat.
The conference was organized in the framework of a partnership between the Arab League and the National Authority for Integrity and the Prevention and Combating of Bribery in Morocco.
Corruption is one of the main obstacles hindering the development and stability of societies, said Othmani.
He stressed that it “leads to weakening development plans and public policies, preventing societies from attaining their goals, obstructing and delaying investments and resulting in poor infrastructure quality.”
He referred to a study carried out by the International Monetary Fund in 2016, according to which bribery alone was estimated at about two percent of the global gross domestic product.
Othmani also reviewed some of Morocco’s anti-corruption achievements, considering them “encouraging.” But he said they remain insufficient.
Morocco has achieved a qualitative shift in the perception of corruption after being ranked 73rd out of 180 countries in 2019, an improvement from rank 90 in 2017, said Othmani, adding that it ranked the first in North Africa and sixth among Arab states.
Morocco has also improved in the World Bank’s annual Doing Business report of 2019, in which it was unprecedentedly ranked 53rd out of 190 countries.
Morocco topped North African countries, Othmani added, and maintained its second place in the Middle East and North Africa and the third in the African continent.
The conference was attended by delegations from Arab countries that are not party to the convention, namely Yemen, Libya, and Mauritania, in addition to a group of regional and international organizations, all acting as observers.
The Arab delegations have focused on following up on the implementation of the decisions issued during the second session of the Conference of the States Parties to the Arab Anti-Corruption Convention, which was held at the Arab League’s headquarters in December 2017.
They also discussed the report and recommendations of the third meeting of the open-ended committee, consisting of government experts for the state parties to the Convention.
Paris, France, 10 January 2020 - On 9 January 2020, supervisors from around the world met to discuss how to supervise and regulate virtual assets and virtual asset service providers (VASPs). This meeting was the first opportunity for supervisors to discuss how to implement these new measures since the FATF finalised them in June 2019.
Supervisors play an important role in ensuring that regulated entities, such as banks and financial institutions, implement the FATF’s standards to detect and prevent money laundering and terrorist financing. The FATF Supervisors’ Forum is an initiative of the Chinese Presidency of FATF to promote more effective supervision by national authorities.
FATF President, Mr. Xiangmin Liu, opened the second meeting of the FATF Supervisors Forum, which brought together 135 representatives from over 50 delegations involved in virtual asset supervision. He underscored the importance of supervision in an effective anti-money laundering and combating financing of terrorism (AML/CFT) regime.
These regimes can only remain effective if they are regularly refined and strengthened, to address evolving risks and threats. The FATF has made substantial progress by agreeing new global standards that will prevent virtual assets and VASPs from being misused for transactions with links to crime or terrorism. The challenge is now to effectively implement these new standards in practise. By bringing together practitioners from around the world, the FATF is beginning to develop a global knowledge base on ‘what works’ in supervising virtual assets. This will help ensure a consistent global approach to supervision and will help the VASP sector adjust to the new regulatory environment.
Participants in this Forum shared their knowledge and experience in virtual assets and VASP supervision. The Forum discussed three main areas:
- The lessons learnt so far from countries that have already established VASP supervisory regimes and are already supervising VASPs. Supervisors provided examples of positive actions that VASPs have taken to comply with their AML/CFT obligations and also discussed common challenges for the VASP sector.
-Common issues when drafting VASP laws and regulations. With the finalisation of the FATF Standards on VASPs in June 2019, all countries must ensure they have an AML/CFT regime for VASPs. Representatives shared their approach to developing an AML/CFT regime for VASPs in their jurisdictions and outlined how they were implementing the FATF’s rules.
-The tools, skills, procedures and technology that supervisors need to effectively supervise VASPs. Participants explored what information sources may be useful, what software and other products can assist, and also what kinds of human resources supervisors may need. The importance of international co-operation was also highlighted, as virtual assets are inherently global products.
This meeting identified a number of areas that require further actions. These will be taken forward at the FATF Plenary and at further meetings of the Supervisors’ Forum, to be held in May 2020.
