CBA says ‘not every problem’ fixed after money-laundering allegations

Commonwealth Bank chief Ian Narev admits “not every problem” has been fixed following allegations it breached money laundering laws.

Mr Narev was grilled by journalists today over civil action against the bank taken by regulator Austrac, which alleges more than 53,000 breaches of money-laundering laws.

CBA today set out action it had taken to comply with the laws since it was first alerted in 2015 to failures in reporting transactions by its smart ATMs.

But when asked why Austrac would take action against CBA if the problem had been rectified, Mr Narev said: “We’re not saying every problem’s been fixed.

“We need to go through and work……and I’m not going to sit here and say every problem’s been fixed.

“It is important to bear in mind that we have a regulator here that is a very diligent regulator with an extremely important job to do. Austrac needs to exercise its powers, and be seen to exercise its powers very forcefully.”

CBA retreated 0.7 per cent after Mr Narev’s press conference began to a new session low of $80.87.

Mr Narev also defended CBA’s decision not to report alleged breaches to the market before Austrac last week launched civil action in the Federal Court.

“We report around four million transaction reports to Austrac each year. We exercise judgment as to what requires disclosure … our view is that these things didn’t come anywhere near (that requirement) in the form they came at the time.”

Austrac alleges CBA’s repeated failures to deal with suspiciously large and repeated cash deposits into its smart ATMs delayed and hindered enforcement ­efforts, costing agencies intelligence­ and evidence while ­allowing money laundering to continue.

Questioned today, Mr Narev said: “We’re going to look very carefully at the claims and why warnings that claimed to have been given were not heeded.”

He added: “It’s going to be important to make people understand that a lot of work has been done since these claims were brought to our attention. A lot of work still needs to get done and we’ll continue working closely with Austrac.

“The reality is, when dealing with criminal elements, people find ways to circumvent the limits that you put on (the machines).”

Mr Narev also denied CBA had profited from transactions at the centre of the civil action.

“There is no economic reason that would underpin the alleged activity and that’s not part of the equation,” Mr Narev told journalists. Nor was there any evidence the bank had assisted with any terrorist funding.

Mr Narev was speaking after the CBA said earlier it had no reason to believe alleged breaches of money-laundering laws arose from deliberate or unethical behaviour, or any commercial motive.

The statement came as CBA’s board moved to create a dedicated subcommittee to deal with the allegations by Austrac, with $40 million worth of new anti-money laundering technology to be delivered over the next 12 months.

CBA released its update after today unveiling a bumper $9.9 billion full-year profit, and after it yesterday slashed bonuses for CEO Ian Narev and senior executives, and cut directors’ pay, in the wake of over 53,000 alleged breaches of money-laundering laws.

In a statement earlier today, CBA said it had become aware in the second half of 2015 of “alleged issues” relating to threshold transaction reporting (TTRs) on CBA’s network of intelligent deposit machines (IDMs).

CBA said it had already made some progress in strengthening its policies and processes relating to its obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act.

The board has already moved to cut the short-term variable remuneration outcomes for Mr Narev and group executives for the financial year ended June 30, 2017. Fees for non-executive directors have also been slashed 20 per cent during the current 2018 financial year.

“This reflects our view that the board, CEO and group executives take ultimate collective responsibility for the reputation of the bank,” the CBA board said.

With management accountability now under a microscope, CBA’s board maintains that the bank had not been deliberately complicit in any laundering activity carried out over its network of smart ATMs.

“The board notes that it has no reason to believe that the allegations arose from deliberate or unethical behaviour, or any commercial motive,” it said.

CBA said this week its automated reporting system was knocked offline by a coding error introduced during a software update in 2012.

The bank added that the error was rectified as soon as it was notified and it had taken significant additional steps, including the addition of manpower to its criminal compliance team, the development of a specialist hub to strengthen its Know Your Customer (KYC) processes; and an upgrade of its financial crime technology capabilities.

Mr Narev added this afternoon: “We are not saying it’s all about a software error … we’re saying a significant proportion was due to a coding error. We are going into this with an open mind and we’re going to look at every single claim under the supervision of the committee. It’s going to take a while.”

Mr Narev today repeated the bank made “made mistakes”.

“It’s been a tough time at the Commonwealth Bank since the Austrac proceedings were filed and we’re taking them very seriously,” Mr Narev said. “We know that we’ve made mistakes; we have fixed a lot of those mistakes and we will continue to look to make our business better and better.”

While each of the more than 53,000 alleged contraventions carries a maximum penalty of $18m, the bank has downplayed the prospect of a massive penalty, arguing the breaches overwhelmingly relate to a single software error.

