money laundering

India: Trader arrested on laundering charges

Officers from India’s Enforcement Directorate have arrested a man on suspicion of laundering INR190m (USD3m).  Ajit Jain, a trader from Mumbai, faces charges under the Prevention of Money Laundering Act (PMLA).Mumbai

The funds, according to reports, stem from a large scale fraud.

The case dates back to a 2013 report made by Canara Bank about a similar sum of money defrauded from some of its clients. The accused allegedly helped to channel funds to the unknown person behind the fraud, using both the banking system and hawala.

Read the story in the Economic Times.


DOJ indictment of FIFA – a quick reminder of the details

So, this morning the FIFA members are voting on who will be the next president.

In the Blue Corner weighing in at four terms on the throne at football’s governing body, 79 year old Joseph “Sepp” Blatter is expected to take the title by almost 75% of the votes, according to this round-up from the Guardian.

In the Red Corner, the only contender for the crown, Prince Ali bin Hussein of Jordan, a 39 year old royal and president of FIFA Asia. Two days before the US Department of Justice’s swoop on FIFA officials, Prince Ali’s team contacted police in the UK to report an alleged offer of 47 more votes for Ali in the FIFA election. The votes were rejected. Prince Ali’s team engaged a UK based corporate intelligence firm, headed up by a former London police commissioner, to ensure integrity and high ethical standards throughout the campaign.

Falling on their swords?

Falling on their swords?

Blatter appears undeterred by the arrest and indictment of nine FIFA officials this week and apparently has the support of the vast majority of delegates, who when asked by the BBC this morning, seemed to err on the side of caution.

The party line appears to be this: you cannot blame whoever sits at the top of the tree for the actions of the apples hanging from it.

But should he not be responsible for what happened on his watch?

The indictment

The indictment reaches back to 1991, eight years before Blatter ascended to the top job.

According to the DOJ: “The soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.”

Any money laundering techniques uncovered and publicised during this investigation will provide a blue-print on how to clean your dirty cash. Although, that said, if Jack Warner’s claims are correct, bribery was nothing to be ashamed of, there was nothing to hide, and maybe nobody cared where the money came from.

Jack Warner, the Trinidadian former FIFA vice president, was released from jail yesterday and has proclaimed his innocence to the press. He had resigned from the VP seat in 2011 amid allegations he had bribed Caribbean associates.

‘At the time he said he had been “hung out to dry”, insisting that the giving of gifts had been part of Fifa culture during his 30 years in the organisation.’

Could the Jack be reliving the same nightmare?

Read the full starting nine member of the FIFA executive arrested here. Banks will have screened the names of all nine as soon as the indictment sheet was published. Any half decent data link analysis software will bring up connected entities and transactions. But what will the world’s financial institutions now do with that info?


Myanmar PEP bribery probe targets property investment

Property is, without doubt, one of the preferred tools for laundering the proceeds of crime. Where better to hide the bribe money given by the fixer of a foreign arms company, or the hoards of cash made selling off a state enterprise or historical artefact you did not pay tax on than in the construction of a brand new 14 storey condominium slap bang in the heart of a developing capital city?



Myanmar‘s capital Yangon is undergoing a property boom, and the Financial Intelligence Unit, part of the Ministry of Home Affairs, is working to identify and stem the flow of dirty money into the real estate sector.

Legally, property companies are not required by law to report suspicious transactions to the FIU, however the government is encouraging them to report any transaction worth more than K100m (Kyat) (USD102,000) for investigation. New money laundering regulations scheduled to pass in the Burmese parliament in October will make suspicious transaction reporting mandatory for more business sectors.

Chinese money

The move comes hot on the heels of a report in the China Securities Journal, claiming that K31.7tr (USD32.5bn) in illegal foreign currency investment was flowing into Myanmar from China annually.

Indian trade based money laundering worth USD302m

More than INR18bn (USD302m) in the proceeds of crime was laundered via trade based activities in India FCA - container shipduring 2013, a report from the revenue intelligence agency claims.

The Directorate of Revenue Intelligence registered 296 cases of suspected trade-based money laundering (TBML) during the same period.

