Questions on ML a priority for US prosecutors

OLYMPUS DIGITAL CAMERAUS investigators at the Justice Department‘s Money Laundering and Bank Integrity Unit (MLBIU) are directing prosecutors to add a question to their interrogations which has, according to this exclusive interview in Reuters, produced favourable results.

Investigators are asking suspects and convicted criminals this:

“Who is moving your money?”

A simple, direct approach to finding out the information they want to know; so simple that it is a wonder they have never asked anyone this before.

The US justice system favours the carrot and stick, and this case is no exception.

Any suspect or con who is willing and able to reveal the name of the institution which holds their assets, or those of their associates, can enter into a plea agreement or receive a reduced sentence for their information.

This is a useful piece of guidance for any anti-money laundering law enforcement officers or prosecutors in Asia although they are probably already asking this question, maybe they do not have the supporting legal framework to sweeten the deal.


China halts dollar transactions with most Afghan banks –

May 22 (Reuters) – Chinese banks have halted dollar transactions with most FCA - dollarsAfghan commercial banks, the central bank governor said on Thursday, making it difficult for businesses to pay for imports with one of the Afghanistan’s biggest trading partners.

China is a major country that was handling those bank transfers, and now they have told the banks they can’t do it,” governor Noorullah Delawari told Reuters.

The impact on business had been felt immediately, he said. (Reporting by Jessica Donati, Editing by Maria Golovnina and Angus MacSwan)



Source: Reuters

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Good things in even smaller packages – debit cards used to smuggle Chinese cash into Macau

Following from a recent story on how the EUR500 note is used to smuggle large amounts of cash in small packages across borders, here is another story on how Chinese citizens are using debit cards to access big money to spend in Macau’s casinos.

MACAU (Reuters) – Growing numbers of Chinese are using the country’s state-backed bankcards to illegally spirit billions of dollars abroad, a FCA - ChinaMacau fake sale scamReuters examination has found.

This underground money is flowing across the border into the gambling hub of Macau, a former Portuguese colony that like Hong Kong is an autonomous region of China. And the conduit for the cash is the Chinese government-supported payment card network, China UnionPay.

In a warren of gritty streets around Macau’s ritzy casino resorts, hundreds of neon-lit jewellery, watch and pawn shops are doing a brisk business giving mainland Chinese customers cash by allowing them to use UnionPay cards to make fake purchases – a way of evading China’s strict currency-export controls.

On a recent day at the Choi Seng Jewellery and Watches company, a middle-aged woman strode to the counter past dusty shelves of watches. She handed the clerk her UnionPay card and received HK$300,000 ($50,000) in cash. She signed a credit card receipt describing the transaction as a “general sale”, stuffed the cash into her handbag and strolled over to the Ponte 16 casino next door.

The withdrawal far exceeded the daily limit of 20,000 yuan, or $3,200, in cash that individual Chinese can legally move out of the mainland. “Don’t worry,” said a store clerk when asked about the legality of the transaction. “Everyone does this.”
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Rolls-Royce bolsters ethics policy in face of corruption probe

(Reuters) – Aerospace and defence company Rolls-Royce (RR.L), facing an investigation by Britain’s anti-fraud watchdog, said it had cut the number of middlemen it uses as it steps up efforts to prevent bribery and corruption. FCA - RollsRoycePOverty

The British company said in its annual report on Wednesday that as well as cutting down on the number of intermediaries it uses, it has relaunched a 24-hour ethics telephone line for staff and created a new role of head of risk training.

The world’s second-largest maker of aircraft engines said in December the Serious Fraud Office (SFO) had launched a formal investigation into concerns of possible bribery and corruption in China and Indonesia.

A year earlier, it had passed information to the SFO relating to bribery and corruption involving intermediaries in overseas markets, and said it could face prosecution.

Rolls-Royce is also facing an investigation into state-run Hindustan Aeronautics Ltd‘s (HAL) orders from Rolls-Royce.

Investigations over overseas corruption and bribery are a perennial risk facing makers of military equipment, given the huge contracts and high secrecy in the defence sector.

Rolls-Royce tasked lawyer David Gold with leading a review of its compliance procedures after the allegations emerged. He published his interim report in July. A final version is expected in due course.