In a separate development, ANZ responded to media reports by declaring it has

systems in place to ensure it complies with anti-money laundering obligations.

“We are also subject to continuous supervision from Austrac and have no outstanding requirements,” ANZ said.

ANZ said Austrac had reviewed its smart ATMs in late 2015 and found no evidence of noncompliance with anti-money laundering regulation.

http://www.theaustralian.com.au/business/financial-services/cba-says-no-unethical-behaviour-behind-moneylaundering-scandal/news-story/f5fed05fa40066ce18af27042878620f

Photo: James Croucher

FinCEN Fines BTC-e Virtual Currency Exchange $110 Million for Facilitating Ransomware, Dark Net Drug Sales

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN), working in coordination with the U.S. Attorney’s Office for the Northern District of California, assessed a $110,003,314 civil money penalty today against BTC-e a/k/a Canton Business Corporation (BTC-e) for willfully violating U.S. anti-money laundering (AML) laws. Russian national Alexander Vinnik, one of the operators of BTC-e, was arrested in Greece this week, and FinCEN assessed a $12 million penalty against him for his role in the violations.

BTC-e is an internet-based, foreign-located money transmitter that exchanges fiat currency as well as the convertible virtual currencies Bitcoin, Litecoin, Namecoin, Novacoin, Peercoin, Ethereum, and Dash. It is one of the largest virtual currency exchanges by volume in the world. BTC-e facilitated transactions involving ransomware, computer hacking, identity theft, tax refund fraud schemes, public corruption, and drug trafficking.

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. anti-money laundering laws,” said Jamal El-Hindi, Acting Director for FinCEN. “This action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency. Treasury’s FinCEN team and our law enforcement partners will work with foreign counterparts across the globe to appropriately oversee virtual currency exchangers and administrators who attempt to subvert U.S. law and avoid complying with U.S. AML safeguards.”

FinCEN acted in coordination with law enforcement’s seizure of BTC-e and Vinnik’s arrest. The Internal Revenue Service-Criminal Investigation Division, Federal Bureau of Investigation, United States Secret Service, and Homeland Security Investigations conducted the criminal investigation.

Among other violations, BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address. Instead of acting to prevent money laundering, BTC-e and its operators embraced the pervasive criminal activity conducted at the exchange. Users openly and explicitly discussed criminal activity on BTC-e’s user chat. BTC-e’s customer service representatives offered advice on how to process and access money obtained from illegal drug sales on dark net markets like Silk Road, Hansa Market, and AlphaBay.

BTC-e also processed transactions involving funds stolen between 2011 and 2014 from one of the world’s largest bitcoin exchanges, Mt. Gox. BTC-e processed over 300,000 bitcoin in transactions traceable to the theft. FinCEN has also identified at least $3 million of facilitated transactions tied to ransomware attacks such as “Cryptolocker” and “Locky.” Further, BTC-e shared customers and conducted transactions with the now-defunct money laundering website Liberty Reserve. FinCEN previously issued a finding under Section 311 of the USA PATRIOT Act that identified Liberty Reserve as a financial institution of primary money laundering concern.

BTC-e has conducted over $296 million in transactions of bitcoin alone and tens of thousands of transactions in other convertible virtual currencies. The transactions included funds sent from customers located within the United States to recipients who were also located within the United States. BTC-e also concealed its geographic location and its ownership. Regardless of its ownership or location, the company was required to comply with U.S. AML laws and regulations as a foreign-located MSB including AML program, MSB registration, suspicious activity reporting, and recordkeeping requirements. This is the second supervisory enforcement action FinCEN has taken against a business that operates as an exchanger of virtual currency, and the first it has taken against a foreign-located MSB doing business in the United States.

https://www.fincen.gov/news/news-releases/fincen-fines-btc-e-virtual-currency-exchange-110-million-facilitating-ransomware

 

 

Criminal mastermind’ of $4bn bitcoin laundering scheme arrested

The Russian “internationally sought ‘mastermind’ of a crime organisation” accused of laundering more than $4bn in bitcoin, including funds obtained from the hack of failed bitcoin exchange Mt Gox, has been arrested in Greece.

A US jury indicted Alexander Vinnik on Wednesday after his arrest in a small beachside village in northern Greece on Tuesday, following an investigation led by the US justice department along with several other federal agencies and task forces.

Vinnik was described by the justice department as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011, which was allegedly used to launder more than $4bn for people involved in crimes ranging from computer hacking to drug trafficking.