Eleven persons were arrested in 2013 for their role TBML schemes which included the misuse of various government-run schemes, such as foreign or preferential trade agreements

False invoicing – over or under valuing the worth of goods in invoices, or issuing an invoice for goods that were never traded – was a popular method of laundering cash, the report continued.

Source: Economic Times

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If a tree didn’t fall in the woods, could a laundryman still make money?

Bangladesh’s Anti-Corruption Commission (ACC) has charged 51 people, FCA - TIMBERincluding the Managing Director and President of a tree planting co-operative in connection with laundering BDT4,000cr – a staggering USD515m in funds embezzled from a tree planting scheme.

The story in the Daily Star alleges links to a number of illegal activities which would contribute to the money laundering charges, including:

They funds were generated by an investment scam. The group allegedly conned BDT2,433cr (USD312m) from 1.75m investors by selling 6.18bn tree saplings under the tree plantation project. In reality, the group planted only 3.2m trees. It looks like the investors, rather than being eco-warriors striving to create a green and airy Bangladesh, were lured by the promise of unrealistically high returns on investments. 

Once the money was paid to the a tree plantation cooperative, the accused allegedly syphoned it out of the books and records under the guise of paying salaries, undisclosed fees for services rendered, commissions and other staff related costs. They transferred the funds to employee’s bank accounts and to accounts of 20 other companies within the group.

The group was was already under investigation for illegal banking, according to the press, and this could mean they were using hawala. The hawala informal banking network is alive and well in South Asia and is used by businesses to send and receive funds domestically and internationally.

The funds were laundered outside of Bangladesh, according to charge sheets quoted in the press. BDT100cr (USD12m) was allegedly sent to Hong Kong to pay for the import of electrical and electronic goods, cosmetics and agro products, and leasing an aircraft. investigators claim the goods were never bought and no aircraft were leased in connection with this transaction. 

So far, five of the group are behind bars and the other 46 are reportedly on the lam.

Source: The Daily Star

What’s driving Pharma’s international bribery scandals?

Reviewing some of the points in raised about why pharmaceutical firms are caught up in bribery cases, and how they are disguising the grease payments, here are the highlights of a report from the Inquirer.

Does this ever happen?

Does this ever happen?

  • Bribery is the norm in emerging nations; it is routine and systematic
  • Disguising the source and money trail left by bribes.
  • Competitive advantage trumps bribery penalties.
  • Compliance is destined to fail when corrupt employees are considered to be ‘savvy’.
  • Fines and penalties are not deterrents.
  • Flagging business performance is worrying firms and encouraging the unethical pursuit of sales

The system is sophisticated enough to merit its own laundry. Of course, no one wants to openly accept a bribe so figuring out how to hide the source of funds becomes a requirement. If the money goes straight to a service business used by the intended bribe recipients, such as a travel agency, the agency can lay it all off as travel expenses, from luxury cars, to suites at five star hotels and extravagant tours. While the payments appear as such on the books, they are only bookings, and the money is instead channelled to the intended bribe recipient, minus the agency’s commission.

The investigations into the big-pharma bribery scandals highlights the abject failure of anti-bribery and corruption efforts to date. Big-pharma, and any other company operating in emerging nations, with ever decreasing profit margins and an apparent absence of ethics is still focusing on the money, no matter how they get it. It appears, from the CEO comments, that corruption happens systematically even when improper behaviour exposes bribe givers to prosecution and fines.

Progression or regression?

“Once again, a progression first attributed to Steve Jobs and previously cited here applies to pharma.  When a company and its industry are growing and producing products of value that its customers want to buy, then their scientists, engineers and other R&D people drive the business.  Once the innovation and the value of new products decline and demand slackens, then marketing and sales drive things.  That works for a time until it no longer remains possible to continue selling old wine in new bottles.  Then finance drives everything, catering to Wall Street with cost cutting, layoffs, mergers, divestitures, and arithmetic sleights of hand.  That also works for a while, until it no longer does.  In the final stage, some businesses resort to cheating, bribery or other underhanded methods.”  From the Inquirer article.

