Financial Crime Digest September 2021.

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FINANCIAL CRIME DIGEST

SEPTEMBER 2021
Diligent analysis. Powering business. TM

ISSN: 2632-8364
About Us
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CONTENTS
ENFORCEMENT AND LITIGATION 4 REPORTS 15
SPECIAL FEATURE 35 LEGISLATION 41
SPEECHES 61 GUIDANCE 68
ANNOUNCEMENTS 72 CONSULTATIONS 89
PRESS AND MEDIA 95 Q&A 101
INTRODUCTION
Welcome to the September issue of the Financial Crime Digest. To receive the publication direct to your inbox every month,
please sign up here. We are currently developing an online platform, which provides more comprehensive coverage of
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EDITOR'S PICKS
ENFORCEMENT AND LITIGATION page 4 CONSULTATIONS page 90
UK SFO secures conviction against Petrofac EU consults on blocking statute amendment
ANNOUNCEMENTS page 72 SPECIAL FEATURE page 35

EU Data Protection Supervisor calls for Dealings of leaders and super-rich exposed
greater clarity on proposed AML legislative in “biggest ever” leak dubbed the Pandora
package Papers
DATES FOR THE DIARY

October UK government technical consultation closes October UK Financial Conduct Authority holds
15 21
on the Economic Crime (Anti-Money sustainability TechSprint demo day on ESG data
Laundering) Levy: draft legislation and disclosures
October US FinCEN consultation closes on the October

UK JMLSG consultation closes on proposed
25 30
implementation of amendments to the Bank
changes to Part I Chapter 5.7 of its guidance
Secrecy Act regarding trade in antiquities
aperio-intelligence.com FINANCIAL CRIME DIGEST | SEPTEMBER 2021
ENFORCEMENT AND LITIGATION
UK SFO secures conviction against Petrofac

the UAE to secure projects worth of contracts in Iraq and $3.5
between 2012 and 2015. billion worth of contracts in Saudi

Arabia, according to which Lufkin
The SFO first confirmed its pleaded guilty in February 2019. On
investigation into Petrofac in 2017, 4 October, Lufkin received a two-
announcing the company’s year custodial sentence, which was
connection to a probe into Unaoil, suspended for 18 months, for
The UK’s Serious Fraud Office whose bribes to secure contracts committing 14 counts of bribery.

(SFO) announced on 24 in Iraq for its clients SBM Offshore
September that it had charged and Leighton Contractors In a 24 September press

Petrofac Ltd with failure to Singapore PTE Ltd resulted in the release, Petrofac stated that it has
prevent bribery between 2011 and conviction of two of its employees. a “well-developed, comprehensive
2017. On 4 October, Southwark
compliance and governance
Crown Court sentenced Petrofac, In January, Petrofac’s former global regime”, with a “dedicated
ordering it to pay £77 million, head of sales, David Lufkin, compliance and investigation
comprising of a confiscation pleaded guilty to three counts of team, [...] and a company culture
order, a fine, and SFO costs. bribery related to a scheme to based on ethical business conduct
influence the awarding of contracts and transparency”.

On 1 October, Petrofac pleaded worth $3.3 billion to Petrofac in the
guilty in the case to seven charges UAE. The charges followed 11 SFO press release
relating to former Petrofac other charges of bribery already

Petrofac press release
employees offering or making illicit brought by the SFO in connection
payments in Iraq, Saudi Arabia, and with the awarding of $730 million
Aperio Analysis by Gunita Thethy
The SFO's investigation into Petrofac Ltd's conduct and the manner in which it won tenders spans a period
of over 15 years. The company also admitted to being involved with Unaoil, another entity which saw four
of its executives sentenced to prison in the UK for bribery related to the Iraqi oil industry. Petrofac has
operations in several high-risk jurisdictions including but not limited to China, India, Thailand, Russia and
Algeria, which are also likely to have fallen under the purview of the SFO's review. Petrofac will need to
focus on repairing its broken reputation if it is to continue to win lucrative contracts. While the company
has purged itself of employees that were complicit in corruption, this will not go far enough in what is likely
to have been a deep-seated culture of acceptable levels of corruption and bribery. To overcome this, it will
require a degree of transparency by opening its doors to inspection by independent auditors and
consultants who are best placed to evaluate the company's internal controls and processes.
4
OFAC reaches settlement with NewTek over

apparent Iran sanctions violations
The US Treasury’s Office of conducted between 2013 and The regulator notes that the total
Foreign Assets Control (OFAC) 2018, when NewTek allegedly value of transactions related to the
announced on 9 September that it exported 49 products from the US violations was $583,024 and that
has entered a $189,483 to two companies located in the profits resulting from the sales
settlement agreement with Texas- France and Dubai. Under the terms amounted to around $61,070.
based technology company of the agreements with the two
NewTek Inc over 52 apparent companies, NewTek purportedly In establishing the terms of the
violations of the Iranian authorised the distribution and agreement, OFAC considered that
Transactions and Sanctions support of its products in the NewTek voluntarily self-disclosed
Regulations (ITSR) and Executive Middle East region, including Iran. the apparent violations, which were
Order (EO) 13628. The company purportedly had non-egregious. Meanwhile, the
knowledge about Iran’s inclusion in company purportedly possessed
the region prior to exporting the actual knowledge of the conduct
NewTek wrongfully goods and in the case involving the leading to the sanctions violations
French distributor, it provided but cooperated with the authorities
believed that its credits for the sale of products to during the investigation.
exports did not the Iranian reseller. Additionally, NewTek has
constitute
purportedly taken several remedial
OFAC found that NewTek actions, including establishing
sanctions violations wrongfully believed that its exports export control and sanctions
in part because the did not constitute sanctions compliance policies and
deals had not been violations in part because the deals procedures, hiring a director of
had not been made directly with compliance, and implementing
made directly with the Iranian entities. Additionally, the geo-IP blocking measures.
the Iranian entities company lacked export control or
sanctions compliance policies and OFAC press release
procedures when the violations
According to OFAC, the apparent OFAC notice
occurred and did not provide
violations concern actions related training to its personnel.
Aperio Analysis by James Tytler
The OFAC penalty highlights that ignorance or misinterpretation of Iran-focused sanctions is not taken as a
valid excuse, and that even indirect contact with Iranian counterparties can constitute a breach. US-based
companies in particular will need to continue to show that they have robust policies in place to ensure that
their operations are not in violation of the Iranian Transactions and Sanctions Regulations, which lay out
detailed and specific guidance for transactions with an Iranian nexus.
5
OFAC reaches settlements with Schlumberger

affiliates over apparent sanctions violations
Limited, agreed to pay $1,423,766 OFAC’s now-repealed Sudanese
to settle its potential civil liability Sanctions Regulations. Between
for “apparent violations arising December 2015 and April 2016,
from its provision of services to the three US employees of the
Russian energy firm Gazprom-Neft company allegedly “facilitated the
Shelf for an Arctic offshore oil sale and shipment of oilfield
project”. The alleged violations equipment from a Canadian
The US Department of the refer to Cameron’s approval of five subsidiary of Schlumberger to a
Treasury’s Office of Foreign contracts between July 2015 and Chinese joint venture of
Assets Control (OFAC) announced November 2016 for its subsidiary Schlumberger for onward delivery
on 27 September that it has Cameron Romania without the to Sudan”, OFAC stated.
reached separate settlement necessary licence or authorisation
agreements with Cameron in alleged violation of Executive OFAC determined both companies’
International Corporation and Order 13662 concerning Ukraine. conduct was not voluntarily self-
Schlumberger Rod Lift over
disclosed, and not egregious.
apparent sanctions violations. Schlumberger Rod Lift (now doing
business as Lufkin Rod Lift) – a OFAC press release
Cameron International Corporation, former US subsidiary of

Enforcement release - Cameron
a supplier of goods and services to Schlumberger Limited – also
the oil and gas industries, and a separately agreed to settle its
Enforcement release - Schlum…
subsidiary of Schlumberger potential civil liability for $160,000
over an apparent violation of
N26 Bank fined in Germany over delayed SARs

N26 Bank GmbH announced on 28 delayed submission of around 50 In May, BaFin ordered N26 Bank to
September that German Federal suspicious activity reports (SARs) ensure that it has adequate
Financial Supervisory Authority in 2019 and 2020. resources to comply with its AML
(BaFin) fined the online bank
obligations and to rectify several
€4.25 million in June for failures N26 Bank's statement adds that it deficiencies identified in its IT
to comply with its anti-money has taken all remedial actions in monitoring and customer
laundering obligations. BaFin has connection with its SAR due diligence procedures. BaFin
yet to issue an announcement. submissions procedure and appointed a commissioner to
established structures and monitor the firm’s progress.

The bank states in a press release processes that meet the “highest
that the irregularities relate to the standards” of crime prevention. N26 Bank press release
6
UK SFO announces investigation into £150m

leasehold investment schemes
The UK Serious Fraud Office mandatory requests for evidence and 2019, promising 8-10 percent
(SFO) announced on 29 across the country”. Working with returns on investment over the first
September it is investigating the Cleveland Police, the agency decade, the SFO states. Over 1,500
Alpha and Green Park group of searched properties and arrested investors from around 50 countries
companies over suspected fraud and interviewed a suspect. invested an estimated £150 million
and money laundering. Alpha-
– but all investors stopped
branded companies are The agency also issued several receiving returns in 2018.
suspected of misleading investors Section 2 notices, which force
into purchasing leaseholds for companies to provide information. The SFO adds that the directors of
student accommodation, and The Alpha-branded companies are the companies are thought to have
Green Park-branded companies suspected of fraudulent activity in made around £20 million from the
are suspected of a holiday homes Leicestershire, Lancashire, schemes. The agency is set to
fraud scheme. Staffordshire, and West Yorkshire. contact UK-based investors and
Green Park-branded companies are request that they fill in a

Following a six-month covert suspected of a scheme in Devon. questionnaire by 30 November.
investigation, the SFO states it
“carried out a series of co- The companies sold investments SFO press release
ordinated raids, interviews and into leasehold units between 2014
UK FCA warning notices over market abuse
The UK's Financial Conduct to have occurred on or after 3 July The FCA states that the individuals
Authority (FCA) published a 2016 when the regulation came “falsely represented to the market
statement on 10 September in into force, and the conduct in an intention to buy or sell when
relation to three individual violation of the FSMA is said to their true intention was the
warning notices that were issued have occurred prior to 3 July 2016. opposite”. The individuals’ intention
on 16 July to three bank traders.
in placing the misleading orders
The traders are alleged to have The three traders allegedly “placed was to facilitate the execution of
“deliberately engaged in market large orders for futures on a the genuine orders, the FCA adds.

abuse” contrary to the Market trading platform that they did not
The individuals have the right to
Abuse Regulation and the intend to execute”, the FCA states.
appeal the FCA's decision to the
Financial Services and Markets These “misleading orders” were
Regulatory Decisions Committee.
Act (FSMA) 2000. placed on the opposite side of the
order book to small “genuine

FCA warning notice statement
The conduct in violation of the orders” that the three traders did
Market Abuse Regulation is alleged intend to execute.
7
Huawei CFO enters deferred prosecution

agreement with the US to resolve fraud charges
to another controlled entity, worked. Additionally, she
Canicula Holdings. However, in purportedly stated that Huawei
2012, Huawei purportedly noted in operates in Iran in compliance with
its corporate documents that all regulations and sanctions and
Skycom was among its claimed that neither the company
subsidiaries, with all significant nor any third-party with which it
company decisions being made by worked had engaged in any export
The US Department of Justice Huawei. Between 2010 and 2014, control violations.
(DOJ) announced on 24 Huawei allegedly caused Skycom
September that Huawei to engage in around $100 million Following the agreement, US
Technologies Co Ltd’s CFO worth of transactions, including prosecutors will drop their
Wanzhou Meng has agreed to $7.5 million relating to Iran-based extradition request to the Canadian
enter into a deferred prosecution contractors, through an unnamed government, with Wanzhou
agreement (DPA) and admit her financial institution. agreeing not to commit other
guilt in a scheme to defraud
crimes. Meng has already
several global financial After multiple news outlets reportedly departed Canada for
institutions by denying reports reported in December 2012 and China. The DPA must be approved
that Hong Kong-based Skycom January 2013 that Skycom offered by the US District Court for the
Tech Co Ltd, which engaged in to sell US equipment to Iran in Eastern District of New York.
violations of sanctions, is violation of US export control laws,
controlled by Huawei. Meng allegedly denied any DOJ press release
involvement to an unnamed
DPA
According to prosecutors, in 2008, financial institution, stating that
Huawei sold its shares in Skycom Skycom was a business partner
and third-party with which Huawei
UK FCA warnings over alleged pensions scam

The UK's Financial Conduct their alleged involvement in a payments from investment firms in
Authority (FCA) announced on 30 £5.9 million pensions scam. return for advising customers to
September that it has issued
place their funds in a self-
warning notices to two The professionals, who remain invested personal pension. The
independent financial advisers anonymous, purportedly undertook savings scheme consisted of high-
who work for the same firm and a the fraud between 2015 and 2017. risk and illiquid investments.
retail advisory stockbroker for The regulator alleges that the
individuals received substantial FCA warning notice
8
US charges six individuals and Swiss Allied

Finance with facilitating tax evasion scheme
The US Department of Justice transferring income and assets of concealed around $5 million in
(DOJ) announced on 28 US clients that were held in undisclosed income by transferring
September that it has unsealed an undeclared Privatbank IHAG Zurich funds from his Privatbank offshore
indictment charging six AG bank accounts to disguise any accounts through nominee
individuals and the Allied Finance connection with US taxpayers. The accounts outside Switzerland. He
Trust AG of Zürich in connection defendants allegedly channelled allegedly later returned the
with a scheme to facilitate the funds through a series of nominee amounts in the name of a
concealment of $60 million in bank accounts in Hong Kong and Singapore-based trust company on
undeclared and untaxed income other locations before returning behalf of two foundations created
and assets of certain US citizens. them to newly opened accounts at by an alleged co-conspirator.
Separately, prosecutors unsealed Privatbank in the name of a
the guilty plea of Wayne Franklyn Singapore-based asset According to the DOJ, Chinn has
Chinn, for his alleged involvement management firm. pleaded guilty to tax evasion and
in the scheme.
consented to the civil forfeiture of
Rüegg, who was a member of 83 percent of the funds held at two

According to prosecutors, between Privatbank’s management and Singapore banks. He is due to be
2008 and 2014, Ivo Bechtiger, relationship manager for one of the sentenced on 19 November.
Bernhard Lampert, Peter Rüegg, involved US clients allegedly helped
Roderic Sage, Rolf Schnellmann, conceal around $50 million through DOJ press release
Daniel Wälchli and Allied Finance the illicit scheme.
DOJ indictment
devised and implemented the so-
called “Singapore Solution”. The According to prosecutors, from at

Chinn DPA
scheme purportedly consisted of least 2001 through 2019, Chinn
European Commission opens infringement

proceedings over counter terrorism rules
The European Commission The European Commission urges the directive’s special provisions for
announced on 23 September that the four countries to include in their victims of terrorism. The national
it has sent letters of formal notice domestic legislation authorities of the four countries
to Austria, Finland, Croatia and provisions that criminalise and must reply to the letter of formal
Luxembourg for failing to sanction terrorist related notice within two months.
correctly transpose elements of offences. Furthermore, the letters
Directive (EU) 2017/541 on call on the member states to make EC press release
combatting terrorism. the required effort to implement
9
UK FRC fines Grant Thornton UK and audit

engagement partner over Patisserie Valerie
and FY17, which was larger than the company’s
growth in revenue or profit before taxes.

Moreover, GT also failed to challenge inaccurately

categorised motor vehicle additions of Patisserie
Holdings in the years under investigation, which led to
nearly £2 million of fixed asset additions to be
incorrectly categorised by the company’s
management. Concurrently, GT did not confirm
whether Patisserie Holding’s finance team adequately
approved journal entries in their accounting records.
The UK Financial Reporting Council (FRC)
announced on 27 September that Grant Thornton UK In a public statement released in October 2018,
LLP (GT) has been fined £2.34 million for its audit of Patisserie Holdings declared that its board had been
Patisserie Holdings plc for financial years (FYs) notified about “significant and potentially fraudulent,
2015, 2016 and 2017. An £87,750 fine and a three- accounting irregularities” and suspected
year ban from carrying out statutory audits and misstatement of its accounts.
signing audit reports has also been imposed on GT’s
Audit Engagement Partner David Newstead. In addition to the financial penalty, GT is also required
to conduct a review of its audit practices and submit a

According to the regulator’s notice, GT and Newstead report with proposed actions and its progress on
committed “serious breaches” of several International these measures to the FRC’s Executive Counsel and
Standards on Auditing across four different audit Executive Director of Supervision.
areas over three years, by failing to identify “red flags”
and obtain sufficient audit evidence, as well as to According to a progress report on the liquidation of
perform audits with “professional scepticism”. The Patisserie Holdings published on 24 September by
FRC highlights that if GT and Newstead had Companies House, auditing company KPMG LLP and
conducted a proper investigation of the matters the current liquidator FRP Advisory Trading Ltd are
identified in the adverse findings, they should have scheduled to appear before the High Court on 23
recognised “clear indicators of the risk of material November to “resolve the uncertainties” arising
misstatement due to fraud”. from KPMG’s work as administrator of the café chain
between January 2019 and October 2019.

The notice provides that the audits failed to test
disproportionately large receipts of Patisserie FRC press release
Holdings, as well as to investigate large amounts of
revenue which were received at the end of each FY. Notice
For example, audits failed to investigate the
company’s “significant” cash growth between FY15
10
New Zealand High Court fines derivatives firm

for AML/CFT compliance failures
The High Court of New Zealand 10 transactions amounting to NZD accidental or due to
ordered on 6 September 49.5 million (£25.45 million), with misunderstandings of the
derivatives issuer CLSA Premium over 80 percent of the sum requirements. The court applied a
New Zealand Limited (CLSAP NZ) deposited by two customers. 23 percent discount to the penalty
to pay a penalty of NZD 770,000
because CLSA NZ admitted its
(£396,000) for violations of the According to a statement of facts liability, agreed to a statement of
Anti-Money Laundering and agreed upon by both parties, the facts, and cooperated with the
Countering Financing of compliance breaches include FMA during the investigation.
Terrorism (AML/CFT) Act. The failures to conduct enhanced due
decision concludes proceedings diligence in relation to 12 In a 13 September statement,

brought in June 2020 by the transactions, failure to conduct CLSAP NZ explains that it accepts
country's Financial Markets customer due diligence (CDD) in the penalty, underscores that the
Authority (FMA) against the relation to one party, failure to firm has made significant changes
company, a local subsidiary of terminate business relationships to its board and management
Hong Kong-based CLSA Premium when CDD could not be completed, starting mid-2019, and that it has
International Ltd. failure to report suspicious undertaken an independent review
transactions or activity in nine of its compliance programme.

The regulator states that the firm instances, and failure to keep the
failed to comply with its AML/CFT relevant records as required by the FMA press release
obligations between April 2015 and AML/CFT Act.
High Court judgment
November 2018, despite warnings
received in 2014. The FMA’s legal In deciding on the penalty, the

CLSAP NZ statement
action, the first to be brought under judge determined that the firm’s
the AML/CFT Act, revolves around non-compliance was not
Interpol operation targeting illegal gambling
Interpol announced on 14 Operation SOGA VIII involved 28 the alleged leader of a triad-
September that its latest countries and was coordinated by controlled bookmaking syndicate,
operation targeting illegal Interpol’s Financial Crimes and and seized $2.7 million in cash.
gambling and money laundering Anti-Corruption units with support
According to Interpol, police have
linked to the Euro 2020 Football from the Asia-Pacific Expert Group
reported increased illicit activity
Championship has led to the on Organized Crime and Interpol’s
on online gaming platforms.
arrest of 1,400 suspects and the Match Fixing Task Force. Hong
seizure of $7.9 million in cash. Kong police purportedly detained
Interpol press release
more than 800 suspects, including
11
UK Gambling Commission fines Daub Alderney

for AML and social responsibility failings
The UK Gambling Commission announced on 1 Listed failings include

September that gambling operator Daub Alderney
Limited has been fined £5.85 million and issued a A customer depositing £50,000 prior to the
warning for anti-money laundering (AML) failures as operator requesting evidence of funding sources
well as shortcomings in social responsibility.
A customer depositing over £40,000 in a single

Reported offences took place between January 2019 month without providing any evidence of sources
and March 2020 and purportedly entailed a lack of of funding
policies, procedures, and controls to prevent ML,
A customer lost over £50,000 but only provided
terrorist financing, and problem gambling.
home ownership as source of funds
Gambling Commission Executive Director Helen Venn A customer lost over £43,000 in four months and
states that the case should serve as a warning to displayed signs of problem gambling, including
operators that a failure to raise standards may result using four different payment cards in a single day
in financial penalties. Venn also notes that many of
the failures occurred in the period prior to the
Gambling Commission press release
company taking ownership in October 2019 and that
Daub Alderney has since made improvements.
UK regulator fines EU Lotto for AML failures

The UK Gambling Commission announced on 23 party debit cards, excessively relied on ineffective
September that it has imposed a £760,000 fine on threshold triggers, and lacked information on
gambling operator EU Lotto Ltd for anti-money customer spending ceilings based on risk factors.
laundering (AML) and social responsibility failures.
The operator has also been ordered to undergo an EU Lotto purportedly failed to qualify as signs of harm
independent audit. the fact that customers changed deposit limits
frequently and could not demonstrate that it

EU Lotto received a formal warning for multiple AML conducted suitable financial and affordability
failures between 2019 and 2020 regarding conducting assessments. Additionally, the commission could not
customer due diligence verifications. Specifically, the find any evidence of risk of harm based interactions
operator purportedly did not review or analyse bank between the operator and its customers.
statements provided by customers during due
diligence processes nor restricted customer accounts UK Gambling Commission press release
following source of fund requests. Additionally, the
UK Gambling Commission notice
operator allegedly allowed customers to register third-
12
European Court of Justice Advocate General

opines that UK failed to counter customs fraud
financial interests by entering inaccurate amounts of

customs duties relating to Chinese imports. The AG
adds that the UK’s “mass undervaluation fraud […]
committed during the infringement period was not
inevitable” and that the measures adopted to prevent
the fraudulent activity were “manifestly ineffective” for
ensuring efficient revenue collection.

In addition, the AG notes that the UK’s argument that

member states “enjoy a broad discretion” in
implementing mechanisms for preventing unlawful
The European Court of Justice’s (ECJ) Advocate
activities, including customs fraud, which are contrary
General (AG) Priit Pikamäe issued on 9 September a
to the EU's financial interests cannot be admitted,
non-binding opinion in a case brought by the
because there is “a direct link” between customs
European Commission (EC) against the UK over
duties collection carried out directly though member
allegations that the country failed to fulfil its general
states and the EU’s own resources.
obligations to protect the EU’s financial interests and

counter customs fraud. Additionally, the EC claims

However, Pikamäe underlines that the EC’s argument
that the UK failed to comply with EU law and collect
that the EU was deprived of a part of its own
the correct amount of customs duties and VAT on
resources when the UK failed to collect the
imported apparel products from China.
appropriate amount of VAT revenue should be
dismissed. The AG notes that despite existing

The infringement procedure was launched by the EC
infringements of provisions on determining the
in 2018, after the European Anti-Fraud Office (OLAF)
taxable amounts of VAT and countering customs
closed an investigation which found that the UK
fraud by the UK, an under-evaluation of customs value
evaded “large amounts of customs duty”. According to
of imported goods does not automatically cause a
OLAF, the UK purportedly submitted fictitious invoices
reduction in EU resources accrued from VAT.
and false customs value declarations between 2013
Specifically, Pikamäe highlights that the total net VAT
and 2016 with respect to Chinese textiles and
revenue depends both on the customs value of goods,
footwear. Concurrently, OLAF’s investigation revealed
as well as on the sale price charged to the final
that the majority of imports into the UK were supplies
purchaser. Therefore “the amount of VAT revenue
intended for the black market and that Chinese
remains the same where the final purchaser has paid
criminal gangs benefitted from the fraudulent scheme
a purchase price equivalent to the actual customs
through VAT evasion in member states that were the
value of the goods”.
final destination of the products, which included
Germany, Spain, France and Italy.
Advocate General opinion
In its latest opinion, Pikamäe agrees that the UK failed

to take appropriate measures to protect the EU’s
13
Romanian ASF revokes City Insurance licence,

prosecutors lead financial crime investigation
Romania’s Financial Supervisory company held RON 615,637,500 paid to Vivendi in exchange for the
Authority (ASF) announced on 17 (£106m) in a foreign bank account, fictitious loans, according to local
September that it has decided to which purportedly came from media reports. Former ASF director
revoke City Insurance SA’s licence loans by a non-identified company Mișu Negrițoiu also stated that he
due to its failure to demonstrate and its main shareholder Vivendi revoked City Insurance’s licence
how it will cover the solvency International SRL. in April 2017 due to similar
capital requirement (SCR), the
irregularities, but after his
minimum capital requirement In a 15 September interview with removal from office in May, the
(MCR) and related threshold, and Radio Free Europe, ASF Director watchdog decided not to continue
calculated SCR and MCR values. Valentin Ionescu stressed that the procedure, according to
On 23 September, prosecutors pursuant to an international reporting by HotNews.
raided the insurer’s offices, as investigation, the regulator found
part of an ongoing investigation that the company forged The ASF is reportedly set to initiate
into alleged embezzlement, documents to certify that it held bankruptcy proceedings against
money laundering and fraud, with funds in non-existent Swiss bank the company. Romanian Prime
no further details being disclosed. accounts. He recalls that even Minister Florin Cîțu announced on
though City Insurance has been 22 September that he has required
The decision to revoke the insurer’s sanctioned almost annually and both the ASF and the National
licence follows its failure to bring has been required to submit a Agency of Fiscal Administration
adequate short-term financing and recovery plan, the company (ANAF) to disclose their reports
recovery plans in line with Law No. appealed the decisions in court relating to City Insurance for the
237/2015 and as required by the and either suspended or blocked past several years, according to
ASF in June. On 3 June, the ASF those measures. Ziarul Financiar. Additionally, Cîțu
issued a RON 2,930,766 (£509k)

reportedly stated that the
fine against City Insurance and Additionally, Ionescu reportedly government has adopted an
asked it to provide a short-term stated that the insurer has emergency ordinance to amend
financing plan to restore the MCR misrepresented the number of Law No. 213/2015 on the FGA
level or change its risk profile covered accidents and damages to avoid any potential impact City
within a three-month deadline. outside the country, which resulted Insurance’s bankruptcy might
in the misrepresentation of have on insured individuals.
Concurrently, the regulator issued company reserves. Significantly,

ASF press statement
fines against eight members of the ASF Director reportedly
City Insurance’s Management and disclosed that City Insurance’s
ASF press release
Supervisory Boards and withdrew main shareholder and owner of
their authorisation. Irregularities Vivendi Dan Odobescu embezzled General Prosecutor Office pres…
include fraudulently stating that the €18 million, which City Insurance
14
REPORTS
UK OPBAS report on legal and accountancy

professional body supervisors' progress
OPBAS highlights that over 80 Other key findings include
percent of PBSs have not
implemented a robust risk-based A third of PBSs do not have
approach to AML supervision, with effective separation of their
inconsistencies found in policies advocacy and regulatory
related to information sharing. functions, presenting a “clear

risk of conflict of interest”
In addition, despite a slight
The UK Financial Conduct increase in the number of AML Twenty-five percent of PBSs
Authority's (FCA) Office for enforcement action noted between have ineffective record keeping,
Professional Body Anti-Money April 2019 and April 2020, the such as maintaining records of
Laundering Supervision (OPBAS) report states that two thirds of decisions on AML supervision
released on 20 September its PBSs do not have effective
Gaps were noted with respect
latest report evaluating the enforcement frameworks, and fail
to PBSs being able to evidence
progress made in tackling money to explain their criteria for taking
their understanding of AML
laundering by professional body enforcement action and the tools
risks. Sixty percent of legal
supervisors over the past year. and procedures used. “Only a
PBSs and less than 40 percent
The report covers eight main quarter of PBSs used their
of accountancy PBSs were
themes, namely governance, risk- enforcement tools effectively”, the
found to be using their powers
based approach, supervision, report warns. Furthermore, it
effectively to support the
information sharing, enforcement, underlines that certain legal sector
adoption of a risk-based
guidance for members, staff PBSs continue to have their
approach by their members
training, and record keeping. powers hindered by statutory
limitations, which require them to

The report finds that the 22 refer matters to the independent OPBAS found good examples of
professional body supervisors Solicitors Disciplinary Tribunal. PBSs amending their risk-based
(PBSs) responsible for anti-money
approach to factor in pandemic-
laundering and counter-terrorist The report reiterates that the FCA's specific challenges and the
financing (AML/CFT) supervision Business Plan focuses on ensuring majority of PBSs were deemed
of the accountancy and legal the effectiveness of financial crime effective in providing guidance
sectors have generally improved controls and reducing financial to members
efforts to comply with the Money crime. OPBAS expects PBSs to
Laundering Regulations. However, focus their efforts on actions with OPBAS report
differing levels of achievement and the greatest impact on the
some weaknesses are noted. prevention of money laundering. FCA press release
15
UN Secretary-General publishes report on small

arms and light weapons
UN Secretary-General António trafficking commodities or as tools Nakamitsu presented the report to

Guterres issued a report on 30 allowing terrorists to facilitate the UN Security Council on 6
September on the use of small activities carried out by others, with October. She states that the use of
arms and light weapons, noting existing trade routes overlapping small arms and light weapons can
that efforts to prevent the significantly with territory render arms embargoes ineffective
acquisition of weapons by controlled by terrorists. The report and encourages the Council to
terrorists have been maintained in recalls that the ongoing integrate the consideration of
large part through UN guidance discussions around the weapons and ammunition into
on the implementation of Mechanism to Review the thematic as well as
resolution 2370 (2017). The Implementation of the UN country‑specific discussions,
Secretary-General submits a Convention Against Transnational including in addressing the
report every two years pursuant to Organised Crime and its protocols multifaceted threat of the arms-
resolution 2220 (2015). can complement existing reporting crime-terrorism nexus.
obligations on small arms, such as
those under the UN Programme of Indian representative T. S.