US authorities also linked him to the failure of Mt Gox, the Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik “obtained” funds from the hack of Mt Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.

“Just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes,” said Brian Stretch, US attorney for the Northern District of California.

Vinnik’s arrest is the latest in a series of US operations against Russian cybercriminals in Europe, including the taking down of two of the biggest dark web marketplaces for drugs, guns and other illicit items, AlphaBay and Hansa, last week.

The prosecutions also coincide with intensified scrutiny of Russian hackers after US intelligence officials determined that Russia interfered in the 2016 US presidential election using cyber-warfare methods to help Donald Trump, something Moscow denies.

During his time in the digital currency market, US authorities allege Vinnik facilitated crimes including hacking, fraud, identity theft, tax refund fraud, public corruption and drug trafficking. Greek police described Vinnik as a “an internationally sought ‘mastermind’ of a crime organisation”.

BTC-e, which has been out of service for more than a day, attributed this to “unplanned maintenance”. In a tweet on Wednesday after the arrest of Vinnik, BTC-e said it would restore service in the next five to 10 days.

The exchange is one of the oldest virtual currency platforms. It allows users to trade bitcoin pseudonymously against a variety of fiat and virtual currencies, and is known in cryptocurrency markets as having relaxed standards for checking users’ identity, and for not collaborating with law enforcement.

https://www.google.com/amp/s/amp.theguardian.com/technology/2017/jul/27/russian-criminal-mastermind-4bn-bitcoin-laundering-scheme-arrested-mt-gox-exchange-alexander-vinnik

Businessman accused of stealing millions in Ponzi scheme

A businessman is accused of running a Ponzi scheme that took more than $3.6 million from people in Central Florida, according to the Orange County Sheriff’s Office.

Deputies arrested Justin Troy Spearman, 29, on numerous fraud-related charges Saturday.

Spearman, formerly of Winter Park, persuaded people in Orange, Seminole and Volusia counties to let him invest their money in 2013 and 2014, according to the probable-cause affidavit.

He told them the money was going into gas and oil businesses in Texas, and provided fake documents to persuade them.

The investors, many of whom knew one another, gave Spearman more than $3.6 million, according to the affidavit. He would pay old investors with money taken from the new investors.

Spearman was a big spender, using the money on luxury cars, private airplanes and extravagant gifts, according to court records.

Public records show he also had a Palm Beach condo worth nearly $800,000 in 2015.

Some of the investors confronted Spearman in 2014 when they weren’t getting the returns they were promised. He confessed on-camera to the scheme and admitted himself for psychiatric evaluation at a hospital, according to court documents.

Orange County Circuit Court records show that Gloria Cockman, one of the investors, sued Spearman in 2014.

He pleaded the Fifth Amendment during the case, and she was awarded a settlement.

Spearman was sentenced to 27 months in prison in July 2016 for another Ponzi scheme in Texas.

The investigation of Spearman was conducted jointly by the Winter Park Police Department and the Florida Office of Financial Regulation, according to the affidavit.

Spearman’s charges include grand theft, securities fraud and sale of unregistered securities, according to the arrest affidavit.

He was booked into the Orange County Jail with bond set at $2.1 million, the affidavit shows.

http://www.orlandosentinel.com/news/breaking-news/os-justin-spearman-arrested-ponzi-scheme-20170719-story.html

 

 

Newark man sentenced to one year and a day in prison for money laundering

A 68-year-old Newark man was sentenced to one year and a day in prison for his part in a wire fraud scheme that transferred $6.1 million from the Newark financial services company his wife worked at to her bank account.

Matthew Czap was sentenced Wednesday by Chief U. S. District Court Judge Leonard P. Stark. Czap’s wife, Roberta, 66, pleaded guilty last month and is scheduled to be sentenced in September.

“Mr. Czap’s conduct helped to conceal the proceeds of fraud and allowed the crime to go undetected for years,” Acting U.S. Attorney for the District of Delaware David C. Weiss said in a statement. “While he didn’t personally steal the money, he enjoyed the benefits of it. Individuals contemplating similar conduct should understand that their crimes will have the most serious of consequences.”

From Jan. 11, 2011, to Aug. 30, 2016, Roberta Czap directed more than $6.1 million dollars in electronic funds transfers from her company’s operating account to her personal bank accounts, according to court documents.

Using the personal identification information of another employee, she created false payment requests, designed to appear legitimate, to the company’s vendors. She then authorized nearly 500 payments with company funds, using her own credentials. While Roberta Czap filed federal tax returns for 2013, 2014, and 2015, those returns did not, as was required by law, include her illegal income from the company’s funds, and materially understated her income.