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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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Terrorist financing: Spain arrests four in Iran proliferation network

Spanish law enforcement officers have arrested a group people suspected of trafficking sanctioned materials through Spain to Iran. The group FCA - SPAIN TBML ARRESTmoved dual-use goods, so-called as they can be used for civilian or military purposes and which in this case could have been used for Iran’s banned nuclear programme.

Officers received information on the purchase of two metal working machines from a British defence company in 2013. The Guardia Civil police force believes the machines were first sent from the UK to Spain to throw investigators off the scent and until they could be safely sent onto their final destination in Iran. Sending dual-use goods to Iran is in breach of international sanctions  in connection with the development of the country’s nuclear and missile programs.

The suspects – three Spaniards and one Iranian – have been charged with belonging to a criminal organisation, smuggling dual-use materials and money laundering. Investigators raided four homes and business premises in Tarragona, northern Spain and in Palma de Mallorca in the Canary Islands. The industrial metal working machines were made by LEIFELD. Officers seized the equivalent of EUR10,000 in Iranian Rials and Euros which they suspect was earned through trafficking. The police also issued an order to freeze the assets of companies suspected of being part of the network.

Proliferation parameters

Although not mentioned in the Guardia Civil’s press release, the cash to pay for the machinery must have been channelled through the financial system somehow. FCA - SPAIN TBML METALMACHINETransactions to defence companies and for duel-use materials should be in a high-risk category and subject to enhanced scrutiny, including enhanced due-diligence for entities involved in the transactions.

Identifying dual-use materials from a transaction sheet, however, can be challenging for bank analysts who are not necessarily aware of the range of uses a gas centrifuge, for example, can be put to. Transaction monitoring software can be tuned to identify suspicious transfers within certain parameters, but where does the bank get the information from to set the parameters? Entity based parameters which include geography, type of business, beneficial owners, locations of subsidiaries, are easier to follow than new technological developments.

The Financial Action Task Force stepped up its work on ‘proliferation financing’ in 2012 when it made implementing targeted financial sanctions to comply with the United Nations Security Council Resolutions (UNSCRs) relating to the prevention, suppression and disruption of proliferation of weapons of mass destruction (WMD) and its financing one of its 40 Recommendations.  A 2010 report on the subject examines, among other areas, how practitioners can apply a risk-based approach to proliferation financing, managing transaction monitoring and analyses the pros and cons of  ‘goods based screening.’  The report notes that financial institutions are not necessarily in possession of the technical knowledge available to experts and exporters and that a list of controlled goods can be a challenge for export enforcement authorities and real time screening.

‘Goods lists, in themselves, should not be used as a basis for transaction screening by FIs, as they are difficult for those without a degree of technical expertise to interpret correctly which thus make them an inefficient safeguard.’

Reports produced on this subject by the International Chamber of Commerce provide useful information for financial institutions working on international trade transactions and examples of sanctions clauses which could appear in transactions.


Source: Guardia Civil

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Dying to tell the story

A decade ago, when I started writing about money laundering, organised crime and corruption, my editor told me this was sometimes a dangerous job. Aside from a few scrapes with sub-editors and the occasional less then co-operative government press officer, I have had few misgivings about the subject I write about and have never been in any danger (that I know of…).

I do recall once finding a series of internal memos from a multi-national bank that had been leaked on-line. The file was made up of letters, emails and account ledgers with hand written comments from the institution’s compliance officer, claiming emphatically that certain transactions did not constitute money laundering. I quietly showed file to a colleague, who  added a healthy dose of scepticism to the conversation. He questioned the file’s legitimacy, it could have been posted by a disgruntled employee, and pointed out to me that as the CO in question had just been announced a member of our firm’s advisory board, it might be prudent not to follow it up. To my great shame, I did not pursue it.  Fortunately, several other people did and the CO in question stood down from his post. Unfortunately, I did not save the link to the files so cannot share that with you.

The real heroes of corruption journalism are out there exposing embezzlement, graft and politically exposed persons who abuse their positions whenever they can.  Tetyana Chornovol, the Ukrainian FCA - Tatyana Chornovilinvestigator who was brutally assaulted by members of the ex-Ukrainian president‘s security force, and her peers have done so in Ukraine and their efforts have borne fruit; a corrupt regime was ousted. Chornovol survived the attack and is now the head of the new Ukrainian government’s anti-corruption bureau.