Member states and Action on Small Arms. Tirumurti also noted that terrorist

organisations have increased the
the UN are urged to
The UN Secretary-General volume and quality of their arsenal.
address the encourages states to enhance their Meanwhile, Small Arms Survey
terrorism-arms- efforts to detect and seize parts researcher David Lochheed stated
and components of weapons and that peacekeeping operations must
crime nexus and ammunition to support the fight prioritise counterproliferation. UK
detect the links against illicit conversion and craft representative James Roscoe also
between terrorism production. Member states and the stressed that UN member states
UN are urged to address the should consider the Security
financing and illicit terrorism-arms-crime nexus and Council’s call to modify or
arms trafficking detect the links between terrorism reconsider arms embargoes,
financing and illicit arms trafficking encouraging all states to sign
by tracing financial flows and the Arms Trade Treaty. Other
According to Guterres, the reinforcing financial intelligence members stressed that small arms
availability of small arms, light capabilities. Additionally, states and light weapons have
weapons, and ammunition in the should develop and implement contributed to rights abuses and
Sahel and parts of the Central comprehensive border security and exacerbated transnational
African subregion enables management strategies and organised crime and terrorism.
terrorists, organised crime, and engage all national agencies.
armed groups to control large
UN Secretary-General report
territories. Additionally, small arms UN High Representative for
and light weapons can serve as UNSC meeting coverage (6 Oct…
Disarmament Affairs Izumi
16
UN South Sudan report finds $73m in public

funds stolen, corruption fuelling rights violations
A 23 September report prepared by the UN’s transfer instructions without providing robust
Commission on Human Rights in South Sudan states reasoning to prevent abuse of power and retaliation
that the country’s political elite have diverted at least against whistleblowers or reporters.
$73 million representing non-oil revenues since
2018. A conference room paper presented to the The conference room paper further recommends
Human Rights Council (HRC) further discusses probing all transactions and contracts related to
South Sudan’s anti-financial crime measures and companies linked with businessmen Ashraf Seed
sets out recommendations for authorities. Ahmed Al-Cardinal and Kur Ajing Ater in light of the
longstanding allegations of corruption. In one reported

The $73 million figure concerns only three studies that instance in 2016, over a period of two months, South
the experts develop upon in the report, with billions of Sudan’s Ministry of Finance is alleged to have paid two
dollars estimated to have been lost to corruption since of Al-Cardinal’s companies $39 million. Both
2012, one year after the country’s establishment. The individuals were designated by the US Treasury’s
report highlights that government officials have Office of Foreign Assets Control (OFAC) in October
engaged in procurement fraud using fraudulent 2019 under the Global Magnitsky Act.
documents and inflated prices for goods to receive
kickbacks. The experts note that some illicit payments The experts call for the completion of efforts to
are made using cash without underlying establish the country’s Financial Intelligence Unit and
documentation. investigate allegations that politically exposed
persons (PEPs) are among the entities controlling

South Sudan’s government rejected the allegations in South Sudanese banks.
a 27 September statement issued to Agence France
Presse, citing an international attack on the The Commission was established by the UNHRC in
government and emphasising that only its citizens 2016 through resolution 31/20 and entrusted with a
and not “external forces” can hold the state mandate to collect facts and evidence related to
accountable, Al Jazeera reports. A 23 September HRC violations of human rights in the country. Its mandate
press release discussing the report highlights that was extended in March 2021 for another year.
corruption breeds competition among political elites
for the opportunity to plunder public funds, fueling OHCHR report
conflict and human rights violations.
Al Jazeera article
The experts recommend that the government

OHCHR press release
strengthens institutions responsible for oversight,
prosecute those found responsible for economic Al- Nashif statement
crime, and repatriate stolen funds. The report stresses
that South Sudan should stop using freezing orders or
17
UK Financial Ombudsman latest data shows

significant rise in fraud and scam complaints
more action to ensure customer explanations for the rise in the
complaints are handled fairly number of complaints.
before cases end up with the FOS.
Fraud and scam related From April to June 2021, 50,906

complaints totalled 5,025 in the complaints relating to financial
period from April to June, up from businesses were received by the
3,028 during the same three FOS. In the same period this year,
months in 2020. 6,911 complaints were received
The UK’s Financial Ombudsman

about current accounts and 4,039
Service (FOS) published its latest
The financial ombudsman office complaints were received relating
quarterly and half-year data on 24
notes that many fraud case to credit cards, while auto
September, which shows a 66
complaints received involved bank insurance represented another
percent rise in complaints related
employee impersonation, goods cohort at 2,427 complaints.
to fraud and scams in the first
paid for by bank transfer but not Complaints related to current
quarter of this financial year.
received, and fraud or scams accounts are up by 55 percent
involving cryptocurrency compared to April to June 2020,

Sixty percent of fraud and scam
investments. Scams on social with half of current account-related
complaints by consumers were
media and increasing numbers of complaints this past quarter
ultimately supported by the
young furloughed citizens involving fraud and scams.
ombudsman, with the office stating
engaging in cryptocurrency
that the statistics demonstrate that
investments are listed as anecdotal Financial Ombudsman press re…
financial institutions must take
UK Finance report on risks from crypto-assets
UK Finance published on 16 they navigate the “transitional The paper explores elements
September a report reviewing the period” from a decade ago when including business models, money
range of cypto-asset business over a third of crypto-asset laundering and terrorist financing,
activity, associated financial transactions were estimated to be sanctions evasion, fraud and the
crime risks and good practices for illicit to today where governments UK's regulatory approach.
financial institutions. and international standard setters
are seeking to bring firms in line UK Finance report

The paper, entitled “Navigating the with regulations on money
UK Finance document
Path to Respectability”, aims to laundering and terrorist financing.
support financial institutions as
18
UK review of BetIndex collapse critiques FCA

and Gambling Commission supervision
The UK Department for Digital, Culture, Media & 280,000 customer accounts. The English High Court
Sport published on 22 September the results of the ordered BetIndex into administration two weeks later.
independent review into how the Gambling
Commission regulated BetIndex Ltd, which operated
the since-collapsed novel betting product Football The review also examined
Index. In the wake of the review, commissioned in
communication between the
June and led by Malcolm Sheehan QC, the Gambling
Commission has announced that it will now factor FCA and the Commission over
novel products into gambling company risk whether the Football Index as a
assessments, improve supervisory coordination with
the Financial Conduct Authority (FCA), and continue
product ought to be regulated
to investigate BetIndex. by the FCA rather than the
gambling regulator. He writes

Sheehan reports that the company failed to inform the
Gambling Commission about the true nature of the
that these communications are
Football Index when it first applied for a licence in in part responsible for the delay
September 2015, during which time it did not notify
in action against BetIndex
the regulator about the share selling and cash-out
functions which were present in the product’s original
marketing. This “go-to-market” feature did, however, The report finds that the Gambling Commission did
appear on the product’s website during the time that not subject the product’s terms and conditions to
gambling regulator undertook two reviews into the detailed legal scrutiny until the regulator increased
company prior to granting the licence. Furthermore, focus on the company in 2019. The regulator’s risk-
the product itself evolved over time, offering display based assessment, in place since 2017, does
features mirroring stock market terminology, including not consider novel products as significant risk factors,
traders, shares, and dividends, and displaying similar the report concludes. Additionally, as the Gambling
imagery, with the Football Index even being referred to Commission determined in 2015 that BetIndex should
as a football stockmarket in promotional material by be considered a small operator, it failed to proactively
the company. BetIndex earned revenue through the monitor the company prior to 2019 and missed
sale of new shares and from commission on shares two indications in March 2018 via an audit report and
between traders, closely resembling brokerage firms. BetIndex letter that Football Index had evolved. In
addition to the three years during which Football Index

The Gambling Commission launched a statutory operated unabated, Sheehan reports, the nearly two-
review of the company’s gambling licence four and a year period from the time that the Gambling
half years after first granting the application, which Commission became increasingly aware of the novel
remains ongoing. At the time of BetIndex’s gambling product’s operations and the decision to suspend the
licence suspension in March, the company had nearly licence was too long.
19
Sheehan’s review also examined communication supervisory oversight. The Gambling Commission has
between the FCA and the Gambling Commission also reportedly enhanced its memorandum of
which began in May 2019 over the question of understanding with the FCA as well as included “novel
whether the Football Index as a product ought to be products” within risk factors that will be considered
regulated by the FCA rather than the gambling when assessing gambling entities overall risk profiles.
regulator, an issue which has reportedly not been
resolved as of the time of the report’s publication. He The report concludes that the FCA and Gambling
writes that these communications are in part Commission agreement should include a mechanism
responsible for the delay in action against BetIndex in for resolving regulatory responsibility to avoid the type
addition to pressure on regulators due to the Covid-19 of stalemate that Sheehan determines took place in
pandemic. Significantly, however, the review found the BetIndex case. This should also include agreed-
that the Gambling Commission continued regulating upon timetables for resolving escalated regulatory
the product for that extended timeframe all while disputes and clearly mandate that there be written
having determined that the product should be records of discussion outcomes concerning
overseen by the FCA instead. regulatory responsibility. Sheehan urges the FCA to

improve its decision-making time, ensure consistency

Concerning the FCA’s role in the delay, Sheehan across intra-FCA sections, and enhance cooperation
asserts that it should have acted quicker, dismissing with the Gambling Commission.
as speculative the regulator’s suggestion that the
Gambling Commission should have given more Recommendations for the Commission
detailed information. Following the Gambling
Commission’s initial outreach to the FCA in May 2019, Prioritise novel products for enhanced regulation
the FCA waited nearly four months to respond.
Additionally, the review determined that the FCA Increase scrutiny of terms and conditions during
offered BetIndex and its regulatory counterpart the licensing application process with a focus on
“different and inconsistent positions” during the two- fairness to customers
year period between 2019 and 2021.
Consider the type of language and marketing used
for gambling products to determine if customers

In a 22 September press release, Gambling
will understand whether they are engaging more in
Commission CEO Andrew Rhodes acknowledges that
a type of financial market investment
the commission “should have drawn a line under our
efforts sooner” but asserts that affected customers
Apply heightened scrutiny at the licensing stage to
would still have presumably lost their investments
any differences between how a product is
following the company’s collapse. He adds that
described versus actual product features
increasingly complex business models and products
have blurred the lines between financial services or
entertainment and gambling, challenging current Increase decision-making and action time
official definitions of gambling.
Independent review report

Rhodes states that he welcomes the review’s
recommendations, noting that some have already Gambling Commission press release
been adopted, and states that a government funding
Government press release
increase in October will further provide the
commission with opportunities to improve
20
UK HMRC publishes latest tax gap report

The UK’s HMRC published on 16 falling from £1.6 billion in the 2018 base erosion profit shifting (BEPS)
September the tax gap estimates to 2019 tax year to £1.5 billion in schemes into its calculations,
for 2019 and 2020, noting a tax the 2019 to 2020 tax year. despite these categories
gap worth £35 billion, Additionally, avoidance purportedly amounting to at least £20 billion.
representing 5.3 percent of tax accounts for the smallest When categorised in this manner,
liabilities. On the same day, UK proportion of the tax gap, with fraudulent behaviour purportedly
think tank Tax Watch published a failure to take reasonable care accounts for at least £15.2 billion,
paper analysing the latest figures representing the main cause. which represents 43 percent of the
and proposing an alternative
total tax gap and 2.25 percent of
categorisation of non-compliance According to Tax Watch, a tax gap the total amount of tax.
based on fraud, negligence, and definition linked to fraud,
dishonesty. negligence, and dishonesty is more The think tank suggests that
appropriate because it contains HMRC should publish a more

The tax watchdog notes that the terms recognised by law and would detailed estimate of the amount of
corporate tax gap has dropped to be easily understood by the public. tax lost to fraud after assessing
eight percent, down from 11.3 Additionally, the watchdog states it how much fraud is included in legal
percent in 2005 to 2006, with the would provide clarity in developing interpretation, BEPS practices, and
avoidance tax gap down from £4.7 HMRC’s strategy. non-payment categories.
billion to £1.5 billion.
Tax Watch adds that fraud figures HMRC press release

HMRC states that authorities should include criminal attacks,
HMRC tax gap paper
collected around 95 percent of the evasion, the hidden economy, and
tax due in 2019 to 2020, with the avoidance. Additionally, it states
Tax Watch press release
tax gap for wealthy individuals that HMRC does not factor most
UK figures show surge in impersonation scams
The results of a poll published by able to steal £129.4 million, turning down such a request over
UK Finance on 10 September compared to £57.9 million in the the phone. Generally, individuals try
show that fraudsters are first six months of 2020, according to find alternative phrases to use
increasingly successful in to the trade association’s latest instead of refusals, giving
deceiving individuals through fraud report. scammers the opportunity to press
impersonation scams.
on, UK Finance states.
When contacted via email or text,

The incidence of such scams more 19 percent of people reportedly UK Finance press release
than doubled in the first half of find it difficult to refuse offering
2021 compared to last year, rising personal details, with 23 percent of
to 33,115 cases. Fraudsters were respondents feeling uncomfortable
21
UK Independent Anti-Slavery Commissioner

publishes recommendations for financial sector
varying levels of understanding about the links that
their supply chains may have to modern slavery and
labour exploitation, with some organisations
introducing assurance and compliance data
requirements for suppliers and developing new risk
management tools.

Additionally, other FIs purportedly mentioned the

introduction of employee and supplier hotlines and
enhanced supplier codes of conduct and conducting
regular training and awareness campaigns. The report
The UK’s Independent Anti-Slavery Commissioner also comprises other points related to detecting and
Dame Sara Thornton published on 22 September a disrupting modern slavery proceeds, collaboration
follow-up review of questions received from 44 with other structures, such as the Joint Money
financial services CEOs on their measures to Laundering Intelligence Taskforce (JMLIT), investing,
address modern slavery concerns, including five empowering, and supporting survivors of modern
recommendations by the commissioner to the slavery and human trafficking.
financial sector.
Thornton states that while encouraging, such

Thornton sent questions to 51 CEOs in the financial measures only provide a baseline of engagement,
sector after a January joint report found that nearly offering recommendations focusing on the need to
half of senior managers were unaware that modern develop relevant risk management and mitigation
slavery exists in the UK. The latest survey finds that processes and the need to create better systems to
although almost all financial institutions (FIs) share intelligence. Additionally, she encourages
confirmed that they are legally compliant, very few growing collective action initiatives by investors and
suggested that their statements address anti-slavery suggests that financial services could be a powerful
activities in their investing and lending portfolios. force to encourage action to address significant risks
in the electronics business. Furthermore, Thornton

Several FIs, such as Bank of America and Standard suggests that FIs should be reporting on their
Chartered, have established specific taskforces or investment and lending portfolios under Section 54 of
working groups or appointed an accountable the Modern Slavery Act and, until amendments are
executive for human rights, according to the review. introduced, the financial sector should voluntarily
Meanwhile, in recent years, several executives are cover this area in modern slavery statements.
reported to have directly engaged in discussions on
modern slavery risks and many businesses have been Anti-Slavery Commissioner press release
revising and strengthening their ethical policies and
codes of conduct. Significantly, in their responses to Anti-Slavery Commissioner review
the commissioner, FIs reportedly demonstrated
22
EBA reports “sharp acceleration” in digitalisation

of banking during the Covid-19 pandemic
The European Banking Authority increasing platformisation has The authority also sets out its
(EBA) reported on 21 September resulted in “new dependencies findings and recommended
that there has been a “sharp between financial and non-financial actions relating to consumer
acceleration” in digitalisation of firms”, posing challenges for the protection and conduct of business
both front- and back-office majority of authorities which requirements; anti-money
processes in the European Union’s “currently have a limited laundering/counter terrorism
banking and payment sector in understanding of platform-based financing (AML/CFT) and data
the context of the response to the business models”, the EBA states. protection and privacy. The
Covid-19 pandemic. Financial
authority did not identify the need
institutions have increasingly In 2022 the EBA will support for any specific legislative changes,
introduced technologies to authorities in developing taking into account the existing
facilitate customer digital access questionnaires for regulated legislative proposals put forward
to financial products and services. financial institutions on digital by the EU Commission in the area
platform use. It proposes to of digital operational resilience.

Digitalisation presents a “range of develop a framework to help
potential opportunities” for EU aggregate information about EBA press release
customers and financial dependencies on digital platforms,
EBA report
institutions, offering “significant and establish indicators that could
transformative potential”, the help in assessing systemic risks.
authority states. However,
EU funds should be provided to member states

respecting rule of law, Parliament survey finds
The European Parliament (EP) Common values deemed by should ensure that democracy,
published on 10 September the respondents as an essential human rights and the rule of law
results of an online survey condition for receiving EU funds represent priorities in its relations
conducted between 17 and 25 include guaranteeing media with international actors. Thirty-
August on the state of the freedom and independence of one percent agreed that the EP
European Union, which finds that justice, as well as engagement in should prioritise the fight against
81 percent of respondents agree the fight against corruption and the terrorism and organised crime.
that EU funds should only be protection of human rights.

made available to member states

European Parliament press rel…
that respect the rule of law and According to the survey, 85 percent
Survey report
democratic principles. of respondents stated that the EU
23
EU Court of Auditors call for specific EU strategy

to tackle oligarchy in Ukraine corruption report
harms growth and democracy. The corruption at the oligarchic and
auditors assert that EU strategies national levels
have not sufficiently targeted grand
Reassess and modify support
corruption to address the links
between state-owned corporations, for investigative journalists in
Ukraine and other aspects of
civil servants, and oligarchs, adding
that some efforts, such as civil society
The European Court of Auditors
Ukraine’s visa-free system,
(ECA) issued a report on 23 Assist in improvements to
continues to receive overly positive
September which offers monitor and report measures
European Commission
recommendations to the EU on dealing with corruption and
assessment and support despite
how to reduce corruption in suspected corruption
not meeting multiple conditions.
Ukraine both by targeting the

Ensure that capacity building
country’s oligarch-supporting
Another area of EU support that support focuses on integrity
structure and removing barriers to
lacks the necessary commitment and reforms
legitimate competition.
from Ukrainian authorities is
Assist Ukraine in developing

assistance in developing digital
The ECA’s report finds that despite digital databases and registers
tools to counter corruption, with
over two decades of EU measures,
the ECA reporting that a lack of
including funding and political Tighten the conditions upon
accurate databases makes
efforts aimed at strengthening an which EU support is granted
transparency efforts difficult.
independent judiciary, aiding
Ukrainian civil society, and ECA press release
Recommendations include
combatting corruption, state
capture and large-scale corruption ECA report
Put in place targeted actions to
remain rampant. The report notes
focus on countering grand
that corruption costs Ukraine tens
of billions of euros every year and
Aperio Analysis by George Voloshin
The ECA report on corruption in Ukraine comes as a strong critical statement about the EU's approach
towards this Central European country at a time when, still facing multiple risks emanating from its
Russian neighbour, it struggles to implement structural reforms long demanded by the EU, the US and the
IMF. In late September, the Ukrainian parliament passed a draft law aimed at restricting the influence of so-
called oligarchs, that is people with significant personal wealth and real levers to meddle in politics. Once
signed into law, the bill will also apply to the former leader of Ukraine following the 2014 Euromaidan,
current MP Petro Poroshenko.
24
Basel Institute on Governance 10th AML Index

The Basel Institute on posed by virtual assets, beneficial None of the assessed
Governance published its 10th ownership (BO) transparency, and jurisdictions had an effective
Anti-Money Laundering (AML) the application of AML/CFT BO transparency system, with
Index on 13 September, which measures to non-financial sectors, 44 percent of them scoring zero
raises “grave” concerns about the particularly designated non- for the effectiveness of their BO
110 assessed jurisdictions’ financial businesses and transparency measures.
approach to tackling money professions (DNFBPs). Notably, certain jurisdictions,
laundering and terrorist financing scored highly on BO technical
(ML/TF) risks. Key findings include compliance criteria, but zero in
terms of effectiveness
Risk scores used for the Prevention of money laundering
Supervision and application of
independent annual ranking are activity is ineffective, with
based on data from publicly AML/CFT measures with
several jurisdictions having
respect to DNFBPs is a
available sources such as the laws and institutions in place
Financial Action Task Force (FATF), particularly weak area across
that are largely compliant with
jurisdictions.
Transparency International, the FATF Recommendations, but
World Bank, and the World ineffective in practice.
Economic Forum. Significantly, the UK and Spain Basel Institute on Governance …
are the only assessed countries

The report looks at four areas of Basel AML Index report
to achieve scores of 67 percent
AML/CFT policy that need to be or more for both prevention and
addressed, including ineffective enforcement criteria
prevention, response to threats
New Zealand report on AML/CFT efforts over

past three years shows step up in enforcement
The New Zealand Financial The regulator reports that between irregularities, with the FMA filing
Markets Authority (FMA) July 2018 and June 2021 it issued the first proceeding against a
published a report on 30 three public warnings and 27 regulated entity for alleged
September covering its anti- formal, private warnings, an breaches of the AML/CFT Act.

money laundering and countering increase over the previous

the financing of terrorism monitoring period, when the FMA press release
(AML/CFT) efforts over the past regulator issued only one public
FMA report
three years, which finds that the warning and 17 formal, private
regulator has increased warnings. Most of the warnings
enforcement action. were in response to audit
25
EU Commission releases annual report on the

protection of the EU’s financial interests
conditionality of EU budget Other key findings include

allocations; and (4) progress on
implementing the Commission’s Most cases reported in 2020 as
Anti-Fraud Strategy, with two thirds fraudulent or non-fraudulent
of planned actions implemented. affecting EU revenue concern
Significantly, the EPPO has already undervaluation, incorrect
registered 1,700 crime reports and classification or incorrect
has opened 300 investigations, description of goods or
The European Commission (EC)
with estimated losses to the EU smuggling, with the types of
released on 21 September its
budget amounting to €4.5 billion. goods most affected by
annual report on the protection of

attempted fraud found to be
the EU’s financial interests (PIF
In addition to the publication of the footwear, textiles, vehicles,
report 2020), summarising EU
report, the EC released six staff electrical machinery and
counter-fraud efforts in 2020. The
working documents analysing: (1) equipment
report highlights that the financial
the measures adopted by member
impact of detected fraud against
states to protect the EU’s financial In proportion to payments,
the EU budget continued to
interests in compliance with Article fisheries policy is deemed to be
decrease in 2020, with 1,056
325; (2) the implementation of the an area highly affected by fraud
fraudulent irregularities reported
Hercule III programme aimed at and irregularities, whilst
in 2020 causing a combined
protecting the EU's financial measures for productive
financial impact of €371 million –
interests by fighting fraud, investments in aquaculture and
20 percent less than in 2019.
corruption and other illegal investments in processing and
activities; (3) the work of the Early- marketing appear among the
The PIF report, submitted pursuant
Detection and Exclusion System riskiest operations
to Article 325(5) of the Treaty on
(EDES) panel which ensures
the Functioning of the EU (TFEU),
coherence of the administrative The difference between
provides an overview of the EU’s
sanctions procedure with respect expected VAT revenues and
financial interests and the
to breaches of the EU’s financial VAT actually collected, also
measures taken to counter fraud
interests; (4) statistical evaluation known as the ‘VAT gap’ has
and other illegal activities.
of the irregularities and fraud declined for 21 member states,
detected by member states during most significantly in Hungary

The report highlights four main
2020; (5) progress made towards
achievements made in 2020 and in
the European Commission’s Anti-
the first half of 2021, including: (1) EC fraud report
Fraud Strategy Action Plan as at
the European Public Prosecutor’s
June 2021; and (6) follow-up by Annexes to the report
Office (EPPO) began operation; (2)
member states on implementation
a revised regulation for the
of the recommendations set out in EC staff working document on …
European Anti-Fraud Office (OLAF);
the 2019 PIF report.
(3) tougher rules on the
26
ESAs call on financial institutions to adapt to

increasing cyber and event driven risks
The Joint Committee of the 2021 EBA RAQ stating that “cyber managed by Credit Suisse exposed
European Supervisory Authorities risk and data security is the most to the firm and four other AIFs that
(ESAs) – the European Banking important driver of operational invested in the said AIFs, mainly
Authority (EBA), the European risk”. According to the report, one due to valuation uncertainties and
Securities and Markets Authority challenge for monitoring the reduced availability of
(ESMA) and the European information and communication insurance coverage.
Insurance and Occupational technology (ICT) risk is the lack of
Pensions Authority (EIOPA), timely and comprehensive data at The ESAs advise: (1) financial
released on 8 September their EU level, an area which the EU institutions and supervisors to be
second joint risk assessment Commission’s proposed Digital prepared for a potential
report for 2021, highlighting risks Operational Resilience Act (DORA) deterioration of asset quality in the
prompted by measures to combat aims to address through provisions financial sector, as well as to
the Covid-19 crisis, and calling for for harmonised incident reporting carefully manage their ICT and
financial institutions to adapt to across the EU financial sector. cyber risks; (2) national competent
emerging cyber risks and the
authorities, financial institutions
materialisation of event driven In terms of digitalisation, the ESAs and market participants to shift
risks, such as Greensill Capital further underline that focus to allow adequate
and GameStop. materialisation of event driven assessment of the consequences
risks, such as GameStop, of the pandemic on banks’ lending

In terms of cyber risk, particularly Archegos, and Greensill, as well as books, and banks to properly
prompted by the Covid-19 rising prices and volumes traded manage the transition towards the
pandemic, the report highlights on crypto-assets, raise concerns recovery phase; and (3) the sector
that increasing reliance on digital about increased risk taking to closely monitor disorderly
solutions has expanded the behaviour and “possible market increases in yields and sudden
opportunities for cyber attackers, exuberance”. The paper highlights reversals of risk premia in terms of
and notes that the cost of cyber the example of March 2021, when the impact for financial institutions
incidents coupled with a tightening the collapse of financial services as well as investors.
of data protection regulation companies Greensill and Archegos
across the world could boost the brought “evidence that risks arising Joint ESAs report
demand for cyber insurance. from interconnections within the
EBA press release
financial system can be

The EASs note that cyber risk is significant”. Accordingly, the report
EIOPA press release
ranked among the most significant notes that the filing for insolvency
operational risks by financial by Greensill led to the suspension ESMA press release
institutions and supervisors, with of redemption of four so-called
88 percent of respondents to the supply chain finance funds (AIF)
27
Scammers steal £4m a day in the UK as APP

fraud overtakes payment card fraud losses
By contrast, for every instance of APP fraud there
were more than 10 cases of unauthorised card fraud,
totalling over 1.4 million. Scammers were reportedly
able to steal £261.7 million, a drop of 9 percent in
losses compared to the first half of 2020. The
document notes that victims of unauthorised card
fraud are fully refunded in nearly all cases, compared
to only 42 percent of targets of APP scams.

A UK Finance half-year report on fraud published on In cases of unauthorised card, cheque, and remote
22 September reveals that scammers stole nearly banking fraud, banks reportedly prevented £736.1
£754 million in the first six months of 2021, an million in theft, safeguarding two out of every three
increase of almost a third compared to the same pounds in the targeted customers’ accounts.
period in 2020.
In both number and value, the biggest increase was

recorded in the cases of impersonation scams
UK Finance highlights that emulating police or bank officials, which more than
doubled throughout the analysed period, reaching
scammers are employing 18,816 cases and £84.7 million in losses.
different strategies for moving
UK Finance highlights that scammers are employing

stolen funds, including using
different strategies for moving stolen funds, including
teenagers as money mules and using teenagers as money mules and diverting money
quickly diverting money through through cryptocurrency wallets. The press release
states that fraud represents a national security threat,
cryptocurrency wallets
and the banking sector calls for government action,
including through bringing all economic crime within
the scope of the Online Safety Bill.
UK Finance Economic Crime Managing Director Katy
Worobec states that the latest figures indicate that
UK Finance 2021 half-year fraud update
criminals focused more on authorised push payment
(APP) fraud, which overtook unauthorised payment
UK Finance publishing note
card fraud for the first time since the trade association
began collecting data in 2018. Reported cases of APP UK Finance press release
scams rose by 60 percent to over 106,000, with the
total amount reported lost increasing by 71 percent to
reach £355.3 million.
28
US report on blocked assets related to terrorism

The US Treasury’s Office of Act of 1996 on foreign terrorist terrorist-related entities, or
Foreign Assets Control (OFAC) organisations (FTOs), and the decreases due to licensing activity
released on 8 September its sanctions regime on state and victims of terrorism obtaining
annual report on US assets sponsors of terrorism instituted blocked assets pursuant to the
relating to individuals, under the Export Administration Terrorism Risk Insurance Act.
organisations and countries and Arms Export Control Acts.
engaged in terrorism.
The report also assesses the
In regard to state sponsors of impact of the US sanctions

The report includes an overview of terrorism, the report provides programmes, as well as
existing US sanctions programmes details on the nature and extent of enforcement measures, and
targeting international terrorists, assets held in the US that are provides a summary of currently
organisations, their supporters and blocked for being related to Iran, blocked assets. According to the
individuals connected to states Syria, and North Korea. It explains report, in 2020, the US had $73.75
designated as sponsors of that the primary reason for major million worth of blocked assets
terrorism. These include Executive changes seen in recent years with related to Iran, $35.32 million
Order (EO) 13224 on specially regards to the value, location, and related to Syria, and $31.69 million
designated global terrorists composition of reported blocked related to North Korea.
(SDGTs), EOs 12947, 13099, and assets, generally involve increases
13886 on specially designated based on new listings or OFAC terrorist assets report
terrorists (SDTs), the Antiterrorism transactions associated with
Human rights Watch calls for sanctions against

Egypt for “extrajudicial executions”
Non-governmental organisation Police and National Security targeted sanctions, including asset
Human Rights Watch (HRW) Agency officers have killed freezes against Egyptian officials
published on 7 September a “dozens” of purported armed and entities responsible for human
report calling for the international militants believed “to have rights violations.
community to impose an embargo belonged to, assisted or financed
on the export of arms to the Islamist armed groups”, including HRW press release
Egyptian army and police, as well those affiliated with Al-Qaida and
HRW report
as sanctions against security the Islamic State (ISIS).
agencies and officials responsible
for “grave human rights abuses”. The report recommends that the
international community,
HRW’s request follows allegations particularly the US, Canada, the UK,
that the Egyptian Interior Ministry EU and its member states, impose
29
EU considering sanctions for environmental

damage and human rights violations
to conduct due diligence verifications in order to
ensure accountability for violence against
environmental defenders throughout their entire
supply chain. Similarly, businesses should ensure that
they are not contributing to or profiting from human
rights abuses across their supply chains.

