Financial services

Abu Dhabi proposes 50 year zero tax zone?

A report in the Khaleej Times from 1st July on proposed regulation for the Abu Dhabi Global Market hides an interesting nugget, way down in paragraph six.

A palace overlooks Abu Dhabi Yacht Club - a high roller's playground?  Image: wavejourney.com

A palace overlooks Abu Dhabi Yacht Club – a high roller’s playground? Image: wavejourney.com

“Abu Dhabi financial zone will offer a zero-tax environment for 50 years. In the launch phase, the financial hub will benefit from Abu Dhabi’s natural strength, ie private banking, wealth management and asset management and will grow according to market demand to eventually become a broad based financial hub.”

Great news for private and corporate clients who want to take a break from paying taxes, but how does this sit with the rest of the world’s focus on tax crimes? Will parking funds in the ADGM and avoiding coughing up your dues in the place you make your money be OK? Time will tell.

Abu Dhabi is a part of the United Arab Emirates, a member of the Financial Action Task Force’s regional body – MENAFATF.

 

 

How much do APAC’s regulators earn?

Regulators’ salaries across Asia Pacific vary enormously:some supervisors earn fortunes and others hit the pay scale at the average to low end.APAC REGULATORs - SALARIES

Some governments believe that paying politicians and civil servants high salaries should reduce the likelihood of them accepting a bribe, offered in cash or disguised as a gift. Others argue that financial regulators will be less likely to jump ship and work for a bank if they are paid competitively by the government. Some countries pay their banking regulators on the same modest scale as other government employees , pitting them against some of the highest paid people in the country – bankers.

Last April, we found out how much the head of the Hong Kong Monetary Authority brings home; Norman Chan Tak-lam was set to earn HKD$9.41m(USD1.2m), making him the highest paid central bank chief in the world.  As the HKMA is also the banking regulator, this makes Chan Tak-lam the biggest earning regulator in the world. Chan Tak-lam’s counterpart in Beijing, Shang Fulin, the head of China Banking Regulatory Commission, earns an estimated  CNY11,271 (USD1,800) per month.

The accompanying infographic details more of APAC banking regulators’ earnings.

Comparing regulators salaries with those of bankers reveals a stark difference. Since the global financial crisis took hold in 2008, we have seen a distinct change of attitude towards financial institutions. Blatant rule breaking by banks – whether money laundering, sanctions busting or tax evasion – is being punished in high-profile cases as regulators finally start to show their teeth. However, the impact on the individuals responsible have been unremarkable; a move to a less high-profile role in the bank, or early retirement as opposed to job loss or, as some have called for, criminal prosecution.

Rather than going after the bankers who allowed criminality to go unchecked at banks, or those who made good from the financial crisis, there is an element of maintaining the status quo vis a vis bankers’ salaries that is out of step with the movement to make change for the better in the financial sector.

In the post global financial crisis and post public bailout economy, can banks justify paying million dollar bonuses?

In February 2015, Ross McEwen, the head of RBS, went on record to defend bonuses for bankers in spite of government bailouts and losses:

“I need to be fair paying for our people so I can actually keep them onboard.”

Although McEwen has opted to hand back his personal GBP1m (USD1.5m) share award to the bank he will still take home an expected GBP2.7m (USD4m) in 2015. Peter Sands, the outgoing boss of Standard Chartered also waived his bonus in 2015.

Looking at Asia Pacific, four of China’s largest five banks made the Banker’s Almanac list of top ten biggest financial institutions. This includes Industrial and Commercial Bank of China, China Construction Bank Corporation, Agricultural Bank of China Limited and Bank of China. China Development Bank Corporation languished at no. 21 on the list.

“According to the half-year annual reports of the listed commercial banks, the average annual payment before deductions for the chairmen of the five biggest Chinese commercial banks was around 2 million yuan ($325,600).”Source:The Global Times 2014.

Piyush Gupta, CEO of DBS bank, Singapore’s largest, made SGD9.2m (USD 6.6m)
The CEOs of United Overseas Bank and Oversea Chinese Banking Corporation were not far behind.

