And the last thing I would say, as with any risk- based AML decision, is just document whatever your risk-based approach is going to be. Wondering what a Money Laundering Reporting Officer (MLRO) does and what their key responsibilities should be?To help, we've consolidated the mainstream practices for you.Our checklist identifies the 20 key areas of responsibility that should fall under the MLRO's remit. Disclaimer: Please note FINRA podcasts are the sole property of FINRA, and the information provided is for informational and educational purposes only. Kaitlyn Kiernan: Those are helpful, effective practices to refer to. Credit Suisse and a former employee have been found guilty by Switzerland's Federal Criminal Court of failing to prevent money-laundering. But add to that a landscape of constantly evolving threats and it is a lot to keep up with. Credit Suisse faces a fine of 2 million Swiss francs ($2.1 million). It's really important right now that we have these to really start learning about them and thinking about how they may apply to the different business models. Jason Foye: I think there's a couple of things to take away here. By SAM SUTTON. The main reason for the fine was the bank's practice of providing correspondent banking services to other lenders, which enabled them to provide products and payment services they would otherwise be unable to. It's really important right now that we have these to really start learning about them and thinking about how they may apply to the different business models. A lock () or https:// means you've safely connected to the .gov website. Kaitlyn Kiernan: Yeah. AML enforcement has not taken a back seat during the pandemic, with fines, scandals, leaks and sweeping new regulations. What are the AML risks that firms should be aware of as a result of the military action that remains ongoing? Treasurys Office of Terrorist Financing and Financial Crimes led the assessment process and coordinated closely with offices and bureaus in the Treasury Department, relevant law enforcement and regulatory agencies, staffs of the Federal functional regulators, and across the intelligence and diplomatic communities. There's a training component to that as well, but I think there's also just the relationship driven component to that. We want to hear from you. The priorities themselves focused on threats to the U.S. financial system and national security, and they reflect longstanding and continuing concerns that have previously been identified by FinCEN, and other US government departments and agencies. It won't be a one-size-fits all approach across the industry, but Ill share some thoughts on where to start. Jason, just to dig in now on AML, in June of 2021, FinCEN issued its first government wide priorities for AML and countering the financing of terrorism. But it's the left of boom and right of boom, right of boom being all that investigative stuff that happens after something occurs. Credit Suisse and a former employee have been found guilty by Switzerland's Federal Criminal Court of failing to prevent money-laundering in the country's first criminal trial of one of its major banks. From 2012 to 2017, the bank's systems couldn't properly verify the information that customers provided regarding their businesses. Official websites use .gov Eleven-count indictment charging methamphetamine and fentanyl trafficking, firearm offense, and money laundering offenses Troutville man pleads guilty to drug trafficking charges North Carolina CFO sentenced to 18 months in prison in multimillion tax fraud case Kaitlyn Kiernan: Welcome to FINRA Unscripted. Press Release Milwaukee Woman Indicted for Perpetrating a $2.3 Million Health Care Fraud June 22, 2023 Read More Press Release Fugitive Extradited From Hungary to the United States to Face Fraud. And because it can help us right now, even before that, get our arms around some critical threats, educate ourselves, think about how we're going to incorporate these things and get ready for that as we prepare. Banks and other financial institutions were fined almost $5bn for "anti-money laundering" infractions, breaching sanctions and failings in their "know your customer" systems in 2022, bringing. But add to that a landscape of constantly evolving threats, and it's a lot to keep up with. You mentioned the cyber section of the 2022 report on FINRA'S Exam and Risk Monitoring program. Kaitlyn Kiernan: And you just mentioned there have been changes within member supervision and the National Cause and Financial Crimes Detection Program. In this article. And then when, FinCEN's final regulation comes out, we'll be in a better position collectively. Key AML fines in 2022 Santander - 108m fine 888 UK Limited - 9.4m fine Ghana International Bank - 5.8m fine Javanshir Feyziyev - 5.6m fine TJM Partnership - 2m fine Robeco - 2m fine Danske Bank - 1.82m fine UK Estate Agents - 500k fine Southern Cross SICAV plc - 300k fine XNT Ltd - 245k fine The devious duo -- who were indicted in February -- allegedly embezzled nearly $3 million from Sawusch and tried to steal another $20 million after his 2018 death. . We also have 100+ free compliance training aids, including assessments, best practice guides, checklists, desk aids, eBooks, games, posters, training presentations and even e-learning modules! So far in 2022, the FATF has added one country and removed one country from the grey list. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder. Michael Redmann, Acting Deputy Chief 4. Mary Butler, Chief Looking for U.S. government information and services? Stefan Wermuth | Bloomberg | Getty Images. In the coming weeks, Treasury will release the 2022 National Strategy for Combatting Terrorist and Other Illicit Finance, a plan directly informed by the analysis contained in the risk assessments. And one thing at the industry level in terms of red flags to be aware of is common identifying information across seemingly unrelated accounts, especially if there's a lot of seemingly unrelated accounts that have, for example, the same address, the same bank account tied to an email address, even more granular things like IP addresses or MAC addresses. Credit Suisse has disputed the illegal origin of the money, saying that former Bulgarian wrestler Banev and his circle operated legitimate businesses in construction, leasing and hotels. "In view of this, there was no clear rationale as to why the company was investing in the business of its customers and whether this was in line with the prospectus and the customary business of the company,. If you recognize Jason's voice, it's because he's been a repeat guest on FINRA Unscripted. Since the 2018 NPFRA, China and, to a lesser extent, Russia, have expanded their efforts to illegally acquire U.S.-origin goods. A .gov website belongs to an official government organization in the United States. United States Enters into Agreement with Nigeria to Repatriate Over $23 Million in Assets Stolen by Former Nigerian Dictator General Sani Abacha (August 23, 2022) Former San Diego Police Officer and Three Co-Defendants Indicted for Owning and Operating Illicit Massage Businesses in California and Arizona (August 12, 2022) But from our firm's perspective, its customer is the foreign broker dealer itself. The 2022 Risk Monitoring report I think is a great example of that. Firm compliance professionals can access filings and requests, run reports and submit support tickets. I think we've talked about that on most of our past episodes. FinCEN will also promulgate rules regarding (1) the retention and disclosure of the beneficial ownership data, including how federal, local, and international regulators can obtain access to the information, and (2) updating the customer due diligence rule in light of the beneficial ownership registry. Nonetheless, it can be seen that the greater the attempt, the greater the fine. NMLRA: Criminals continue to use a wide range of money laundering techniques to move and conceal illicit proceeds and promote criminal activity depending on availability and convenience. A lock (LockA locked padlock) or https:// means youve safely connected to the .gov website. Get more information about Money laundering at straitstimes.com. When we see these kinds of common identifiers popping up across a wide range of accounts, that don't seem to be related to one another, that is a big red flag of this type of issue, whether it's new account fraud or account takeover fraud. Reports Identify Key Illicit Finance Concerns to the United States; Enable the Public and Private Sectors to More Effectively Manage and Combat Illicit Finance Risks WASHINGTON - The U.S. Department of the Treasury today issued the 2022 National Risk Assessments (NRAs) on Money Laundering (NMLRA), Terrorist Financing (NTFRA) and Proliferation Financing (NPFRA). It's one of a number of different requirements of that legislation. The named estate agents have been fined an amount totalling over 500k. Ravnaas kept some of the funds as well to use for her own purposes. It's a constantly evolving threat area that we're really focused on right now from the SIU's. However, the overall number of fines may increase due to continued regulatory scrutiny in the wake of high-profile money laundering cases. Once victims sent payment for the goods, the conspiracy engaged in a complicated money laundering scheme where U.S.-based associates would accept victim funds, convert these funds to cryptocurrency, and transfer the cryptocurrency to foreign-based money launderers. Another 1,379 went to trial and were found guilty (1.9%). From the U.S. Attorneys Office, District of South Dakota: United States Attorney Dennis R. Holmes announced that a Miller, South Dakota, woman convicted of Money Laundering was sentenced on April 4, 2022, by U.S. District Judge Roberto A. Lange. An online gambling business that operates 78 websites, 888 UK Limited, has been ordered to pay a 9.4 million fine issued by the UK Gambling Commission. According to our extensive research: Approximately $300 billion is laundered through the United States each year. That's all really interesting. The eight priorities are corruption, cybercrime, including relevant cybersecurity and virtual currency considerations, foreign and domestic terrorist financing, fraud, including securities and investment fraud, as well as internet-enabled fraud, transnational criminal organizations, drug trafficking organizations, human trafficking and human smuggling. Manuel Gonzalez, Deputy Chief, Special Financial Investigations Unit AFM, the financial regulator in the Netherlands, has issued a 2m fine to Robeco for failing to check its clients for money laundering sufficiently. Meanwhile, the Financial Crimes Enforcement Network (FinCEN) continues to be an active regulator, most notably regarding the implementation of the Corporate Transparency Act (CTA) and Anti-Money Laundering Act of 2020 (AMLA). The many case studies included in the 2022 NMLRA ultimately reflect instances where money laundering was uncovered and mitigated because of the strength of our existing AML/CFT regime. And as long as it's a true omnibus relationship and the underlying customers of the omnibus are controlling the account of the activity in such a way that makes them the customer of the broker dealer, then the firms only have to do CIP and CDD at that top level omnibus relationship. Kaitlyn Kiernan: Another topic that came up after the 2022 report came out, of course, is Russia invaded the Ukraine. Can you tell us a little bit about what the concern is there? CII, which is where my group sits now, is also