The NGO recommends that companies implement

“robust due diligence procedures” with the aim of
preventing, identifying and mitigating risks of being
involved in any environmental damage or human
Anti-corruption campaign group Global Witness
rights violations, and adopt “a zero-tolerance stance”
launched during a webinar on 13 September its
to retaliation against environmental defenders in their
report called ‘Last line of defence’, which finds that
global operations and supply chains.
227 land and environmental defenders were

murdered in 2020.
Concurrently, the NGO calls on the European Union to
adopt strong enforcement mechanisms to ensure that

During the event, Nils Behrndt, Deputy Director-General
companies are held accountable for “contributing to,
in the Directorate-General for Justice and Consumers
failing to prevent, or benefiting from harms, or
at the European Commission (EC), stated that the EU
violations of due diligence requirements”, including by
is currently working to amend the existing legal
allowing those harmed by corporate operations to
framework to ensure that sanctions imposed for
seek remedies before EU courts.
environmental damage and retaliation have such a

great impact that the “economic rationale behind

Behrndt underlined during the webinar that the EU is
the[se] crime[s] is taken away”.
working to “oblige” entities which are located or
operating in the EU to comply with sustainability

According to the report, 30 percent of the recorded
requirements, in order to ensure that they “monitor
attacks on environmental defenders were allegedly
whether in their supply chain there is a respect for
linked to resource exploitation, while logging was the
social and human rights law”. He added that the EC is
industry with the highest number of documented
“looking into the question of sanctions [and] penalties”
killings, with 23 cases, mostly in countries such as
aimed at tackling environmental damage and human
Brazil, Nicaragua, Peru and the Philippines. The
rights abuses and noted that a lack of enforcement
majority of such cases are not prosecuted due to the
“will not create the necessary pressure”.
fact that access to corporate information is often
restricted and that, particularly at local level,
Global Witness press release
corruption prevents efficient investigations.
Global Witness report

Global Witness recommends that governments
require domiciled companies and financial institutions Webinar recording (requires password from Global …
30
FATF body mutual evaluation report on Chile

The Financial Action Task Force does not identify fraud derived illicit for the adoption of reforms that
(FATF) released on 13 September assets as posing a threat, although would ensure the prompt
the Financial Action Task Force of it addresses the risk in subsequent implementation of targeted
Latin America, GAFILAT, mutual material concerning typologies and financial sanctions.
evaluation report assessing red flags. The document states
Chile’s anti-money laundering and that the authorities must further GAFILAT reports that Chile’s
countering the financing of study terrorism financing risks. authorities have access to basic,
terrorism (AML/CFT) measures.
accurate, and updated information
The review concludes that Chile is Chile’s institutions have a good on legal persons, but there are
“compliant” with 12 FATF level of understanding of money shortcomings in relation to
Recommendations, “largely laundering risks, but there are beneficial ownership (BO) data.
compliant” with 18, and “partially discrepancies in the
compliant” with nine comprehension of terrorism FATF press release
Recommendations. financing threats. One priority
FATF report
action concerns strengthening the

The report notes that Chile’s 2017 understanding of terrorism
National Risk Assessment (NRA) financing risks, while another calls
FATF body issues follow-up report on Pakistan

The country has been re-rated on requirements to put in place AML
four Recommendations, all and CFT programmes, with
previously rated “partially the APG determining that Pakistan
compliant”. Recommendation 10, has met two out of the three
which addresses AML policies at criteria and mostly met the third.
the Central Directorate of National
Savings and Pakistan Post, has Recommendation 26 addresses
risk-based supervision and APG
The Asia/Pacific Group on Money been upgraded to “compliant”.
Amendments to the AML Act 2010 reports that five criteria have
Laundering (APG) published on 7
mostly been met. The final
September its third enhanced made in 2020 are considered to
have resulted in Pakistan meeting Recommendation upgraded to
follow-up report on Pakistan’s
“largely compliant” addresses
progress up to February 2021 in all criteria of the Recommendation.

AML/CFT regulatory feedback.
implementing the FATF's
Recommendations on anti-money Recommendations 18, 26, and 34

FATF notice
laundering and counter terrorist have been re-rated as “largely
financing (AML/CFT). compliant”. Recommendation 18
APG report
relates to financial institution
31
AUSTRAC publishes four money laundering and

terrorism financing risk assessments
The Australian Transaction profiles vary by AML/CFT Foreign subsidiary banks are
Reports and Analysis Centre programme maturity. The reports reported to have experienced fewer
(AUSTRAC) published on 6 state that most illicit activity within instances of ML compared to
September four banking sector the ML/TF category takes place at domestic banks but continue to
money laundering and terrorist the level of retail banking. face threats of fraud and scams,
financing (ML/TF) risk
with some inherent ML/TF risks
assessments, covering threats to Major banks have been identified related to cash use, remote delivery
four major banks, 12 other as having high exposure to multiple channels, and foreign jurisdiction
domestic banks, seven foreign types of ML due to large customer risk, as well as certain high-risk
subsidiary banks, and 48 foreign bases, many high-risk clients, high customers dropped by major
bank branches in Australia. The cash exposure, significant foreign banks. An additional risk facing
assessments find ML/TF risks are jurisdiction risk, and numerous foreign bank branches in Australia
medium for foreign subsidiary product offerings. Nevertheless, is corporate tax evasion, with
banks and foreign bank branches the four major Australian banks vulnerabilities from correspondent
and high for major and other reportedly interact with AUSTRAC banking, agent bank arrangements,
domestic banks. on a regular basis and have international trade, and certain
invested heavily in AML/CFT products or services that can

AUSTRAC notes that ML/TF risk efforts. Of the 12 remaining conceal beneficial ownership.

largely varies in proportion with domestic banks, AUSTRAC reports

financial institution size, customer that some of the smaller AUSTRAC press release
base, global exposure, and institutions lack sophisticated
products and services, while risk AML/CFT programmes.
Environmental Investigation Agency finds Italian

entities engaged in illegal Myanmar timber trade
The Environmental Investigation Myanmar timber-related due nearly €24 million worth of
Agency (EIA) published on 1 diligence checks cannot be fully products being imported in 2020,
September a report which claims compliant with the provisions of which accounted for 66 percent of
that 27 Italian timber traders have the EU Timber Regulation (EUTR). total Myanmar timber imports into
been importing teak from
the EU for the year.
Myanmar, despite EU sanctions on EIA found that Italy is the EU’s
the Myanmar Timber Enterprise largest importer of timber products EIA press release
and EU documents noting that from Myanmar since 2013, with
32
UN Secretary-General publishes report on

human trafficking off the Libyan coast
UN Secretary-General António refugees arriving in Europe from security forces have reportedly
Guterres issued a report on 2 the central Mediterranean route off started targeting the informal
September on the implementation the Libyan and Tunisian coasts, places of detention and
of UN Security Council resolution with at least 24,670 migrants and safehouses operated by traffickers
2240 (2015), which authorises refugees being returned to Libya and have made several arrests,
states and organisations to during the same period. including notorious trafficker Abd
inspect and seize vessels
al-Rahman Milad.
suspected of engaging in human Smugglers purportedly shifted their
smuggling and trafficking off the online activities to private access Guterres calls on all third parties
coast of Libya. platforms to hide their illegal not to assist in any return of
activities and engaged in human migrants and refugees to Libya

UNSCR 2546 (2020) is the latest rights violations at detention sites from areas beyond its territorial
renewal of the UN’s authorisation controlled by organised crime sea and urges the Libyan
to scrutinise vessels. The report groups. Significantly, when authorities to close detention
covers developments between returned to Libya, migrants and centres and decriminalise irregular
September 2020 and August 2021. refugees are reportedly often entry, stay, and exit from the
detained arbitrarily and may be country. Additionally, he urges

The Secretary-General notes while subject to abuses by guards, often Libyan authorities to prosecute
21 percent less migrants were with no judicial consequences. smugglers and traffickers.
reported arriving in Europe from
across the Mediterranean than in Along with EU and international UN Secretary-General report
the previous year, there was a 98 efforts to address human
percent increase in the number of trafficking and smuggling, Libyan
Aperio Analysis by Tom Ready
Since the toppling of former dictator Muammar Gaddafi in 2011, Libya has become a hub for African and
Middle Eastern migrants escaping war and poverty to seek a better life in Europe. The EU’s cooperation
with Libyan authorities to prevent migrants from crossing the Mediterranean has led to sharp criticism
from human rights groups, with growing evidence that returnees are held in squalid conditions in Libyan
prisons and forced to pay ransoms to armed groups to secure release. In early October, Libyan authorities
launched a heavy-handed crackdown ostensibly on illegal migration and drug trafficking in the town of
Gargaresh. The raids have drawn sharp international condemnation, including from the US and the UN, for
targeting unarmed migrants with excessive force. Meanwhile, Libya is expected to go to the polls to elect a
new president and parliament in the coming months, the culmination of a UN-backed peace process in
place since a landmark ceasefire between rival governments in 2020. However, rising tensions between
key political factions have placed the elections in jeopardy.
33
Egmont Group financial crime case studies

The Egmont Group of Financial terrorism, organised crime, and enforcement officers rescued her
Intelligence Units (FIUs) and the human trafficking. former personal assistant, Benhur
Technical Assistance and Training
K. Luy, whom the entrepreneur had
Working Group (TATWG) The Anti-Money Laundering illegally detained.

announced on 1 September the Council (AMLC), the Philippines’
publication of the Best Egmont FIU, submitted an investigation Israel’s submission relates to a
Case Award (BECA) book. The relating to the so-called ‘pork barrel’ cross-border case involving
publication contains 26 case scam, a case opened in 2013 in diamond traders, in which the
studies of financial analysis from which several members of the country’s FIU, the Israel Money
2014 to 2020 submitted by FIUs country’s congress stood accused Laundering and Terror Financing
around the world and covering of misusing the discretionary lump- Prohibition Authority, assisted law
bribery and corruption, sum Priority Development enforcement agencies in proving
cybercrime and cryptocurrency, Assistance Funds (PDAF), the laundering of $800 million.
drug trafficking, fraud and commonly known as ‘pork barrel’.
embezzlement, smuggling and The investigation led to Egmont Group press release
gambling, trade-based and third- businesswoman Janet Lim-
BECA book
party money laundering, and Napoles being designated as the
scheme’s mastermind, after law
AIBA-commissioned preliminary report identifies

corruption at Rio 2016 Olympics
“system for the manipulation of report states that then-president of
bouts”. Professor Richard AIBA Wu Ching-kuo “bears the
McLaren and his investigators ultimate responsibility” for
found that tampered scores improper application of the rules
resulted from corruption amongst and the conduct of others.
referees and judges (R&Js) and
The McLaren report found around
the draw commission.
11 “suspicious” bouts, highlighting
The first report published on 30
that there may be other

September and commissioned by According to the report, former
dubious results. The preliminary
the International Boxing AIBA executive director Karim
report will be followed by two
Association (AIBA) finds that the Bouzidi, alleged to have influenced
others in November and March.
men’s competition at the 2016 Rio results, selected R&Js such
Summer Olympic Games in Rio de that certain adjudicators would
McLaren report
Janeiro, Brazil was marred by a oversee certain matches. The
34
SPECIAL FEATURE
Dealings of leaders and super-rich exposed in

“biggest ever” leak dubbed the Pandora Papers
Tony Blair, Russian President Vladimir Putin, former

Azerbaijan president Ilham Aliyev, Ukraine President
Volodymyr Zelensky, Kenyan President Uhuru
Kenyatta, Czech Prime Minister Andrej Babis, and
Jordanian King Abdullah II.

Over 100 billionaires feature in the data which was

shared by the ICIJ, with media partners including the
Guardian, BBC Panorama, Le Monde and the
Washington Post. Over 600 journalists had access to
the files as part of a global investigation. According to
the ICIJ, the files break down to roughly 6.5 million
The International Consortium of Investigative
documents, 2.94 million images, 1.2 million emails,
Journalists (ICIJ) reported on 3 October it has
467,000 spreadsheets and 887,000 others.
uncovered offshore financial details of world
leaders, politicians, wealthy public figures and It is not known how the organisation acquired the
criminals in a data leak containing 11.9 million
leaks, but the ICIJ has revealed the 14 firms where the
confidential files dubbed the ‘Pandora Papers’. files originated. The largest leak of 3.375 million files
was from one of the world’s biggest offshore

The leak contains significantly more data than the providers, Trident Trust Company Limited in the BVI.
2016 Panama Papers. The files largely show the

creation of shell companies, foundations and trusts; Additional offshore firms include All About Offshore
the use of these entities to purchase real estate,
and Alpha Consulting Limited in the Seychelles;
yachts, jets and life insurance; investments; tax Overseas Management Company and Aleman,
avoidance; money laundering; and estate planning and
Cordero, Galindo & Lee in Panama; Asiaciti Trust Asia
inheritance matters. The files, most of which were limited and Il Shin in Hong Kong; CCS Trust
created between 1996 and 2020, originated at 14
Limited, CIL Trust International, Glenn D Godfrey and
offshore services firms according to the ICIJ. The files Company LLP in Belize; Commence Overseas Limited,
show the creation of offshore structures and trusts in
Fidelity Corporate Services Limited in the BVI;
tax havens such as Dubai, Monaco, Switzerland, the Demetrios A Demetriades LLC in Cyprus; and SFM
BVI, Panama and the Cayman Islands.
Corporate Services in Switzerland and Dubai.
The Pandora Papers expose as many as 300 public Individuals can use offshore companies in purchases
officials in more than 90 countries including 35 current for legitimate reasons of security or privacy, and doing
and former world leaders. The files show financial so does not necessarily imply illegality.

dealings of former United Kingdom prime minister
35
UK property bought with offshore structures of millions of dollars through PrivatBank’s Cyprus
branch, owns more than £400 million of UK property,
The Pandora Papers have brought to light previously
some of which was bought through offshore
hidden owners of over 1,500 UK properties bought
companies according to the documents. Lawyers for
using offshore firms, worth an estimated value of
Bogolyubov reportedly declined to comment due to
above £4 billion, according to the BBC. High profile
ongoing legal action.
politicians, individuals accused of corruption and UK

political donors are among the owners.

The wife of retail businessman Sir Philip Green was
found to have bought property worth millions in

Ukrainian President Volodymyr Zelensky “capitalised
London through BVI shell companies in 2016, as the
on widespread public anger at corruption” to win an
department chain store they had owned BHS was set
election in the Eastern European country in 2019,
to collapse. The purchases included a £15 million flat
according to the Organized Crime and Corruption
in Mayfair and a £10.6 million property bought for
Reporting Project. However, the Pandora Papers show their daughter near Buckingham Palace. The Greens
that his associates used offshore companies to hide
reportedly declined to comment, suggesting these
wealth, including expensive property in London.
were private matters.
Zelensky, a former actor, coordinated with partners in
television production company Kvartal 95 to establish The ICIJ reports that the trove of leaked documents
an offshore network “dating back to at least 2012”. also show Jordan’s long-ruling monarch, King
Abdullah II bin Al-Hussein, acquired 15 properties

According to the OCCRP, the documents “also show including in the UK and US valued above $106 million
that just before he was elected, he gifted his stake in a through front companies registered in tax havens like
key offshore company, the British Virgin Islands- the BVI. UK properties include homes in Ascot and
registered Maltex Multicapital Corp, to his business multi-million pound flats in central London. The King’s
partner — soon to be his top presidential aide. And in lawyers denied anything improper about
spite of giving up his shares, the documents show owning property through offshore companies. The
that an arrangement was soon made that would allow investigation revealed that Abdullah has owned
the offshore to keep paying dividends to a company more than 36 front companies in tax havens,
that now belongs to his wife”. according to the ICIJ. The UK is one of Jordan’s
biggest financial backers, increasing funding to £650

The documents reportedly show that part of million over five years in 2019. Al-Hussein’s lawyers
Zelensky’s network was managed with help from reportedly told the ICIJ that professionals manage his
Fidelity Corporate Services, and that the President companies to ensure legal compliance.
used companies based in the BVI, Belize and Cyprus.
Two of Zelensky’s associates in the network, who The ruling Qatari Al-Thani family were found to have
bought two of the UK’s most expensive properties in
were also part of his TV production company, include
Serhiy Shefir a top presidential aide and Ivan Bakanov London for over £120 million via offshore companies,
avoiding £18.5 million in stamp duty. There is no
the head of Ukraine’s Security Service. Zelensky
reportedly declined to comment. suggestion of illegality, according to the BBC.
Former UK prime minister Tony Blair avoided more

Ukrainian billionaire Gennadiy Bogolyubov, who
than £300,000 in stamp duty following the
according to the Financial Times was under
acquisition with his wife Cherie of a £6.45 million
investigation in 2019 by the US Federal Bureau of
London townhouse in Marylebone through an offshore
Investigation over allegations he laundered hundreds
company. Mrs Blair reportedly said the original sellers
36
insisted the building was sold this way, and that the involved in a $220 million payment to an offshore
Blairs would be liable to pay capital gains tax if they company in 2010. The company was owned by
sell it on. There is no stamp duty for buying a Gulnara Karimova - the daughter of the then president
company in the UK. The property in question was of Uzbekistan – and was described in court
owned by an offshore company. The Blairs set up a documents by US authorities as a "$220 million bribe".
UK company, which bought the offshore firm that
owned the house. They subsequently dissolved the According to US court documents, TeliaSonera sought
offshore firm and brought the property under UK new mobile operating licences for its business in
control, thus avoiding the tax. Uzbekistan. It gave shares in its Uzbek subsidiary to
Karimova – said to have “influence” with the Uzbek

Pakistan Prime Minister Imran Khan was another regulator – with her involvement hidden behind
prominent politician who rode to power promising an offshore company. TeliaSonera subsequently
anti-corruption measures but has been exposed by offered to buy back most of Karimova’s shares, with
the leak. The Pandora Papers show a key Khan ally Amersi agreeing to handle negotiations for
“tried to bypass tax authorities” while military elites TeliaSonera according to the BBC. Amersi’s lawyers
reportedly bought luxury apartments and established have said the offshore company was “vetted and
shell companies, according to the ICIJ. approved” by TeliaSonera.
World leaders and wealthy individuals exposed

While the documents contain no suggestion that Khan
himself owns offshore structures, his Finance
Kenyan President Uhuru Kenyatta and his family have
Minister, Shaukat Fayaz Ahmed Tarin, and his family,
“for years been secretly accumulating a
and the son of Khan’s former adviser for finance and
personal fortune behind offshore corporate veils”
revenue, Waqar Masood Khan were found in
while mounting a political comeback by campaigning
documents to have used them. The records also
against corruption, according to the ICIJ. Kenyatta,
reportedly show the dealings of a top PTI donor, Arif
along with his mother, sisters and brothers, is said
Naqvi, who is facing fraud charges in the United
to have shielded assets worth more than £30 million
States. Tarin reportedly did not respond to a request
through offshore companies registered anonymously
for comment. Khan reportedly told the ICIJ that he
in Panama and the BVI. According to the ICIJ,
does not know what his son’s company does and that
Kenyatta used a Swiss private bank called Union
his son is financially independent.
Bancaire Privee in conjunction with offshore tax haven
specialists to shelter his wealth in anonymous

Conservative party donor under scrutiny
structures. Swiss advisers reportedly referred to the
Kenyattas with the code “client 13173”. Panama

The Pandora Papers have uncovered how the British
foundations can be designed to allow families to
corporate lawyer Mohammed Amersi, who has given
transfer generational wealth tax free, and are not
hundreds of thousands of pounds to the Conservative
required to register the true beneficial owners. It has
party since 2018, worked on a series of deals for
been reported that the Kenyattas did not respond to a
Swedish telecommunications company Telia, which
request for comment.
was later fined £700 million as part of a settlement in
a US Foreign Corrupt Practices Act prosecution. Pandora Papers files also reveal that Czech Republic
Prime Minister Andrej Babis moved $22 million

Amersi reportedly worked between 2007 and 2013 as through offshore companies to buy a “lavish estate”
a consultant for Telia, then known as TeliaSonera. on the French Riviera in 2009 while keeping his
According to the ICIJ, documents show Amersi was ownership secret, according to the ICIJ.
37
The property is five bedroom 9.4 acre Chateau Bigaud, Nine months following the end of the Olympics, Ernst
“nestled between medieval ruins and lush forests” in became a “secret partner” in a deal to buy 39 aging but
Mougins. Neither the shell company Babis bought the valuable Soviet-era cinemas and surrounding property
property through, or the chateau itself, feature on from the city of Moscow, the ICIJ claims. The deal
Babis’ asset declarations, according to the ICIJ. The was reportedly financed by state-owned VTB Bank.
property reportedly boasts a private cinema, The ICIJ adds that the files show Ernst was the
swimming pool, billiard room and wine cellar, and a beneficiary of a $16.2 million loan backed by a Cyprus
master bedroom with two en suite bathrooms. bank partly owned by VTB to fund his stake in the

deal. The files reportedly show the bank instructed

Documents show that in 2009 Babis, who had not yet offshore lawyers to keep Ernst’s name from being
entered politics, transferred €15 million via a connected to the loan. Ernst has denied that his
succession of loans through three offshore involvement in the deal was connected to the
companies: from BVI-based Blakey Finance Limited Olympics, and refused to respond to the ICIJ on
through Boyne Holding LLC in Washington DC to its grounds that it is “not an independent investigation
subsidiary SCP Bigaud in Monaco. According to the company but an organisation commissioned by the
ICIJ he had used the Panamanian law firm Alcogal to US secret services”.
create the three companies in the same year.
Documents support hunt for Cambodian artefacts
Babis, who denies wrongdoing, has already been

The Pandora Papers has not only exposed real estate
facing investigations over alleged conflicts of interest
dealings and hidden wealth. Previously undisclosed
and improper receipt of EU subsidies by an
records describe offshore companies and trusts
agricultural business he founded named Agrofert. At
that the late British collector of Khmer artefacts
the time of writing on 11 October, partial results
Douglas Latchford and his family controlled.
suggest Babis and his ruling ANO Party are set to lose
Latchford, who was indicted by the US authorities in
power in the country following a close run general
2019 on charges of smuggling and forging
election, which saw the Pandora Papers dominate the
documents before he died in 2020, used the
conversation in the lead up to the vote.
structures to “avoid them becoming liable to UK
inheritance tax” when he passed the artefacts on to

Prominent figures close to Russian President Vladimir
his daughter, according to the Guardian.
Putin also feature in the leaks. The ICIJ’s analysis

finds that Russian nationals were behind around 14

Latchford’s Skanda Trust was set up in 2011 and the
percent of the more than 27,000 companies whose
Siva Trust in 2012 in Jersey, months after US
ownership details were contained in the files, with at
investigators tied Latchford to looted Cambodian
least 46 oligarchs using offshore companies.
antiquities, according to the ICIJ. Latchford’s daughter
Julia has said she is not personally subject to

One such individual is television producer Konstantin
any investigation and is voluntarily cooperating with
Ernst, head of Russia’s network Channel One, who
authorities on investigations with respect to her
produced the opening and closing ceremonies of the
late father’s estate.
Sochi 2014 Winter Olympics. According to the ICIJ,
despite Ernst’s claim not to have been paid for the Reactions so far
work, on the day of the Opening Ceremony a BVI
company was incorporated that would “pave the way Following the leak US State Department spokesman
for Ernst’s secret 23% stake in a state-funded Ned Price announced on 4 October that US authorities
privatisation deal worth a billion dollars”.
38
are reviewing the Pandora Papers but are “not in a South Dakota found to be the most popular location,
position to comment specifically on the with 81 trusts. Florida, Delaware, Texas and Nevada
findings”. Responding to a question about the also feature prominently.
allegations against the King of Jordan, Price stated
that assistance to Amman was "in the direct national Officials in India, Pakistan, Mexico, Spain, Brazil, Sri
security interests of the United States” and that “we Lanka, Australia and Panama have reportedly
carefully conduct monitoring and evaluation of all of promised inquiries into the use of offshore structures,
our programs to ensure they are implemented while authorities in the Czech Republic tweeted on 4
according to their intended purpose”. October that they will investigate those named in the
Pandora Papers.
Members of Congress announced on 6 October the
introduction of the bipartisan Establishing New

Meeting in Luxembourg on 5 October, European Union
Authorities for Business Laundering and Enabling
finance ministers removed Anguilla, Dominica and the
Risks to Security (ENABLERS) Act - a bill that “closes
Seychelles from the bloc’s list of tax havens. The list
loopholes that kleptocrats from around the world use
was created to suppress tax avoidance and evasion,
to launder money in the United States”. A joint
and now contains nine “non-cooperative” jurisdictions:
statement from Representatives Tom Malinowski (D-
American Samoa, Fiji, Guam, Palau, Panama, Samoa,
NJ), Maria Elvira Salazar (R-FL), Steve Cohen (D-TN),
Trinidad and Tobago, US Virgin Islands, and Vanuatu.
and Joe Wilson (R-SC) highlights that “dictators,

criminals, and terrorists continue to make the United

Transparency International states that the Pandora
States a destination of choice for hiding illicitly
Papers “bring home the need to rein in the lawless
acquired wealth”. The Act would “impose stronger due
offshore industry […] governments that have been
diligence requirements” on US-based middlemen.
holding up meaningful reforms towards ending the
abuse of corporate secrecy should find themselves

The Guardian reports that the Pandora Papers show
out of excuses”. The group calls for AML obligations
how US state South Dakota is sheltering billions of
to be extended to private sector intermediaries such
dollars in wealth, some linked to individuals and
as corporate service providers, and for more
companies accused of financial crime. More than 200
resources to be given to supervisory authorities.
US trusts appear in the Pandora Papers data, with
Aperio Analysis by Adrian Ford
In what is becoming a regular feature (the twelfth such leak

since Offshore Leaks in 2013), the start of
October saw the release of information on yet
another massive data breach from 14 firms servicing the
offshore finance
industry, known as the Pandora Papers. Based on information published to
date, the
Pandora Papers principally relate to the United States, Pakistan,
Mexico and the United Kingdom. Two of
those jurisdictions, the US and the
UK, also featured prominently in the Panama Papers leak in 2016. As
the world’s
leading financial centres, the fact they feature prominently is indicative of
the entrenched and
enormous industry which exists to service the investment
needs of the super-wealthy, but which – through
a lack of sufficient scrutiny
and transparency – provides ample opportunities for corruption, money
laundering, tax evasion and other forms of financial and socially-damaging
crimes to persist. At a time
when the world is struggling to cope with
the impact of the Covid-19 pandemic, governments are forced to
take unprecedented
financial measures, and disparities between rich and poor have grown to record
levels,
39
it is hardly a surprise that Prime Minister Imran Khan responded to the

latest allegations vowing to
investigate every one of the Pakistani nationals
named in the Pandora Papers, and likening “this grave
injustice as similar to
the climate change crisis” (noting, however, that a number of individuals
mentioned
so far in relation to the Pandora Papers appear to be close
acquaintances of Prime Minister Khan).

Much of the anger or surprise in previous data leaks, such
as the Panama Papers (2016) and the Paradise
Papers (2017) was directed against
British overseas territories for their role in enabling billionaires, political
leaders and celebrities to avoid tax, conceal assets and in some cases, perpetrate
fraudulent or corrupt
schemes. Trident Trust in the British Virgin
Islands, one of the firms that features prominently in the
Pandora Papers, was
a recipient of many client accounts previously held by Mossack Fonseca, the
Panamanian law firm at the centre of the Panama Papers scandal. The
Pandora Papers also sheds more
light on the role of US onshore secrecy
jurisdictions, particularly Delaware, Nevada and South Dakota. In
2020,
the UK-based Tax Justice Network’s biennial Financial Secrecy Index showed the
US was the world’s
second-largest tax haven, after the Cayman Islands. Writing
in Foreign Affairs magazine in 2020 before his
election as President,
Joseph Biden vowed to “bring transparency to the global financial system, go
after
illicit tax havens, seize stolen assets, and make it more difficult for
leaders who steal from their people to
hide behind anonymous front
companies”. Inevitably, the data leaks prior to the Pandora Papers had
already created strong impetus for change but this has run into strong vested
interests. In the face of this
resistance, proposals such as
publicly accessible corporate registers in British overseas territories, which
would serve as a genuinely useful measure against financial crime, have been
pared back, allowing only
restricted access to certain government
agencies. Yet it is the media, and the private sector in general, that
is
often better placed to expose wrongdoing and raise it to the attention of
politicians.

Whilst, to fulfil the public interest test, the ICIJ will
continue to focus on certain individuals named in the
Pandora Papers, such as
politicians or billionaires, the network also notes that the latest papers
reveal
activities in secrecy locations involving successful business owners,
religious leaders and professionals
such as doctors. Without access to
the underlying data, which the ICIJ does not publish, it is not possible
to
know who was involved in this way, or for what reasons. Nevertheless, as
the ICIJ acknowledges, such
activity is likely to be significant on a global
scale, potentially denying governments access to tax revenues
which imposes
greater hardship on those unable or unwilling to structure their affairs this
way. Moreover,
the ICIJ states that the Pandora Papers reveal that a
number of the firms involved had only basic filing
systems, some of which were
not digitised, and in some cases there was no discernible process at all for
organising the records. In light of this, perhaps it is no surprise these
firms suffered such massive data
breaches. It also raises the question
whether other offshore services firms have similarly questionable
controls to
prevent further data loss (11 leaks since 2013 suggests a systemic and ongoing
issue in the
sector). The ICIJ also notes that some of the services firms
claimed to employ rigorous KYC/EDD
procedures, yet this appears highly
questionable in light of revelations about the activities of beneficial
owners. In a well regulated environment, the appearance of politicians,
politically connected individuals,
individuals from countries with elevated
financial crime risks, or even those with no obvious justifiable
reason to hold
relationships in the jurisdiction would raise red flags and require
exhaustive EDD procedures
including a full understanding of the source of
wealth/source of funds. Despite years of international
pressure, this
approach still appears to be substantively lacking at some offshore services
firms willing to
lend their name or the credibility of their home jurisdiction
in return for fees and few questions.
40
LEGISLATION
OFAC designates first virtual currency exchange

and issues updated ransomware advisory
ransomware and other illicit funds presence in Czech Republic, but

are believed to have been sent to operates as a nested service at
SUEX since 2018. OFAC has also major exchanges, and is known by
added to its SDN list numerous Chainalysis to operate in Russia
digital currency addresses that are and the Middle East.
affiliated with SUEX.
The US Treasury Department’s

OFAC concurrently issued an
Office of Foreign Assets Control Chainalysis hosted a webinar on 22 updated advisory on the potential
(OFAC) designated virtual September on the enforcement sanctions risks for facilitating
currency exchange SUEX OTC action, which featured Treasury ransomware payments. The
S.R.O. on 21 September pursuant officials. According to the joint advisory encourages stakeholders
to Executive Order 13694 for its OFAC presentation, 82 percent of to contact OFAC about suspected
alleged role in facilitating all ransomware funds in 2020 were sanctions nexus, such as links to
financial transactions for at least sent to only five exchanges, while sanctioned jurisdictions or
eight variants of ransomware. 199 deposit addresses received 80 addresses on the SDN list.
OFAC’s first action against a percent of ransomware funds and
virtual currency exchange. 46 percent of such funds could be Treasury press release
linked to only 25 addresses.