Chief regulators salaries fall far short of those earned by their peers at regulated entities.
It’s unlikely they will ever be measured on the same scale. Regulators, in an ideal world, would be motivated by doing the right thing for the right reasons. That is certainly the message that some regulators are putting across. But banking is all about money, and the more you earn, the higher your status.

First published on the International Compliance Association blog in March 2015. 

The success of Apple’s wallet technology rests on its security

This week, Apple launched the iPhone 6, which has payment functionality. The Apple Pay system relies on contact-less payment technology to allow users to buy goods and services using tokenization. FCA - contactless payment

American Banker reported: First Data, TSYS and Visa have announced their tokenization technology will support Apple Pay, which will enable the upcoming iPhones and Apple Watch to make contact-less payments at a variety of retailers from cards issued by many of the top banks.

Tokenization is the process of swapping sensitive data (ie your bank account details or credit card number) for non-sensitive data – a randomly generated number which gives authorisation for the payment and can be set to expire within a specified time frame. This makes it a useless target for fraudsters and makes life easier for the retailer, who never sees or handles the customer’s personal information.

Given the recent highly public security breaches in Apple’s i-Cloud, the firm has a lot of work to do to restore confidence in its ability to safeguard access to bank accounts. That said, as soon as any new technology is launched, hackers work towards breaking into it. The Apple Pay system is a great step forward for new payment services, but it will certainly face some security challenges in the early years which may stop mass adoption.

Big banks can aid financial inclusion and raise their social kudos

Last week, India’s Prime Minister Narendra Modi hit the headlines with his promise of bank accounts for every household in the country, a bid to offer help to the country’s poor. The initiative is part of a movement towards financial inclusion, which means making financial services accessible by people who do not have formal identification documents, fixed abodes or even known dates of birth. Financial inclusion can be a sticky wicket for large financial institutions, however, as this same group of people can be defined, albeit unfairly, as high-risk and the costs of compliance with anti-money laundering rules can render financially inclusive products  uneconomical. FCA - aadhaar

PM Modi’s  Jan Dhan Yojana (Scheme for People’s Wealth) would rely on the biometric data obtained for the Aadhaar Unique Identification Number (UID) programme to remove some of the account opening requirements which have caused financial inclusion in the past.

The scheme is targeting 75m Indians who receive welfare payments and subsidies for grain, fuel and fertiliser, offering ‘account holders a debit card and accident insurance cover.’The aim is to reduce poverty by safeguarding salaries in banks and to stem corruption around cash hand-outs. With fewer people in the chain, there will be fewer hands on the rupees and reduced attempts at syphoning some of it off.

The large scale financial inclusion plan looks good from this perspective, although it is facing a few setbacks.

Another grand scheme designed to protect the integrity of the financial system is putting up one of the main obstacles to financial inclusion. Anti-money laundering (AML) rules globally recommend  proof of identification backed by proof of address provides the ‘one plus one’ basic requirement for opening a bank account, applying for a loan, credit card and other financial products. Many people in India have neither. The financially excluded create a risk/reward scenario which is often viewed unfavourably by financial institutions. The amount of work required to ID them and monitor their accounts, which contain relatively small balances, makes developing inclusion focused products cost expensive and not viable.

In poorly supervised markets, when the better regulated firms do not step in, the less scrupulous take centre stage. Financial inclusion as a movement is ripe for the plucking. The movement is about providing appropriate, ‘smart’ financial services to safeguard the funds and livelihoods of the poor, to keep money-lenders and loan sharks at bay.

One Indian pre-paid card provider I approached during research for a training course on financial inclusion had no idea what AML meant; but he was keen to learn and asked for guidance on where to find information on the subject. He is a businessman who sees an opportunity to make money, albeit from the backs of the low salaried. Modi’s scheme is not without its detractors. New money payment providers and services look beyond and operate outside of banking, and are championed by non-banking institutions. New players include on-line platform providers, (think Paypal and Transferwise), mobile money (M-Pesa in Kenya, Afghanistan, India and South Africa) and digital or crypto-currency (Bitcoin, Mazacoin, Auroracoin) can be attuned to focus on financial inclusion.