where the Higher Risk Representative Unit sits, along with other groups such as the Vulnerable Adults and Seniors Team, the Financial Intelligence Unit and the Cyber Analytics Unit. Yep. Ravnaas conducted financial transactions using WorldRemit, knowing that the financial transactions were designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds of the wire fraud scheme. In addition to broad focus on cryptocurrency enforcement, U.S. enforcement agencies have continued to investigate and resolve traditional money laundering offenses. FINRA continues to observe an increase in activity in low- priced securities that could be indicative of fraudulent schemes, including an increase in this type of activity through omnibus accounts of foreign financial institutions. So have a thoughtful approach to looking for red flags of sanction evasion. Just to wrap up today. The Securities and Exchange Commission today announced charges against Wells Fargo Advisors for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021. Marietta Ravnaas, age 52, was sentenced to two years of probation, restitution in the amount of $8,200 to Commonwealth of Massachusetts, Department of Unemployment Assistance, and restitution in the amount of $12,100 to Washington State, Employment Security Department, and a special assessment to the Federal Crime Victims Fund in the amount of $100. It is a requirement for Dutch financial institutions to report suspected transactions to the Financial Intelligence Unit (FIU). Kaitlyn Kiernan: So, you haven't had your opportunity to do your KYC on those people coming through that way? It's one of a number of different requirements of that legislation. As you mentioned, I'm currently the senior director of FINRA Special Investigations Unit. That's certainly worth some questions to that customer about what prompted the change as you investigate whether or not that may be a red flag of sanctions evasion. We had an entire episode on the overlapping risks of cybersecurity and AML. An official website of the United States government. I enjoyed our conversation and I'm sure our listeners did too. Jason Foye: FINRA continues to observe an increase in activity in low- priced securities that could be indicative of fraudulent schemes, including an increase in this type of activity through omnibus accounts of foreign financial institutions. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. That foreign broker dealer has its own customers that it's doing business with. And I think some of the common themes we see is not using AML reports or systems that accurately or reasonably capture potential suspicious activity and are free of data integrity issues. That needs to be investigated. "[The] fine is one of our largest to date, and all should be clear that if there is a repeat of the failures at 888, then we have to seriously consider the suitability of the operators to uphold the licensing objectives and keep gambling safe and crime-free.". The priorities themselves focused on threats to the U.S. financial system and national security, and they reflect longstanding and continuing concerns that have previously been identified by FinCEN, and other US government departments and agencies. But another great section to look at is a section highlighting emerging low-priced securities risk. Both because we can anticipate that these are going to be requirements as part of the AML regime that broker dealers and other financial institutions are going to be required to incorporate down the road. Please check the corresponding audio before quoting in print. But at the heart of it, combating money laundering and financial crime is just such a critical component of what we do day in, day out, that's trying to protect investors and markets. For example: Editors: Ian A. Herbert, Leah Moushey, Ann Sultan,William P. Barry,Kirby D. Behre, Contributors: Maame Esi Austin, Alexandra Beaulieu, Nicole Gkebay, Abi Hollinger, Arman Krpoyan,* Helen Mitsuko Marsh*. It includes some of the things we've talked about before. The FATF classifies countries according to AML and CFT risks, maintaining both a list of high-risk jurisdictions subject to a Call for Action (also known as the "black list") which identifies jurisdictions which the FATF has called upon to apply significant measures to prevent money laundering, terrorist financing, and proliferation financing and jurisdictions under Increased Monitoring (also known as the "grey list"), which identifies countries with "strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing" but which have committed to resolve the deficiencies "swiftly." XNT Ltd, a financial services company, has been fined an administrative penalty of 244,679 by the FIAU. The FCA picked up the pace of issuing penalties as 2022 progressed. To hear about the latest trends, emerging threats and how firms can ensure their AML programs remain strong and effective. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. FINRA IS A REGISTERED TRADEMARK OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AML Update: The Latest Trends and Effective Practices. Not that it's necessarily new, it's really just exploding in this post-pandemic world where so much more of our day-to-day life occurs online and firms have adjusted to offer the ability of customers to open accounts online and are leveraging tools for things like automatic customer verification and things of that nature. Is this for the benefit of customers? It continues to be extremely interesting. If you are unable to download a copy of an enforcement action from FinCEN's Web site, you may request that a paper copy be mailed to you by: (i) an e-mail: frc@FinCEN.gov; (ii) a fax request to FinCEN's fax number at 202-354-6411; or (iii) a call to FinCEN's Regulatory Helpline at 1-800-949-2732. There