“The number of intermediaries used by our businesses has continued to fall dramatically during the year,” Rolls said in its annual report, adding that it was working to simplify its anti-bribery policies in line with Gold’s recommendations.

Rolls-Royce said last month that U.S. and European spending cuts would halt profit growth in 2014, bringing to an end the group’s decade-long record of increasing annual profits.

A pay freeze for top management will accompany the group’s gloomier outlook for this year.

“There will be no increase in basic pay for most of the senior leadership team in 2014,” the company said.

Rolls’s performance over the previous three years was, however, strong enough to trigger rewards under a long term incentive plan.

The group’s chief executive John Rishton earned a total of 6.2 million poundsin 2013, 36 percent higher than the 4.6 million pounds he took home the year before on account of the payout.

(Reporting by Sarah Young, editing by Louise Heavens)

Source: Reuters

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U.N. sanctions experts investigate Rodman’s North Korea trips

(Reuters) – A group of United Nations sanctions experts has been investigating former basketball star Dennis Rodman because of gifts he brought to North Korea during his visits to the reclusive state, according to an excerpt from the group’s latest report.

Bodyguards clear a path for former NBA basketball player Dennis Rodman (C) as journalists surround him upon his arrival from North Korea's Pyongyang at Beijing Capital International Airport January 13, 2014. CREDIT: REUTERS/KIM KYUNG-HOON

Bodyguards clear a path for former NBA basketball player Dennis Rodman (C) as journalists surround him upon his arrival from North Korea’s Pyongyang at Beijing Capital International Airport January 13, 2014.

While the U.N. Panel of Experts, an independent body that monitors compliance with the United Nations’ North Korea sanctions regime, did not explicitly accuse Rodman of violating the U.N. ban on luxury goods, it suggested his actions may have represented a breach of international restrictions on Pyongyang.

“The panel also investigated allegations that Dennis Rodman and his party may have taken luxury items as gifts when he visited Pyongyang in September and December 2013 and January 2014,” the experts’ unpublished report says.

On his January trip, Rodman was accompanied by a contingent of other former National Basketball Association players for an exhibition game in Pyongyang. He sang “Happy Birthday,” to Kim Jong Un at a celebration marking what was believed to be his 31st birthday.

“Media reports … corroborated by the panel indicate that among items taken by Dennis Rodman and his party during their visits were sporting goods from various countries, five bottles of vodka (United States) taken by Rodman and one bottle of whiskey (Ireland),” the report says.

In an excerpt seen by Reuters, the report also refers to other gifts, including “two whiskey glasses and one whiskey decanter (Ireland), and a Mulberry handbag (United Kingdom) taken by Paddy Power, a company based in Ireland.”

The former basketball star’s trips had previously been financed by Irish bookmaker Paddy Power, although it has since withdrawn its backing. Rodman used his first visit in 2013 to promote his own vodka brand.

“The panel considers that this (the Rodman case) illustrates the importance of informing individuals and companies of their obligations under the (Security Council sanctions) resolutions,” the report said. “It is continuing in its enquiries.”

There is a U.N. ban on the export of luxury goods to North Korea under sanctions imposed by the Security Council in response to Pyongyang’s 2006 and 2009 nuclear tests and several missile launches.

The athlete’s most recent visit to Pyongyang became controversial after an agitated, drunken Rodman gave an interview to CNN from North Korea in which he suggested that Kenneth Bae, an American missionary imprisoned in North Korea, was responsible for his own imprisonment.

Rodman checked himself into a substance abuse rehabilitation center shortly after returning from North Korea in January.

Last year, the Panel of Experts said North Korea continued to violate the U.N. ban on luxury goods, which is intended to punish the country’s ruling elite. The panel cited suspected violations of the ban involving alcohol, tobacco, electronic items, automobiles and cosmetics.

The Panel of Experts has also looked at the case of a North Korean cargo ship, the Chong Chon Gang, detained near the Panama Canal for holding Cuban weapons. The ship was seized in July 2013 for smuggling Soviet-era arms, including two MiG-21 aircraft, hidden under 10,000 tons of sugar.

Several Security Council diplomats told Reuters on condition of anonymity that in the Chong Chon Gang case, the experts determined that North Korea had used a network of firms based abroad, including in China – its standard method of trying to avoid detection while violating the U.N. arms embargo.