Treasury asserts that 40 percent of OFAC advisory

SUEX transactions are illicit or SUEX, a Czech-based OTC broker,

Chainalysis analysis and webin…
associated with illicit actors. does not have a known physical
Furthermore, $160 million in
Aperio Analysis by George Voloshin
OFAC's move against SUEX,

while being the first such action against a cryptocurrency exchange,
underscores
the continued focus on fighting cybercrime and associated money
laundering which increasingly leverage the
advantages of crypto-assets for
placing, layering and subsequently legitimising (via the usual stage of
integration) proceeds of crime. Earlier in the year, several US companies
became high-profile victims of
ransomware attacks, including a refinery whose
disruption by hackers using Bitcoin for extortion purposes
caused a spike in
domestic gasoline prices and a temporary halt to exports. The SUEX case also
highlights the
danger embedded in unregulated, low-profile, middleman-type
crypto exchanges that have relationships with
bigger players in their industry
whose infrastructure they (still) frequently manage to misuse in order to help
international criminals launder their ill-gotten gains.
41
EU Council adopts position on the proposed

public country-by-country reporting directive
The Council of the European Union adopted on 28 According to the Council, the reporting will be required
September its position at first reading on the within 12 months of the balance sheet date for the
proposed public country-by-country reporting relevant financial year. The directive sets out the
(CbCR) directive on the disclosure of income tax conditions under which a company may defer the
information by certain undertakings and branches. disclosure of certain information for a maximum of
five years, provided they disclose the existence of the

The adoption of the Council’s decision follows a deferral, provide a reasoned explanation for it in the
provisional agreement reached with the European report and document the reasoning. Exceptional
Parliament on 1 June after informal negotiations situations would cover instances where certain
between representatives of the Parliament, the commercially sensitive information is disclosed.
Council, and the European Commission and a
statement issued by a number of member states in Furthermore, the CbCR stipulates who is responsible
the Council on 20 September. for ensuring compliance with the reporting obligation,
namely the members of the administrative,

The states, including Croatia, the Czech Republic, management and supervisory bodies of the ultimate
Hungary, Ireland, Luxembourg, Malta and Sweden parent undertaking or standalone undertaking which
criticised the legal basis used for adoption of the is established within the EU, and which has the
proposed CbCR, urging that the adoption of the obligation to draw up, publish and make accessible
directive should require unanimity. For the adoption of the report on income tax information.

the Council’s position, Sweden and Cyprus reportedly
voted against, whilst the Czech Republic, Ireland, The next step before the directive can enter into force
Luxembourg and Malta abstained. is formal approval by the European Parliament of the
June provisional agreement, which is expected to be

As per the Council’s position, the directive is aimed at scheduled for one of the Parliament’s two plenary
enhancing the corporate transparency of large sessions in November. The directive will enter into
multinational companies. The directive intends to force on the 20th day following its publication in the
introduce the requirement on certain multinational Official Journal of the European Union, and member
undertakings with annual global consolidated revenue states will have 18 months from entry into force to
exceeding €750 million to publicly disclose in a transpose it into national law.
specific report and on a country-by-country basis,
corporate income tax information with respect to their EU Council press release
operations in each member state, as well as
EU Council position at first reading
information for certain third countries on the EU list of
non-cooperative jurisdictions and on the EU ‘grey list’
Proposal for a directive
for two consecutive years.
42
EU Export Control Regulation enters into force
Arrangement and allows the EU to Northern Ireland will need to

coordinate expertise in order to comply with the EU regulation.
tackle challenges related to
emerging dual-use technologies On 15 September, the Commission

and cyber surveillance, in respect issued Recommendation (EU)
to which due diligence guidelines 2021/1700 on internal compliance
are currently in preparation. programmes for controls relating
The European Parliament’s (EP) Furthermore, it increases the level to research involving dual-use
Regulation (EU) 2021/821 setting of consultations and reporting items under the regulation.
up an EU regime for the control of between member states and the Specifically, the document
exports, brokering, technical European Commission, recommends member states and
assistance, transit and transfer of contributing to the development of exporters, including research
dual-use items entered into force a new EU electronic licensing organisations and researchers,
on 9 September. The regulation platform which is being piloted in take account of the non-binding
aims to enhance the EU’s capacity Latvia, Italy, Romania and Greece. guidance on the new regulation. In
to tackle emerging security risks
addition, it outlines the basic dual-
and technologies, to protect The European Commission’s press use export control regime and
human rights and support secure release highlights its plan to hold controls on software, technology
supply chains for strategic items. the annual Export Control Forum and certain specific activities,
on 8 December 2021, as an identifies research areas that could

The European Commission important step in the process of involve dual-use export controls,
submitted to the EP and the EU developing "partnership with the and clarifies who is considered "the
Council on 20 September 2016 a private sector" to support exporter" for research.
proposal for the recast of the compliance and implementation of
Council Regulation (EC) No the EU's export controls. Export Control Regulation – Re…
428/2009 of 5 May 2009 (Dual-Use
European Commission press re…

Regulation), with the purpose of According to a notice to exporters
modernising the EU export control published by the UK Department
Memorandum
framework. Following negotiations, for International Trade (DIT) on 14
in November 2020, the institutions September, the Protocol on Dual-use trade controls guidan…
reached a full provisional Ireland/Northern Ireland provides

that the new EU regulation is EU electronic licensing platform
agreement on the final text.
directly applicable in Northern

2021 Export Control Forum
Adopted on 20 May 2021, the Ireland. Therefore, any applications
regulation builds on the existing for the export of dual-use items
UK notice to exporters (14 Sep…
multilateral framework of export submitted to the Export Control
control – the Wassenaar Joint Unit from 9 September from Commission Recommendation…
43
US designates Hezbollah and IRGC-QF financial

facilitators and front companies
The US Department of the Ismai’l orchestrated the transfer of in the UAE through the Dubai-
Treasury’s Office of Foreign millions of dollars to Hezbollah based company Hemera
Assets Control (OFAC) designated from Kuwait through similarly Infotech FZCO, which is
on 17 September several listed Jamal Husayn ‘Abd ‘Ali ‘Abd- concurrently sanctioned
individuals, including members of al-Rahim al-Shatti.
a Lebanon-Kuwait network of
China-based businessman
financial facilitators and front Furthermore, OFAC is also Morteza Minaye Hashemi for
using his access to the
companies, alleged to have designating Ali Qasir for
laundered tens of millions of purportedly commanding a international financial system to
dollars to support Hezbollah and network of 20 individuals and front launder “vast sums of money”
Iran’s Islamic Revolutionary Guard companies located in various for the IRGC-QF, as well as Yan
Su Xuan and Song Jing who, at
Corps-Qods Force (IRGC-QF). The jurisdictions, which control the
action is taken pursuant to movement and sale of tens of the direction of Hashemi, have
Executive Order (EO) 13224, millions of dollars’ worth of gold, helped him establish bank
under which Hezbollah was electronics, and foreign currency to accounts and serve as straw
owners for his companies
designated on 31 October 2001, finance the activities of Hezbollah
and IRGC-QF in 2007. and IRGC-QF. Qasir is also believed
Five companies owned or
to be managing Hezbollah’s bank

controlled by Hashemi: PCA
In a concurrent statement, US accounts and financial
Xiang Gang Limited, Damineh
Secretary of State Antony Blinken transactions in Iran.
Optic Limited, China 49 Group
calls on governments to ensure
Co Limited, Taiwan Be Charm
that they prevent the exploitation of Other designated members Trading Co Limited, and Black
their territory and financial of Qasir’s network include Drop Intl Co Limited
institutions by Hezbollah and other
terrorist organisations. Omid Yazdanparast, Two companies owned or
controlled by Song Jing:

Mohammad Ali Damirchilu, and
The sanctions target Hasib Victory Somo Group (HK)

Samaneh Damirchilu, for
Muhammad Hadwan, otherwise facilitating gold and currency Limited and Yummy Be Charm
knows as Hajj Zayn, who is smuggling from Iran to Turkey Trading (HK) Limited
purported to be a senior official in
via commercial flights operated
Hezbollah’s General Secretariat, as
by designated airline Mahan Air OFAC press release
well as his office manager, Ali al-
Sha’ir, who, according to OFAC, has Mohammad Reza Kazemi, who OFAC identifying information
been accepting financial is believed to control the gold
contributions on behalf of the sales in Turkey Department of State press rele…
organisation since 2000.

Additionally, it is believed that now Mostafa Puriya and Hossein Updated SDN list
designated Talib Husayn ‘Ali Jarak Asadollah for selling electronics
44
US issues new Executive Order to establish

sanctions regime in response to Ethiopia crisis
Africa”. The measures also reportedly follows the UN

Secretary-General's statement on 26 August urging
the 10-month confrontation in the northern region of
Tigray to cease and calling on all parties to recognise
that “there is no military solution” to the crisis.

According to the White House factsheet

accompanying the new EO, the parties to the conflict,
including the Ethiopian National Defense Forces
(ENDF), Eritrean Defense Forces (EDF), TPLF, and
Amhara regional forces, are reported to have
perpetrated “brutal acts of murder, rape, and other
sexual violence against civilian populations”.

The new EO provides for the imposition of menu-

US President Joseph Biden signed on 17 September
based sanctions against foreign persons deemed by
a new Executive Order (EO) establishing a sanctions
the Secretary of the Treasury in consultation with the
regime which grants the US the authority to
Secretary of State as being responsible for or
designate individuals and entities in the Ethiopian
complicit in actions contributing to the ongoing crisis
government, Eritrean government, the Tigray
in northern Ethiopia. Specifically, the EO authorises
People’s Liberation Front (TPLF), and the Amhara
OFAC to sanction persons determined to be: (1)
regional government involved in perpetuating the
responsible for or engaged in actions adverse to
conflict in the region, obstructing humanitarian
democracy, peace and security, in corruption and
access, and preventing a ceasefire.
human rights violations, obstruction of humanitarian
relief, the violent targeting of civilians and attacks in

The confrontation involving Ethiopian and Eritrean
northern Ethiopia; (2) a military or security force
parties started in November 2020 with Ethiopian
operating in northern Ethiopia; or (3) a political agent
Prime Minister Abiy Ahmed Ali ordering a military
of the parties to the conflict.
incursion into the Tigray province bordering Eritrea

after accusing TPLF-related forces of attacking a

The issuance of the EO is not accompanied by
federal military base in the region.
targeted sanctions, however, US Secretary of State
Antony Blinken concurrently warned that “absent clear

The US action follows Biden’s 10 September
and concrete progress toward a negotiated ceasefire
statement on the celebration of Enkutatash, wherein
and an end to abuses – as well as unhindered
he expressed “deep concern” over the reports of
humanitarian access to those Ethiopians who are
violence against civilian populations in Ethiopia,
suffering – the United States will designate
emphasising that the administration is “engaging in
imminently specific leaders, organizations, and
robust diplomacy with […] partners throughout the
entities under this new sanctions regime”.
region to peacefully resolve conflicts in the Horn of
45
On 23 August 2021, the Chief of Staff of the Eritrean GL 2 enables transactions and activities that are
Defence Forces (EDF), General Filipos ordinarily incident and necessary to certain
Woldeyohannes, was sanctioned by the US for enumerated activities by NGOs which FAQ 926
allegedly being involved in the conflict and engaging in details, including humanitarian projects,
serious human rights abuses, and on 23 May 2021 democracy building initiatives, education
Blinken announced the introduction of a visa programmes, non-commercial development
restriction policy on those responsible for the crisis. projects, and environmental or natural resource

protection programmes
In furtherance of the new EO, the US Department of
the Treasury’s Office of Foreign Assets Control (OFAC) GL 3 allows transactions and activities ordinarily
published several general licences (GL) and six incident and necessary to the exportation or re-
exportation of “covered items” in the category of
frequently asked questions (FAQs) clarifying that,
agricultural commodities, medicine, medical
unlike most US sanctions programmes, the new EO
stipulates that OFAC’s ‘50 percent rule’ does not devices, replacement parts and components for
automatically apply to any entity “owned in whole or in medical devices, and software updates for medical
devices to Ethiopia or Eritrea, or to persons in third
part, directly or indirectly, by one or more sanctioned
countries purchasing for the purpose of resale to
persons, unless the entity is itself a sanctioned
person”. FAQs 923 and 924 highlight that such Ethiopia or Eritrea. GL 3 also highlights that
restrictions do not automatically “flow down” to licensing requirements of the US Department of

Commerce’s Bureau of Industry and Security (BIS)
entities owned in whole or in part by sanctioned
are still applicable
persons unless said entities are separately listed on
OFAC’s specially designated nationals (SDN) list or
non-SDN menu-based sanctions (NS-MBS) list. White House briefing
On the same day, Ethiopian Prime Minister Abiy White House presidential letter
published an open letter addressed to Biden, wherein

White House factsheet
he accuses the US and international community of
overlooking abuses by the TPLF, which he describes President Biden statement
as a “terrorist organisation” and calls the action
“unwarranted pressure” based on “double standards”. Department of State press release
OFAC press release

OFAC GL 1, 2, and 3 provide the following
OFAC notice
GL 1 authorises all transactions and activities for
the conduct of official business of certain specified Ethiopian PM Abiy Ahmed Ali open letter to US Presi…
international bodies and NGOs, for which FAQ 925
clarifies that it also covers the UN programmes, President Biden statement (10 September 2021)
funds, and other entities and bodies, as well as

US visa restrictions on Eritrea and Ethiopia officials (…
specialised agencies and related organisations
46
OFAC and Qatar coordinate sanctions against

Hezbollah financial network
The US Department of the formal financial system and cash Saudi Arabia-based Abd-al-Muhsin
Treasury’s Office of Foreign couriers and regularly met with managed al-Banais’s real estate
Assets Control (OFAC) announced Hezbollah officials during trips to throughout the Gulf, including
on 29 September that in Lebanon and Iran. Ali al-Banai Bahrain, Saudi Arabia and the UAE.
coordination with the government allegedly contributed funds to
of Qatar it has designated a major Hezbollah via a Kuwait-based Sulaiman al-Banai was “a primary
Hezbollah financial network branch of the US designated manager of Ali al-Banai’s business
based in the Arabian Peninsula. Martyrs foundation, which was and financial activity in Qatar and
designated in 2007. Ali al-Banai abroad”, OFAC states. Qatar-based

OFAC announced it has designated and his brother Abd al-Muayyid AlDar Properties has also been
Ali Reda Hassan al-Banai (Ali al- transferred funds to Hezbollah as designated for being controlled by
Banai), Ali Reda al-Qassabi Lari (Ali recently as late 2020, OFAC states. Sulaiman al-Banai, OFAC states,
Lari), and Abd al-Muayyid al-Banai
adding that it is not connected with
(Abd al-Muayyid) as specially The agency has also designated the real estate company Aldar
designated global terrorists Abd al-Rahman Abd al-Nabi Properties PJSC in the UAE.

(SDGTs) pursuant to Executive Shams, Yahya Muhammad al-Abd-

Order 13224, for providing financial al-Muhsin, Majdi Fa’iz al-Ustadz, US Treasury press release
support to Hezbollah. and Sulaiman al-Banai as specially
Updated SDN list
designated global terrorists for

Ali al-Banai and Lari are alleged to providing support to al-Banai. The
have secretly sent tens of millions government of Bahrain has frozen
of dollars to Hezbollah through the the bank accounts of Shams.
Aperio Analysis by Larissa Normanton
This move weighs into the delicate balancing act of US

relationships with key powers in the Gulf region,
many of whom have complex
relationships with Qatar. The US have had a key military airbase in Qatar
since 2002,
however, relations between the two countries deteriorated under president Trump who
ostensibly gave the green light for the 2017 GCC embargo of
Qatar by neighbouring countries. Relations
appear to be strengthening under
President Biden, particularly following Qatar’s key role in the evacuation
of those fleeing Taliban rule in Afghanistan in August. For Qatar, balancing relations with both the US and
Hezbollah-aligned Iran will be a challenge. Hezbollah is a major political,
social as well as military Lebanese
actor, ideologically linked to Iran. Qatar has closer ties with Iran compared to its Sunni neighbours,
including Saudi
Arabia and the UAE, which were augmented by their three and a half year
diplomatic and
economic embargo of Qatar that ostensibly ended in January this
year. It will be interesting to see whether
the recent sanctions have an impact
on the relationship between Iran and Qatar and whether this move
signals Qatar
increasing its ties with the US at the expense of those with Iran.
47
OFAC designates entities linked to Sinaloa cartel
The US Department of the Treasury’s Office of The seven other individuals are being designated for
Foreign Assets Control (OFAC) designated on 22 providing material support to Valenzuela Valenzuela.
September eight Mexican nationals and two entities They include Valenzuela Valenzuela associate
pursuant to the Foreign Narcotics Kingpin Leonardo Pineda Armenta, who directs operations for
Designation Act, including Sinaloa Cartel plaza boss him, and six “cartel lieutenants” who ultimately report
Sergio Valenzuela Valenzuela. to Valenzuela Valenzuela.

OFAC states that Valenzuela Valenzuela “oversees a The full list of those designated: Luis Alberto Carrillo
major drug trafficking corridor in Mexico [and] is Jiminez; Jaime Humberto Onzalez Higuear; Miguel
responsible for smuggling tons of fentanyl and other Raymundo Marrufo Cabrera; Gilberto Martinez
drugs into the United States”. The US agency claims Renteria; Leonardo Pineda Armenta; Meliton Rochin
that Valenzuela Valenzuela “leads a poly-drug Hurtado; Jorge Damian Roman Figueroa; Sergio
smuggling organization responsible for the Valenzuela Valenzuela; Acuaindustria Narciso
transportation and importation of multi-ton quantities Mendoza; and Club Indios Rojos de Juarez.

of illicit drugs, including methamphetamine, heroin,

and fentanyl, from Mexico to the United States”. OFAC press release
Updated SDN list

Valenzuela Valenzuela is currently a fugitive following
a federal drug trafficking indictment which was
OFAC cartel chart
returned against him in the US District Court for the
Southern District of California in September 2018 and DOJ press release
unsealed on 22 September 2021.
US government extends national emergency

with respect to terrorist attacks
US President Joseph Biden signed on 9 September September 2001 and with respect to the immediate
the continuation for one year of the national threat of further attacks on the United States.

emergency with respect to certain terrorist attacks.

The presidential document was published in the White House notice
Federal Register on the same day.
White House letter
The national emergency in the US was initially

Federal Register entry
declared pursuant to Proclamation 7463 of 14
September 2001 following the terrorist attacks on 11
48
US lists Al-Qaida supporters operating in Turkey
The US Department of the All individuals have purportedly now-deceased leader Abdullah
Treasury’s Office of Foreign materially assisted, sponsored, or Muhammad Rajab Abd al-Rahman.
Assets Control (OFAC) added on provided support for, or goods or Meanwhile, Guzel is believed to
16 September five individuals to services in support of, Al-Qaida. have provided support to Muslihan
its specially designated nationals
in establishing contact with Abd al-
(SDN) list pursuant to Executive Salim is the former Emir of the Rahman in Syria, whilst Gurleyen is
Order (EO) 13224, for allegedly Egyptian Islamic Jihad and is alleged to have provided travel
providing financial support and purportedly one of the primary assistance to an Al-Qaida member.
facilitating travel to Al-Qaida. facilitators of a range of Al-Qaida
activities in Turkey. Al-Ghazlani is OFAC press release

According to OFAC, the designated an alleged financial courier for the
OFAC notice
individuals operating in Turkey are terrorist network, with Muslihan
Majdi Salim, Muhammad Nasr al- purportedly having been involved in
US State Department press rel…
Din al-Ghazlani, Nurettin Muslihan, maintaining contact with Al-Qaida
Cebrail Guzel, and Soner Gurleyen. senior leadership, including the
OFAC designates four Iranian intelligence agents

The US Treasury’s Office of pay a private investigator to surveil bank and wire fraud. Although the
Foreign Assets Control (OFAC) an Iranian-American activist in New four remain at large, the
designated on 3 September four York City, while the four purportedly Department of Justice did charge
Iranian intelligence agents of the plotted to abduct the activist via Niloufar Bahadorifar, who was
Iranian Ministry of Intelligence speedboat to Venezuela. arrested on 1 July, with providing
and Security accused of plotting
financial services to the plotters
to kidnap a US journalist and In a State Department press and conspiracy to violate sanctions
target Iranian dissidents abroad release, Secretary of State Antony against Iran, money laundering,
as part of a government campaign Blinken asserts that the US will not bank and wire fraud, and structure
to repress government critics. tolerate Iranian efforts to suppress cash deposits of nearly $500,000.
free expression on US soil, and

The four Iranians are designated notes that the government is US Treasury press release
pursuant to Executive Order 13553 aware of continued Iranian interest
Updated SDN list
and are reportedly led by senior in US targets.
Iranian intelligence official Alireza
State Department press release

Shahvaroghi. The remaining three All four have also been indicted in
operatives are Mahmoud Khazein, the US District Court for the DOJ press release
Kiya Sadeghi, and Omid Noori. The Southern District of New York for
four allegedly laundered Iranian kidnapping conspiracy, violating
funds to the US that were used to sanctions, money laundering, and
49
US State Department designates five Salvadoran

judges and two Guatemalan officials
The US Department of State accepting illegal appointments and lawmakers accused Bukele of
announced on 20 September the issuing a 3 September decision staging an attempted coup d’état
designation of five Salvadoran stating that the court cannot by bringing armed troops into the
judges and Guatemala Attorney interpret that Article 88 of the Legislative Assembly.
General Maria Consuelo Porras Constitution precludes the
Argueta De Porres, along with her consecutive re-election of the Concerning Guatemala, De Porres
Secretary General, adding them to president. This decision allegedly obstructed corruption
the Undemocratic and Corrupt purportedly offers current investigations by ordering
Actors list, pursuant to Section President Nayib Bukele the prosecutors to ignore cases based
353 of the Consolidated possibility to seek another term in on political considerations and
Appropriations Act. The 2024. On 5 September, the US firing the Special Prosecutor
individuals are being designated Department of State condemned Against Impunity’s chief, Juan
for their alleged involvement in the decision, recalling that on 31 Francisco Sandoval. Additionally,
actions undermining democracy August, the Salvadoran Legislative the current Attorney General’s
and the rule of law. Assembly also amended the Secretary General, Angel Arnoldo
judicial careers law to mandate Pineda Avila, has purportedly

Those designated are: Elsy Dueñas justices’ early retirement. interfered in corruption
De Aviles, Oscar Alberto López
investigations and disclosed
Jerez, Hector Nahun Martinez In May, the newly elected National information to targets.
Garcia, Jose Angel Perez Chacon, Assembly controlled by President
and Luis Javier Suárez Magaña, Bukele’s party reportedly illicitly US State Department press rel…
currently judges of the dismissed El Salvador’s attorney
US State Department press rel…
Constitutional Chamber of the general and five judges from the
Supreme Court in El Salvador, for Supreme Court. In February 2020,
US extends national emergency with respect to

persons who commit or support terrorism
US President Joseph Biden The national emergency was first White House notice
signed on 15 September the declared pursuant to Executive
continuation for one year of the Order 13224 of 23 September White House letter
national emergency with respect 2001, following the 9/11 terrorist
to persons who commit, threaten attacks and with respect to the Federal Register entry (17 Sept…
to commit terrorist attacks, or immediate threat of further attacks

support terrorism. against the US and US nationals.
50
OFAC lists four Colombians under Kingpin Act

The US Department of the corridors in the northern region of narcotics traffickers for the
Treasury’s Office of Foreign the country. Her sons, Washington protection and safe passage of
Assets Control (OFAC) announced Antunez Musso and Juan Carlos shipments of large quantities of
on 16 September the designation Reales Britto and husband Luis cocaine from Colombia to the US,
of four Colombian nationals and Antonio Bermudez Mejia are also Europe, the Caribbean, Central
two entities involved in being listed for providing material America, and Mexico, whilst her
international drug trafficking, support to her activities. sons and husband allegedly assist
pursuant to the Foreign Narcotics Additionally, OFAC has designated Torres’ drug trafficking activities at
Kingpin Designation Act. Exclusive Import Export S.A.S., seaports and maritime locations in
which is allegedly owned, the Magdalena, Atlántico, and La

According to OFAC, Musso Torres controlled, or directed by Britto, and Guajira regions.
is designated for being the Poligono Santa Maria S.A.S., for
purported leader of an international being owned, controlled, or OFAC press release
drug trafficking organisation based directed by both Britto and Musso.
OFAC notice
in Santa Marta, Magdalena,
Colombia that controls Furthermore, OFAC alleges that

OFAC chart
strategically located maritime Torres collects taxes from
US government extends national emergency

with respect to election interference
US President Joseph Biden located outside the US to interfere influencing the outcome of any US
announced on 7 September the or weaken public confidence in US election, the proliferation of digital
continuation for one year of the elections, including through services and internet based
national emergency with respect unauthorised access to US election communications pose “significant
to foreign interference or and campaign infrastructure or by vulnerabilities” and enhance “the
undermining public confidence in disseminating propaganda and scope and intensity of the threat of
US elections, which was initially disinformation “continues to pose foreign interference”.
declared in 2018 through an unusual and extraordinary
Executive Order (EO) 13848, threat to the national security and White House press release
pursuant to the International foreign policy of the US”.
White House letter
Emergency Economic Powers Act.
President Biden notes that

Federal Register entry
According to the White House although there has been no
notice, the ability of persons evidence of a foreign power
51
UK amends DRC sanctions regulations to

implement additional designation criterion
The UK’s Foreign, Commonwealth authorities to implement its due to “the presence of large
and Development Office (FCDO) obligations under paragraph 3 of numbers of humanitarian actors
laid before parliament on 16 UNSCR 2582. The provision states working to address needs in
September the Democratic that the travel ban and asset freeze Eastern DRC”, as well as the
Republic of the Congo (Sanctions) measures within UNSC resolution prevalence of armed groups in the
(EU Exit) (Amendment) 1807 (2008) shall also apply to region, which has led to serious
Regulations 2021, which amends individuals and entities designated concerns regarding potential
the DRC Regulations to enable the by the Committee of the UN attacks on medical and
UK to implement financial Security Council concerning the humanitarian personnel.
sanctions required by the United Democratic Republic of the Congo
Nations on the basis of the (DRC) for “planning, directing, The statutory instrument came into
additional designation criterion in sponsoring or participating in force on 7 October.
UN Security Council resolution attacks against medical personnel
(UNSCR) 2582. or humanitarian personnel”. Statutory instrument text
Explanatory memorandum
The statutory instrument amends According to the explanatory
the Democratic Republic of the memorandum, the decision to
Statutory instrument timeline
Congo (Sanctions) (EU Exit) include the additional designation
Regulations 2019 to allow UK criterion was supported by the UK
UK government makes additional designations

under Myanmar sanctions regime
UK Foreign Secretary Dominic assisting the Myanmar military businessman faces UK travel
Raab announced on 2 with arms procurement and restrictions. The move comes after
September new designations providing financial support, the G7 Foreign and Development
under the Myanmar sanctions including involvement in and Ministers’ communique in which
regime targeting the military support for the 2017 military action G7 nations agreed to block
government’s business ally for which resulted in the killing of arms supplies and other forms of
financial and weapons support. thousands of Rohingya people in assistance to the junta.
the Rakhine region.