Switzerland has been the home for various cryptocurrency projects due to its sorted outlook towards it and its underlying technology, blockchain. However, the country’s financial regulators have warned against the risk emerging from blockchain and bank’s lower profit margins.
The regulators also noted that Switzerland was “particularly exposed” to money laundering risks due to its traditional role as a magnet for wealthy people. The regulators noted about these risks in its 2019 Risk Monitor report.
It noted, “In addition to these traditional money-laundering risks, the financial industry also faces new risks in the area of blockchain technology and the cryptoassets that are attracting growing interest from clients.”
The report further noted that even though blockchain technology promises efficiency to banks, its other features like anonymity and transaction speeds also appealed to money launderers and others looking to finance terrorist activities. It added that squeeze margins may push banks in on-boarding new clients with a financial appeal, adding that these clients came from emerging countries that pose “strong risks.”
According to reports, Finma had previously investigated numerous Swiss banks for persuading clients involved in scandals, without carrying out necessary compliance and due diligence work to ensure that they were not depositing dirty money.
Recently, Finma called for supervisory convergence on the regulation of crypto-assets across Europe. The paper, formulated after analyzing crypto-asset taxonomies and regulatory approaches across 11 European jurisdictions, noted that the need for convergence emerged due to insufficient harmonization among regulators. It added that this step would support innovation and provide an opportunity to further the objects set by the EU to create Capital Markets Union [CMU] and Digital Single Market [DSM].
The ECB was also reported to consider a pan-European central bank digital currency as it still investigates the benefits and costs associated with the same. The announcement followed French First Deputy Governor, Denis Beau’s support for building a blockchain technology-based settlement system.
Police, CERTs and private sector come together to mitigate this emerging cybercrime
SINGAPORE – An INTERPOL-coordinated operation in Southeast Asia against an emerging form of cybercrime known as cryptojacking has led to a massive reduction in the number of infected devices across the region.
Cryptojacking is the unauthorized use of victims’ computing power to mine cryptocurrency for the cybercriminals. In cryptojacking, the victims unwittingly install a programme with malicious scripts that allow the cybercriminals to access their computer or other Internet-connected devices. This is often the result of victims clicking on malicious links or visiting infected websites. Programmes called ‘coin miners’ are then used by the cybercriminals to mine cryptocurrency.
Based on data from police and partners in the cybersecurity industry, INTERPOL identified a global cryptojacking campaign facilitated by the exploitation of a vulnerability in MikroTik routers. Intelligence was developed and disseminated via Cyber Activity Reports to the affected member countries.
Recognizing cryptojacking as a growing threat in the countries of the ASEAN (Association of Southeast Asian Nations) region, INTERPOL’s ASEAN Cyber Capability Desk launched Operation Goldfish Alpha in June 2019. At that time, intelligence identified more than 20,000 hacked routers in the region, accounting for 18 per cent of infections globally. With support from INTERPOL’s Cyber Foundation project, an operational meeting was held in June 2019 to coordinate the response.
During the five months of the operation, cybercrime investigators and experts from police and national Computer Emergency Response Teams (CERTs) across the 10 ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) worked together to locate the infected routers, alert the victims and patch the devices so they were no longer under the control of the cybercriminals. INTERPOL’s ASEAN Desk facilitated the exchange of information and follow-up actions amongst the countries involved.
When the operation concluded in late November, the number of infected devices had been reduced by 78 per cent. Efforts to remove the infections from the remaining devices continue.
Private sector support
Private sector partners including Cyber Defense Institute and Trend Micro supported the operation through information sharing and analysis of cryptojacking cases, and providing the participating countries with guidelines for patching infected routers and advice on preventing future infections. The National Cyber Security Center of Myanmar also issued a set of good cyber hygiene guidelines for protecting against cryptojacking.
“When faced with emerging cybercrimes like cryptojacking, the importance of strong partnerships between police and the cybersecurity industry cannot be overstated,” said INTERPOL’s Director of Cybercrime, Craig Jones.