According to federal prosecutors, Matthew Czap took some of that money and deposited it in amounts of less than $10,000.

Dating back to January 2013, he structured approximately $1.2 million of cash deposits, while aware that the currency represented the proceeds of his wife’s criminal conduct.

Some of the money was used for gambling, according to court documents.

For example, between Jan. 1, 2013, and July 14, 2016, the Czaps played more than $2.9 million on table games and slot machine play at one casino and suffered a combined loss of more than $1.4 million.

The two were indicted early this year.

Matthew Czap pleaded guilty on March 22 to one count of structuring financial transactions to avoid currency reporting requirements.

http://www.delawareonline.com/story/news/crime/2017/07/17/newark-delaware-man-sentenced-one-year-and-day-prison-money-laundering/484934001/

 

Australia a ‘place of choice’ for money laundering due to lack of regulation

ANZ Bank says a lack of political will has seen successive Australian governments fail to extend money laundering laws to cover lawyers, real estate agents and accountants.

Australia’s hot property market is an attractive haven for criminals, with estimates that billions of dollars of dirty money is being laundered through residential property.

Australia’s anti-money laundering law does not cover real estate agents, lawyers and accountants, despite promises when the law was enacted in 2006 that the legislation would be widened.

ANZ’s head of financial crime, Guy Boyd, is scathing of the failure of subsequent governments to extend the legislation.

Money laundering occurs when criminals channel money from illegal assets or activities into legal assets such as a trust fund or by buying property in an attempt to “clean” the money.

Federal Justice Minister Michael Keenan defended Australia’s anti-money laundering regime.

“We do have very robust arrangements in Australia, including for property, but we are looking at how we can improve those arrangements,” Mr Keenan said at a press conference in Sydney on Wednesday.

Australia’s anti-money laundering (AML) legislation covers organisations including banks and money changers.

Mr Keenan said industry consultation on extending the laws was continuing.

International bodies like the Financial Action Task Force and Transparency International have slammed Australia’s lack of action on forcing lawyers, real estate agents and accountants to report suspicious transactions.

Mr Boyd said the lack of regulation makes Australia an attractive target for money launderers.

“I think Australian real estate is obviously an attractive destination for capital, both legitimate and illegitimate,” he said.

AUSTRAC, Australia’s financial crimes regulator, said in a report two years ago that the laundering of illicit funds through real estate was “an established money laundering method in Australia”.

It said around $1 billion in suspicious transactions came from Chinese investors into Australian property in 2015-16.

Australia’s housing market has been targeted by money launderers from countries including Papua New Guinea, Malaysia and China.

Dudley House, student accommodation in inner city Melbourne, was bought at a significantly inflated value by Malaysian officials.

Thomson Reuters financial crimes analyst Nathan Lynch said the lack of regulation covering gatekeepers like lawyers makes Australian property a weak link for criminals.

“The money flows to the path of least resistance and in reality that is the property sector,” Mr Lynch said.

http://www.abc.net.au/news/2017-07-13/should-australias-anti-money-laundering-laws-be-extended/8703354

Photo: ABC News Peter Drought

Cuban man accused of laundering $238 million in Medicare payments must face trial

A Cuban businessman charged with laundering $238 million in illicit Medicare payments through South Florida will have to face trial now that a federal judge has rejected his motion to dismiss a massive money laundering case against him.

The motion by Jorge Emilio Perez de Morales to dismiss the indictment was highly unusual because the 52-year-old is considered a fugitive after fleeing to Spain.

Through his Miami defense attorney, the absent Perez asked a magistrate judge to throw out the case, claiming he was running a legitimate remittance company outside the United States so he couldn’t have committed a crime.

But this month, Magistrate Judge Patrick Hunt denied his motion, saying the U.S. money-laundering conspiracy charge filed five years ago extends beyond the boundaries of this country because the alleged offense happened here.

“If he wishes to contest the charges in this case, [Perez] will have to first submit to the court’s jurisdiction,” Hunt wrote in a nine-page ruling. “If he would like to go to trial, the door to the federal court, as always, remains open.”

Perez’s attorney, Stephen Golembe, has until Friday to appeal the judge’s ruling. It came in response to an unusual hearing in March, when the judge, Golembe and federal prosecutor Ron Davidson debated whether Perez is a fugitive — a thorny legal issue arising from the fact that he has yet to be arrested on the money-laundering conspiracy charge. His lawyer said he isn’t; the prosecutor said he is.

https://www.google.com/amp/amp.miamiherald.com/news/local/article157126544.html

 

 

Deputies: Stolen guns recovered when swiped iPad found

DELTONA, Fla. — A stolen iPad led deputies to an even larger theft in Deltona.