U Tay Za and the Htoo Group of
UK government announcement
Companies, a business U Tay Za’s personal and company
Myanmar sanctions notice
conglomerate controlled by U Tay assets in the UK are subject to
Za, is being designated for immediate freezes, and the
52
Taliban government includes listed individuals
Rahman Haqqani are members of the Haqqani

Network and were designated by the UN Security
Council for participating in the financing, preparing or
perpetrating of acts or activities of the Taliban or Al-
Qaida, respectively. Similarly, the newly-appointed
Taliban Prime Minister Mullah Mohammad Hasan
Akhund, was designated by the UN Security Council
(UNSC) Sanctions Committee on 25 January 2001 as
the first deputy of the Councils of Ministers in the
previous Taliban regime, pursuant to resolution 1267
(1999) and 1333 (2000), which expanded sanctions to
The Taliban’s chief spokesman Zabinullah Mujahid include the freezing of funds of Osama bin Laden and
announced on 7 September during a press associates, and imposed arms embargoes on Afghan
conference the new Taliban government composed territory controlled by the Taliban.
of 33 members, which includes US specially
designated global terrorist (SDGT) Minister of Other members of the Taliban government currently
Interior Sirajuddin Haqqani and UN-designated subject to UNSC sanctions include: Mullah Abdul
Prime Minister Mohammad Hasan Akhund. Ghani Baradar – First Deputy Prime Minister; Molavi
Abdul Salam Hanafi – Second Deputy Prime Minister;

Sirajuddin Haqqani was included on the US sanctions Molavi Muhammad Yaqoob Mujahid – Minister of
list in March 2008, pursuant to Executive Order (EO) Defence; Molavi Amir Khan Muttaqi – Minister of
13224 for committing or posing a “significant risk” of Foreign Affairs; Sher Muhammad Abbas Stanikzai –
committing acts of terrorism which threaten the US Deputy Foreign Minister; Mullah Khairullah Khairhwa –
national security, foreign policy and economy. He is Minister of Information and Broadcasting; Qari Din
currently on the FBI’s most wanted list for his Mohammad Hanif – Minister of Economic Affairs;
involvement in the 2008 Kabul Serena Hotel attack. Molavi Noor Muhammad Saqib – Minister of Hajj and
The FBI notes that Haqqani “is believed to have Auqaf; Noorullah Noori – Minister of Borders and
coordinated and participated in cross-border attacks Tribal Affairs; Mullah Muhammad Essa Akhund –
against US and coalition forces in Afghanistan”, as Minister of Minerals and Petroleum; Molavi Abdul Latif
well as in the planning of the 2008 assassination Mansoor – Minister of Water and Energy; Abdul Baqi
attempt on Afghan President Hamid Karzai. Haqqani – Minister of Education; Najibullah Haqqani –
Minister of Communications; and Abdul Haq Wasiq –

Another US designated member of the new Taliban Deputy Interior Minister.
government is Minister of Refugees Khalil al-Rahman
Haqqani, also known as Khalil Ahmed Haqqani, who is The European Union’s response
the uncle of Sirajuddin Haqqani and who was added to
Since the appointment of the new de facto Taliban
the US SDGTs list on 9 February 2011. He is also
government, the European Union has focused on
wanted in the US for being linked to Al-Qaida terrorist
discussing ways for future engagement with the new
operations and for engaging in fundraising activities
administration. The EU Foreign Ministers met on 3
on behalf of the Taliban. Both Sirajuddin Haqqani and
September for a two-day event organised by
53
the Slovenian Presidency to the EU Council and EU Parliament and PACE adopt resolutions on the
chaired by the High Representative of the EU for situation in Afghanistan
Foreign Affairs and Security Policy, where they
discussed the future approach with respect to The situation in Afghanistan was also subject to
Afghanistan following the Taliban takeover. The parliamentary debates at EU level during the European
officials agreed on five benchmarks which the Taliban Parliament (EP) plenary session which took place
government will have to fulfil for future engagement between 13 and 16 September, as well as at
with the international community: (1) ensuring that the international level, within the Parliamentary Assembly
country does not become a safe haven for terrorist of the Council of Europe (PACE). With respect to the
groups; (2) respecting human rights, particularly those EU dimension, on 16 September the EP adopted a
of women and girls, as well as the rule of law and resolution on the situation in Afghanistan which notes
media freedom; (3) ensuring free access to that operational engagement by the EU with the
humanitarian aid; (4) establishing an inclusive and Taliban’s de facto government is required for logistical,
representative transitional government; and (5) operational and humanitarian matters, however such
ensuring free passage for all individuals who wish to contact “should remain strictly limited” to the purpose
leave Afghanistan, in line with UN Security Council of the activities supporting the Afghan population, and
resolution 2593 (2021). it should not be understood as an official recognition
of the cabinet. The resolution expresses “grave
In its conclusions adopted on 21 September, the EU
concern” about the composition of the government
Council sets out the bloc’s position in relation to the and highlights that none of the conditions required by
situation in Afghanistan, highlighting the same the international community for its recognition have
benchmarks for the Taliban government, as well as
been met so far. Members of the EP also stressed that
the next steps regarding future engagement with the
“the Taliban will be judged by the international
country. The conclusions provide that the EU intends community on the basis of their actions on the
to initiate a regional political platform of cooperation ground, not by public declarations”.
with the country’s neighbouring states in order to
prevent “negative spill-over effects in Afghanistan’s The document provides that one of the key priorities
neighbourhood” and ensure economic resilience and for EU member states should be enhancing efforts for
regional economic cooperation. In this regard, the EU combatting the financing of terrorism and ensuring
aims to enhance cooperation with the United Nations, that if the Taliban fail to fulfil their
the World Bank, NATO, as well as other local, regional counterterrorism commitments, which include
and international actors to address the challenges preventing Al-Qaida, ISIL (Da’esh) and other terrorist
brought by the humanitarian crisis and to ensure groups or individuals from being recruited, trained and
support for the Afghan population, as well as to sponsored in Afghanistan, they will face international
support the departure of the remaining EU citizens in sanctions and isolation. Member states are required
Afghanistan. The EU Council’s conclusions also to share intelligence gained by their military and law
recognise the fact that the current situation poses a enforcement agencies from their missions in
threat for regional stability, human rights, organised Afghanistan, especially with respect to biometric data
crime and the fight against terrorism and trafficking of aimed at "identifying any returning foreign fighters".
human beings and drugs and underlines that the
The resolution also raises concerns about opium
international community must ensure accountability
for human rights violations and breaches of production and trade, which represents the main
international law by the Taliban. source of funding for the Taliban, and calls for a
54
temporary ban on the import of cultural good from the change of the individual circumstances which led to
country, in order to prevent the Taliban from profiting their inclusion in the first place”, but calls on member
from cultural smuggling. states to ensure that any freezing of Afghan financial
assets does not deteriorate the country’s socio-
With respect to humanitarian aid, the paper highlights economic situation. PACE recalls the same conditions
that the EU will engage with relevant international for operational engagement with the Taliban
organisations and NGOs for the creation of
government and requests Afghanistan’s neighbouring
humanitarian corridors for the provision of food, water,
countries to enhance efforts to tackle threats such as
sanitation and medication, and calls on the European “terrorism, violent extremism, drug trafficking,
Commission to monitor ongoing development smuggling of migrants and trafficking in human
projects in Afghanistan and ensure that these efforts
beings”, including with the political and financial
are not hindered by the Taliban regime.
support of Council of Europe member states.
MEPs qualify the latest developments in Afghanistan Failing to uphold its commitments
as “a collective failure of Western foreign and security

policy and strategy” which could translate into “a

The benchmarks have also been discussed in the past
strategic advantage for non-Western powers and month by other international actors, however following
neighbouring countries” especially Pakistan, China and the appointment of the new government, many
Russia. Therefore, the EP calls on the European
countries have raised concerns that the group is not
External Action Service to enhance diplomatic
completely upholding its commitments. During the
representation in Central Asia, as well as cooperation UNSC meeting on 9 September, UK representative to
with countries in the region, particularly Tajikistan, in the UN Barbara Woodward urged the Taliban “to
order to obtain “first-hand information about
distance themselves from terrorism and to live up to
developments on the ground”.
the[ir] commitments”. At the same meeting, the UN
Secretary General’s Special Representative for

Considering the need to enhance EU engagement with Afghanistan Deborah Lyons highlighted that all
countries in the region, French MEP Dominique Bilde
states must decide on the impact of their future
submitted on 15 September a motion for a resolution
engagement with the Taliban, considering that many
on cooperation with Pakistan in the light of the of the officials are on the UN sanctions list. She added
Taliban’s return to power in Afghanistan. The text calls that “addressing [the humanitarian] crisis cannot wait
on the EC to investigate media allegations that the
for political decisions on the removal of sanctions”.
Pakistani military is assisting the Taliban offensive in
the Panjshir Valley and to reassess its cooperation UN representatives also highlighted the need to
with the country, particularly in relation to its eligibility enhance efforts for ensuring that human rights
for the EU Generalised Scheme of Preferences (GSP) and fundamental freedoms are respected within the
and the benefits that come with it. country, especially with regard to girls and women.
Despite assurances from the Taliban that they will

At international level, PACE also adopted a resolution uphold the rights of girls and women, UN officials
on the consequences that the situation in Afghanistan have received numerous reports that women are
may have on Europe and countries in the region, which banned from appearing in public places without
expresses “deep concern” that a large number of male chaperones, prevented from working and have
Taliban individuals are on the UN sanctions list. The limited access to education. Furthermore, previous
document highlights that any delisting of Taliban reporting by the Wall Street Journal (WSJ) highlights
members should be “conditional upon an actual that the group's commanders have demanded
55
communities from territories seized prior to the Kabul appointed Haji Mohammad Idris as the new governor
takeover to “turn over unmarried women to become of DAB. Several FinTRACA employees reportedly
wives for their fighters” and resorted to sexual stated for Reuters that only some DAB units are still
violence. Other media reports allege that “offering operational and that FinTRACA is not among them,
wives or sex slaves is part of the Taliban’s recruitment raising concerns that the country will be excluded
strategy to lure militants to join the Taliban”. from the global financial system.
The situation is particularly worrying, as experts allege

Cryptocurrencies – financing Taliban operations?
that many hawala networks with brokers in the UK are
Since the composition of the Taliban cabinet was used by the Taliban “to wire donations from the West”.
announced, questions have been raised about how the Robert Greenway, Senior Director at the US National
Security Council reportedly told The Telegraph that the
group will govern, given the international sanctions
UK “missed opportunities” to prevent the Taliban and
targeting most of its members, as well as how the
Afghan population will manage the economic crisis. affiliates “from using London as a money-laundering
One particular topic concerns the growing use of hub, and of preventing donations from sympathisers”.

cryptocurrency in Afghanistan in the past months.

With respect to CFT efforts, there have been constant
Crypto analytics company Chainalysis placed
Afghanistan in the top 20 of the 154 countries ranked discussions about the risk that Afghanistan
by cryptocurrency adoption in the 2021 Global Crypto could become a shelter for terrorist groups, in
absence of efficient mechanisms by the Taliban.
Adoption Index. Similarly, digital services company
Blinken gave assurances before the Senate Foreign
FinClusive Inc states that the use of Bitcoin has
surged since the withdrawal of US military and the Relations Committee on 14 September that the US
Taliban takeover, given that Afghans are transforming “will maintain a vigilant effort to monitor threats [and]
robust counter terrorism capabilities in the region”
their savings into an asset which displays greater
with the aim of neutralising any activity by
stability than the local currency or the traditional
financial system. However, the increasing use of terrorist networks operating within Afghanistan.
digital currencies within Afghanistan also raises

UN efforts to facilitate negotiations and peace talks
security threats, with several experts reporting for the

WSJ that given the anonymity offered by some trading

In an effort to facilitate negotiations between the
platforms, cryptocurrencies could be “inviting” for US-
Taliban and the international community, the UNSC
designated terrorist groups, including the Taliban, “if
sanctions committee established pursuant to
US sanctions do move forward, and Afghanistan
resolution 1988 (2011) decided on 21 September to
remains cut off from international finance”.
extend for a 90-day period a travel ban wavier
Afghanistan’s AML/CFT efforts on several Taliban members, beginning on 23
September and ending on 22 December. The UNSC
The Egmont Group of Financial Intelligence Units highlighted that the travel ban exemption has been
adopted “solely for travel required for participation in
announced that from 15 August, the Financial
Transactions and Reports Analysis Centre of peace and stability discussions in a range of
Afghanistan (FinTRACA) was disconnected from the countries”. Additionally, the committee decided on a
Egmont Secure Web (ESW), an encrypted limited asset freeze exemption, only for the purposes
of financing exempted travel by the group.
platform which enables secure communication
among FIUs. FinTRACA’s website became unavailable,
following the announcement that the Taliban had
56
European Union renews sanctions over Ukraine’s

territorial integrity for six months
The Council of the European Union decided on 10 undermining or threatening of the territorial integrity,
September to extend until 15 March 2022 the sovereignty, and independence of Ukraine.
sanctions regime targeting individuals and entities Additionally, the Council has amended the information
responsible for undermining or threatening the concerning 19 individuals and entities included in the
territorial integrity, sovereignty, and independence of Annex to Council Decision 2014/145/CFSP. Amended
Ukraine, pursuant to the Council Implementing entries relate to several organisations, armed
Regulation (EU) 2021/1464 and Council Decision separatist groups, and confiscated joint stock
(CFSP) 2021/1470. company Production-Agrarian Union Massandra.
According to the Council, the extension of the EU Council press release

sanctions regime is necessary given the continued
UN renews mission in Libya and authorisation to

inspect vessels engaged in human trafficking
The United Nations Security Council (UNSC) adopted After the vote on resolution 2599, UK and French
on 29 September resolution 2598 (2021) extending representatives stressed that the full implementation
for an additional year the authorisation for member of the ceasefire agreement must include the
states to inspect vessels that they have reasonable withdrawal of all foreign forces and mercenaries. The
grounds to suspect are being used for migrant US representative also expressed regret that the
smuggling or human trafficking off the coast of UNSC failed to implement the recommendations of
Libya. The UNSC also adopted resolution 2599 the UN Secretary-General’s independent strategic
(2021) the following day, which extends the review published in August, which included an
mandate of the UN Support Mission in Libya assessment of UNSMIL.

(UNSMIL) until 31 January 2022.
UNSC press release

The UN Secretary-General must provide a report on
UNSC press release
the implementation of resolution 2598 within 11
months. The resolution condemns all migrant
UNSC resolution 2598 (2021)
smuggling and human trafficking into, though, and
from Libyan territory and off the coast of Libya, noting UNSC resolution 2599 (2021)
that it will continue to review the situation and
consider renewing the authority if necessary.
57
ECOWAS imposes sanctions on Mali and Guinea
The Authority of Heads of State ECOWAS is calling on the African October 2021 a timetable with the
and Government of the Economic Union, the EU and the UN to steps to be taken in this regard.
Community of West African support the implementation of the
States (ECOWAS) decided during restrictive measures, as well as the The officials are imposing travel
an extraordinary session on 16 restoration of Guinea’s bans and asset freezes against
September to impose sanctions constitutional rule. The Western individuals who interfere in the
against the military junta of the African state officials are also preparation of the electoral
Republic of Guinea, the National calling for presidential and process and request the President
Committee of Reconciliation and legislative elections in Guinea of the ECOWAS Commission to
Development (CNRD). The action within six months and demand the compile a list containing the
follows the 5 September coup release of President Condé. names of all such persons. The
d'état which concluded with the
authority also condemns the
capture of Guinean President Concurrently, ECOWAS decided to deterioration of the security
Alpha Condé. impose targeted sanctions against situation in Mali generated by the
individuals who negatively impact appointment of private security

The authority is imposing travel the transition timetable for the companies by the transitional
bans and asset freezes on all preparations of the February 2022 authorities, as well as the arrest
CNRD members and their families elections in Mali. The authority and detention of Malian political
and will uphold the suspension of expressed concern about the “slow leaders and opponents.

Guinea from all governing bodies pace of preparations” for the Mali
of the regional bloc until elections and requested the ECOWAS communiqué
constitutional order is restored. transitional authorities to submit by
Russia designates Church of Scientology
The Russian Prosecutor-General’s Church of Spiritual Technology undesirable foreign and

Office announced on 24 face financial penalties and their international non-governmental
September that it has designated staff working in Russia may be organisations.
two US Church of Scientology- jailed for up to six years if the
affiliated organisations as threats groups continue domestic Radio Free Europe reports that the
to state security pursuant to operations. The two organisations Church of Scientology’s Moscow
Federal Law No. 129-FZ on are also known as WISE Int and L branch was forcibly closed by the
“undesirable organisations”. Ron Hubbard Library, respectively. Russian government in 2016.
The decision has been referred to

World Institute of Scientology the Ministry of Justice for Russian Prosecutor-General’s s…
Enterprises International and the consideration to list the groups as
58
Ukraine imposes sanctions in connection with

Russian State Duma elections
Ukraine’s National Security and Danilov warned that since Russia a resolution calling on international
Defence Council (NSDC) imposed has no right to hold elections on bodies, including the UN Security
on 17 September sanctions in Ukrainian territories, “all Council, the EU, the OSCE and the
connection with Russian State participants in this process – Council of Europe, not to recognise
Duma elections in the temporarily members of election commissions, the State Duma elections due to
occupied Donetsk and Luhansk agitators [and] candidates” will be Russia’s decision to illegally
regions. NSDC Secretary Oleksiy sanctioned by Ukraine. The NSDC organise the vote in Crimea and
Danilov announced the has also designated seven officials Sevastopol, as well as in areas of
designation of 53 members of the of the Russian Federal Security the Donetsk and Luhansk regions.
territorial election commissions Service for their alleged
and 33 candidates for deputies of involvement in the poisoning of NSDC press release
the Russian State Duma and opposition leader Alexei Navalny.
Ukrainian parliament resolutio…
added that additional sanctions
are being considered. On 8 September, the parliament of
Ukraine (Verkhovna Rada) adopted
OFAC issues Venezuela-related general licence
The US Treasury’s Office of inquiries over the 2020 bond, for bondholders unless specifically
Foreign Assets Control (OFAC) which shares in Citgo Petroleum authorised until 21 January 2022.
issued General License 5H on 10 Corporation are serving as OFAC states that creditors seeking
September under the Venezuela collateral. PDVSA purchased half of refinancing or restructuring
Sanctions Regulations extending Citgo’s ownership in 1986 and the agreements on the 8.5 percent
the ban on certain transactions remainder in 1990, with the bond may be subject to further
connected to the state-controlled company cutting its links to the licencing requirements and are
oil company Petroleos de Venezuelan state enterprise encouraged to apply for a specific
Venezuela SA (PDVSA) 2020 8.5 following US sanctions on PDVSA licence. OFAC adds that such
percent bond until 21 January in January 2019. 50.1 percent of agreements will be viewed
2022. OFAC concurrently updated Citgo equity is serving as collateral favourably by the regulator.
FAQ 595 clarifying the latest for the 2020 bond, with the latest
general licence. general licence continuing the OFAC notice
block on credit holders taking

General License 5H
General License 5H replaces and ownership in the company.
supersedes licence 5G from July.
Updated FAQ 595

FAQ 595 clarifies that the general Executive Order 13835 subsection
licence has been issued following 1(a)(iii) remains applicable for
59
OFAC issues Afghanistan-related GLs and FAQs
The US Treasury’s Office of and Executive Order (EO) 13224, if animals, seeds for food crops,
Foreign Assets Control (OFAC) such transactions are intended for fertilisers or organic fertilisers and
issued on 24 September two the provision of humanitarian aid reproductive materials for the
Afghanistan-related General and supporting basic human needs production of food animals, as well
Licenses (GLs) aimed at to the people of Afghanistan. as medicine, medical devices,
facilitating humanitarian
replacement parts and
assistance and the provision of According to FAQ 929, for the components or software updates
basic supplies to the Afghan purpose of GL 14, humanitarian for such devices.
population. Additionally, OFAC has assistance includes the provision
issued four FAQs, which provide of relief services, healthcare and The licences do not authorise
clarity on the scope of the GLs. health-related services, protection financial transfers to any
and assistance for vulnerable designated person other than for

GL 14 authorises the US populations, operation of the purpose of paying taxes, fees,
government, non-governmental orphanages and the distribution of import duties or for purchasing
organisations (NGOs) and several food, clothing and medicine. permits licences or public utility
international organisations and Activities that support basic services. Furthermore, they do not
entities, or persons acting on their human needs include those authorise other transactions and
behalf to engage in transactions concerning shelter and settlement activities otherwise prohibited by
involving the Taliban or the assistance, food security, water, the GTSR, the FTOSR or EO 13224.
Haqqani Network or an entity in sanitation, hygiene and any other Additionally, the GLs prohibit any
which these groups have an support for at-risk individuals. debit to a blocked account by any
interest. The licence concerns
US financial institution.
transactions prohibited by the GL 15 authorises certain
provisions of the Global Terrorism transactions related to the OFAC press release
Sanctions Regulations (GTSR), the exportation or re-exportation of
OFAC notice
Foreign Terrorist Organisations agricultural commodities, which
Sanctions Regulations (FTOSR) include food for humans and
OFAC issues Iran-related FAQ 932

The US Treasury’s Office of The office clarifies that acquisition of goods or services for
Foreign Assets Control (OFAC) transactions ordinarily incident to personal use during travel, and
issued on 30 September Iran- travel to or from Iran by US persons donations made to the Imam
related FAQ 932 in relation to US fall within the exceptions provided Reza Holy Shrine that are intended
sanctions stipulations on visiting by Section 560.210 of the Iranian to alleviate human suffering.
and making donations to the Transactions and Sanctions
Imam Reza Holy Shrine. Regulations (ITSR). Exceptions OFAC press release
include religious pilgrimages, the
60
SPEECHES
Google pushes against inclusion of scam ads in

Online Safety Bill, during Committee meeting
content, someone looking at policy protection law enables

and a piece of content could make organisations and businesses to
a pretty clear decision about share personal data securely, fairly
whether that content is violative”. and proportionately. Our data

sharing code of practice provides
“With a scam, you are looking at guidance, alongside practical tools,
one signal. That cannot necessarily to help organisations be confident
tell you whether it is a scam; you they can share data within the law”.
need to look at the actor, the
A Google executive has rejected a During the hearing, which was also
behaviour and the piece of content
suggestion that fraudulent attended by representatives from
itself to ultimately make a decision
adverts be included in the much- eBay, Facebook and Amazon,
about whether it is a scam. The
debated Online Safety Bill, telling Storey told MPs that Google has
techniques for user-generated
UK MPs that the bill is not offered 1.5 million – it
content and for scams are quite
“targeted” enough to be “efficient” was unspecified whether dollars or
different. Therefore, the Online
at tackling online scams. pounds – in credits to the UK
Safety Bill is not necessarily
Financial Conduct Authority (FCA)

targeted in the way that it would
The debate over the Online Safety to reimburse the body for the cost
need to be to be efficient at
Bill includes discussion over of adverts it has put online to warn
tackling online scams. That needs
whether the bill should include consumers about online scams.
to be considered”, explained Storey.
online advertising, forcing websites

to have a duty to ensure that Subsequent to the hearing,

Storey later clarified that Google
fraudsters are not operating, likely Treasury Committee Chair
agrees with the bill, which
with penalties if scams are Mel Stride MP wrote to the
recommends automation to help
advertised to the public. representatives to request further
tackle user-generated content, but
information regarding engagement

added that automated means
While giving evidence on 22 with the FCA, information
alone are not going to be sufficient
September before the Treasury sharing, advertising policies for
for tackling scams. “It really does
Committee’s inquiry into economic financial services, the online fraud
require the kind of sustained and
crime, Director of Trust and Safety steering group and customer
strong collaboration that we've
at Google Amanda Storey told MPs compensation following fraud.
started to engage in with the online
that the bill “is designed for user-
fraud steering group, with Stop Treasury Committee meeting
generated content. When you look
Scams UK”, Storey added.
at the traits of user-generated

Meeting transcript
content versus scams, they are
A spokesperson for the ICO told
quite different. With user-generated Meeting recording
the Financial Crime Digest: “Data
61
UK corporate criminal liability reform must not

pose undue burden on companies
The Lord Chancellor of Great any reform “must also take government “by the end of this year
Britain Robert Buckland delivered account of the impact of increased or early next”, Buckland stated.
a speech on 10 September during costs on law-abiding corporations
the 38th annual Symposium on to ensure they are not Buckland added that one of his
Economic Crime held at the overburdened by processes they priorities as Lord Chancellor has
University of Cambridge – to give are expected to follow”. been to improve the government’s
an update on the government’s
response to how victims of crime
progress and plans in relation to In response to a call for evidence, are treated. The government is
economic crime. stakeholders have raised seeking to take specific measures
“important questions, in particular such as expanding the National

Buckland stated that while reform about the operation of the Economic Crime Victim Care Unit.

to the law on corporate criminal identification doctrine which
liability may be necessary to represents the general common Buckland was replaced by Dominic
ensure companies can be held to law test under which corporations Raab MP in a cabinet reshuffle.
account for economic crime, “it is can be attributed with criminal
of course important to ensure that liability”, he added. Lord Chancellor speech
any reform does not impose an
Law Commission corporate cri…

undue burden of compliance on The Law Commission is set to
companies”. Buckland added that provide an options paper to the
UK Gambling Commission Executive Director

calls for intelligence sharing and cooperation
UK Gambling Commission According to Miller, the Gambling for a common international
Executive Director Tim Miller Commission has made it clear that approach to complex cross-border
discussed during a 15 September it expects operators to comply with criminality, such as match-fixing.
conference held by the its norms and not present resource
International Association of pressures from commercial Miller also called for all gambling
Gaming Regulators (IAGR) what expansion overseas as a mitigating regulators to collaborate and share
gambling regulators do to ensure factor for domestic compliance intelligence which could raise
that transnational gaming failures. Additionally, he pointed out standards of compliance across all
operators are compliant in their that the solution to tackling jurisdictions, suggesting the
established jurisdictions and unlicenced services is not to cease establishment of a working group.

when entering new markets. taking action to make regulated
gambling safer, while advocating UK Gambling Commission spe…
62
UK sees high attrition rate in crypto-asset firm

registration, discloses FCA at annual meeting
As many as 84 percent of crypto- AML/CFT rules, the agency is of cryptoassets, and the difficulty
asset firms the UK Financial “looking at potentially in valuing crypto reliably”.
Conduct Authority (FCA) has strengthening the scope of
reviewed for registration have financial promotions rules, so that Also, at the public meeting the FCA
withdrawn their application, the those that are making financial stated it is putting social media
regulator disclosed at its annual promotions, promoting companies “on notice” over
public meeting on 28 September. unregistered cryptoassets, that promotion of scams, and is “really
they're brought within the pleased” to see that Google

FCA Markets Executive Director regulatory perimeter”. changed the terms of agreement
Sarah Pritchard stated that the FCA
with advertisers to exclude
is taking a “tough and assertive” Around 2.3 million Britons currently financial promotions from its
approach to crypto-asset firms hold cryptocurrency, the FCA has priority searches that come from
seeking a licence to operate in the estimated, with the median holding firms not authorised by the FCA.
UK. Pritchard said the attrition rate around £300 and a user profile
is “significantly higher than in other largely male, over 35 and in FCA APM
sectors, which contributes to our managerial, administrative and
FCA speech
concerns about the level of risks professional occupations.
that exist in that sector as a Pritchard added: “We're concerned
FCA meeting transcript
whole”. Pritchard added that while about the risks to market integrity.
the FCA’s regulatory scope over the We're concerned about the risks of
crypto-asset sector is limited to financial crime, the price volatility
EU Commissioner McGuinness discusses the

EU’s AML package at the Eurofi Financial Forum
The EU Commissioner McGuinness states that by and demands across member

responsible for financial services, introducing a single AML/CFT states and encourages
financial stability and the Capital rulebook and a new AML/CFT stakeholders to offer their support
Markets Union Mairead supervisory authority, EU in ensuring the EU financial system
McGuinness discussed during a 9 institutions will have a better is not abused by criminals.
September Eurofi Financial Forum picture of the situation across
event the AML/CFT package Europe. She also stresses that the Commissioner McGuinness sp…
published in July by the European new rules will respond to concerns
Commission (EC). in the financial system in relation to
the fragmentation of AML rules
63
We all pay for economic crime, Attorney General

of England and Wales tells Symposium
The Attorney General for England the year ending March 2021 – a created “new opportunities for
and Wales, Michael Ellis MP, 24% increase compared with the criminals to commit fraud and to
addressed the Cambridge year ending March 2019”, he extend their victim base, and
International Symposium on stated. Ellis added that the Home enabled fraud to be more easily be
Economic Crime on 9 September. Office estimates that the social and committed at scale”.
Ellis stated that economic crime economic cost of fraud in England
affects society “at every level: and Wales to individuals is £4.7 Ellis pointed to the UK government
individuals, communities, billion per year, with the cost of and UK Finance publishing its
organisations and businesses, organised fraud against Economic Crime Plan 2019-22 as
governments, our societies and businesses and the public sector in evidence of its “whole-system
economies-at-large”. the UK reaching £5.9 billion. approach” to responding to

economic crime, as well as
Ellis noted the prevalence of fraud Ellis stated that spurred by Covid- highlighting the government’s
in the UK, stating that it makes up 19, “we have seen evidence of recent Beating Crime Plan
40 percent of all crime against increased use of cryptoassets in published in July 2021.
individuals. “The telephone- money laundering across a range
operated Crime Survey for England of serious crime types”. Ellis noted Attorney General speech
and Wales estimates that there that behavioural changes such as
were 4.6 million fraud offences in increased online shopping has
UK FCA to be bolder in dealing with misconduct
The UK Financial Conduct applying a bolder risk appetite in Rathi highlighted the “extraordinary
Authority (FCA) has responded to dealing with serious misconduct, measures” taken to protect
criticism that it acts too slowly including, as you will have seen, consumers throughout the
and is applying a “bolder risk using criminal powers in the most pandemic and boosted investment
appetite” in cracking down on serious cases involving financial in the FCA’s data regulation
misconduct, Chief Executive crime or money laundering”. capacity as important elements of
Nikhil Rathi stated in a speech
recent work. Rathi called on the
delivered at the Lord Mayor's City “We will litigate more if we need to, sector to “partner with us to seize
Banquet on 22 September. recognising we won’t win every the opportunities presented by
aspect of every case but also the profound forces transforming

Rathi told the audience that the appreciating that legal certainty the sector and society”.
FCA has “often been criticised for can provide considerable benefits
acting slowly or with too much risk for industry as well”, Rathi stated. FCA speech transcript
aversion. This is changing. We are
64
UK FCA chair discusses token regulation
speculation, citing a recent raises unrealistic expectations of

promotion by Kim Kardashian of consumer protection”.
the Ethereum Max token to 250
million social media followers. He The FCA currently maintains a

urged online platforms, such as register of crypto-focused
Facebook, Twitter, Microsoft and companies that meet its AML
TikTok to commit to cease requirements, as well as an interim
Charles Randell, Chair of the UK’s promoting ads for financial list of applicants awaiting approval.
Financial Conduct Authority (FCA) products unless they obtain The regulator banned the
and Payment Systems Regulator approval that the ad has been marketing of crypto derivatives to
(PSR) delivered a speech to the cleared by an FCA authorised firm. retail investors in October 2020.
Cambridge International

Symposium on Economic Crime Randell cited June 2021 research In Randell’s view, creating an
on 6 September warning that conducted by the FCA which effective regulatory regime would
legislation will be needed to revealed that 2.3 million UK require legislators to consider how
prevent online advertising fraud citizens have purchased crypto- to make it harder for digital tokens
regarding financial products on assets, with 14 percent of them to be used for financial crime, while
internet platforms. He also using credit to acquire them, which also considering how to support
discussed the potential to significantly increased “the useful innovation, and the extent to
regulate cryptocurrencies beyond exposure to loss”. Furthermore, which consumers should be free to
the FCA’s current responsibilities, according to the report, 12 percent buy unregulated, speculative
which at the moment mainly of UK citizens holding crypto- tokens. Furthermore, he stated that
covers anti-money laundering assets wrongfully believe that the he expects a “consistent
(AML) purposes. FCA or the Financial Services collaborative effort” among leading
Compensation Scheme will provide regulators to take action against