“By combining the expertise and data on cyberthreats held by the private sector with the investigative capabilities of law enforcement, we can best protect our communities from all forms of cybercrime,” concluded Mr Jones.
As a crime type which is not yet widely known to law enforcement worldwide, Operation Goldfish Alpha also served to increase awareness of cryptojacking, how to identify it and how to mitigate the threat.
CHISINAU, REPUBLIC OF MOLDOVA - The Council of Europe, in collaboration with the Moldovan Financial Intelligence Unit (FIU), has supported a two-day workshop on cash smuggling and anti-money laundering for twenty four customs officers from the Republic of Moldova.
The Council of Europe experts presented the methods and techniques for physical transportation of cash, interviewing techniques during the cash control and emerging trends related to trade based money laundering.
Red flags related to cash smuggling relevant for the Republic of Moldova, importance of joint intelligence teams and next steps for improving money laundering investigations and cash seizure in the country were also discussed at the workshop.
The workshop was organised within the joint European Union and Council of Europe Project on “Controlling corruption through law enforcement and prevention” (CLEP), implemented in the Republic of Moldova since 2017.
Bloomberg Business - December 2019.
A new front is opening up in Europe’s battle with money laundering.
After dirty-cash scandals involving hundreds of billions of euros rocked some of the continent’s biggest banks, the Baltic region -- where one of the the biggest cases yet erupted -- has begun a fresh clampdown.
This time, the target is payment-service providers, which as well as facilitating e-commerce often help people send money around the world at low costs. The risk is that criminals use them to conceal illicit transactions while scrutiny is focused on traditional banks.
The danger was flagged earlier this year by officials from the Nordic countries, which have been at the heart of developments after Danske Bank A/S admitted that much of about $230 billion that flowed through its tiny branch in Estonia may have been illicit.
There’s also been concern about big global players like London-based Revolut Ltd, which has a European banking license from Lithuania.
But it’s law enforcement and regulators in Tallinn, Riga and Vilnius -- a hub for fintech companies -- who’ve taken the most drastic action.
Estonian police this month detained three employees of GFC Good Finance Company AS over money laundering and embezzlement.
GFC, which had been operating since 2013 and controlled more than half of the 183 million-euro ($200 million) market in the first quarter of this year, had its license withdrawn in May. The authorities said it had “seriously breached” rules including know-your-client procedures.
In April, AS Talveaed -- which had serviced higher-risk non-resident clients since 2011 -- was also stripped of its license following “several years” of it violating legal obligations.
“We can confirm that after dealing with those cases, the risk in that sector has significantly declined,” financial watchdog head Kilvar Kessler said by email.
In Lithuania, the central bank fined payment company MisterTango UAB 245,000 euros ($270,000) in October for breaching anti-money laundering and counter-terrorist financing rules -- the company’s third breach since 2016. The bank has also toughened AML and capital requirements on electronic money and payment companies.
Latvia is similarly concerned. Its anti-money laundering watchdog deems some companies service foreign clients as high risk due to weaknesses in client vetting. In a risk assessment published this year, it said firms providing services to local clients could also be exposed to tax-fraud schemes.
Risks “are increased by the high vulnerability of the sector” to management of AML systems, according to the report.
It was Estonia, where Skype was created and which has embraced all things electronic -- from online tax filings to voting in elections -- that was among the first to question payment providers.
The minutes of a meeting of the government’s anti-money laundering commission back in 2011, seen by Bloomberg, shows some were already worried.
“Funds likely received through crime must be legalized somehow,” said Krista Aas, representing the criminal police. “Using payment services is ideal for this.” Those fears are still evident today. “E-money institutions and payment companies are a really big danger,” Ilze Znotina, head of Latvia’s Financial Intelligence Unit, said in September.
(MENAFN - Gulf Times) - QCB adopts new executive regulations.
Qatar Central Bank (QCB) has announced the adoption of the new executive regulations for Law No. (20) of 2019 issuing the Anti-Money Laundering and Combating the Financing of Terrorism Law, based on the innovative and strict regulatory and legislative initiatives stipulated by the law regarding combating money laundering and terrorist financing issued on September 11, 2019.