Nonetheless, ‘Big Banking’ has a part to play here. Larger financial institutions have a social responsibility to step up and create, or at least endorse, products offering fair and transparent financially inclusive solutions. They might not make a mint from it, but their social kudos will reap the benefits.

First published on the International Compliance Association blog.

The banking sector is still rewarding poor conduct

Senator Elizabeth Warren tore into Federal Reserve officials this week for not jailing a single banking executive in relation to their role in the collapse of the banking system. Senator Warren is making sure that US society, government and the banking sector does not forget that instead of punishing those who caused and oversaw the collapse, we are rewarding them.

The four biggest financial institutions [in the US] are 40% bigger than they were five years ago and the five biggest banking institutions have more than half of all the banking assets in the US, Warren told Bloomberg in this video. JPMorgan Chase CEO Jamie Dimon received a hefty bonus after negotiating a settlement with the feds over his bank’s involvement in the mortgage crisis, the Washington Times reported.

No deterrents

There are no deterrents for poor conduct in banking. You can break the whole system, make a tidy profit for yourself and stay employed. Bankers have got it made; governments gave them the keys to the coffers. Bankers are thought to be arrogant, but is that any wonder when you are in a position of great power and impunity?

I left the UK for Asia a few months after Lehman’s collapsed and I am getting back in touch with the banking world in the UK for the first time in five years. Although some of the edges have been worn off, the swaggering arrogance of banking executives is still apparent.

“Banker bashing must stop now,” one offshore banker determined to push the merits of his financial centre to Russian and Chinese clientèle told a packed conference hall. The people who raised the alarm on the extent of the financial crisis are dubbed ideologists who want simple solutions to complex problems by another British business leader. Their comments encapsulated the struggle that banking will face when trying to change its motivation from money to doing the right thing.

Professional standards

Not all in the banking world have the same attitude. Creating professional standards for bankers and playing up the benefits of doing well by doing good are the new battle cries of the financial services sector in the UK.. Although real changes are afoot, it will take half a generation or around 15 years according to representative from one institution, before we see the benefits of compliance universities and courses on ethics for bankers. We could wonder why it will take so long if we know where we need to go, but when you hear hardcore investment bankers talking about compliance and ethics as intrinsic to restoring confidence in the financial sector, you can’t help but think that enormous fines for criminal and regulatory failures have hit the spot.

Many banking insiders do not want change; they are happy with their set up. And that may be why it will take 15 years to see changes in the industry. Meanwhile, new payment products and services, crypto-currencies and other innovations will keep moving forward and gaining more ground, more users, more market share.

Financial exclusion keeps Asia’s poor shackled to debt

Would you ever use a loan shark to borrow money? If you have a bank account, a credit rating, an address and an identity card, the chances are you will never need to. Many people in Asia, however, have no choice and the consequences of using illegal and unscrupulous lenders are catastrophic, resulting in spiralling and impossible to pay interest payments, violence and, tragically, slavery. Providing access to fair and transparent lending schemes is slowly gaining ground in Asia. FCA-loanshark

In Northern Thailand, loan sharks prey on the stateless groups living along the Thai/Burma border. The Children of the Forest project in Sangkhlaburi, north western Thailand, works with stateless children and mothers and have seen the horrendous consequences of dealing with loan sharks.

“Many of the Burmese refugee camps are just across the border in Thailand, set in dense jungle where mosquito borne diseases such as malaria and dengue are rife. If someone in a family without papers catches dengue and requires hospitalisation they must pay the hospital in full as they cannot access the cheaper health care offered to Thai identity card holders. Without the funds to pay, people turn to the local money lender who demands swift repayment and adds high interest. When the family cannot meet the payments, which is often the case, a so-called friend of the lender will step in and offer the eldest child in the family a job in Bangkok, in exchange for clearing the debt. They may even throw in the first month’s salary as a goodwill gesture to the parents. In most cases, the ‘friend’ is a child trafficker who sends children to work in bonded labour or into sexual exploitation,”one worker told me.