In his speech, the FCA chair financial protection for such “businesses which choose not to
discussed the risks of token acquisitions. bring themselves within the reach
regulation and the rules that are
of an effective national regulator”.
expected to protect people from With respect to regulation, Randell
investment fraud and scams, warned that, while it is difficult for Pinpointing Treasury’s consultation
emphasising the possibility of regulators to “stand by and watch on the UK approach to crypto-
sponsoring unknown or people, sometimes very vulnerable assets and stablecoins which
untrustworthy financial products. people, putting their financial closed on 21 March this year,
Specifically, he warned that futures in jeopardy based on Randell noted that stablecoins
celebrities, influencers, and other disinformation and fear of missing could provide valuable competition
categories of people with large out”, FCA regulation could lead within payment systems.
audiences are “routinely paid by people to believe crypto-assets are
scammers to pump and dump" legitimate investments, essentially FCA speech
new tokens on the basis of pure giving them a “halo effect that
65
Webinar on laundering in US real estate sector
Financial Accountability and require beneficial ownership 2015 and 2020 involving illicit
Corporate Transparency (FACT) standards for real estate. money being funneled through the
Coalition Executive Director Ian Global Financial Integrity (GFI) real estate sector. The report found
Gary moderated a discussion on 9 Policy Director Lakshmi Kumar that at least $2.3 billion was
September on “The Global is stated that US policy on real estate laundered through the real estate
Local - Linking the Fight Against transparency only involves county- sector during that period, with 60
Corruption with Fair Housing in based geographic targeting orders percent of those cases occurring
the US” that examined the (GTOs) since 2016, according to outside GTO counties. Over 80
consequences of a lack of real which a reporting requirement is percent of these cases involved
estate ownership transparency. triggered only for residential real anonymous legal structures, with a
estate purchased in cash over a majority involving politically

Gary noted that the US is the only certain threshold. exposed persons and 82 percent

G7 nation that does not require the

involving foreign funds.
real estate sector to adhere to Citing GFI’s “Acres of Money
money laundering regulations, Laundering” report, Kumar noted FACT Coalition event page
calling on the US government to that GFI found 56 cases between
Mafia and organised crime challenges threaten

EU Recovery Funds rollout in Italy
Aperio Intelligence held a webinar comes from the outside and government websites and the
on 29 September to discuss the infiltrates the legal economy. But press on what is happening on the
EU Recovery Fund and Italy’s this is not correct, the Mafia are ground, and what law
green drive. The panel included already operating in the enforcement is working on.
Sergio Nazzaro, investigative legal system, they pay taxes and
journalist and spokesman for the work in white collar industries. Sergio noted that undertaking
President of the Anti-Mafia adequate due diligence before
parliamentary commission, who Sergio added that Italy has a long entering an investment is essential
tradition in fighting back and to mitigate the risks of organised
outlined the ongoing threat from
the Italian Mafia and organised understanding what is going on in crime, which requires knowledge
crime groups and provided advice a business or corporation. The about how the Mafia works and the
on how companies and investors justice system and law area and type of investment.
enforcement know how the Mafia
can mitigate these risks.
To listen to an audio recording of
work and how they move. Also,

the webinar, please follow this link.
Sergio noted that often the Mafia is there is a large amount of open
characterised as a force that source information from
66
UK director states some gambling operators

AML/CFT policies and controls still not adequate
harm, but the same operators and codes of practice (LCCP) on

purportedly often also fail to meet customer interactions in the
AML standards. coming weeks, with a consultation

on the thresholds for identifying
The executive director also key financial risks being considered
stresses that the Gambling as a next step, according to Miller.
Commission has seen “notable”
UK Gambling Commission
cases this year in which gambling In relation to the LCCP, he stresses
Executive Director Tim Miller
operators lack appropriate that the practice of outsourcing
stated in a 7 September speech at
AML/CFT mechanisms. Miller data quality assurance by some
the Know Now's Conference that
underscores that the Gambling operators will no longer be
some licensees’ money
Commission will act against tolerated, with a programme of
laundering and terrorist financing
operators that do not meet their compliance and enforcement
(ML/TF) risk assessments,
obligations, adding that the action around the quality and
policies, procedures, and controls
upcoming compliance and timeliness of regulatory returns
continue to be unfit for purpose.
enforcement report will detail the scheduled to be included in the
Commission’s expectations. Commission’s 2022 business plan.

According to Miller, the regulator’s

compliance and enforcement

The Gambling Commission will Gambling Commission speech
focus is usually on the failings of
publish revised licence conditions
operators to minimise the risk of
Upcoming revised FATF guidance on virtual

assets discussed during OECD event
Jon Fishman, Co-Chair of the According to Fishman, the new Fishman stresses that the VACG
Financial Action Task Force’s guidance will bring clarification intends to monitor stablecoins and
(FATF) Virtual Assets Contact with respect to definitions and DeFi to identify whether there is a
Group (VACG), presented during a consider in more detail peer-to- need for further action by FATF.
15 September event organised by peer transactions, stablecoins, and
VACG aims to focus on standards
the OECD, the upcoming revised non-fungible tokens (NFTs). Other
implementation, ransomware and
guidance on VAs and virtual areas discussed in the guidance
assets service providers (VASPs), include decentralised finance associated laundering.
announcing that publication is (DeFi) and mitigating strategies,

OECD Blockchain event recordi…
due this autumn. and application of the travel rule.

67
GUIDANCE
UK Finance publishes technical guidance on

anti-bribery and corruption compliance
UK Finance published an anti- “broad, overarching approach” to UK Finance lists key criteria for
bribery and corruption (ABC) defining who should be considered assessment, such as determining
compliance paper on 30 a public official. if an entity is under government
September, which offers a risk-
control, delivers a public service, or
based definition of public officials The definition draws upon the UK involves public security, local
that the trade association Bribery Act classification and government departments,
proposes can be used offers a three-step approach for international development
consistently in national and determining status. The approach organisations, public funds, or
international cases. entails focusing on officials of political organisations. The paper
relevant organisations and defining also includes a public official

The paper notes that ambiguity relevant bodies with the UKBA inclusion and exclusion list that
over the accepted definition of definition of “carrying out a public firms can use with the caveat that
public officials leads to additional function for a foreign country or they should apply their own ABC
costs as well as delays to efforts to the country’s public”. The third step risk based approach.
counter bribery. Lack of an agreed- entails including known exceptions
upon definition further reduces to the previous steps when it is UK Finance paper summary
businesses’ appetite for engaging sufficiently relevant from an ABC
UK Finance guidance
in commerce in new markets. As risk standpoint.
such, UK Finance is offering a
UK revokes individual licences for Afghanistan

The UK Department for EU and National Arms Export destination. By removing
International Trade (DIT) and the Licensing Criteria. Afghanistan as a permitted
Export Control Joint Unit (ECJU)
destination, the ECJU halted the
published on 10 September The notice was issued following a issuance of OGELs for exports to
Notice 2021/11 which revokes all review and reassessment of all Afghanistan and required exporters
individual licences authorising existing individual licences and in to apply for standard individual
direct or indirect supply of furtherance to Notice to exporters licences (SIELs) instead.
controlled items to Afghanistan, 2021/10, which amended five open
which were found to be no longer general export licences (OGELs) to Notice 2021/11
consistent with the Consolidated exclude Afghanistan as a permitted
68
US FinCEN issues SARs filing instructions

concerning online child sexual exploitation
The US Financial Crimes convertible virtual currency, P2P 43. Meanwhile, Fields 38(h) or (g)
Enforcement Network (FinCEN) mobile apps, and the darknet. must be used to indicate
issued filing instructions on 16 Additionally, offenders purportedly human trafficking or human
September for suspicious activity use anonymisation, encryption and smuggling, respectively.
reports (SARs) relating to online third-party payment processors.
The notice also includes an
child sexual exploitation (OCSE).
appendix with child sexual

FinCEN also provides an overview FinCEN states that financial
of OCSE financial trends. institutions must reference exploitation-related terms and
keyword “OCSE-FIN-2021-NTC3” in definitions, references to FAQs,

and an advisory on cybercrime and
According to FinCEN, between SAR Field 2 and include it in the
cyber-event reporting.
2017 and 2020, there was a 147 narrative if applicable. Additionally,
percent increase in OCSE-related they must select Field 38(z) as the
FinCEN notice
SAR filings and a 17 percent year- associated suspicious activity type
on-year increase in 2020. The and include OCSE in the text box,
regulator found that OCSE while the offender’s internet-based
offenders are increasingly using contact should be filed in SAR Field
UK government issues updated CFT guidance
The UK Home Office and HM investigating TF as well as holding following UN Security Council
Treasury published on 3 financial supporters accountable. resolution 1373, and the Counter-
September updated guidance on
Terrorism (Sanctions) (EU Exit)
countering terrorist financing The guidance cites the Sanctions Regulations 2019.
(CFT), which the government and Anti-Money Laundering Act
notes is established through its 2018 as offering the legal The guidance adds that the UK is
counter-terrorist strategy 2018. sanctions framework by which the continuing to advance its
government can disrupt TF comprehension of TF trends and

The government’s three-pronged through sanctions. These regimes engagement with the UN, the
CFT approach consists of reducing are the ISIL and Al-Qaida (UN Financial Action Task Force, and
TF threats through detection, Sanctions) (EU Exit) Regulations the private sector to ensure the
prevention, deterrence, and 2019 following UN Security Council effective exchange of information.
disruption, understanding TF resolution 2368, the UK Counter-
activity through the utilisation of Terrorism (International Sanctions) UK countering terrorist financi…
financial intelligence, and (EU Exit) Regulations 2019
69
UK's FCA publishes Financial Crime Guide
The UK's Financial Conduct risk assessment frameworks and transactions, and the
Authority (FCA) published on 1 effective, up-to-date screening distribution channels it uses to
September its Financial Crime systems to ensure that breaches of service its customers
Guide, which aims to provide sanctions regimes are avoided.
practical assistance and The guide notes that screening Each firm should be able to take
information for firms across all should take place at the time of a holistic view of the risks
FCA-supervised sectors on customer onboarding, and good associated with individual
effective systems and controls to reasons are required to justify the business relationships,
counter financial crime risks, both risk posed by retrospective considering all relevant risk
generally and in regards to screening, such as the existence of factors, and to apply the
specific risks such as money general licences. Firms should also appropriate level of due
laundering (ML), bribery, ensure they have procedures for diligence to manage such risks.
corruption, fraud, insider dealing identifying “false positives” when Firms should regularly review
and market manipulation, as well comparing a customer’s name with both their business-wide and
as sanctions. The guide is persons on the Consolidated List. individual risk assessments to
included in the FCA Handbook. ensure they remain current
Other expectations include

Each section of the guide Senior management should
discusses how firms can tackle commission reports from the
Senior management should
each different type of financial Money Laundering Reporting
take clear responsibility for
crime, highlighting mandatory Officer (MLRO) at least annually,
managing financial crime risks
requirements, the FCA’s who should act as a focal point
and ensure evidence of active
expectations and examples of for the firm’s anti-money
engagement in the firm’s
good practice. Mandatory laundering (AML) activity and
approach to addressing such
requirements cover related ensure effective oversight of its
risks. Firms’ structures should
provisions of the Money AML compliance
promote coordination and
Laundering Regulations, the EU information sharing across the Firms should note that
Funds Transfer Regulations, business with respect to customer due diligence
Proceeds of Crime Act 2002, counter-financial crime efforts measures also apply when
Companies Act 2006, and Bribery and responsibilities
contacting an existing
Act 2010, among others.
customer as part of any legal
Each firm should identify and

duty in the course of a calendar
With respect to the FCA’s assess the financial crime risks
year for the purpose of
expectations regarding sanctions to which it is exposed as a
reviewing information as part of
compliance, Chapter 7 of the guide result of certain aspects,
the customer risk assessment
highlights that the FCA requires including the products and
firm’s senior management to be services it offers, the
sufficiently aware of the firm’s jurisdictions it operates in, the Financial Crime Guide
obligations regarding financial types of customers it attracts,
the complexity and volume of FCA Handbook
sanctions and should have in place
70
OECD jointly updates manual on exchange of

information for tax purposes
The OECD Global Forum on Updating the first edition of the competent authority and the EOI,
Transparency and Exchange of manual, which was issued in 2013 the manual presents all
Information for Tax Purposes, the by the Global Forum and the World mechanisms available in terms of
World Bank Group and the African Bank Group and was dedicated to all types of EOI practice, as well as
Development Bank jointly exchange of information (EOI) on aspects of EOI management, such
published on 16 September the request and spontaneous EOI, the as confidentiality rules, record
latest version of the Manual on new version of the report covers a keeping, statistics and
Exchange of Information for Tax broader range of tools, including measurement of performance.
Purposes, presenting legal and simultaneous tax examinations.

practical tools to help

OECD press release
jurisdictions effectively utilise The report comprises guidance for
OECD manual
international cooperation to the competent authority and the
detect and mitigate tax evasion EOI unit as well as a manual for tax
and avoidance. auditors and field officers. For the
RUSI paper on proliferation financing risks
The UK Royal United Services

the client. Additionally, verifications
Institute (RUSI) issued a 15 RUSI advises VASPs to adhere to should target beneficial owners or
September guidance paper on sanctions lists, which also include any persons acting on behalf of
proliferation financing (PF) risks VA addresses in the case of the US, customers, coupled with
intended to assist virtual asset with sanctions screening being comprehensive KYC processes.
service providers (VASPs). conducted at the identity The nature and purpose of the
verification stage and throughout relationship and the source and

According to RUSI, VASPs must the business relationship. RUSI destination of funds should also be
ensure they have knowledgeable adds that names provided by UN verified, with automated third-party
compliance teams, initial risk Panel of Experts’ reports, media blockchain analysis solutions
assessments, and a thorough screening and typology reports highly recommended.
understanding of all relevant made by NGOs and the private
national and international sector should also be considered. RUSI press release
requirements before onboarding
RUSI paper
any customers. Additionally, they In relation to onboarding
must have proper cybersecurity customers, the paper notes that
training and protocols and VASPs should apply know-your-
establish bespoke policies customer (KYC) processes before
regarding coin listing decisions. funds are deposited or accepted by
71
ANNOUNCEMENTS
EU Data Protection Supervisor calls for greater

clarity on proposed AML legislative package
package includes the With respect to the proposal for the

establishment of a European coordination mechanism of FIUs,
Authority for Countering Money the EDPS states that access to
Laundering and Financing of information related to criminal
Terrorism as well as a proposed offences in particular, and access
regulation on information to administrative information and
accompanying transfers of funds financial information about
The European Data Protection and certain crypto-assets. individuals should be limited to
Supervisor (EDPS) Wojciech
what is necessary in light of
Wiewiorowski has called for In his opinion, Wiewiorowski calls specific purposes. In this regard, he
“further clarifications” on the for the legislation to identify the invites the legislator to reassess
European Union’s proposed anti- categories of personal data to be the necessity and proportionality of
money laundering and counter processed by obliged entities, the proposed access rights.
terrorist financing (AML/CFT) instead of leaving the specification
legislative package, to minimise to regulatory technical standards. Regarding sources of information

intrusion into individuals’ privacy. He also calls for greater clarity on for customer due diligence,
personal data relating to criminal including “watch lists”, the

In an opinion note published on 22 convictions and offences. legislation should clarify the
September Wiewiorowski states
specific cases institutions should
that while he supports the Regarding beneficial ownership have access to such lists – and it
objectives of the package which registers, the EDPS recommends should be considered whether
would harmonise AML/CFT rules that access be limited to the access should only be permitted in
and enhance supervision, the purpose of fighting money high-risk cases. A risk-based
proposed risk-based approach to laundering and financing of approach should be taken with
monitoring the use of the financial terrorism, and not necessarily respect to due diligence, meaning
system for money laundering available to “any member of the the amount and categories of data,
“while welcome, needs further public”. The necessity and and the number of typologies and
specifications and clarifications”. proportionality of a general right to sources to be consulted should be
access beneficial ownership different with a normal customer

The European Commission registers should be assessed, the than with a politically exposed
adopted in July legislation seeking EDPS states, adding that there person, the EDPS opines.
to strengthen the EU’s AML/CFT should also be a reporting
rules. As well as a new proposed mechanism on the effectiveness of EDPS press release
regulation and directive from the beneficial ownership registers in

EDPS opinion
Parliament and Council, the the fight against money laundering.

72
UK FCA Dear CEO letter flags key harms and

expectations to the wealth management sector
The UK’s Financial Conduct or individuals operating “without highlights that it expects firms to
Authority (FCA) published on 30 the right permissions”. implement “clear systems and
September a Dear CEO letter, processes” for collecting and
which is dated 16 September, aggregating data and to ensure
addressed to firms operating in The letter covers comprehensive and timely
the wealth management and disclosure to consumers.
issues with respect
stockbroking sector, providing an
update on key harms and threats to four areas of Highlighting the findings of its call
to the sector, the regulator’s interest, including for input on consumer investment
expectations concerning firms’ markets, which was comprised in
efforts to mitigate the threats and
culture, fraud, the regulator’s strategy and
its upcoming work in the area. investment scams feedback statement published on
and market abuse 15 September, the FCA notes that

The letter covers issues with it will introduce a new ‘consumer
respect to four areas of interest, duty’, that will “set higher
including culture in financial In terms of financial resilience, the expectations for the standard of
services, such as diversity and FCA emphasises that firms must care that firms provide to
inclusion, fraud, investment scams have a good understanding of their consumers”. According to the
and market abuse, financial regulatory capital and reporting letter, this will imply “a significant
resilience and disorderly firm requirements and recommends shift in culture and behaviour” for
failure, and disclosure of charges. that they consult the Finalised many firms, which will be required
Guidance 20/1: Assessing to focus more consistently on

Warning that investment fraud and adequate financial resources, consumer outcomes. In addition,
scams are still impacting both which sets out the regulator’s the regulator pinpoints a
consumers and other firms, the approach to the adequate discussion paper launched with the
FCA stresses that it expects wealth assessment of financial resources. Prudential Regulation Authority and
management and stockbroking The FCA advises firms to regularly the Bank of England that invited
firms to ensure client portfolios are review their emerging liquidity and stakeholders to share their views
managed “in line with individual capital risks and to “proactively on how the regulators can
client risk profiles”, through robust notify” it in order to minimise accelerate “meaningful change”
due diligence procedures consumer harm. with respect to diversity and
particularly with regards to high-
inclusion in the sector.
risk and unregulated investments. With respect to the new
Firms are required to inform the requirements for the disclosure of FCA Dear CEO letter
regulator about the identity of any costs and charges brought by
Consumer Investment Markets…
authorised or unauthorised firms MiFID II in January 2018, the FCA
73
Three countries removed from the EU list of non-

cooperative jurisdictions for tax purposes
Reuters reported on 28 committing to automatic at the Council’s meeting on 5
September that the EU Council is information exchange with all EU October. Reuters reports that an
prepared to remove Dominica, member states. unnamed member state
Anguilla, and the Seychelles from
representatives expressed
the bloc’s list of non-cooperative A debate in the European concerns about one undisclosed
jurisdictions for tax purposes. The Parliament on 7 October jurisdiction named in the
Council approved the removal of highlighted the wide-ranging documents.
the three jurisdictions on 5 indignation over the Pandora
October, days after media outlets Papers directed against member Coreper II, which is comprised of
worldwide revealed offshore tax states, which MEPs accuse of member states’ permanent
evasion strategies based on the permitting tax evasion or representatives, included the
‘Pandora Papers’ in which the avoidance. The representatives conclusions on its list of non-
Seychelles features prominently. criticised the Finance Ministers’ discussion items, determining that
amendments to the EU blacklist the document was deemed to not

The news agency, citing yet- and the mechanism’s require further debate. The code of
unreleased documents, reported ineffectiveness. conduct group (COCG) on business
that the three jurisdictions were set
taxation, a Council working party
to be moved to the EU grey list NGOs have decried the delisting mandated to carry out the
awaiting the outcome of a decision, with an Oxfam official preparatory work necessary for list
supplementary review assessing criticising the blacklist in the wake revisions, proposed the
their declared commitment to tax of the Pandora Papers amendments and draft
reforms. Panama’s application for investigations, which claim that the conclusions on 21 September, a
delisting was reportedly denied Seychelles is a prominent COCG communication shows.
based on failure to reform or repeal destination for hidden wealth.
the foreign source income According to the anti-poverty European Parliament press rel…
exemption regime, according to confederation, with the delisting of
MEPs debate, part 1 of 2 (7 Oct…
reporting by Reuters. Anguilla, the list now includes none
of the jurisdictions with a zero

MEPs debate, part 2 of 2 (7 Oct…
In determining to keep the percent tax rate.
jurisdiction on the blacklist, the
EU Council press release (5 Oc…
Council cites the exemption and The Permanent Representatives
further states that Panama does Committee (Coreper II) approved Council conclusions (5 Octobe…
not meet the minimum compliance on 29 September the conclusions

Oxfam press release (5 Octobe…
threshold set by the Global Forum on the revision of the EU blacklist,
on Transparency and Exchange of which translates into the document Statement on Turkey (4 Octobe…
Information for Tax Purposes. being included on a provisional list
Turkey also remains on the grey list of items to be approved without
following insufficient progress in discussion – known as A items –
74
UK FCA and PRA issue joint Dear CEO letter

concerning trade finance business
The letter warns that recent The regulators further reiterate
assessments of individual firms their expectation that firms
have highlighted deficiencies with conduct effective credit analysis of
respect to credit risk analysis and all trade finance counterparts prior
financial crime controls, which has to establishing formal credit limits,
resulted in firms being exposed to which should include all parties
“unnecessary” risks. The reviews with an interest in the transactions,
found that trade finance firms are including the end-buyer, credit
not fully focusing on the insurer and others. Furthermore,
identification and assessment of the letter highlights that in cases
financial crime risks, particularly where the end-buyers are the
dual-use goods and fraud. primary source of repayment under
The UK’s Financial Conduct
the transactions, firms should
Authority (FCA) and the With respect to client risk, the obtain formal written confirmation
Prudential Regulation Authority
regulators note that their reviews from the end-buyer stating that the
issued on 9 September a Dear have found that firms often fail to amount due and payable under the
CEO letter reiterating their adequately assess the risks posed trade finance transaction is
expectations regarding firms by the industry or jurisdictions payable to the financing firm, and
conducting trade finance activity
wherein their clients operate, as not to the borrower.
to carry out effective financial
well as by the specifics of the
crime risk assessments. transactions, or are unable to In addition, firms are required to
provide evidence that they have ensure adequate oversight of their
conducted such procedures. policies and controls, including by
The letter advises
monitoring the discounting of red
trade finance The letter advises trade finance flags, transaction approval
businesses to undertake a holistic rationales, and the quality of
businesses to assessment of money laundering, escalations from first-line business
undertake a holistic sanctions evasion, terrorist functions or trade finance
assessment of financing and fraud risks, which operations teams.
should be documented within a
money laundering, business-wide financial crime risk FCA Dear CEO letter
sanctions evasion, assessment. Firms are expected to
PRA announcement
identify specific types of
terrorist financing
customers or transactions where
and fraud risks enhanced due diligence is needed.
75
FATF holds webinar on environmental crime
institutions (FIs). Conway stated that FIs should

enhance cooperation with environmental crime
investigators and that countries should consider
developing public-private partnerships for information
sharing purposes and enhance capacity to investigate
and trace illegal proceeds from environmental crime.
The Director of Financial Crime

The Financial Action Task Force (FATF) held on 30
Framework and Policies at
September a webinar on money laundering through
environmental crime, which discussed approaches Santander Bank John Edward
to identifying red flag indicators for detecting illicit Conway recognised that “there
finance deriving from such activities, as well as
is a significant lack of
mechanisms for overcoming challenges in
identifying and tackling them. awareness on environmental
crime” in financial institutions

During the webinar, panellists highlighted that the key
challenges specific to environmental crime concern
the lack of governmental and institutional A point of discussion was raised by Matthew Shannon
prioritisation for tackling offences, as well as a general from the Canadian Department of Finance, who
lack of awareness, both within civil society, but also underlined that intermediaries, such as lawyers,
within the financial sector. Rochelle Pastana Ribeiro accountants or trust and company service providers
Pasiani, General-Coordinator of the Brazilian Council (TCSPs), play a critical role in facilitating corporate
for Financial Activities Control (COAF), underlined that formation and layering the funds derived from criminal
many countries fail to implement FATF standards activity. However, Shannon raised concerns that many
properly and therefore lack understanding of the risks of them, especially TCSPs have “among the weakest
associated with environmental crime, thus failing to implementation of AML/CFT standards”.
identify gaps and adopt mechanisms for mitigating
such risks. Pasiani recommended that relevant The webinar followed the publication in July of FATF’s
authorities should focus on analysing environmental report on money laundering from environmental
crime in connection with other types of criminal crime, which analysed methods used by criminal
activity, such as money laundering, tax fraud, trade networks to launder the proceeds from various
fraud, and drug trafficking, in order to ensure that activities such as illegal mining, illegal logging, waste
illegal proceeds are traced and confiscated. trafficking and the illegal wildlife trade.
The Director of Financial Crime Framework and FATF webinar page

Policies at Santander Bank John Edward Conway
recognised that “there is a significant lack of FATF report on money laundering from environmenta…
awareness on environmental crime” within financial
76
EPPO investigations involve an estimated €4.5bn

in damages against the EU budget
The European Public Prosecutor’s since the commencement of its prosecuting perpetrators targeting
Office (EPPO) announced on 14 operations on 1 June, following the bloc’s financial interests
September that the estimated more than 1,700 crime reports through various types of fraud,
damage to the EU budget in its received from member states and including VAT fraud, money
ongoing investigations amounts private entities. laundering, and corruption.
to nearly €4.5 billion.
As the EU’s independent public EPPO press release

According to the EPPO, over 300 prosecution office, the EPPO is
investigations have been launched responsible for investigating and
UK National Crime Agency and Europol sign new

working and administrative arrangement
The UK’s National Crime Agency covered by Title V of the TCA, DoubleVPN cybercrime service and
(NCA) announced on 29 including cooperation to prevent the capture of six fugitives wanted
September that pursuant to the and combat serious crime, in Romania, Hungary and Lithuania
UK-EU Trade and Cooperation terrorism and other crimes. for modern slavery, human
Agreement (TCA), it has signed a
trafficking, and human smuggling.
new working and administrative The scope of cooperation may
arrangement with Europol, which include exchanges of information, NCA Director General Dame Lynne
provides further clarity on general situation reports, results of Owens states that “The TCA, and
operational cooperation. strategic analysis, and information our arrangement with Europol,
on criminal investigation reflects the scale of the NCA’s

According to the NCA, liaison procedures and crime prevention contribution in protecting the UK
officers will be based at Europol methods. The specific forms of from serious and organised crime,
headquarters and will have access cooperation include high-level and we look forward to continued
to its secure messaging system. meetings and regular consultations collaborative working with our EU
British liaison officers will be able on policy issues and matters of law enforcement partners”.
to attend and organise operational common interest.
and other meetings at Europol and
NCA press release
contribute to analysis projects. The NCA recalls the results of its
NCA-Europol arrangement
working relationship with EU

Under the new working agreement, partners in the previous nine
the NCA and Europol will attend months, including taking down the
regular meetings to discuss issues Emotet malware and the
77
China prohibits cryptocurrency transactions

The People’s Bank of China (PBOC) announced on
Virtual currency exchanges
24 September the prohibition of all cryptocurrency
transactions in China. The ban also extends to
providing services to Chinese
overseas virtual currency exchanges providing residents also constitutes a
services to Chinese residents.
crime, and domestic employees
In a public notice co-signed by nine other Chinese continuing to work for such
agencies, the Supreme People’s Court of the Central entities will face prosecution
Cyberspace Administration of the PBOC declared that
all virtual currency-related business operations
constitute illicit financial activity, to include providing Criminal activity that involves virtual currencies,
any related services, fundraising, or virtual currency including money laundering, cross-border gambling,
derivatives transactions. Virtual currency exchanges and pyramid schemes utilising virtual currencies, will
providing services to Chinese residents constitutes a also come under increased scrutiny by the Ministry of
crime, and domestic employees continuing to work for Public Security, according to the PBOC notice. In a
any such entities will be subject to prosecution. Q&A accompanying the notice, the PBOC states that
Bitcoin and other digital tokens or virtual currencies

The notice goes on to announce the formation of a have disrupted financial and economic order and have
work coordination mechanism to address risks of enabled money laundering.
virtual currency trading and ensure the ban is enforced
across all Chinese territory. Provincial governments In response to the warning about virtual currency
are given responsibility for carrying out local promotion online, Chinese media platforms such as
monitoring and early warning mechanisms related to Douyin have begun removing information previously
policing any virtual currency promotions. PBOC states made available in search results about digital tokens,
that it will coordinate with other departments to target according to 5 October reporting by the Financial
virtual currency mining as well as other related activity Times. The media outlet also reports that numerous
and establish a cross-departmental information digital wallets have since disconnected from users in
sharing and response mechanisms. China and foreign virtual currency exchanges have
begun rejecting Chinese clients.