His Highness the Amir Sheikh Tamim bin Hamad al-Thani had ratified on Thursday, Cabinet decision No 41 of 2019 issuing the executive regulations for Law No 20 of 2019 on combating money laundering and terrorism financing.
According to a statement by QCB, the new executive regulations reflect Qatar's firm and continuous commitment to combating money laundering and terrorist financing as well as fighting illicit financing in all its forms, in light of updating the international standards adopted by the main international organisations, including the Financial Action Task Force (FATF).
The executive regulations also highlight the pioneering and influential role of Qatar in the region in terms of setting standards for its legal and regulatory framework for combating money laundering and terrorist financing.
The new executive regulations are the result of the untiring efforts made by QCB along with other ministries and government bodies members of the National Anti-Money Laundering and Combating the Financing of Terrorism Committee, which is responsible for protecting the financial system of the State of Qatar from the risks of illicit financing.
HE the QCB Governor Sheikh Abdullah bin Saud al-Thani said: "The new executive regulations come within the framework of upholding the provisions of Law No. 20 of 2019 issuing the Anti-Money Laundering and Combating the Financing of Terrorism Law, and Qatar, thus stresses that combating money laundering and terrorist financing requires a strict and effective regulatory and legislative framework, whereby it determines the powers and responsibilities of each of the government agencies and relevant ministries, in relation to combating money laundering and terrorist financing".
The Deputy Governor of QCB and Chairman of the National Anti-Money Laundering and Combating the Financing of Terrorism Committee, stated that the new executive regulations are "the result of the tireless work and untiring efforts made by members of the committee during the past two years". He thanked all the members of the national committee for their efforts in issuing the new executive regulations that come in the framework of enhancing the effectiveness of Qatar's system in combating money laundering and terrorist financing.
The issuance of the new executive regulations is part of Qatar's continuous efforts to develop an effective legal and regulatory framework that defines the responsibilities and competences of the National Anti-Money Laundering and Combating the Financing of Terrorism Committee and its members of the other government bodies, in taking the necessary measures to effectively combat illicit financing.
Boosting the role of cross-sector collaboration against intellectual property crime
DUBAI, United Arab Emirates – Sharing and developing best practices against counterfeiting and piracy crimes has been the focus of the 8th Regional IP Crime Conference.
Bringing together some 480 delegates representing mainly the Middle East and North Africa region, INTERPOL, the Dubai Police and the Emirates IP Association (EIPA) co-hosted the two-day (8 to 9 December) event.
With the global aspects of transnational organized IP crime high on the agenda, delegates focused on the extensive and complex criminal enterprises involved, as well as the importance of awareness and education in fighting IP crime.
“IP crime generates huge profits and organized criminal groups are constantly seeking new opportunities to distribute their illicit products. This conference has highlighted the important need for law enforcement and other stakeholders to collaborate and innovate in response,” said H.E Lieutenant General Dhahi Khalfan Tamim, Deputy Chairman of Police and General Security in Dubai.
In this respect, participants underlined the role for innovation and cooperation through cross-sector partnerships as two necessary components for winning the battle against counterfeits.
“We must focus on the fact that making money is a key incentive for criminals involved in IP crime,” said Daoming Zhang, INTERPOL Assistant Director, Organized and Emerging Crime.
“INTERPOL works with its member countries to increase the risk of prosecution and seize the assets of criminals. Intelligence is vital to all our activities and we strongly encourage police and partners to share their data systematically with INTERPOL,” added Mr Zhang.
INTERPOL and EIPA held workshops during the conference to allow law enforcement and industry experts to share the latest IP crime trends and enforcement challenges, as well as best practices for raising awareness amongst civil society on the dangers posed by counterfeit and pirated goods.
INTERPOL helps police to identify firearms, track their movement and disrupt the supply.
LYON, France – A regional law enforcement operation against firearms trafficking in West Africa has seen arrests and seizures in Burkina Faso, Côte d’Ivoire and Mali.
