GLOBAL COLLABORATION KEY TO ENSURING IMPLEMENTATION OF ANTI-MONEY LAUNDERING LEGISLATION

By Zac Cohen

Banks are spending $20 billion on compliance in an effort to combat money laundering, yet only one per cent of illicit financial flows are seized by authorities every year. While regulations have been introduced to crack-down on money laundering, so far they have had a limited effect. Given that banks will incur more than $400 billion in fines by 2020, as a result of misconduct and inadequate AML measures, organisations are under pressure to strengthen their own customer due diligence in order to avoid heavy fines.

Simultaneously, international trade is also becoming increasingly susceptible to trade based money laundering (TBML). Although the World Trade Organisation anticipates merchandise trade volume growth of 4.4 per cent in 2018, TBML accounts for hundreds of billions of dollars of illegal money flows annually.

Operating on such a large scale, techniques for money laundering have become increasingly sophisticated over time. Illegal activities are often masked under massive volumes of legitimate trade, making them challenging to uncover. For example, techniques such as under- or over-invoicing, falsifying documents, and misrepresenting financial transactions, are difficult to trace as they can involve multiple parties, jurisdictions and transactions. To be able to uncover these illicit activities, it is imperative to be able to identify and verify the people behind them.

Establishing ‘Beneficial Ownership’ and Business Verification

For the last two years, the European Union has been working on legislation to combat money laundering. The 4th Anti Money Laundering (AML) directive lays out the need to discover the beneficial owner of business customers, partners, suppliers and other business relationships.

Beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.Financial Action Task Force (FATF)

That is to say, you need to know who you are doing business with and the person (or group of people) who owns or controls that business.

Procedures and processes have to be put in place to collect information about the beneficial owner. By making use of the wide variety of technology available, a scalable solution to authentication can be created across companies and across borders. Automated systems and technology driven by Artificial Intelligence (AI) can be used to scour company documents in order to identify beneficial owners and make transactions more transparent. Cross-referenceing this against electronic ID verification solutions that leverage reliable and unique data from global sources around the world will help forma full picture of each beneficial owner of a business.

By knowing the businesses and knowing the key players within it, it is easier to differentiate between legal and fraudulent transactions, taking advantage of a transparent and secure approach to the global issue of money laundering.

A Global Solution for a Global Issue

Since money laundering is an international issue, it only makes sense for the solution to be cross-border as well. However, in reality, the ‘politics of Anti-Money Laundering’ is largely social and political. The leaders of any organisation set the tone, the priorities, and the agenda that permeates throughout the system. The leaders of a country are no different. They have varying influence and impact based upon their political capital, the willingness and strength of the bureaucracy to push through or downplay the leader’s decisions, and the agendas of the courts and legislators.

Moreover, as with any political issue, public interest in AML rises and falls depending on circumstances. When corruption scandals such as the Panama Papers hit the news, the public takes notice. In response, politicians and regulators note the loopholes and various actions are proposed and/or implemented.

It’s clear that a secure, reliable and global solution is required to fight money laundering and the financing of terrorism.As money laundering is so widespread and sophisticated, it will also require coordinated international efforts from numerous agencies, regulators and financial institutions to successfully combat money laundering. Allowing financial institutions to securely see more information from exporters, importers, shippers, and authorities enables them to better perform due diligence and monitoring.If regulators across borders can agree on standards for better, safer information sharing, money laundering can dramatically be reduced.

In order to take an active rather than reactive approach, renewed focus must be put on collaboration between policymakers, regulators and governments to leverage new technology and close gaps and loopholes. With that said, one of the most important factors is ensuring these technologies share information securely, especially on such a large scale. A combination of new technology, alongside ironclad policies for secure sharing, could help countries tackle the ever-evolving threat of money laundering, terrorist financing, fraud and tax evasion.

The purpose of a collaborative approach, reliant on secure data sharing, is to ensure swift authentication and verification of individuals and businesses. The data that European governments and companies hold on their citizens and consumers serves little purpose if kept in siloed departments. But if linked together, they can act as pieces of a puzzle and provide a holistic image of any individual or business.