Gone but not forgotten

Here is a list of prominent anti-corruption writers who have felt the might of their opposition.

FCA - CardosoCarlos Cardoso, affectionately referred to as the Patron Saint of Corruption Journos by some, is one such hero. Back in November 2000, Cardoso was gunned down in Mozambique. Cardoso published a corruption news letter which he circulated to 400 subscribers from diplomatic, government and business circles. Six men were put on trial for Cardoso’s murder. Journalists in Mozambique were cautious about reporting sensitive stories since then.


Then we have figures such as Anna Politkovskaya, the Russian reporter with Novaya Gazeta, a paper which criticised the Russian government and questioned the sources FCA - Politkovskayaof wealth owned by rising oligarchs, was shot and killed outside her home in November 2006. Politkovskaya was reporting on the war and atrocities in Chechnya, as well as the sources of ‘new Russian’ wealth.

FCA - LitvinenkoAleksandr Litvinenko was poisoned by polonium-210 in London, almost one month after he accused the Russian government of murdering Politkovskaya. Litvinenko, a former secret service agent who spoke out against a corrupt regime in Russia, was arrested and jailed twice before fleeing to the UK where he was granted political asylum in 2000, and from where he continued to speak and write about corruption.


Further back, we have the woman whose work and sadly her death, gave rise to the asset seizure structure employed by governments and the law globally to freeze and confiscate assets bought with the proceeds of crime. Veronica Guerin spent years pursuing major crime bosses in Ireland to expose the real nature of their money making enterprises. She was shot twice and injured before the bad guys finally killed her on June 26th 1996 as she waited in her car at a traffic light in Dublin. Her murderers came from the major drug traffickers in Dublin who she had doggedly pursued, questioning their lavish lifestyles with no apparent sources of income.

FCA - Guerin

Within a week of her murder, the Oireachtas, the Irish parliament, enacted the Proceeds of Crime Act 1996 and the Criminal Assets Bureau Act 1996, which allowed the government to seize assets suspected of being acquired with the proceeds of crime. This legislation was the blueprint for similar legislation in the UK (POCA 2002).

The title of this blog is taken from the Freedom Forum conference Guerin was due to speak at on June 28th 1996.

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Australia: NSW super-squad to chase top crims

New South Wales police say a newly formed squad will hit elite organised criminals where it hurts by cracking down on money FCA - super heroeslaundering and tracking the proceeds of crime.

The state’s Asian Crime Squad, Organised Crime Targeting Squad and Casino and Racing Investigation Unit have merged to become the Organised Crime Squad, which is backed up by the NSW Crime Commission and federal law enforcement agencies.

NSW Police Commissioner Andrew Scipione said the squad’s brief was to pursue criminals at “the top of the food chain“.

“It’s all about the money,” Mr Scipione told reporters on Tuesday.

“We will see a fully dedicated money-laundering unit that will go after those that are laundering money (and) unexplained wealth.

“I don’t think many of these crime syndicates have amassed their money simply because they’re good savers.”

Squad commander Detective Superintendent Scott Cook said his 100-strong team was already pursuing lines of inquiry ranging from gambling to drug trafficking.

“The focus for us is going to be criminal networks, not an individual group at any moment in time,” he said.

“We’re going to work with other agencies, as well as the NSW Crime Commission, to make sure that we cut everyone off – the lawyers, accountants, other professionals – doesn’t matter who they are, they might find themselves down at the Crime Commission answering questions.”

NSW Crime Commissioner Peter Hastings QC said the new squad was a response to increasingly sophisticated crime syndicates.

“There are increasing and disturbing signs of enhanced sophistication amongst some criminal groups,” he said.

“Fortunately, a lot of criminals aren’t all that bright. They make mistakes, they become visible and they become apprehended.

“At the same time, there are people out there in the strand of organised crime who do not make mistakes, are not visible.”

The squad formally came into effect in Saturday.

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