The investigation began Sunday when a woman called the Sheriff’s Office to report her iPad was stolen while it was in her son’s possession outside a Publix supermarket.

“Just beware and be careful,” Rosa Campbell said about the theft.

She told WESH 2 her son was trying to do something nice for a man in need, but that man then took advantage.

“My son went into the store to buy him a sub-sandwich because he said he was homeless,” Campbell explained, “then he took the iPad … he distracted him.”

Campbell and her son then decided to investigate. She called her cellphone service provider and enabled the “Find My iPad” app.

She watched as the device’s GPS was sending back signals from all over town.

Once the movement stopped, she called the Volusia County Sheriff’s Office.

Within an hour, deputies moved in on their suspect and arrested him. He’s identified as 28-year-old Raymond Ingberg.

“(We) found him in possession of various items that were stolen in another case,” Sheriff’s Office spokesman Andrew Gant said.

Gant told WESH 2 the other items found in a bag Ingberg was holding had been taken during a recent home break-in.

Along with the iPad, deputies also recovered jewelry and five stolen guns.

“We’re thankful we were able to get those guns quickly off the street before they became involved in some other kind of crime,” Gant said.

Campbell said she’s glad she was able to track her iPad and help deputies find it and the suspect as well.

“Even though it may look minor you have to think what they might do to someone else,” Campbell said. “That minor thing can lead to big things, remember these people that do these crimes, they start little and then they keep getting big.”

Ingberg was booked into the Volusia County Jail on several charges under a bond of $55,000.

http://www.wesh.com/article/deputies-stolen-guns-recovered-when-swiped-ipad-found/10046035

 

Skimming device found at Cocoa Beach gas station

Cocoa police showed off the devices that were helping thieves steal money at a gas station pump.

A maintenance worker discovered credit card skimmers at the Chevron station at 2700 U.S. Highway 1.

Police are not sure how long the device may have been in place.

Authorities are asking customers who made fuel purchases there to contact their credit card company to verify all recent transactions.

Additionally, they are asking people to be on the alert for any other devices that may be in place in the area.

http://www.wesh.com/article/skimming-device-found-at-cocoa-gas-station/10036202

 

Former Eatonville mayor asks for new trial in voting fraud case

Former Eatonville mayor Anthony Grant’s defense attorney asked a judge for a new trial Tuesday in his voting-fraud case, in part because one of the jurors may have not been able to hear some of the proceedings.

Grant was found guilty May 19 of felony election violation, voting fraud, and misdemeanor absentee-voting violation. When a court official tried to poll the jury — a routine proceeding asking every juror in open court if the verdict that was just read is the one he or she chose — one juror sitting in the courtroom did not respond.

Another juror said that the juror’s hearing aid was not working properly at that moment, so she could not hear them.

Grant’s lawyer, Gary Dorst, filed a motion May 24 asking for a new trial. But that would require evidence that the juror indeed could not hear the evidence, arguments, and deliberations.

In this case, the only evidence Dorst had was what happened in court after the jury delivered its verdict. Without speaking with the juror, he said, he would have no way of knowing how much of the trial she could or could not hear.

But Florida case law does not allow attorneys to interview jurors about a verdict without evidence that there are legal grounds to challenge the verdict or proof of jury misconduct, Circuit Judge Keith Carsten said in court Tuesday, citing case law.

It comes down to one of the Florida Rules of Criminal Procedure: “If no reason is found to believe that the verdict may be subject to challenge, the court shall enter its order denying permission to interview.”

Dorst filed another motion Monday, arguing that the jury’s guilty verdict on the voting fraud charge contradicts the weight of the evidence.

Grant, who was sent to the Orange County Jail after the guilty verdict, sat quietly in his navy blue jail-issued clothing during the hearing, listening to the proceedings. He did not speak.

Jurors last month also convicted former campaign aide Mia Nowells of coercing a voter, acquitting her of three other charges she faced. They found another campaign aide, James Randolph, not guilty.

Grant was Eatonville’s mayor from 1994 to 2009.

He ran again in 2015 against Bruce Mount, getting 15 fewer votes at the polls but winning in absentee votes, getting 196 to Mount’s 69. Mount sued, and the Florida Department of Law Enforcement launched an investigation that ended in Grant’s arrest.

http://www.orlandosentinel.com/news/breaking-news/os-anthony-grant-new-trial-request-20170613-story.html