Financial institutions are warned not to provide any
services to virtual currency-related businesses, PBOC notice
including transferring funds, using virtual currency as
PBOC Q&A
collateral, or opening accounts. All internet content
related to virtual currencies, including promotion, is
Financial Times article
also prohibited, and any related mobile applications,
websites, or linked programs will be shut down.
78
UK FCA's new consumer investments strategy
Among other objectives set out in scams more robustly than [...] ever
its strategy, the FCA aims to reduce [...] before", particularly in the light
the money consumers lose to of the pandemic. Gupta also
investment scams perpetrated or reiterated the FCA's supportive
facilitated by regulated firms. position with respect to the
According to the regulator’s review, inclusion of financial fraud and
consumers lost approximately scams in the Online Harms Bill, as
The UK’s Financial Conduct £570 million to investment fraud in well as its commitment to working
Authority (FCA) published on 15 2020-2021, an almost threefold with online platforms to take
September its new strategy for increase since 2018, when losses comprehensive action against
consumer investments along with amounted to over £197 million. fraudsters and to alert consumers
a feedback statement which
and takedown harmful websites.
follows its September 2020 call The FCA published its consumer
for input. Through its strategy, the investments data review, covering Key action points include
regulator aims to halve the the period from 1 April 2020 to 31
number of consumers investing in March 2021, which highlights the Launching a new £11 million
unsuitable, high-risk products, regulator’s work around tackling investment harm campaign to
and reduce the amount of money related harms, including: (1) help consumers make better
lost to investment scams. stopping 48 new firms from informed investment decisions
entering the market where the FCA and to reduce the number of
Noting that the characteristics of identified potential for consumer people approaching high-risk
investors are changing, as well as harm, equating to one in five investments
their approach to investment, the applications; (2) preventing nine
FCA underlines in its strategy that financial adviser firms and two Increase assertiveness and
6 percent of consumers increased individuals from gaining agility in how the FCA detects,
their holdings of higher risk authorisation on phoenixing disrupts and takes action
investments during the pandemic. suspicions; (3) opening over 1,700 against scammers, by focusing
supervisory cases involving scams

on online service providers,
The FCA's recent call for input or higher risk investments; and (4) automated web scraping
found that younger people are publishing 1,317 alerts about identification and alerts
twice as likely to have invested in unauthorised firms and individuals.
higher risk investments than adults
FCA press release

overall, with 44 percent of During the Inside FCA Podcast
cryptocurrencies and 31 percent of released on 27 September, Director
Consumer investments strateg…
crowdfunding investments being of the FCA’s Supervision on
held by people under 34. A lack of Investment, Wholesale and FCA consumer investments da…
awareness of the risks associated Specialists Division, Debbie Gupta
stressed that the FCA is FCA consumer investments da…
with investing is also emphasised.
determined to "tackle fraud and
79
Dutch Banking Disciplinary Commission clears

former directors linked to AML/CFT scandal
The Dutch Banking Disciplinary The Dutch Banking Disciplinary hundreds of millions of euros
Commission concluded on 15 Commission states that it has also between 2010 and 2016.
September that no breaches considered a 2018 inquiry into
occurred following an possible violations of the bankers’ The Dutch Public Prosecutions
investigation into alleged oath through an earlier proposal to Office found no evidence that the
violations of bankers’ oaths by significantly increase then ING CEO responsibility for the money
several bank directors of a non- Ralph Hammers’ salary, finding laundering offences was
identified bank purportedly possible violations and announcing attributable to natural persons and
committed in the context of a separate complaints against three agreed not to bring further charges
money laundering and countering unidentified individuals. against any individuals. The
the financing of terrorism
specific provisions exonerating ING
(AML/CFT) scandal. Netherland The disciplinary investigation executives has been met with
News claims that the concerned follows a €775 million settlement criticism and a complaint from
bank is ING Bank NV and that between ING and the Dutch Public financial activist Pieter Lakeman.
among the targeted executives is Prosecutor Office in September
current UBS Group AG Chief 2018. Prosecutors accused the Dutch Banking Disciplinary Co…
Executive Ralph Hamers. bank of failing to prevent the use of
Dutch Banking Disciplinary Co…
ING customer accounts to launder
UK bars Chinese ambassador from APPG event
The spokesperson of the Chinese Xinjiang security body pursuant to The Chinese Foreign Ministry
Embassy to the UK announced on the UK’s Global Human Rights spokesperson Zhao Lijian stated
14 September that the Chinese sanctions regime, over “systematic that China’s decision to sanction
Ambassador Zheng Zeguang has violations against Uyghurs and UK MPs was “justified and
been barred from participating in other minorities” in Xinjiang. reasonable” and urged the UK to
an All Party Parliamentary Group
revise its decision and “make more
(APPG) event over previous According to Reuters, Lindsay concrete efforts to consolidate and
sanctions imposed by China on Hoyle, the speaker of the House of develop China-UK relations”.
several UK MPs. Commons stated that “it is not Similarly, the Chinese Embassy
appropriate for the ambassador for condemned the UK’s decision.

On 26 March, China sanctioned China to meet on the Commons
nine British nationals in response estate […] when his country has Chinese Embassy to the UK sta…
to the UK's designation of four imposed sanctions against some
Statement of Chinese Foreign …
Chinese government officials and a of [the UK Parliament] members”.
80
G7 Ministers commit to addressing terrorism,

online harms, security threats and corruption
“terrorists attempting to cross Supporting global action to

borders, child abusers exploiting confront emerging issues
their victims, or ransomware affecting national and border
attacks against critical security, with an emphasis on
infrastructure”. cybercrime, including
ransomware, irregular migration
G7 commitments include and forced displacement.
The G7 Interior and Security Accordingly, recalling the
Ministers met along with EU Countering violent extremism ongoing situation in
representatives and the Secretary and terrorism, including online Afghanistan, G7 ministers
General of Interpol in London perpetration, through strong expressed their commitment to
between 7 and 9 September to collaboration and coordination ensuring safe and regular
discuss potential collective action routes for protection and
Strengthening resilience against resettlement of Afghan citizens
to address serious and organised
online harms, by more
crime, illegal wildlife trade, online
accurately defining and Enhancing international action
harms, threats to national and
effectively addressing violent against corruption and
border security, and corruption
extremist content, online kleptocracies, through
and kleptocracies. The meeting
violence against women and strengthened support for the
concluded with the establishment
girls and child sexual International Anti-Corruption
of a detailed set of commitments.
exploitation and abuse, as well Co-ordination Centre and
as encouraging increased leading global efforts to ensure

Significantly, recalling 9/11 and
coordination between public policies address
more recent terrorist attacks, the
governments, industry and civil emerging threats
ministers called for the expansion
society to further integrate
of the use of Interpol to respond to
crisis response mechanisms Home Office policy paper relea…
global crime threats and terrorism
through increased sharing of Preventing economic security G7 interior commitments
information, expertise and from being undermined by the
operational support. According to threat of serious and organised Statement against corruption a…
Interpol Secretary General Jürgen crime, for example through
Stock “a fully integrated global Statement on preventing and c…
more thoroughly involving
security architecture supported by Interpol’s capabilities in the
Interpol” is an essential Statement on protecting again…
response to money laundering
contribution to effectively and illicit finance, including links G7 UK Presidency website noti…
addressing threats including to environmental crime
81
British American Tobacco suspends Belarus

tobacco manufacturing due to US sanctions
A British American Tobacco (BAT) The tobacco producer responded Financial Crime Digest that the
plc spokesperson informed the to human rights abuse allegations, company “does not do any
Financial Crime Digest on 24 stating that its relationship with business with GTF Neman”. The
September that the company GTF Neman was compliant with company states that it remains
ceased manufacturing orders to a due diligence procedures. The “committed to complying with all
Belarusian factory in August after conglomerate further suspended a applicable international sanctions”
the US Treasury’s Office of scheduled on-site independent and continues to monitor the
Foreign Assets Control (OFAC) audit that aimed to review situation in Belarus. On its website,
imposed additional sanctions that workplace conditions at the JTI states that it has an entity in
month on entities controlled by sanctioned factory in the wake of Belarus named Japan Tobacco
contested President Alexander restrictive measures. The tobacco International S&D FLLC.
Lukashenko and his government. conglomerate did not reveal any
plan to review working conditions GTF Neman was designated by

Following the imposition of when contacted for comment. OFAC along with other Belarusian
sanctions on Hrodzenskaya
individuals and entities on 9
Tytunyovaya Fabryka Neman A GTF Neman webpage on a August, pursuant to Executive
Adkrytaye Aktsyyanernaye business-to-business portal states Order (EO) blocking property of
Tavarystva (Grodno Tobacco that the Belarusian producer is additional persons contributing to
Factory Neman OJSC, GTF “cooperating with international the situation in Belarus.
Neman), BAT subsidiaries companies such as BAT and
suspended transactions with the [Japan Tobacco International SA]” BAT dedicated page for respon…
listed entity, a dedicated page on to manufacture their brands.
Tobacco1 page for GTF Neman
the BAT website notes. GTF Contacted for comment about its
Neman manufactures cigarettes reported relationship with the
JTI contact information for Bel…
on behalf of BAT Belarus. designated factory, a JTI
spokesperson informed the
UNSC urges states to enforce Mali travel bans
The UN Security Council (UNSC) on individuals designated under grant exemptions on a case-by-
Committee established pursuant the resolution. case basis, with related
to resolution 2374 (2017)
notifications being communicated
concerning Mali called on 13 The committee recommends that in writing to the relevant UN
September for all member states member states consult the list of Permanent Mission.
to take the necessary measures to individuals subject to travel bans
implement the current travel bans and reminds them that it may also UN press release
82
UK FCA and Treasury respond to committee

report on London Capital & Finance plc collapse
The UK’s House of Commons Treasury Select The FCA also states the need to treat the fight against
Committee published on 13 September two fraud as a collective effort and to allocate appropriate
responses to its June report into the collapse of funds to it. The June report further recommended that
mini-bond issuer London Capital & Finance plc the government take into consideration enhancing the
(LCF). The August letters from HM Treasury and the FCA’s power to investigate fraud and other types of
Financial Conduct Authority (FCA) detail how the financial crime. HM Treasury states in its response
institutions plan to respond to the MPs that the Home Office is still currently developing the
recommendations. Fraud Action Plan, which will “consider any potential or
regulatory change”.

The FCA commits to updating the committee on the
resolution of LCF complaints by 31 September, stating The response also notes that HM Treasury is working
that by the end of August it had responded to 98 with the FCA to review several exemptions to the
percent of grievances. The regulator declares that it financial promotions regime, while the government
acted on the recommendations issued by the Dame plans to establish a regulatory gateway for the
Elizabeth Gloster inquiry and implemented a “use it or approval of such promotions. The proposed change
lose it” policy that seeks to remove regulated activity would only allow companies with the relevant
permissions that are not being actively utilised. expertise to promote products and would ensure that
the FCA is able to identify breaches and act

The FCA states that despite the Gloster report it accordingly, according to the letter. Rathi shares the
identified no personal culpability of misconduct in its committee’s concern regarding promotions and states
handling of the LCF case and remains committed to he supports legislative change to address exemptions.
implementing all nine recommendations, including
those relating to institutional culture. In addition to this, HM Treasury responds positively to
the recommendation to include measures to address

HM Treasury’s response notes that it does not view fraud in the Online Safety Bill, stating that the
providing the FCA with formal powers to recommend government is considering stricter regulations for
changes to its perimeter of regulation as a necessary online advertising, including from a scam prevention
step, as was suggested by a previous Treasury perspective, with the FCA in support of the proposal.
Committee. The letter cites FCA CEO Nikhil Rathi as
stating that such a prerogative “would [not] add very Committee press release
much” during his own oral evidence in the context of
Responses to LCF report
the current inquiry. The regulator states that it is
focused on tackling fraud risks outside the perimeter
and is taking steps to collaborate more effectively with
the government and law enforcement.
83
German investigators raid Justice and Finance

Ministries in FIU money laundering probe
The FIU is based in Cologne and number “since the FIU took over
operates independently from the the money laundering control”.
Finance Ministry. However,
prosecutors state the probe is Scholz criticised the raids. On 20

examining whether Finance September, he appeared before
Ministry officials explicitly Germany’s parliament to answer
instructed the FIU to ignore lawmakers’ questions over the
The Osnabrück Public warnings over suspected probe. Although the session was
Prosecutor’s Office announced on transactions, which included over not open to the public, Scholz has
9 September that authorities from €1 million in payments made to previously pointed to staff
its Central Criminal Inspectorate accounts in Africa in 2018. increases at the FIU under his

raided Germany’s Justice and

tenure as Finance Minister, raising
Finance Ministries as part of an A bank’s suspicious transaction the number of employees from 165
investigation into whether the report into the African payments to 500, as an example of his efforts
Financial Intelligence Unit (FIU) triggered the Osnabrück to boost regulatory capacity. Critics
ignored red flags about suspected investigation. Prosecutors assert in the rival Christian Democratic
money laundering transactions that the German FIU noted the Union party noted ahead of the 26
between 2018 and 2020. The FIU report but failed to forward the September national elections that
is controlled by Federal Minister information to police, which the Wirecard scandal also occurred
of Finance and the Social resulted in the payments under Scholz’s watch.

Democratic Party’s candidate for continuing. Another aspect of the

chancellor of Germany, Olaf investigation, according to the Osnabrück Public Prosecutor’s …
Scholz, whose party earned press statement, is an inquiry into

AP article
plurality in the 26 September why suspicious transaction reports
federal election. have significantly decreased in
UK captures evidence of ships apparently

breaching UN sanctions targeting North Korea
The UK’s Ministry of Defence violate UN Security Council release as stating that his crew
announced on 26 September that sanctions relating to North Korea. located ships which appeared to be
the frigate HMS Richmond has
engaging in sanctions violations.
captured video and photographic Richmond Commander Hugh
evidence of vessels appearing to Botterill is quoted in the press UK Defence Ministry press rele…
84
EU Parliament resolution on EU-Russia relations
financial assets of the Russian country ceases “its aggressive

regime’s autocrats and corrupted policy and hybrid warfare”.
oligarchs in EU Member States”,
including by applying a non- The resolution recommends
conviction based confiscation that the EU should
policy to fight kleptocracy.

Enhance cooperation with
The European Parliament adopted MEPs also raise concerns about
member states to strengthen
on 16 September a resolution on Russia’s financial interference in security, military and cyber
the direction of EU-Russia Belarus, which supports Alexander resilience, to counter
political relations, noting that the Lukashenko’s regime accused of disinformation campaigns,
bloc should consider including being responsible for the “brutal cyber-attacks, election
Russia on its list of non-EU states persecution” of Belarusian activists interference and espionage
posing a high-risk of money and rule of law violations.
laundering (ML), to enhance
control of all suspicious financial Reconsider along with its

The resolution notes that the EU
flows originating from Russia. member states investment
should not recognise the Russian
support for projects such as

parliament as legitimate if
The resolution highlights that the Nord Stream 2, and should
allegations of electoral fraud are
EU must enhance cooperation with focus on Russia’s strategic
confirmed and should consider
the US and other international investments which are aimed at
requesting Russia’s suspension
partners, including Canada, the UK “fund[ing] Russia’s malign
from international organisations
and Japan, and establish an interference and spreading of
with parliamentary assemblies,
alliance aimed at counterbalancing corruption in the EU”
such as the Parliamentary
Russia and China’s “efforts to Assembly of the Council of Europe.
weaken democracy worldwide”. Monitor the human rights

The alliance should also focus on situation in Russia, including by

Additionally, the European
supporting human rights activists assessing court cases of
Parliament emphasises that
and establishing joint actions on opposition leaders, activists or
member states should “introduce
sanctions, countering illicit civil society organisations and
sanctions for all activities which
financial flows and conducting apply the EU Global Human
may be falsely claimed to
international investigations. Rights Sanctions Regime to
constitute international
human rights violations “in all

observation” and should not
With respect to countering territories affected by frozen
endorse Russia’s unlawful
transnational corruption and conflicts or illegally occupied
organisation of elections in
related ML originating from Russia, regions of the EaP countries”
occupied Crimea and occupied
the resolution provides that the EU areas of the Donetsk and Luhansk
should strengthen its capacity to regions. Concurrently, the EU EP press release
stop “dirty money” flows and should ensure that it maintains
expose “the hidden treasures and sanctions against Russia until the EP resolution
85
UK government on regulating election finance
The UK government published on consider options for future The response underlines that
15 September its response to the legislative reform, as well as non- transparency rules concerning
UK Committee on Standards in statutory actions such as engaging third-party campaigning are
Public Life’s (CSPL) report on the with parties, campaigners and “already robust” and will be
regulation of election finance various social media and digital enhanced by the provisions of the
which was released on 7 July. The platforms to develop guidance on UK Elections Bill, which is currently
government notes that it best practice. being discussed in parliament. The
recognises the risk posed by
government adds that the bill aims
individuals seeking to evade the In relation to the CSPL's proposals to increase accountability of the
rules on donations and will on setting out an obligation for the Electoral Commission to
“carefully” consider the CSPL’s Electoral Commission to publish parliament and strengthen the
proposals in order to ensure that information on election integrity of UK elections by
the existing legal framework expenditure of parties and non- ensuring greater transparency of
continues to provide effective party campaigners spending over joint campaigns between political
safeguards to the integrity of the £250,000, the government parties and third parties.
UK political system. highlights that it will consult with
the relevant stakeholders to assess UK Cabinet Office press release

The government notes that it is the intended benefits of the
UK government response
committed to increasing recommendations “against the
transparency in digital administrative impact”.
campaigning, and that it will
UK Treasury responds to Greensill report

The UK House of Commons of the Exchequer Rishi Sunak work to identify ways to “reduce
Treasury Committee published on states in a 20 September letter that opportunities for misuse”. FCA
24 September the government’s Treasury will consider the findings CEO Nikhil Rathi revealed in a 4
response to its July report of the Financial Conduct May letter to the committee that
concerning the collapse of supply Authority’s (FCA) data request to the watchdog is investigating
chain financing firm Greensill firms that used the regime as well matters related to the two firms,
Capital (UK) Ltd. as the results of the consultation including questions related to
on possible changes to the oversight by the AR.

An appointed representatives (AR) framework. Sunak adds that the
framework reportedly allowed Treasury plans to issue a call for Treasury Committee press rele…
Greensill Capital Securities Ltd to evidence relating to the AR regime.
Response letters
carry out regulated activities within
the oversight of its principal, In its response to the committee’s

Mirabella Advisers LLP. Chancellor report, the FCA confirms that it will
86
EU resolution on exchange of tax information
examinations of the measures states to assess the

taken by the member states to effectiveness of their
prevent money laundering and monitoring schemes, including
terrorist financing “reveal worrying compliance with due diligence
deficiencies with direct effect on and beneficial ownership
the effective information exchange obligations, as well as to extend
on tax matters”, noting that none of infringement proceedings to all
The European Parliament (EP) the 18 states reviewed received a states offering golden visas
adopted on 16 September a rating indicating a high-level of
effectiveness. Commissioner Paolo Call on the Commission to
resolution on the implementation
Gentiloni highlighted that the present an evaluation of the
of the EU requirements for
interaction between AML and
exchange of tax information, Commission is “working intensively
on transposition control of Anti- DAC regulations, as well as to
expressing disapproval of the
Money Laundering Directives four ensure that infringement
European Commission’s
proceedings are launched
reluctance to launch infringement and five, and on ensuring timely
creation of national beneficial against member states
proceedings against member
ownership registers and their incorrectly implementing or
states for incorrect
cross-border interconnection”. applying the regulations
implementation of the Directive
on Administrative Cooperation
Proposed measures include Urge member states to
(2011/16/EU, DAC1) and its
consistently verify information
subsequent amendments in the
provided by financial
field of taxation. Strengthen existing rules to
institutions and impose
combat tax evasion, tax

penalties where information is
The resolution follows the EP’s avoidance, and tax fraud
determined to be false
Committee on Economic and through the reporting of
Monetary Affairs (ECON) 3 June beneficial ownership, and
adoption of a report by MEP Sven extension to various types of Allow member states to decide
Giegold on the progress and income and assets, including whether to use information
lessons learnt from DAC1 with the crypto-assets and e-money, obtained through the exchange
aim of countering tax fraud, immovable property and of tax information for other law
avoidance and evasion. Adopting companies, non-financial enforcement purposes, in order

the resolution which evaluates the assets such as cash, art, gold to ensure threats such as
last 10 years of structured or other valuables held at money laundering and
exchange of tax information, MEPs freeports, customs warehouses organised crime are addressed
conclude that there is still or safe deposit boxes, accounts adequately, without requiring
insufficient implementation of the at P2P lending, crowdfunding cross-border authorisation

existing provisions. and similar platforms
EP resolution
Call on the Commission to
During the EP debate on the
include on-site visits in member
resolution, Giegold highlighted that
87
UK joins Beneficial Ownership Leadership Group
the Leadership Group includes Armenia, Kenya, Latvia,

Mexico, Norway, the Slovak Republic, and the UK.

On 1 September, Companies House advised directors

of companies that are due to file accounts by the end
of September to use its online services where
possible, stressing that failing to file the firm’s
accounts by the deadline could result in a criminal
record, a fine or disqualification.

BO disclosure includes
On 1 September, the UK formally joined the
Beneficial Ownership Leadership Group. The UK
Free and unhindered accessibility to company BO
Home Office published a declaration reiterating the
data by the public
commitment to meeting the beneficial ownership
(BO) transparency disclosure principles, by creating Recognising the evolving illicit finance threat and
a global norm for companies by 2023. considering implementing BO transparency beyond
companies to a wider group of asset classes

As a member of the Leadership Group, which was
convened by the Open Ownership and Open Implementing protocols for identifying and
Government Partnership in 2019, the UK aims to investigating red flags in the data, including
develop public registers of company BO and collaboration and accountability between registrars
contribute to efforts sustained globally and regionally and law enforcement
for other countries to implement the disclosure
Representing the full chain of BO, from the ultimate
principles for BO data. The UK also commits to
beneficial owner to the target company, including
ensuring countries eligible for official development
all domestic entities inbetween
assistance (ODA), as defined by the OECD
Development Assistance Committee (DAC), receive Engaging with civil society, as well as other
technical and financial support. governments and international institutions, to
ensure that the statute of BO transparency as a

As part of the process of becoming a member of the global norm is respected
Leadership Group, countries are expected to: (1) make
public statements on their commitment to
UK Home Office release
implementing the BO disclosure principles by 2023; (2)
appoint a senior government official and agency to Signed declaration
conduct the establishment of the public national
company BO register; and (3) develop a national UK OGP commitment
action plan setting out the required steps. At present,
88
CONSULTATIONS
US FinCEN consults on regulations to implement

BSA/AML Act provisions on antiquities trading
facilitation of related transactions. Additionally, the
FinCEN states that it seeks to understand what
verifications traders perform when payments come
from overseas accounts and what ML/TF and
sanctions risks are associated with the trade in
antiquities. FinCEN requests information on what
antiquities trading sectors or geographical locations
pose a greater ML/TF risk and what safeguards the
industry already has in place to protect against
The US Financial Crimes Enforcement Network business loss and fraud.
(FinCEN) announced on 23 September in an advance
notice of proposed rulemaking that it is seeking Other questions relate to trade in antiquities
comments on regulations to implement the trade in regulations, with FinCEN asking whether all or some
antiquities provisions introduced by the Anti-Money elements of the AML/CFT programme requirements
Laundering (AML) Act of 2020. The consultation is currently applicable to financial institutions should be
open until 25 October. extended to the antiquities sector. Significantly, the
regulator asks whether know-your-customer,

Under Section 6110(a) of the AML Act, persons beneficial ownership, and reporting requirements
engaged in the trade of antiquities, including an should be applicable to the antiquities trade, and if so,
advisor, consultant, or any other person who engages which requirements.

as a business in the solicitation or sale of antiquities
are categorised as financial institutions. The AML Act In March, FinCEN issued another notice to financial
also directs the Treasury Secretary, in coordination institutions in relation to antiques and art trading,
with the Director of the Federal Bureau of along with related instructions on filing suspicious
Investigation, the Attorney General, and the Homeland activity reports.
Security Secretary to perform a study on the
facilitation of money laundering and terrorism FinCEN press release
financing (ML/TF) through the artwork trade.

FinCEN proposed rulemaking (24 September)
FinCEN seeks comments from members of the AML Act of 2020

antiquities industry, law enforcement, civil society
groups, and the broader public on the roles, FinCEN notice (9 March)
responsibilities, and activities of persons engaged in
the antiquities trade as well as the financing and
89
EU consults on blocking statute amendment
On 19 January 2021, the EC Regarding the second objective,

released a communication ‘The the proposed amendments could
European economic and financial simplify compliance through
system: fostering openness, streamlined processing for
strength and resilience’, authorisation requests, including a
announcing a strategy to promote review of the information required
the EU’s resilience in economic and to process such a request, as well
The European Commission (EC) financial matters, including by as clarifications of the prohibition
launched on 9 September a considering additional policy to comply with unlawful extra-
consultation seeking feedback on options to further deter and territorial sanctions of third
a potential amendment to Council counteract “the unlawful extra- countries, with a potential focus on
Regulation 2271/96, the EU territorial application of third- strategic sectors.
Blocking Statute, which aims to
country sanctions to EU operators”,

protect EU individuals, The EC on 3 September released a
by amending the blocking statute.
organisations, and companies
report on the application and

from the extra-territorial According to the EC, this initiative, effects of the blocking statute for
application of third-country laws the period 1 August 2018 to 1
which could take the form of an
and measures. All citizens and amending regulation, or a March 2021. The Commission
organisations are invited to regulation repealing and replacing received 63 notifications, 35 related
respond via the online the blocking statute, would (1) to US sanctions against Cuba and
questionnaire by 4 November. include additional deterrence 28 against Iran. They concern (1)
adverse effects related to banking

mechanisms and (2) streamline
The blocking statute, which was the application of the regulation, activities or other financial
enacted in November 1996 in including by reducing compliance services; (2) adverse effects
response to US sanctions against caused by one or several business
costs for EU operators.
Cuba, Iran and Libya, protects EU
partners; (3) administrative and
operators, regardless of size and With respect to the first objective, judicial proceedings in the US;
field of activity, by (1) nullifying the the proposed amendments could and (4) reluctance to engage in
effect in the EU of any foreign court provide the EC with the authority to business in countries targeted by
ruling based on the foreign laws extra-territorial laws.
apply deterrent and counteracting
listed in the Annex to the blocking measures against third countries
statute; and (2) allowing EU EC press release
unlawfully applying extra-territorial
operators to recover in court sanctions, or persons benefiting
Consultation document
damages caused by the extra- from their imposition. Such powers
territorial application of the would include commercial or other Consultation strategy
specified foreign laws. The statute measures in the field of judicial
imposes an obligation on EU cooperation in civil matters, as well Questionnaire
persons to inform the EU if extra- as restricting access to EU capital
territorial sanctions affect their markets, public tenders, or visa
economic or financial interests. limitations for individuals.
90
UK FCA consults on unused firm permissions

The UK Financial Conduct notice to a firm. The FCA highlights authority to prevent scams and
Authority (FCA) published on 9 that under the new authority, it ensure the register presents a
September draft guidance on a would be able to vary or cancel clearer picture of the permissions
new authority pursuant to the permissions after one month, firms hold. The changes would
Financial Services Act 2021 that specifically where the respective only affect firms authorised by the
would streamline the process of firm appears not to be conducting FCA under Part 4A of the Financial
removing regulatory permissions FCA regulated activities for which Services and Markets Act 2000,
that are no longer being used by they have permission, and have not thus they are not related to other
financial services firms. A responded to the FCA's outreach. authorised firms, such as payment
consultation on the changes
service providers and electronic
brought by the new power runs The FCA’s view is that incorrect or money issuers.
until 29 October. outdated permissions on the
Financial Services (FS) Register FCA press release

The regulator states that the new can mislead consumers with
Consultation publication
power would enable it to begin the regards to the level of protection
cancellation process as soon as it offered by a firm or give credibility
Consultation paper
considers permissions are not to a firm’s unregulated activities.
being used, by serving 14 days’ The FCA intends to use the new
UK launches inquiry into Afghanistan policy
Afghanistan. Initial written The inquiry seeks to assess where

evidence can be submitted to the regional powers’ interests on
committee until 15 October. security, migration and economic

ties overlap with those set by the
The committee will also examine UK, and how the UK government
the Foreign, Commonwealth and should work with these states
Development Office’s role in the going forward, in order to achieve
The UK Committee on Foreign UK’s efforts to evacuate individuals the objectives. Additionally, the
Affairs launched on 3 September eligible for protection and will committee will evaluate the UK’s
an inquiry into future UK policy on assess the broader implications for objectives with respect to
Afghanistan, which will assess UK foreign policy. The committee Afghanistan, including its counter-
the national response to the also aims to establish whether the terrorism efforts and the approach
Taliban takeover, including UK situation in Afghanistan has towards the Taliban.
security, as well as the human influenced the role of Russia, China
rights situation and the and other regional powers, as well Foreign Affairs Committee pre…
humanitarian crisis in as how it will impact UK interests.