Codenamed “KAFO” and jointly coordinated by INTERPOL and the United Nations Office on Drugs and Crime (UNODC), the cross-border operation targeted the people and networks behind firearms trafficking in the region and beyond.
Involving 110 officers from police, customs, border and prosecution services from all three countries, the seven-day operation (11 - 17 November 2019) saw law enforcement intercept illicit firearms and make connections with associated criminal activity, including terrorism.
In addition to arrests, initial results include the identification of a trafficking network operating regionally from Côte d’Ivoire, the seizure in Burkina Faso of illicit goods clearly linked to serious organized crime, and the confiscation in Mali of tampered visas smuggled from Burkina Faso by bus, also suggesting an organized crime connection.
Further arrests and prosecutions are foreseen in all three countries as investigations continue to unfold.
An intelligence-driven operation
By collecting investigative crime intelligence ahead of the operation, countries were able to target firearms trafficking hotspots such as land border points where cars, buses, trucks and cargo transporters were searched.
Several firearms recovered in Burkina Faso and Mali were traced back to the countries of manufacture or last known legal import to track their history of ownership.
This kind of action, coupled with comparison of ballistics evidence such as recovered cartridge casings and bullets, enabled investigators to link a wide range of different potential crimes, criminals and countries to one another.
Critical data in the right place at the right time
INTERPOL’s Firearms Programme staff ensured that frontline officers had permanent access to the Organization’s wide range of criminal databases, enabling them to determine if suspects were using stolen travel documents, were known to police in any of INTERPOL’s 194 member countries, or were travelling in a stolen vehicle. Thousands of checks were made against INTERPOL databases throughout the operation.
Côte d’Ivoire gave its national commission for the control of small arms and light weapons access to INTERPOL’s iARMS (illicit Arms Records and tracing Management System) so that it could screen seized weapons against millions of lost, stolen, trafficked and smuggled firearm records and share sensitive and urgent police information with their counterparts around the globe.
Commissions of this kind exist in every ECOWAS country to prevent, combat and eradicate the illicit firearms trade and raise regional awareness with a view to discouraging their production.
“Operation KAFO clearly demonstrates that by pooling the global expertise of our respective organizations in the field, UNODC and INTERPOL can make sure that borders everywhere hinder criminals whilst uniting law enforcement, and make the world a safer place,” said Assistant Director of Forensics and Police Data Management Cyril Gout, who is in charge of INTERPOL’s global firearms programme.
“This kind of operational cooperative action between our two organizations can only benefit global law enforcement and justice as it allows us to grasp the region’s firearms trafficking situation and the practices leading to the kind of prosecution which disrupts criminal networks behind trafficking flows,” said UNODC’s Global Firearms Programme Head, Simonetta Grassi.
Boosting West African detection and investigative skills
Pre-operational training delivered jointly by INTERPOL and UNODC ensured that officers had the skills required to use INTERPOL’s operational capabilities to their full potential and detect firearms trafficking in key strategic locations, particularly border crossings.
In particularly, participants saw how INTERPOL’s iARMS and Firearms Reference Table (IFRT) capabilities enable them to identify and investigate firearms trafficking in the field.
Trainees included experts from national commissions for the control of small arms and light weapons, gendarmerie, criminal investigations police and INTERPOL’s National Central Bureaus (NCB) from all three target countries.
The operation concluded with a debriefing meeting in Bamako to evaluate results and define the way forward for continued support in the fight against illicit firearms trafficking, including follow-up action for investigations triggered as a result of the operation.
Operation KAFO was made possible with the support from Germany, Japan, and the European Union (EU).
Funded by the European Union, INTERPOL’s iARMS (illicit Arms Records and tracing Management System) database can be queried by law enforcement across the world to check if seized firearms have been reported as lost or stolen by other countries.
Spotlight on role of inter-regional cooperation in addressing terrorist threats
ABU DHABI, United Arab Emirates – Representatives from counter-terrorism units and INTERPOL National Central Bureaus met to review common security challenges and terrorism threats that affect both the Middle East & North Africa (MENA) and the Southeast Asia regions.