This happens simply because the family had no choice but to turn to an unregistered, illegal money lender. Organisations like Children of the Forest are able to step in and rescue children if they have the right information and are there at the right time to intervene.

According to the World Bank, approximately 2.5bn people, have no access to the supervised banking sector, leaving them open to exploitation by illegal lenders. Global campaigns to promote financial inclusion – bringing fair and transparent financial services to the world’s poor – are taking off in Asia, as well as in Africa and South America. Financial inclusion is a global, G-20 endorsed campaign which aims to improve livelihoods and ultimately, to squeeze out the loan sharks who prey on the poor. The inclusion campaign is relatively new – its founding Principles were developed by the G-20 in 2010 – but it is working on improving the ability of the global poor to save, borrow and protect themselves from crime and natural disaster by developing new financial systems.

Financial inclusion means provided appropriate saving and lending services of small amounts on a large scale. It calls for innovative solutions that reach local communities without the burden of strict regulations, which exclude the poor from the banking sector. It means finding a compromise for the people who lack formal identification, have no fixed abode and may not know their date of birth.

The amounts of money earned, saved and transacted by those in need of financial inclusion are small, which makes them unattractive clients for traditional banking services. The risk/reward ratio does not make sense. So, smaller banking-lite services, such as mobile-money, micro-lending, some pre-paid debit cards and financial education projects are already working towards providing fair services to those who need them.

The Sold Project in north Thailand runs a scheme providing educational scholarships to families. The money is held in an account by the project and can only be used to pay for education, schooling, clothes, transport. The families can access their scholarship account to follow their spending.

A Sold Project worker told us:“This works really well. People are happy if the scholarship account has more money and add money to it themselves. They are encouraged to apply for other scholarships and loans and not rely on us.”

Providing some small amount of financial education and a secure savings option changes how people manage money, and in this case, changes the lives of future generations.

Back in July, Police officers in Phuket took a swing at illegal lending They arrested five enforcers of a loan shark ring, which had been charging 20 percent interest per month and intimidating people who did not pay on time. The same thing happens across the continent. Where there are people in need and little government oversight, someone will step into corner the market.

The arrests in Phuket show that Thai police are paying attention, although their reputation has not always been one of pure intentions. Often, they provide the best debt collection services. You can sell your loan to the police, minus a 20 per cent cut and allow them to recoup the monies owed, using their influence and uniform to make bad debtors cough up.

With a little more awareness, however, the campaign for financial inclusion could be hugely effective across Asia, reducing the misery brought about by poverty and creating brighter futures for Asia’s youth.

This article first appeared on AsianCorrespondent.com

The financial services industry is one of Europe’s greatest assets? Brussels, we have a problem

Last week, the European Commission (EC) slapped itself on the back a few times, with a congratulatory speech about all the things it has done since 2008 to repair the FCA - Bolting horseimmense damage done to the economy by the financial services industry. EC President José Manuel Barroso claimed the financial services industry as one of Europe’s greatest assets as well a listing various achievements including the banker bonus cap, increasing reserves, scrutinising hedge funds, rating agencies, and improving consumer protection.

My initial thought was something about horses running amok in meadow and Barroso and his pals carefully closing the gate. But then, credit where it is due, some action on behalf of the EC is better than nothing done to rebalance the inequalities exploited by the  financial services sector which allowed institutions and individuals to pay themselves ridiculous bonuses, make opaque trades and leave consumers exposed to the risks of actions taken by others.