has been significant tightening of anti-money laundering regulations in markets that offer cryptocurrency through the last quarter of 2021 and into 2022. And we see this a lot around cybersecurity events or account compromises or takeovers in the accounts that we talked about. Jason Foye: Yeah. And as you know, Kaitlyn, there's a couple of older podcasts that we've done with a range of these groups, so the audience go check those out if they haven't done so already. And as firms think about how to consider this risk, the first step is to think about the customers and the business lines that may have an increased risk, where the firm may be doing business with the types of accounts that may be at risk here, and then looking for any material changes in account activity post sanction. Kaitlyn Kiernan: If you recognize Jason's voice, it's because he's been a repeat guest on FINRA Unscripted. I'm pleased to welcome back to the show Jason Foye, senior director of the Special Investigations Unit within Member Supervisions, National Cause and Financial Crimes Detection Program. Yeah, sure. So, and we do plan to have Omer on the show later this summer as well, so he can talk more in depth about the new group and structure. The SEC saidWellsFargoAdvisors failed to file at least 34 Suspicious Activity Reports in a timely manner between April 2017 and October 2021. And at times, what FINRA has observed is that these foreign financial institution accounts may actually be nesting within omnibus accounts of financial institutions that are based in countries considered to be lower risk, such as Canada, the United Kingdom. Europe. These investments took the form of payments of about 1 million to each of the investors and issuing units in fund. Michael Grady, Chief Secure .gov websites use HTTPS So just the need for the sharing of intelligence, the collaboration where appropriate with industry as we try to combat these different risks and threats that are out there is just something that we're really focused on and certainly something that I think is an evolving space for us. CARES Act unemployment benefits are funded by the U.S. government through the Department of Labor and administered at the state level by state agencies known as state workforce agencies. But what's new here since we last talked on that episode? "Generating compliant business growth in line with legal and regulatory requirements is key for Credit Suisse.". hbspt.cta._relativeUrls=true;hbspt.cta.load(2456764, '38829a6b-e8a7-4fa0-b4d6-d9fa93f64597', {"useNewLoader":"true","region":"na1"}); The investment company, Southern Cross SICAV plc, has been handed a hefty fine by the Financial Intelligence Analysis Unit (FIAU). A provisional order for attaching fifty-two movable and immovable properties worth a total Rs 45.20 crore under the anti-money laundering law has been issued against Praveen Yadav and his family members, the agency said in a statement. Are there any other ways that's impacted the AML team? Furthermore, XNT Ltd had some issues with their policies and procedures as they did not meet the requirements to screen customers. On March 27, 2020, the CARES Act was enacted. And FINRA has certainly put out a number of regulatory notices we can cover in a moment here, and since then we've put out a lot of advisories on this as well. Well, thank you, Jason, for joining me once again to update us on the latest trends and info in the AML space. Both because we can anticipate that these are going to be requirements as part of the AML regime that broker dealers and other financial institutions are going to be required to incorporate down the road. October 3, 2022 | 4:21pm Elvis Eghosa Ogiekpolor, 46, enlisted a crew of eight "money mules" to lure unsuspecting victims into a $9.5 million. The crimes that generate the largest amount of illicit proceeds laundered in or through the United States include: fraud, the largest proceeds generating crime; drug trafficking; cybercrime; human trafficking and smuggling; and corruption. And I think one big change that internally we're doing a lot more thinking about is this concept of left of boom that I'm sure Omer. Polite, Jr. Data is a real-time snapshot *Data is delayed at least 15 minutes. Jason Foye: It's an ever-evolving area of risk, cybersecurity and cyber enabled fraud world. Mandated by the UN General Assembly to inform an effective response to this crime and place it within the context of the UN Sustainable Development Agenda, the Report draws upon the largest existing dataset on trafficking in persons, with information on the more than 450,000 victims and 300,000 (suspected . File a complaint about fraud or unfair practices. Kaitlyn Kiernan: Now, I just wanted to shift gears a little bit and talk about some exam findings and effective practices from the 2022 report. Major Management and Performance Challenges. Record fines against financial institutions such as NatWest and HSBC have all contributed to a climate of increasing AML enforcement actions. Deutsche Bank AG settled a probe by Frankfurt prosecutors looking into whether the bank violated money-laundering prevention rules for 7.01 million euros ($7.1 million). And if you're a member firm listening to this, pick up that report, look at that section. One is the blocking sanctions themselves after the invasion. Feds misled judge who OK'd warrant for $86M safety. They take into account changes to the illicit finance risk environment resulting from the COVID-19 pandemic, ransomware, domestic violent extremism, corruption; the increased digitization of payments and financial services; and the enactment of significant new requirements to the U.S. anti-money laundering/countering the financing of terrorism (AML/CFT) framework.
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