The fourth edition of the Working Group on Combating Terrorism between the Middle East and North Africa and South Asia and the Pacific Countries gathered more than 40 officers from law enforcement agencies in 17 countries in the regions represented at the three-day meeting (10 - 12 December 2019 ).
A key focus of the meeting was to promote international police cooperation among participating countries and identify opportunities to enhance the use of INTERPOL global policing capabilities in supporting counter-terrorism investigations.
“Fighting terrorism and its tools requires exceptional efforts at the regional and international levels so as to confront it in all its forms, dry its sources of financing, and repel all attempts to spread it. Regional and international efforts are essential so as to prevent and disrupt all forms of terrorism, protect the lives of innocent citizens and help make the world safer,” said Lieutenant General Saif Abdullah Al Shafar, Undersecretary of the Ministry of Interior of UAE, during the opening ceremony.
“These inter-regional meetings are an excellent forum to review and target common terrorist threats affecting the MENA and Asia Pacific regions. INTERPOL is committed to continue bringing together counter-terrorism experts and representatives of INTERPOL National Central Bureaus from both regions to facilitate intelligence sharing and cooperation,” said Karel Pelán, Assistant Director of INTERPOL’s Counter-Terrorism unit.
The meeting, co-hosted by INTERPOL and the Ministry of Interior of the United Arab Emirates, was part of the INTERPOL Counter-Terrorism Global Initiative that assists INTERPOL member countries in the targeted regions to contain and disrupt transnational terrorist activities. The initiative is funded by the INTERPOL Foundation for a Safer World.
Cryptocurrency theft and scams stands at $4.4 billion, the lowest it has been in two years, according to the Ciphertrace Q3 2019 Cryptocurrency Anti-Money Laundering Report.
After two years of large, high-profile exchange hacks and exit scams, there has been a significant reduction in cryptocurrency crime, says Ciphertrace. Still, even with the lowest quarterly cryptocurrency thefts and scams in two years, 2019 still experienced a massive spate of crypto crimes—more than $4.4 billion to date, says the report.
In addition, the research results revealed that more than two-thirds (63 percent) of exchanges have "Weak" or "Porous" Know Your Customer (KYC) procedures, which are required by the Financial Action Task Force (FATF), an intergovernmental organization that standardizes global legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats. Only 37 percent of exchanges has "Good" KYC procedures.
The breakdown of the ratings are as follows:
-Weak – These exchanges allowed CipherTrace researchers to withdraw at least .25 BTC daily with very little to no KYC.
-Porous – These exchanges require some sort of ID verification process.
-Good – These exchanges require a very strenuous KYC process, which required completing several steps before the researchers were able to make a deposit or withdrawal. They not only require the ID process but also proof of address. Some require a phone call or video chat to complete the KYC process.
Additional findings include:
-Q3 saw an increasing regulatory clampdown on virtual asset transactions as nations, crypto exchanges, banks and financial institutions prepare for the FATF funds Travel Rule to take hold. The Travel Rule requires VASPs to securely transmit (and store) sender and receiver personally identifiable information (PII) with any cryptocurrency transaction valued at or exceeding USD/EUR 1,000. Consequently, stringent KYC is necessary to meet the Travel Rule’s base requirements.
-In anticipation of the new FATF AML regulations, many cryptocurrency exchanges have preemptively jettisoned their privacy coins; yet, 32 percent of exchanges, including those determined to have weak KYC, still have privacy coins listed.
-Terrorists, wise to blockchain forensics, are developing more sophisticated methods of obfuscating cryptocurrency funds flows for financing attacks and operations.
Egmont Group 23-12-2019.
Last week, Mr. Mariano FEDERICI, Chair of the Egmont Group, and Mr. Jerome BEAUMONT, Egmont Group Executive Secretary, presented at the Parliamentary Intelligence Security Forum in Washington, D.C.
Mr. FEDERICI explained to Members of Parliament from more than 70 countries what an FIU is, its mandate, functions, legal framework, legal powers and the necessity to have FIUs that are autonomous and operationally independent. The Chair also underlined the recently adopted UN Resolution 2462 that stresses the key role of FIU in the AML/CFT Chain.