The bonus cap confusion

Back in March, when the EC announced its plans to curb the excessive bonuses paid to certain employees of the banking industry, the UK released its strategy for getting around the rule. The EC rule limits a bonus to no more than the fixed salary, or twice that level if approved by the bank’s shareholders, and will affect 2014 awards to be handed out early next year. In response to the new law HSBC, the world’s local money launderer, announced  that it will give new “allowances” – expected to take the form of monthly or quarterly payments in cash or shares – to senior staff to boost their fixed pay, meaning that higher bonuses could then be awarded.  The same bank has, however, opted to cut its Chairman’s proposed GBP3.25m  bonus to a measly GBP1m. UK institutions Lloyds and Barclays indicated they would also seek a way around the bonus cap. The UK Government opted to fight the EU’s bonus cap in court and started a legal challenge against the EU, which it lost.

While the UK government sent a strongly worded letter to banks in April, warning them to cut bonuses or face tighter controls, banks have retaliated with a complaint that they will lose their competitive edge in the search for talent and fear the best candidates might all take jobs in the US instead. At least the UK managed to show some mettle and stop the 200 per cent bonuses that RBS – now owned by the UK government since its spectacular bail out in 2008 and 2009 – had scheduled to pay some employees.

Other great assets of Europe

Here is a list of some other great European assets, at least in my opinion. Would you agree?

The Eurovision Song Contest 

Conchita Wurst

Conchita Wurst

The annual paean to the much maligned European pop-song which unites the world for one night a year in awe of this astounding show, and the ever more outlandish performers. Congratulations to Conchita Wurst, the Austrian bearded drag act who won 2014’s content. Her ‘Rise Like a Phoenix’ is no ‘Waterloo’ but the public vote for a champion of tolerance was one in the eye for the countries who have decided to outlaw and punish anything that falls out of the boundaries of heterosexual acts for procreation. I am looking at you India, Nigeria, Russia, Tanzania, Sierra Leone, Uganda, for starters.  Iran, Mauritania, Saudi Arabia, Sudan and Yemen have made homosexuality punishable by death.

 

 

The European Southern Observatory, Chile.FCA - Biggest star ever

Since five European countries signed the ESO convention in 1962, researchers have discovered that the universe is expanding and accelerating as it gets bigger, earning Nobel Physics Prizes for the lead discoverers. They have discovered an Earth sized planet in the star system next door, made the first accurate measurements of the planet Pluto and its moon Charon and found the biggest star ever, see image right.

Eurotrash

FCA - Eurotrash logo

The sadly missed late-night satirical magazine show presented by Antoine de Caunes and Jean-Paul Gaultier, hamming up the French accent for ze British viewerz. The show shed light on some less well known aspects of European life, generally making a mockery of the entire system and reminding us not to take it all so seriously. The term Eurotrash has been used to describe those perceived to be ‘arrogant, lower-class, expatriates’ living in New York. NSFW in the slightest.

Caves

Skocjan Caves

Skocjan Caves

The Eisriesenwelt (German for “World of the Ice Giants”) in Austria is largest ice cave in the world, extending more than 42km (26 miles). The Skocjan cave system in Slovenia includes the highest cave hall in Europe. Or what about the cave paintings at Lascaux in France, a humble message to the future sent by human beings more than 17,000 years ago.

CERN – the European Centre for Nuclear Research

The Big Bang?

The Big Bang?

Where to begin? The biggest particle physics lab in the world has worked continuously to solve some of the biggest mysteries of the universe. On the way, its researchers invented the world wide web in 1989, created stable atoms of antimatter in 2010 and brought us closer to understanding our existence by discovering the Higgs boson in 2013 resulting in Nobel Prizes for the lead researchers. CERN is 60 this year, celebrating  science for peace is its anniversary strap line.

Honourable mention for achievements in the European Financial Services Sector

The EC has done one thing that this European Union citizen considers worth an honourable mention in this list. It now allows me to transfer funds free of charge between my bank in the UK and other banks in the Single European Payments Area. Steps like this have a impact on consumers; it saves them money. This took years to devise and implement when it could have changed retail banking a long time ago. Everything else on Barroso’s list will take a long time to touch the consumer population.

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SAC’s Steinberg gets 3-1/2 years prison for insider trading

(Reuters) – Michael Steinberg, a portfolio manager at Steven A. Cohen’s SAC Capital Advisors hedge fund, was sentenced on Friday to 3-1/2 years in prison for insider trading.