The way forward

The increasing risk of money laundering and fraudulent activities, coupled with the pressure on banks and businesses to comply with regulations, proves the need to revamp the existing system for dealing with these activities. By securely accessing databases that include people and companies that pose financial crime risk, such as OFAC, sanctions, politically exposed persons lists, and existing fraud ledgers, a robust approach can be taken to flagging risk and verifying identity. Not only is it imperative to develop a shared and secured system of information sharing, the process of business and customer verification needs to be automated and digitised to keep up with the world of virtual transactions.

Homeless couple who shared windfall with friends on trial for money laundering

By Daniel Boffey

A homeless couple who found €300,000 (£264,000) in an old Singer sewing machine while squatting in an abandoned building are on trial for money laundering after giving away some of the windfall to people who had helped them in the past.

The prosecution has accepted the couple, named only as Joey D, 32, and Kimberley A, 33, who are also facing charges of drugs possession, distributed the cash out of generosity.

However, the court in Ghent has heard from the prosecutor’s office that the money found in the house in the Flemish town of Assenede was not the couple’s to give away. The nine friends who received money are also being prosecuted.

The public prosecutor told the court: “They shared the money as well-wishers. But of course you cannot hand out money that is not yours. And the people who took the money should have known that Joey and Kimberley could not have come by such sums of money in a normal way.”

A lawyer for Kimberley, Sofie Vermeir, told the court her client had hoped the money would change the course of her life. She said: “They wanted to buy a house, because they know all too well that such shelter is the start of a normal life.”

The owner of the abandoned building is said to want the cash returned.

Jesse van den Broeck, acting for Joey, said his client was an “honest finder” and should be allowed to keep the cash.

“In the first hour procedural errors have already been made, so the investigation is void,” he said. “I ask that Joey get his money back and not be punished.”

The couple’s windfall was only discovered after the property of a friend with whom they were staying was searched during a drugs raid.

Officers found 1.5kg of speed (amphetamine) and more than 1,000 pills in the house, while Joey was found to have €50,000 in cash on him.

The prosecutor’s office is seeking 18-month suspended prison sentences and fines of €6,000 each for the couple. The judge is expected to give his decision in two weeks.

Report describes Dubai real estate as money-laundering haven

By Jon Gambrell

War profiteers, terror financiers and drug traffickers sanctioned by the U.S. in recent years have used Dubai’s real-estate market as a haven for their assets, a new report released Tuesday alleges.

The report by the Washington-based Center for Advanced Defense Studies, relying on leaked property data from the city-state, offers evidence to support the long-whispered rumors about Dubai’s real-estate boom. It identifies some $100 million in suspicious purchases of apartments and villas across the city of skyscrapers in the United Arab Emirates, where foreign ownership fuels construction that now outpaces local demand.

The government-run Dubai Media Office said it could not comment on the report.

For its part, the center known by the acronym C4ADS said Dubai has a “high-end luxury real estate market and lax regulatory environment prizing secrecy and anonymity above all else.” That comes as the U.S. already warns that Dubai’s economic free zones and trade in gold and diamonds poses a risk.

“The permissive nature of this environment has global security implications far beyond the sands of the UAE,” the center said in its report. “In an interconnected global economy with low barriers impeding the movement of funds, a single point of weakness in the regulatory system can empower and enable a range of global illicit actors.”

The properties in question include million-dollar villas on the fronds of the man-made Palm Jumeirah archipelago to an apartment in the Burj Khalifa, the world’s tallest building. Others appear to be one-bedroom apartments in more-affordable neighborhoods in Dubai, the UAE’s biggest city.

Among the highest-profile individuals named in the report is Rami Makhlouf, a cousin of embattled Syrian President Bashar Assad and one of that country’s wealthiest businessmen. The U.S. has sanctioned Makhlouf, who owns the largest mobile phone carrier Syriatel, for using “intimidation and his close ties to the Assad regime to obtain improper financial advantages at the expense of ordinary Syrians.”

Makhlouf and his brother, also sanctioned by the U.S., own real estate on the Palm Jumeirah, according to the report. They also have ties to two UAE-based free-zone companies. The UAE, a federation of seven sheikhdoms led from oil-rich Abu Dhabi, has opposed Assad in his country’s yearslong war.