(Reporting by Louis Charbonneau, editing by G Crosse)

Source: Reuters

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SAC receives record US$1.8bn for insider trading

(Reuters) – Steven A. Cohen‘s embattled hedge fund SAC Capital Advisors will plead guilty in federal court and pay $1.8 billion to settle charges stemming from an insider trading investigation that lasted more than five years, prosecutors said on Monday.

The two sides reached a settlement agreement which, if approved by a judge, would also resolve a civil forfeiture action against SAC and its affiliates, prosecutors said.

Sources have told Reuters the total settlement amount will include a $616 million penalty that SAC had already agreed to pay earlier this year to settle civil lawsuits by the U.S. Securities and Exchange Commission for insider trading will count towards the latest deal.

U.S. prosecutors in July charged the hedge fund – which managed as much as $14 billion this year before investors began withdrawing money – with presiding over a culture in which employees flouted the law and were encouraged to tap personal networks for inside information about publicly traded companiesReuters

Out of business

The enormous financial penalty will send shockwaves through the hedge fund US-ECONOMY-FINANCE-CRIMEsector, as Cohen’s firm faces closure. Some news sources are reporting the SEC’s censure will force the firm and Cohen out of the investment business permanently. Others report SAC will merely be busted down from the giddy heights of hedge funds to a more sedate family office.

Cohen does have more pressing concerns, however. New York District Attorney, Preet Bharara told a press conference that the investigation is far from over, and individual prosecutions could be on the cards.

US Energy Regulator, the FBI and JP Morgan

English: Electricity pylon next to the Al-Dour...
English: Electricity pylon next to the Al-Doura power plant in Baghdad. (Photo credit: Wikipedia)
The FBI and Manhattan DA Preet Bharara’s office are conducting a criminal probe into whether JPMorgan employees tried to obstruct a regulatory investigation into power market manipulation, as reported in a Reuters exclusive last week.  The results of the probe, and ramifications for energy trading will set the tone for this lucrative business in the future.
In July, JP Morgan Ventures Energy Corporation agreed to pay a USD$410m penalty to the US Federal Energy Regulatory Commission (FERC) for allegations of market manipulation from September 2010 to November 2012.
The settlement sparked a response from US Senators, questioning whether the agreement and lack of proceedings against individuals at the company provided ‘appropriate relief for consumers and deter future law-breaking.’
According to Reuters’ sources, the letter sparked the FBI and Manhattan DA’s criminal probe.
The results from this investigation will be interesting to follow. The focus is now on the individuals involved in the case,  and from allegations of power market manipulation to the obstruction of justice.  This charge is raised  if there is an allegation that a person under investigation has lied to the investigating officers, in this case the FERC.  The charge carries a 20 year prison term, as stipulated under s1519 of the US Code.
JP Morgan is the second big bank to be hit by a fine from FERC in connection with market manipulation allegations. Barclays received a USD$435m penalty for manipulating energy prices which the bank has vowed t0 challenge in court.

India’s debt crisis unfolds

India‘s economy is on its knees. The country is torn apart by extremes of
Rich & Poor

Rich & Poor (Photo credit: DanMoralesPhotography)

poverty and wealth, corruption and political in-fighting. Everyone keeps cash at home; architects building new homes are often asked to include wall cavities designed for storing cash. Businesses prefer to use hawala instead of SWIFT to transfer money. Friends in New Delhi are comparing the crisis to Zimbabwe in 2oo8 when people bought groceries for 1bnZim dollar notes. I hope it doesn’t get that far.
Here’s a quick round up from the press on why the economy is sinking. reckons new economic reforms will never work, as all previous attempts have failed in the past. The answer lies in working to eradicate the institutionalised corruption that drowns out all other state policies,  according to the author.
India is facing a full scale financial crisis, according to Bloomberg, and must curb public borrowing, reduce its external deficit, attract foreign investment and get inflation back down to restore growth. Chances of that happening are slim unless politicians get their act together.
The rupee was down another 0.5 percent against the dollar on Monday and a further 0.6 percent in early trading on Tuesday, to 66.43 rupees to the dollar, bringing its decline since early May to a little more than 20 percent, the New York Times reported this week.
And the economy’s chances of growth in the future are weak, according to several investment banks who spoke to Reuters this week.