The sentence was imposed by U.S. District Judge Richard Sullivan in Manhattan, five months after a federal jury convicted Steinberg on securities fraud and conspiracy charges, in a case stemming from a broad crackdown on insider trading on Wall Street.

Steinberg’s lawyers had asked for no more than two years in prison, while prosecutors had argued for up to 6-1/2 years.

Sullivan also ordered Steinberg to pay a $2 million fine and forfeit $365,142, a sum the government says Steinberg and an SAC analyst were paid from the illegal trading profits.

Dozens of family members and friends attended the sentencing and sent letters to the judge. The letters, Sullivan said, described Steinberg in a positive light that set him apart from other defendants he had sentenced.

“If it were only based on the character of this man, it would be easy, because I do think this is a good man,” he said. “But I do have to consider the crime here.”

Prosecutors accused Steinberg of trading on illegal tips about Dell Inc and Nvidia Corp passed to him by an SAC analyst, who admitted to swapping confidential information among a group of analysts at other hedge funds. Steinberg’s trading resulted in illegal profits of $1.82 million, prosecutors said.

Steinberg, 42, is one of eight current or former SAC Capital employees to be convicted on insider trading charges.

SAC pleaded guilty to fraud charges and has agreed to pay $1.8 billion in criminal and civil settlements.

The Stamford, Connecticut-based firm has rebranded itself Point72 Asset Management as it shifts to being a family office managing Cohen’s fortune.

Sullivan granted Steinberg bail, pending an appeal.

The appeal is expected to focus on Sullivan’s not having required the government to prove that Steinberg knew the insider who originally disclosed non-public information had received a benefit for making the disclosure.

Todd Newman, a former portfolio manager at Diamondback Capital Management, and Anthony Chiasson, co-founder of Level Global Investors, are appealing on similar grounds stemming from convictions in a separate trial Sullivan also oversaw.

During appellate arguments in Newman and Chiasson’s case last month, some judges questioned whether Sullivan’s interpretation of the insider trading law was correct.

Sullivan on Friday noted the arguments, saying the issue appeared to be “a closer call than I thought.”

Steinberg’s sentence was less severe than those of Newman and Chiasson, who in 2013 received terms from Sullivan of 4-1/2 years and 6-1/2 years in prison, respectively.

Cohen has not been criminally charged. The U.S. Securities and Exchange Commission is seeking to bar Cohen from the securities industry for failing to supervise Steinberg and another portfolio manager and prevent insider trading. Cohen denies wrongdoing.

The case is U.S. v. Steinberg, U.S. District Court, Southern District of New York, No. 12-cr-00121.

(Reporting by Nate Raymond in New York, additional reporting by Jonathan Stempel and Joseph Ax, Editing by Franklin Paul and Gunna Dickson)

Source: Reuters

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Indian regulator homes in on round-tripping

 

Yachts in a tax haven quayside

Yachts in a tax haven quayside

Round tripping: routing money back into the country as foreign funds using investment vehicles, such as stocks and bonds, across jurisdictions  

The Securities and Exchange Board of India is reportedly looking into a money movement scheme which allows investors to bring money back into India without paying the correct amount of tax.

According to this report on moneycontrol.com, SEBI is “looking at the possible use of Protected Cell Companies (PCCs) from Mauritius, British Virgin Islands, Cayman Islands and Seychelles for alleged round-tripping of funds back into the capital market in the form of foreign institutional investor and overseas venture capital money.”

Several entities are under investigation, including some well known companies and industrialists, although no names have been confirmed. It also looks like bank employees may have been acting without the knowledge of the institutions to arrange ’round-trips’ for clients: “..while the banks may not have been directly involved, their employees may have dealt with the clients without keeping the banks in the loop.”

The problem is not jsut limited to India, unsurprisingly. A study carried out by professors at Massachusetts Institute of Technology (MIT) int he US revealed that the practice is costing the US billions in unpaid revenue.

 

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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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