Mr. BEAUMONT built upon the Chair’s presentation by addressing how FIUs cooperate internationally through the Egmont Group Platform of information exchange, which provides a way to follow money transnationally.
The Executive Secretary also reiterated that to properly enforce their mandate, FIUs need to have the proper financial, HR and IT resources. He ended his presentation by highlighting the mandate and activities of ECOFEL, the new Egmont Capacity-building program.
The GB Gambling Commission has confirmed that new rules and regulations for money laundering measures will come into effect on 10 January 2020.
The updated Money Laundering Regulations will implement the European Union's 5th Money Laundering Directive. To coincide with this, the Commission will publish the fifth edition of its guidance for remote and non-remote casinos on combatting money laundering and the financing of terrorism.
The major changes to the Money Laundering Regulations applicable to casinos, according to the Commission, include regulation 19, whereby all operators must make sure appropriate measures are in place to prevent money laundering when launching new products or business practices.
Regulation 19 also states remote and non-remote casinos should ensure they have specific policies, procedures and controls for both money laundering and terrorist financing, while regulation 24 sets out how agents working with casinos must be given appropriate training on such issues.
Elsewhere, regulation 28 includes measure for further direction in relation to what information may be regarded as ‘obtained from a reliable source which is independent of the person whose identity is being verified’.
The Commission also said operators should be aware of regulation 33, which sets outs a further requirements for enhanced customer due diligence measures. This relates to high-risk third countries, complex or unusually large transactions, and where there are unusual patterns of transactions, or transactions have no apparent economic or legal purpose.
Regulation 33 also includes directions on due diligence for customers who are beneficiaries of life insurance policies, as well as where the customer is a third country national and received citizenship in an EEA state in exchange for the transfer of capital, purchase of property, government bonds or investment in corporate entities in the EEA state.
“The Commission recognises that it takes time to implement changes and we will take that into account, but we expect to see that operators have acted promptly, invested appropriately –if technology is required to accommodate the changes – and implemented changes with the requisite urgency,” the regulator said.
“Additionally, publication of the updated guidance on 10 January must result in casino businesses reviewing, and accordingly amending, their money laundering and terrorist financing risk assessments, as well as the associated policies, procedures and controls.”
Libra’s ongoing organizational snags and run-ins with regulators continue into December, as EU finance ministers agreed Thursday that Libra cannot be launched in the EU until concerns are adequately addressed. The finance ministers issued a joint statement citing regulatory “challenges and risks.”
Lawmakers Still Reluctant
Just last month news.Bitcoin.com reported on the “Managed Stablecoins are Securities Act of 2019,” proposed legislation in the U.S. which seeks to regulate libra as a security, going against Libra representatives’ stated vision for the project. Project head David Marcus has loosely compared Libra to something more like a Paypal-type payments platform. Though devs are reporting notable successes with the testnet, and a 2020 release is still in view, regulatory worries continue to crop up. Most recently, from EU finance ministers via the EU Council and Commission.
The ministers agreed in a joint statement Thursday that:
“No global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.”
Like most official statements surrounding the Libra project thus far, the EU finance ministers are careful to give lip service to potential benefits. “Technological innovation can produce great economic benefits for the financial sector, promoting competition and financial inclusion, broadening consumer choice, increasing efficiency and delivering cost savings for financial institutions and the economy at large,” the statement reads.
However, promotion of concepts like financial inclusion is soon tempered with commonly repeated regulatory lines when it comes to cryptocurrencies:
“At the same time, these arrangements pose multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty.”