Call for evidence
91
UK JMLSG consults on revisions to its guidance

productive monitoring managing the risk of manual error.
arrangements [...] to higher priority Additionally, entities should focus
risks” and should ensure that the on identifying various transaction
rules applied, and the thresholds, characteristics while monitoring,
are relevant and applicable to their which includes known threats or
operations and customer activities. typologies, networks of connected

accounts, counterparties,
The proposed revisions highlight customers or beneficial owners.
The UK’s Joint Money Laundering
that firms should develop a
Steering Group (JMLSG) launched

governance mechanism for the JMLSG also published the revised
on 23 September a consultation
oversight and approval of their version of Part II on trade finance
on proposed revisions to Part I,
monitoring systems, while also of its guidance, which was subject
Chapter 5.7 of its AML/CFT
considering: (1) defining to consultation until 18 June. New
guidance for the UK financial
responsibilities for this governance provisions covered include a non-
sector regarding monitoring of
mechanism; (2) assessing the exhaustive list of broad financial
customer activity. Proposed
effectiveness of monitoring crime red flag risk factors, as well
amendments provide that given
arrangements; (3) supporting as a table which highlights several
the dynamic process of
changes to procedures for types of customers on whom
transaction monitoring,
addressing evolving money financial institutions should
thresholds should be reviewed
laundering and terrorist financing conduct due diligence verifications.
regularly to ensure efficiency.
risks; and (4) adopting a resource
reallocation approach to high JMLSG press release on the re…

JMLSG provides that in order to
priority risks. The guidance also
ensure effective outcomes, JMLSG press release on propo…
underlines that firms should
financial institutions should
implement procedures for
reallocate resources “from less
UK launches inquiry into digital regulations
The UK House of Lords’ According to the committee, the The committee is calling for the
Communications and Digital inquiry builds on its 2019 establishment of a digital authority
Committee launched a new regulating in a digital world report, to coordinate regulators.
inquiry on 7 September into the which found that the current
effectiveness of the UK’s digital regulatory background is Communications and Digital C…
regulations. Written evidence is fragmentated and regulators do
Call for evidence
being accepted until 22 October. not have strategic thinking.
92
UK Treasury publishes response to economic

crime levy consultation, draft legislation and
launches technical consultation
According to the document on the UK revenue depending on whether

consultation outcome, most the AML regulated entity is
responses highlighted that “funding considered medium (UK revenue
for fraud outcomes should be between £10.2 million and £36
secured through general taxation, million), large (between £36 million
on the basis that the responsibility and £1 billion) or very large (more
and benefit for countering fraud than £1 billion) and will first be
The UK's HM Treasury published sits across society, rather than just collected by the Financial Conduct
on 21 September the draft with the private sector”. In this Authority, HM Revenue & Customs,
legislation for a new levy on the regard, the government’s response and the Gambling Commission
anti-money laundering (AML) recalled the Fraud Action Plan between April 2023 - March 2024.
regulated sector, also known as agreed during a meeting of the Small entities with UK revenue
the ‘Economic Crime Levy (ECL)’, Economic Crime Strategic Board in below £10.2 million will not be
setting out a potential annual February this year, which will cover subject to the levy.

charge of between £5,000 and 2022-25 and include actions by
£250,000, which will be integrated partners in the public sector and Furthermore, the government has
into the 2021-2022 Finance Bill. industry to do more to tackle fraud. opted for a fixed fee system which

The proposed legislation is

is yet to be confirmed. However,
accompanied by the Treasury’s Respondents were largely the draft law indicates that the levy
response to the consultation on supportive of risk being reflected in is likely to amount to between
the introduction of the levy, as the levy calculation. However, there £5,000 and £15,000 for medium
well as by the launch of an were mixed views on the proposed entities, between £30,000 and
additional technical consultation weighting options, by number of £50,000 for large entities and
which runs until 15 October. SARs, National Risk Assessment between £150,000 and £250,000
(NRA) scores, supervisor risk for very large entities. The

The government held an initial assessments, with concern that government highlighted that
consultation on the design of the they would “over complicate the it intends to undertake a review of
levy from July to October 2020. calculation and never truly reflect the levy by the end of 2027.
The consultation sought views on money laundering risk”.
the levy principles, the destination Accordingly, the government has HM Treasury press release
of the funds collected through the decided that the ECL calculation
Draft ECL legislation
levy, how the government can will not include an additional
ensure transparency over levy money laundering risk metric.
Explanatory note
spending, how levy liability will be
calculated, and which entities According to the draft law, the Consultation outcome and res…
should be paying the levy. amount charged will be based on
93
UK committee launches inquiry on CBDCs
With respect to CBDC architecture, the committee is

interested in addressing concerns about privacy and
payment traceability, as well as the potential impact a
CBDC could have on competition and innovation in the
payments and FinTech industries. Furthermore,
another consideration is how a CBDC may affect the
UK’s standing on the international stage, whether
through its impact on economic foreign policy or
geopolitical influence, and if there are implications on
the effectiveness of economic sanctions.

The UK House of Lords Economic Affairs Lord Forsyth of Drumlean stresses that it is important
Committee, chaired by Lord Forsyth of Drumlean, to consider a wide range of issues to understand the
launched on 17 September an inquiry on central full implications of any eventual CBDC programme
bank digital currencies (CDBCs) along with a public and invites all citizens with “a view on any aspect” of
call for written evidence running until 15 October. CBDC to submit comments.
Among the questions posed, the committee is
seeking views on the main benefits and risks of The request for evidence follows steady
CBDCs, as well as traceability, privacy issues and developments in the UK’s CBDC research, including a
how they will affect finance and payments. research roadmap exploring the impact of declining
cash usage on CBDC demand released by the BoE in
March 2020, as well as a round of external
The call for evidence is also consultations concluding with the BoE unveiling a
aimed at investigating how a discussion paper on new forms of digital money that
sought a diverse set of views from financial
CBDC may affect the role of the institutions, merchants, businesses and consumers.
BoE, monetary policy and the The BoE's consultation in response to its discussion
financial sector paper ran until 7 September, and the responses

received will help inform the BoE’s view on the issue
and will support the ongoing work of the recently
The committee is seeking evidence on the issues that announced joint HM Treasury-BoE CBDC Taskforce.
HM Treasury and the Bank of England (BoE) face as
they continue their work around the possibility of Committee statement
CBDC adoption. The call for evidence is also aimed at

Call for evidence
investigating how a CBDC may affect the role of the
BoE, monetary policy and the financial sector.
94
PRESS AND MEDIA
BBC investigates alleged negotiations between

BAT plc and former Zimbabwean president
directors and prompting Mugabe’s investigation by the UK’s Serious

condemnation of BAT’s alleged Fraud Office (SFO). BAT states that
involvement. The founder and it began investigating the
chairperson of Savanna Tobacco, allegations in 2016. The SFO
now Pacific Cigarette plc, is Adam confirmed the probe in 2017 and
Molai, Mugabe’s nephew-in-law. closed the investigation citing a

lack of evidence.

An investigative consortium To resolve the issue, BAT
claims in a series of articles reportedly sent a negotiator, UK Solicitor General Alex Chalk
published on 13 and 14 quoted anonymously by the BBC, responded to questions from MPs
September that tobacco giant to bribe government officials. A on 27 September that the SFO is
British American Tobacco (BAT) public servant reportedly aware of the new reports and will
plc was involved in negotiations suggested that a donation to take into consideration any
to pay up to $500,000 to then Mugabe’s political party would material provided to it.
Zimbabwean president Robert result in a favourable solution. An Transparency International UK is
Gabriel Mugabe in 2013. internal memo reportedly seen by also calling on prosecutors to
the BBC suggests that BAT was investigate the allegations,

Between 2000 and 2016, BAT aware of the deal involving a bribe asserting that any evidence of
reportedly contracted South of between $300,000 to $500,000. bribery should lead the SFO to
African private security company
consider BAT ineligible for a
Forensic Security Services (FSS) The media outlet states that FSS deferred prosecution agreement.
with the apparent aim of tackling may have bribed customs officials
cigarette smuggling in the and law enforcement officers, BBC One’s Panorama programme
southern part of the continent. giving BAT the opportunity to aired the report on 13 September,
However, leaked documents conduct surveillance on rivals in which is based on a joint
obtained by the BBC reportedly southern Africa. In a 13 September investigation with the Bureau of
reveal that FSS engaged in statement, BAT rejects allegations Investigative Journalism and the
sabotage and illegal surveillance of that its conduct had any other University of Bath’s Tobacco
BAT’s African competitors. purpose than combatting the illegal Control Research Group (TCRG).
cigarette trade.
In 2012, a FSS subcontractor was
BBC article
reportedly caught conducting A 2015 Panorama investigation

BBC1 Panorama episode
illegal surveillance of a factory reportedly uncovered evidence that
owned by Savanna Tobacco Pvt BAT secured bribes in east Africa
BAT press release
Ltd, leading to the arrest of three to undermine anti-smoking
measures, prompting an
95
German court sentences insider trader, BaFin

points to ING Germany's failures
The Financial Times reported on and sold highly leveraged derivates insider information in 19 instances,
30 September that a Frankfurt aimed at retail investors. was also given a two-year
court sentenced a former fund
suspended sentence and ordered
manager at Union Investment The German Federal Financial to repay €3.3 million.
Group to three and half year’s Supervisory Authority (BaFin)
imprisonment along with a €45 purportedly received inquiries Union Investment and BaFin
million forfeiture order. flagging suspicious trades from declined to comment, according to
both the issuers of the derivates the Financial Times. ING Germany
According to the news outlet, and ING. However, BaFin expert reportedly declined to comment on
between April and September Frank Mühlhans reportedly stated the case, stressing that it is
2020, the unidentified fund during the trial that ING flagged the complying with its obligation to
manager engaged in 55 cases of suspicious trades relatively late flag suspicious activity that might
insider trading, front-running buy and only after the issuers filed their represent insider trading or market
and sell orders of blue-chip stocks reports. Mühlhans testified that manipulation.
executed on behalf of his employer. ING usually files many suspicious
The schemes purportedly resulted activity reports but remains “lax” in Financial Times article (require…
in a €8.1 million profit. The relation to “significant cases”.
Financial Times article (require…
defendant reportedly used an
undisclosed brokerage account at A friend of the fund manager, who

ING Germany, where he bought was tipped off and traded on the
UK SFO reportedly set to probe Go-Ahead
The Times reported on 29 identified that LSER has not Go-Ahead has admitted the errors,
September that the UK’s Serious declared over £25 million of according to The Times. Group
Fraud Office (SFO) is set to launch historic taxpayer funding, Chairwoman Clare Hollingsworth
an investigation into UK amounting to a significant breach has reportedly apologised and
passenger transport provider Go- of its franchise agreement. stressed that the group is working
Ahead Group, whose subsidiary
towards a settlement.

London & South Eastern Railway The money has purportedly been
(LSER) was found to have hidden repaid and Go-Ahead is still The Times article (requires sub…
£25 million in excess profits. reportedly investigating all related
The Times article (requires sub…
contract issues with LSER. The

A Department of Transport press government will purportedly
Department of Transport press…
release issued the previous day consider further options for
states that an investigation has enforcement action.
96
Paris court sentences Sarkozy to one year of

house arrest for campaign financing fraud
surpassed and wilfully ignored two Thierry Herzog has stated that he
related notes from his will appeal the decision.
accountants. The former president
has reportedly denied the In March, a court reportedly

accusations that he signed any sentenced Sarkozy to three years
invoices, stressing that he did not in prison with a two-year
oversee expenditure. suspended sentence for
France 24 reported on 30
attempting to bribe former judge
September that a Paris court has The court also sentenced 13 other Gilbert Azibert to obtain inside
sentenced former French individuals, including campaign information on an inquiry into the
president Nicolas Sarkozy to one directors Guillaume Lambert and financing of his 2007 presidential
year in prison for bypassing the Jérôme Lavrilleux and Franck Attal, campaign. In January, the Guardian
legal threshold for financing his and the head of Bygmalion SAS reported that the former president
2012 election campaign by using subsidiary Event & Cie, for fraud was involved in a preliminary
a system of false invoices. and complicity in the illegal investigation over influence
campaign financing. peddling allegations related to a €3

According to the news outlet, the
million contract with Russian
court noted that the election bill Sarkozy will not face prison time company, Reso-Garantia Group.
reached at least €42.8 million, but rather will serve his sentence at
nearly double the legal threshold. home with an electronic tag, France 24 article
Sarkozy purportedly knew weeks although the court has not

Le Monde article (in French)
before the 2012 election that the requested immediate enforcement
legal limit was at risk of being of the sentence. Sarkozy’s attorney
Nationwide launches scam and fraud hotline
Nationwide Building Society Head the same day in response to the service, Nationwide states it will
of Fraud Stuart Skinner was cited rise in financial crime, along with offer customer refunds.
by the BBC on 27 September as a dedicated 24/7 fraud hotline. Conversely, customers who skip
urging a slowdown by financial
the check and are then defrauded
institutions of risky payments to Skinner informed the BBC that the will not be guaranteed a refund.
stem the tide of fraud, which has new service entails a halt to
been estimated by UK Finance to transactions and check-in option Nationwide fraud page
be causing £4 million in daily with a financial expert prior to
BBC article
losses in the UK. Nationwide payment approval. If a fraudulent
launched a scam check service payment is made after the check
97
Wall Street Journal reports 130 US judges failed

to recuse themselves over financial interests
in September that federal judges must recuse

themselves when a financial conflict is present.
Although the law does not place a minimum or
maximum threshold on interest, 21 of the cases
investigated by the Journal involved judges holding
over $50,000 in stock in companies party to the case.
Sixty-one judges or families were also reported to
have been engaged in trading relevant stocks while
the cases were ongoing.

One federal judge in California, Janis Sammartino, is

The Wall Street Journal published an investigation named as ruling in 18 lawsuits involving companies
on 28 September alleging that 130 US federal judges she publicly traded in, hearing a total of 54 cases
violated US law by failing to recuse themselves from involving companies whose shares were held in trusts
a total of 685 cases since 2010 which involved belonging to her family. Judge Rodney Gilstrap, a
companies in which the judges or their family federal judge in Texas who is the chief of the US
members were shareholders. District Court Eastern District of Texas, reportedly
heard 138 cases which involved companies where he

The outlet found that in two-thirds of the 685 cases, or his wife were shareholders. Furthermore, the
federal judges, who hold lifetime appointments in the Journal reported on 18 instances in which judges did
US, ruled on the side of companies with whom they or recuse themselves, with the case then being moved to
their families held stock. In one high-value arbitration a new judge who also held a financial conflict of
case, a federal judge in New York ruled in favour of a interest and stayed on the case.
unit of Exxon Mobil Corporation, in which he
reportedly held between $15,000 and $50,000 in stock, Federal judges’ financial disclosures are not publicly
ordering TIG Insurance Company to pay Exxon $25 available online, and US federal judges are personally
million plus $8 million in interest. An official informed of who requests to view their financial
representing the federal court in New York reportedly disclosure statements, which the Wall Street Journal
informed the paper that the judge in question, Edgardo writes may constitute a disincentive for any attorney
Ramos, did not recuse himself because while Exxon arguing a case in front of that judge. The paper
was present on his recusal list, the subsidiary was not. reported that the Administrative Office of the US
TIG has since requested the ruling be set aside, with Courts is reviewing the allegations asserted in the
an appeals court pausing deliberations. investigation and has put in place a conflict-screening
software to prevent future violations.

A 1974 federal law bans judges from ruling in cases in
which they or their spouses or minor children hold any WSJ article
interest in an involved party. The Judicial Conference’s
Committee on Codes of Conduct reportedly confirmed
98
JPMorgan Chase & Co reportedly investigated

by Brazilian authorities in bribery case
Reuters reported on 22 whether JPMC made illegal The media outlet states that
September that Brazilian payments to Petrobras’ employees evidence probed in the case
authorities are investigating through a network of middlemen purportedly includes emails, bank
JPMorgan Chase & Co (JPMC) for with the aim of securing fuel records and witness testimonies,
its alleged role in a suspected shipments at artificially low prices. including statements by former
bribery and money laundering
Petrobras fuel trader Rodrigo
scheme which involved state- The investigation follows the Berkowitz, whose plea reportedly
owned oil company Petróleo purchase of 300,000 barrels of concerns two fuel cargoes which
Brasileiro SA (Petrobras). Petrobras fuel oil by JPMC in 2011. were sold by a JPMC unit in the
Brazilian prosecutors are also period under investigation.

According to documents reportedly investigating whether the alleged

seen by the media outlet, Brazilian bribery scheme continued in the Reuters article
authorities are investigating subsequent years.
Former EU health commissioner to be charged

in Malta over Swedish tobacco bribery case
The Times of Malta reported on 6 the same case. Dalli, who was proceedings. According to Maltese
September that former EU appointed EU commissioner in media, Malta’s current Police
commissioner for health and February 2010, was ordered to Commissioner, Angelo Gafa,
consumer policy John Dalli will be resign in October 2012 by then previously served as lead
charged for allegedly attempting European Commission president investigator into the allegations in
to solicit €60 million in bribes Jose Manuel Barroso the day after 2012. Dalli has accused Gafa of re-
from Stockholm-based tobacco the European Anti-Fraud Office opening the case as part of a
company Swedish Match AB to (OLAF) laid out the allegations in a purported agreement with former
reverse the bloc’s ban on snus, a report to Barroso. OLAF chief Giovanni Kessler, who
form of tobacco.
headed the anti-fraud agency from
Despite the charges against 2010 to 2017 and oversaw the

Dalli allegedly solicited the bribe Zammit, his case was delayed until investigation into Dalli.
through his aide, Silvio Zammit, 2020, when a Maltese court ruled
who was charged in December to close evidence against him, Times of Malta article
2012 for complicity in bribery determining that his rights had
solicitation and influence trading in been violated by the lengthy
99
British businessman charged in Singapore in

connection with Wirecard fraud
The Financial Times reported on 2 controlled the funds. O’Sullivan that €1.9 billion was unaccounted
September that British national reportedly entered into at least one for in its 2019 financial results and
Henri O’Sullivan was arrested and partnership with Citadelle and after the arrest of former CEO
charged in Singapore for allegedly apparently played a significant role Markus Braun on suspicion of
abetting Citadelle Corporate in certain Wirecard agreements, fraud and market manipulation.
Services Pte Ltd’s director with some companies associated
Rajaratnam Shanmugaratnam to with the British national reportedly O’Sullivan is reportedly the second
issue a letter falsely attesting that receiving large loans from the person charged in Singapore in
Dubai-based Wirecard AG short seller. connection with Wirecard, with
subsidiary Cardsystems Middle
Shanmugaratnam also indicted on
East FZ had a €86.4 million In July 2020, the Singapore Police 14 counts of forgery related to
escrow account held by Citadelle. Force and Monetary Authority of financial information
Singapore (MAS) announced an communicated to Wirecard, its

According to the news outlet, investigation into Citadelle, Senjo subsidiaries, and an audit firm.
Citadelle did not maintain the Group, and its subsidiaries for
escrow account on behalf of the alleged falsification of accounts. Financial Times article (require…
Wirecard subsidiary. The The investigation was launched
authorities have not stated who after Wirecard revealed on 18 June
O2 reportedly the subject of UK bribery probe

The Telegraph reported on 4 O2 reportedly revealing the probe violations of anti-bribery rules, with
September that UK following its merger with Virgin the company continuing to
telecommunications company O2 Media in June. The first mention of cooperate with the authorities.
Ltd, currently part of the joint an investigation purportedly VMED O2 UK has purportedly
venture VMED O2 UK Ltd, is appeared in O2’s reports in 2017. recorded a related accrual during
cooperating with the UK's Serious The Financial Times claims that O2 2019 and has not provided any
Fraud Office (SFO) in an is also conducting an internal further details on the probe.
investigation into allegations of investigation into the matter.
kickback payments.
The Telegraph investigation (re…
The joint venture stated in its latest

VMED O2 consolidated financi…
According to the news outlet, the consolidated financial statements
ongoing investigation was on 30 June that O2 has been
prompted after a 2017 addressing a government request
management reorganisation, with for disclosure related to possible
100
Q&A
Q&A: Recovering criminal wealth with Andrew

Dornbierer, Asset Recovery Specialist at the
Basel Institute on Governance
What are illicit enrichment laws? So while the treaties are a good

starting point, they aren't as
It's quite difficult to arrive at a complete as you might want. The
single definition. All the countries more universal definition I arrived
that have legislated on this issue at during my research was that an
have defined the concept slightly illicit enrichment law is, firstly, any
differently. An obvious starting law under which you can sanction
point are international treaties - in an individual if they have enjoyed
the UN Convention Against wealth that isn't justified by
Corruption there's a quite famous reference to their legal income, and
article, Article 20, which covers secondly, one that doesn't require
In recent decades, there has been
illicit enrichment. It talks about the state to prove underlying
a significant rise in the number of
illicit enrichment being a significant criminality, of any kind, before the
countries developing legal tools
increase in assets of a public sanction can be imposed.
to target individuals who enjoy
official that they can't explain or
wealth that can't be explained by

justify by reference to their lawful Could you give us a sense of the
their lawful income.
income. But it doesn't quite cover history of these laws?
all the different interpretations of
These laws allow law enforcement

illicit enrichment that exist The first treaty to define the laws
and prosecutors to recover assets
throughout the world. was the Inter-American Convention
without having to prove any

Against Corruption in 1996, then
underlying criminal behaviour –
For example, there are many laws both the UNCAC, and the African
often presumed to be the proceeds
that don't just target public Union Convention on Preventing
of corruption – that gave rise to the
officials. They see illicit enrichment and Combating Corruption in 2003.
wealth. Financial Crime Digest
as something that could be carried But there were laws and
spoke to Andrew Dornbierer, an
out by private individuals as well. regulations that already existed in
Asset Recovery Specialist at the
There are also laws that don't just the Philippines and Hong Kong
Basel Institute on Governance.
focus on traditional assets. They in the 1950s. And countries like
Dornbierer’s recent book Illicit
think that illicit enrichment should India and Pakistan introduced
Enrichment: A Guide to Laws
be interpreted to include any time laws around the 1960s too. There
Targeting Unexplained Wealth
someone has enjoyed anything of are a few other examples.
analyses the different approaches
pecuniary value - they've spent
and interpretations of criminal and After the drafting of the treaties,
money and enjoyed a service, or
civil-based laws around the world. there has been an explosion in
gone on a trip, for example.
101
adoption of these laws around the not to bring in these laws, and the law has a consequence tied to
world. The rate has only increased neither have Canada or the US. It is it. The law must provide for a
over the past 20 years. There are true that these types of laws exist sanction to be imposed against an
quite a few countries at the more in developing or middle- individual if it is proved that they
moment looking to bring in forms income countries. But I think had wealth that is unjustified. If you
of these laws as well. developed countries are looking at look at the UK’s Unexplained
the issue more and more these Wealth Order, even though they've
Why do such laws exist? days. In Australia, over the past 20 used the term unexplained wealth
years every jurisdiction has to describe the order, the model

The initial driver in places like brought in some version of illicit they have chosen and the actual
Argentina, India, Hong Kong and enrichment law. provisions of the law don't include
Philippines was an anti-corruption
a power that could be used to
focus. It's definitely a key focus As to why, my answer would be impose an order to confiscate the
now too - countries see it as a tool speculation. The fact that western unexplained wealth.
to recover assets that were stolen countries haven't tried to bring in
through corruption. This is also these laws means there aren't If you compare that to the Western
somewhat emphasised by the fact records of legislative debates, Australian law - if there's a civil
that the treaties that include which would maybe point to why action against an individual, who is
articles on illicit enrichment are all they are against them. But unable to justify certain assets that
anti-corruption focused treaties. generally, developed countries tend they control, then the court is
to think that these laws may empowered to compel that person

But it's not the only motivation. contravene established legal rights to pay to the state the value of the
Other jurisdictions give these types within their system. It's a fair assets that they haven't been able
of laws a wider scope. A very good concern, but without these laws to justify. Under the UK law it's
example would be Western being tested within their systems, slightly different - if an individual is
Australia which introduced a civil it's hard to know if those countries faced with a UK UWO, they are
version of this law around 20 years are correct about that. obligated to provide information
ago. Their focus was the proceeds
that justifies certain assets that are
of drugs crime. They wanted to The fact that illicit enrichment laws under their control - and that's it.
target people they suspected of have been tested in other systems,
being involved in the illicit drug where they've been considered The UK UWO by itself is more of an
trade, people who had an satisfactory in the context of legal investigatory tool - it's a power that
enormous amount of wealth that rights means that there's an can be used by agencies to compel
obviously hadn't come from any argument that these developed a person to provide information
legitimate source but had most countries might be incorrect in regarding their assets. Now if they
likely come from the drugs trade. their thinking. don’t comply, or "purport" not

to comply with the order in the UK,
It appears illicit enrichment laws Why is the UK Unexplained Wealth then certain assets can be
are prevalent in developing Order slightly different from other presumed by the court to
countries. Why is that? illicit enrichment laws? have come from criminal sources,

but this presumption will only
That's true - a good demonstration Under the definition I've used in the be relevant in a separate procedure
of that is that most western book, to be considered an illicit called a civil recovery procedure
European countries have chosen enrichment law it is important that under the Proceeds of Crime Act
102
where the court will assess the legislation. Countries that limit challenged on the claim that they
whether or not an individual's themselves to only considering violate the principle of presumption
assets are more likely than not to traditional assets under the laws of innocence, the vast majority of
have come from criminal sources. are not really getting a complete courts have determined that the
picture of the action that has laws don't go against the principle.
How have countries approached occurred. The more open a country
different notions of "wealth" with is to considering all the kinds of There are two main ways that
respect to illicit enrichment? expenses that a person can incur, criminal illicit enrichment laws
the more likely they are to be able have been deemed acceptable in
There's a narrow way of looking at to prove in court the total amount this context. Firstly, some countries
it, and progressively wider ways of of illicit enrichment that has say that under their laws the
looking at it. In the narrow sense, occurred. prosecutor holds the entire burden

some countries draft their law to

to prove all the elements of the
say there is an offence if the A common legal challenge to illicit enrichment: that an individual
individual possesses "property" these laws is that by not requiring has a certain amount of wealth,
that is disproportionate to their the state to prove criminal activity, and that the wealth is not justified
legal income. They'll define it like criminal enrichment laws in reference to lawful income. The
you and I might - real estate, effectively reverse the burden of individual has no obligation at all to
money in your bank account or the proof. Could you explain some of prove anything, but if the
car on your drive. the issues here? prosecutor proves these elements

beyond reasonable doubt, then the
There are a lot of other countries A lot of people criticise criminal individual can be guilty of the
that take a very wide interpretation procedure-based illicit enrichment offence. The offence is not that the
of illicit enrichment, they say that laws on the basis that the state individual hasn't stood up and
anything of pecuniary value that does not need to prove criminality, explained why they own the assets,
has contributed to your lifestyle which can arguably result in an it's that they own assets that are
should be taken into account. So individual under suspicion being disproportionate to their lawful
this factors in any sort of expense - burdened with proving the lawful income. The burden is on the
traditional assets, but also sources of their assets. A lot of prosecutor to prove everything -
payment of TV bills, or elite private people argue that this contravenes and therefore the presumption of
club fees, or reduction of debts. the traditional notion of the innocence is never violated.
presumption of innocence until

Are there countries that have proven guilty. In other countries, they agree that
that the operation of an
been better than others at
applying illicit enrichment laws? The US and Canada both made illicit enrichment law might place a
reservations along these lines burden on a defendant to justify

their assets in certain
Like with any law, the way it is when they were asked to sign the
drafted goes a long way towards Inter-American Convention Against circumstances. But they also
how effectively it can be Corruption. Also when UNCAC was contend at the same time
implemented. There are some that being negotiated this was a that putting the burden on the
are sufficiently wide in scope to concern that was raised. person in these circumstances is
an acceptable deviation from the
allow for easier implementation.
Part of it comes down to the types For countries that have introduced principle of the presumption of
of assets that are covered under these laws, and have had them innocence. They base this on
103
the claim that the presumption defendant and the rights and there’s a likelihood that these
of innocence is not an absolute interests of the public as a whole, countries will opt for this model.
principle - which is an the fact that illicit enrichment laws
interpretation that has been upheld were beneficial in the fight against Also some countries have started
in many courts, including the corruption was one reason to bringing in civil laws to
European Court of Human Rights - justify the potential infringement complement criminal offences that
and that it is possible to make on the presumption of innocence. already exist - so it’s possible that
small exceptions to it if the
this might start happening more.
circumstances justify it. What is the future for illicit
enrichment laws? In general though, I hope that the

In an illicit enrichment context,
countries that already have these
there are several justifications, but There are several countries at the laws in place seek to apply them
one that pops up a lot is that it is moment that seem to be looking at more and more. This will add to the
arguably acceptable to deviate introducing these types of laws body of jurisprudence that can be
from the principle if the public seriously. I think the number of used to answer questions that
interest calls for it, particularly if them will increase. It’s unclear at surround illicit enrichment laws,
the deviation is being made for the the moment whether these and may alleviate the concerns
purposes of combatting
countries will go for illicit that surround them such as the
corruption. It's a key argument that enrichment laws based in civil or application of the presumption of
was used to justify the law in Hong criminal procedure, but as civil illicit innocence principle to them, and
Kong, where in one key case - enrichment laws have become this will in turn hopefully give other
Attorney General v. Hui Kin-hong - increasingly common in the past countries the necessary
the judge noted that while it was 20 years - and these did not exist confidence to apply their laws
important to make a balance before the start of the century - more as well.
between the rights of the
104
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FINANCIAL CRIME DIGEST

Diligent analysis. Powering business. TM

We have completed more than 3,000 assignments over the last

Our team has specialist knowledge of and access to a

SPECIAL FEATURE 35 LEGISLATION 41

PRESS AND MEDIA 95 Q&A 101

ANNOUNCEMENTS page 72 SPECIAL FEATURE page 35

DATES FOR THE DIARY

October US FinCEN consultation closes on the October

ENFORCEMENT AND LITIGATION

UK SFO secures conviction against Petrofac

(SFO) announced on 24 in Iraq for its clients SBM Offshore

September that it had charged and Leighton Contractors In a 24 September press

influence the awarding of contracts and transparency”.

relating to former Petrofac other charges of bribery already

Aperio Analysis by Gunita Thethy

OFAC reaches settlement with NewTek over

Aperio Analysis by James Tytler

OFAC reaches settlements with Schlumberger

business as Lufkin Rod Lift) – a OFAC press release

Cameron International Corporation, former US subsidiary of

N26 Bank fined in Germany over delayed SARs

established structures and monitor the firm’s progress.

UK SFO announces investigation into £150m

Green Park-branded companies are request that they fill in a

UK FCA warning notices over market abuse

order book to small “genuine

Huawei CFO enters deferred prosecution

UK FCA warnings over alleged pensions scam

US charges six individuals and Swiss Allied

Rüegg, who was a member of 83 percent of the funds held at two

called “Singapore Solution”. The According to prosecutors, from at

European Commission opens infringement

UK FRC fines Grant Thornton UK and audit

Moreover, GT also failed to challenge inaccurately

to conduct a review of its audit practices and submit a

between January 2019 and October 2019.

New Zealand High Court fines derivatives firm

decision concludes proceedings diligence in relation to 12 In a 13 September statement,

transactions or activity in nine of its compliance programme.

received in 2014. The FMA’s legal In deciding on the penalty, the

Interpol operation targeting illegal gambling

more than 800 suspects, including

UK Gambling Commission fines Daub Alderney

The UK Gambling Commission announced on 1 Listed failings include

A customer depositing over £40,000 in a single

UK regulator fines EU Lotto for AML failures

frequently and could not demonstrate that it

European Court of Justice Advocate General

financial interests by entering inaccurate amounts of

In addition, the AG notes that the UK’s argument that

counter customs fraud. Additionally, the EC claims

dismissed. The AG notes that despite existing

In its latest opinion, Pikamäe agrees that the UK failed

Romanian ASF revokes City Insurance licence,

though City Insurance has been 22 September that he has required