The UAE also opposes Hezbollah, the Lebanese political party and militia group backed by Iran. However, C4ADS’ report identified at least one property directly linked to Lebanese businessmen Kamel and Issam Amhaz, who the U.S. sanctioned in 2014 for helping Hezbollah “covertly purchase sophisticated electronics” for military drones. The report identified another nearly $70 million in Dubai properties owned by two other shareholders in Amhaz’s sanctioned firms.

Separately, the report identified some $21 million in real estate still held by individuals associated with the Altaf Khanani money laundering organization, a Pakistani ring that aided drug traffickers and Islamic extremists like al-Qaida through its currency exchange houses.

The report identified Dubai properties owned by Hassein Eduardo Figueroa Gomez, a Mexican national indicted in the U.S. for importing mass quantities of chemicals needed to make methamphetamine. It also identified properties owned by two Iranians previously sanctioned for their work on Iran’s missile program.

Dubai, an Arabian Peninsula entrepot, long has been a favorite port of call for those skirting the law. Gold smuggling into India served as one of the emirate’s most lucrative trades for the decades after the pearling industry collapsed. Guns, drugs and other illicit cargo also moved through the city-state.

Over time, however, Dubai itself became a haven. The emirate’s decision in 2002 to allow foreign ownership of so-called “freehold” properties drew a rapid construction boom that attracted developers from across the world, including President Donald Trump, whose name is on two golf course projects and villas.

Dubai’s easily flipped luxury properties offered an opportunity for those wanting to park money they otherwise couldn’t spend. The Federation of American Scientists warned based on news reports in 2002 that “money-laundering activity in the UAE may total $1 billion annually.”

Money quickly flowed in from all corners, especially those now involved in the U.S. wars in Afghanistan and Iraq, likely topping that.

From Kabul, the Afghan capital, over $190 million in physical cash left for Dubai in three months in 2009 on commercial flights, according to an October 2009 U.S. diplomatic cable published by WikiLeaks. In 2008, some $600 million, as well as 100 million euros and 80 million British pounds, made the trip, according to the cable.

A banking scandal in Afghanistan in 2010 saw regulators demand that a banker turn over 18 Palm Jumeirah villas and two business properties. The brother of former Afghan President Hamad Karzai also profited from the sale of a Palm Jumeirah villa at the time.

In Pakistan, authorities believe citizens invested $8 billion in Dubai’s property market over four years, possibly to evade taxes, officials said in 2017. Alleged Australian drug kingpins arrested in Dubai last year also owned real estate in the city, while the governments of Nigeria and South Africa also have launched investigations into alleged money laundering involving Dubai.

Unlike in the U.S., where property records are public, Dubai does not offer an accessible database of all its transactions, instead requiring specific details only individual buyers and sellers would have. C4ADS said it relied in part on “private UAE data compiled by real estate and property professionals” offered by a confidential source for its reporting.

The U.S. State Department as recently as this year issued a warning about money laundering in the UAE in its annual International Narcotics Control Strategy Report, noting the country’s money-exchange shops can allow for “bulk cash smuggling.” The UAE’s economic free zones, real estate sector and its trade in gold and diamonds also pose risks.

“The UAE has demonstrated both a willingness and capability to take action against illicit financial actors if those actors pose a direct national security threat or present a reputational risk to the UAE’s role as the leading regional financial hub,” the State Department said. “However, the UAE needs to continue increasing the resources devoted to investigating, prosecuting and disrupting money laundering.”

Pablo Escobar’s widow, son charged with money laundering in Argentina

By Katherine Lam

Colombian drug lord Pablo Escobar’s widow, her son and a retired Colombian football player were held on Tuesday by Argentine authorities on money laundering charges involving a drug dealer, the country’s official judicial news agency said.

Victoria Henao, Juan Pablo Escobar Henao and Mauricio Serna were charged with being part of a criminal organization devoted to money laundering. The trio are accused of being intermediaries in Argentina for Colombian drug dealer Jose Piedrahita.