The statement ends by turning the focus away from private solutions to state-sponsored initiatives like Central Bank Digital Currencies (CBDC) and praising the European Central Bank (ECB). “We note that the ECB and other central banks and national competent authorities will explore further the ongoing digital transformation of the payment system and, in particular, the consequences of initiatives such as “stablecoins”. We welcome that central banks in cooperation with other relevant authorities continue to assess the costs and benefits of central bank digital currencies…”
Libra Struggles On
“Today the Ecofin endorsed a joint statement with the Commission on stablecoins. These are part of a much broader universe of crypto assets … A number of Member States like France, Germany or Malta introduced national crypto asset laws, but most people agree with the advice of the European Supervisory Authorities that these markets go beyond borders and so we need a common European framework.”
When the EU and governments worldwide will finally be ready for Libra, if ever, remains to be seen. As a large chunk of major league members have left the Libra Association already — such as Paypal, Visa and Mastercard in recent months — the project has no shortage of challenges as it continues pushing forward.
The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) held its 59th Plenary meeting in Strasbourg from 2 to 6 December 2019. 320 participants from MONEYVAL’s 36 member states and jurisdictions (as well as observer states and organisations) attended the Plenary.
At its opening, the Plenary heard a key address by Mr Marcus Pleyer, Vice-President of the Financial Action Task Force (FATF). Moreover, the Committee adopted its anti-money laundering and counter-terrorist financing strategy for the period 2020-2022.
MONEYVAL completed the mutual evaluations of the British Overseas Territory of Gibraltar and Cyprus. It also endorsed the report of the mutual evaluation of the Russian Federation, which had been jointly conducted by the FATF, the Eurasian Group on Combatting Money Laundering and Financing of Terrorism (EAG) and MONEYVAL. The Plenary also adopted follow-up reports of the following countries and jurisdictions: Albania, Andorra, Bosnia and Herzegovina, Hungary, Latvia, Montenegro, Romania, Serbia, Slovenia and the UK Crown Dependency of the Isle of Man.
The Committee heard presentations and held discussions with experts on a number of topics, including combatting the proceeds from modern slavery and human trafficking, good practices for national risks assessment of money laundering and terrorist financing risks, and the recent inter-ministerial conference “No money for terror” held in Melbourne (Australia, 7-8 November 2019). It also continued its work on MONEYVAL’s regional operational plan to counter terrorist financing.
MONEYVAL discussed the recently amended FATF-standards to address the money laundering and terrorist financing risks of virtual assets, and the manner in which the Committee will assess in the future whether countries have taken the necessary steps to implement the new requirements.
MONEYVAL elected Ms Elzbieta Frankow-Jaskiewicz (Poland) as Chair, Mr Alexey Petrenko (Russian Federation) and Mr Richard Walker (UK Crown Dependency of Guernsey) as Vice-Chairs, as well as Mr Ladislav Majernik (Slovak Republic) and Mr Matis Mäeker (Estonia) as Bureau members for a term of two years.
Reports adopted will be made available shortly under each jurisdiction’s profile, in accordance with MONEYVAL’s publication policy.
BIS - 12 December 2019.
A new report by the Committee on Payments and Market Infrastructures (CPMI) sets out a list of criteria for developers and market participants to consider when designing digital tokens for use in wholesale transactions.
The Wholesale digital tokens report describes the potential innovations and design questions associated with digital tokens that could be used to settle wholesale, or large-value, payments, made possible by new technologies such as blockchain, or distributed ledger technology.
Private developers are exploring several applications for wholesale digital tokens. While these could be developed simply to make payments, many initiatives also seek to provide the payment leg of tokenised securities and FX transactions, where a token represents a share, bond or other financial asset.
The report only covers variants of digital tokens issued by identifiable issuers and denominated in sovereign currency. It is not directed at so-called "stablecoins" for retail payments.
Benoît Cœuré, Chair of the CPMI, said: "This report outlines useful considerations for token designers. However, there is no single roadmap for success. Success will depend on whether wholesale digital tokens can provide both improved safety and increased efficiency over the traditional account-based settlement assets used today."
The report describes the critical elements of wholesale digital token arrangements and discusses some potential design choices. It also includes a non-exhaustive list of questions that token developers may need to consider. Important considerations include availability, issuance and redemption, access, underlying assets/funds and claims, transfer mechanism, privacy and regulatory compliance, and interoperability.