Global: money laundering case review

Back to Financial Crime Asia’s roots, this month’s review of money laundering cases from around the world examines developments and prosecution trends in the UK, US, Brazil.

Enforcement in the UK

The UK’s now defunct Office of Fair Trading hit three real estate agents with a parting gift of fines for ‘significant and widespread failures’ in implementing the UK Money Laundering Regulations 2007. The firms dropped their guard in terms of customer due diligence, ongoing monitoring of business relationships, policies and procedures on record-keeping, internal controls and risk assessments, and training on recognising suspicious transactions. The UK OFT closed its doors on March 31st this year; HM Revenue and Customs picked up the reigns for supervising estate agents for AML purposes.

A court in London sentenced two Chinese citizens to 15 and 12 months behind bars FCA - Follow the money keep calmfor laundering GBP30,000 in the proceeds of cocaine trafficking. Detective Constable Andy O’Boy tracked the duo down by following the trail of transactions sent from Northern Ireland to the couple, and then from the couple onto China.

Police officers in Birmingham, UK, smashed what they believe is one of the biggest laundering operations ever to touch the UK and put 32 men behind bars for 140 years for cleaning and estimated GBP180m. The gang used several techniques to place and layer the cash. They made deposits into accounts in the name of a money service business (MSB) at banks in three different cities, totalling GBP160m between 2008 and 2011. One bank sluiced a whopping GBP44m. The money was placed into USD accounts before transfer to Asia and the Middle East; false company records created by the MSB owner hid the transaction trail. The gang also employed the ‘cuckoo smurfing’ technique (placing dirty cash into accounts of unwitting Iranian students who were expecting international transfers, in this case, and asking them to transfer the money on). Police stated the money was the proceeds of trafficking class A and class B drugs. Heroin and marijuana are class A and B drugs which come from Asia.

Interestingly, as yet there is no comment on whether the banks who sluiced the cash will be probed for not spotting the transactions, or praised because their suspicious transaction reports tipped off the police to the network.

US test AML laws against bitcoin

FCA - BitcoinA court in Florida will prosecute the first US trial for money laundering via bitcoin. Investigators arrested two men in a sting operation, after they responded to fake on-line messages from police officers posing as credit card thieves who wanted to launder their cash via bitcoin.

In March, the US Internal Revenue Service ruled that bitcoin should be treated like property and not currency for tax purposes. The recent rise in regulatory and legal interest in crypto-currencies, called convertible virtual currencies in US law, is a double edged sword. On one hand, it allows legitimate crypto-currency firms to step up to the plate and showcase their commitment to compliance with relevant laws and regulations. On the other, it threatens to stem the flow of investment and exchange in crypto-currency by penning them in with complex rules that are difficult to navigate. While the majority of crypto-currency firms are more than willing to comply, and have set up regulatory compliance as a pillar of new businesses, their best intentions could be strangled by regulation, a bitcoin community member argues in this video.

Brazilian state oil company raided in ML probe

Brazil’s Federal Police raided the headquarters of state-run oil company Petroleo Brasileiro SA in Rio de Janeiro on Friday as part of a money-laundering probe, two sources with direct knowledge of the operation FCA - Rio de Janeirotold Reuters.

In a statement Friday, the police said they were exercising 23 search and arrest warrants in the cities of Sao Paulo, Campinas, Rio de Janeiro, Macae and Niteroi as part of its operation Lava Jato (Operation Car Wash) which is an investigation of money laundering by currency exchange houses.

 

 

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