They allegedly laundered money for Piedrahita, who was arrested in Colombia in September, through real estate and a café known for its tango performances.

Serna is a former midfielder who helped Boca Juniors win South America’s Copa Libertadores in 2000 and 2001. The team won the 2000 Intercontinental Cup by beating Real Madrid. He was a regular with Colombia’s national team.

The former Medellin Cartel leader’s family has been living in Argentina, relatively out of the spotlight, since the 1990s after Escobar was shot and killed in 1993. In order to escape Escobar’s grim history, Henao changed her name to Maria Isabel Santos Caballero and her son now goes by Juan Sebastian Marroquin Santos.

Henao and her two children lived in fear of possible revenge attacks by Escobar’s enemies for years.

This isn’t the first time the Escobar’s widow and son were accused of money laundering. The family was arrested in 1999 at their Buenos Aires apartment on charges of money laundering and falsifying documents, the BBC reported. They were eventually cleared of the charges, but had each spent time in jail for the incident.

Henao later told local media she was only arrested because of her relation to Escobar.

“I am imprisoned in Argentina for being Colombian, because they want to judge the ghost of Pablo Escobar and because they want to make people believe that Argentina fights drug trafficking,” she said at the time.

http://www.foxnews.com/world/2018/06/06/pablo-escobar-s-widow-son-charged-with-money-laundering-in-argentina.html

Australia’s biggest bank hit with record fine for money-laundering scandal

By Daniel Shane

The record punishment for Australia’s largest bank is the latest blow to the country’s financial sector, which has been rocked by a series of scandals recently.

Austrac, a regulator that focuses on financial crime, said Monday that CBA (CBAUF) would pay $700 million Australian dollars ($534 million) to settle a lawsuit after the bank admitted it failed to observe laws to prevent money laundering and financing of terrorism.

Between 2012 and 2015, CBA failed to report more than 53,000 suspicious transactions using its ATMs to authorities on time. Drug gangs laundered money by taking advantage of a loophole that allowed for large, anonymous deposits to CBA accounts, Austrac said.

“As we have seen in this case, criminals will exploit poor business practices to launder the proceeds of their crimes,” Austrac CEO Nicole Rose said in a statement.

“This has real impacts on the everyday lives of Australians and puts the community at risk by increasing opportunities for terrorists to support attacks here and overseas, and enabling organized crime groups to peddle drugs to our families and friends,” she added.

Austrac first began legal action against the bank 10 months ago. CBA’s payment of the fine is dependent on the settlement being accepted by Australia’s federal court.

“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” CBA CEO Matt Comyn said in a statement. “Our agreement today is a clear acknowledgment of our failures and is an important step towards moving the bank forward. I apologize to the community for letting them down.”

CBA has blamed the failure to report suspicious transactions on time on a coding error in its computer systems.

It’s the second blow in just over two months for the bank, whose shares are down about 13% so far this year.

In April, CBA admitted to charging fees to clients it knew had died years previously.

The bank told a Royal Commission inquiry that the practice of billing deceased customers for financial advice stretched back years. In one instance, an adviser at the bank’s financial planning business was collecting fees from a client more than a decade after they had died.

A Royal Commission is Australia’s highest form of public inquiry. It was ordered by Prime Minister Malcolm Turnbull at the end of last year in a bid to restore public confidence in the country’s financial sector.

The commission is due to submit its findings to the government in February 2019.

http://money.cnn.com/2018/06/04/investing/cba-fine-money-laundering/index.html

Psychic charged with fraud and money-laundering offenses

By Tom Tuite

A PSYCHIC turned financier charged with fraud and money-laundering offences has been further remanded in custody pending the preparation of a book of evidence.

Astrologer and tarot reader, Simon Gold, 53, with an address at Cartontroy, Athlone, Co. Westmeath faced his second hearing when he appeared at Cloverhill District Court on Thursday, having been refused bail earlier.

Mr Gold is best known for his firm Astrology Ireland and has billed himself as “Ireland’s Leading 7th Generation Psychic Astrologer & Tarot Master”.

He was charged with money laundering by allegedly possessing €800,000 in proceeds of criminal conduct at a bank in Dublin on Oct. 19, 2012.

Defence barrister Niall Storan (instructed by solicitor Brian Keenan) told Judge Victor Blake his client consented to being further remanded in custody to appear again on June 28 next for a book of evidence to be prepared.

Counsel said his client also agreed to appearing via video-link at the next hearing.

The defence asked the judge to direct medical attention for Mr Gold because he had “breathing problems and finds it difficult to walk”. He is being held on the second floor of the prison, in a cell with others, counsel told the judge.

In reply, Judge Blake remarked, “I cannot give room numbers” but he added that he was noting Mr Gold had breathing problems and he directed medical attention for him.

Det Tom Victory of the Garda National Economic Crime Bureau was furnished with a statement of Mr Gold’s means.

State solicitor Michelle Sheeran told Judge Blake that funds in the accused’s bank account have been frozen and she accepted he did not have the means to pay for his defence.

Noting there was no objection, Judge Blake granted legal aid to Mr Gold who spoke only to his barrister during the hearing.

He has three other counts of deception with charges that on other dates in 2011 he induced three other people to transfer stg£30,000, stg£10,000 and another sum of stg£10,000 to the account of the same financial consultancy firm.

The businessman was also charged with having false instruments: one blank bank draft and six other bank drafts with various sums, totalling €55m, payable to three individuals and a named financial advice business. He is charged that he had these drafts in his custody in Delvin, Co. Westmeath on Oct. 22, 2012.

He also had another charge of having another false instrument on a date in 2014 at a location in Co. Leitrim: four sheets allegedly containing 360 removable holograms purporting to be AIB holograms.

The 53-year-old has not yet entered a plea to the charges and the Director of Public Prosecutions has directed that he is to face trial on indictment. This means his case will be sent forward to the Circuit Court, which has tougher sentencing powers, once the prosecution has completed preparing a book of evidence.

https://www.independent.ie/irish-news/courts/psychic-charged-with-fraud-and-moneylaundering-offenses-36965887.html

Property Professionals & Unusual Money Laundering Cases

By Jonathon Fisher

As pressure from regulators and law enforcement intensifies, and property professionals develop their risk assessments, the need for greater publicly available information about money laundering techniques and practices remains unmet. Sometimes, the factors which trigger suspicions will be obvious. Where, for example, a purchaser or seller seeks anonymity, or funds supporting a purchase are received through an unnecessarily circuitous offshore route, red lights will start to flash. The UK Government’s National Risk Assessment published in October 2017 revealed that in an analysis of suspicious activity reports linked to property, 27% highlighted the presence of companies and trusts, 36% highlighted use of professional intermediaries, and 17% reported high cash payments. However, in other cases, the money launderers’ techniques may be more subtle and sophisticated, making it difficult for the property professional to spot. This article relates the circumstances of six suspected money laundering cases which do not fit the traditional mould. As I have been professionally instructed in each of these cases, the facts have been anonymised for obvious reasons.

Exchange controls and false declarations

The first case is interesting because it involved a string of out-of-London residential property purchases. Today, when the link between the property sector and money laundering is made, invariably attention focuses on prime, and super-prime, property in London. The recent work undertaken by Transparency International points to investment in the London property market of the illegal fruits of grand corruption emanating from a basket of leading figures based in Eastern European and African countries. This perception was reinforced in the National Risk Assessment in 2015 when it reported that 75% of investigations involving real estate had been handled by the Metropolitan Police Corruption Unit. In fact, the risks of money laundering are much wider. In the case in point a cohort of Chinese investors had decided to purchase multiple residential properties outside London of relatively low value. Customer identification presented certain difficulties, but the challenge for the property professionals was to grapple with the investors’ source of funds. The monies were coming from China, and although a breach of exchange controls does not always enliven the money laundering offences, if funds are transferred out of China on the back of a false declaration made to the Chinese authorities, a money laundering issue would arise. Typically, the false declaration would indicate that the purpose of the transfer was to pay for educational fees when in fact the true purpose was property investment.

Sidestepping the conveyance solicitor

The second case was entirely different in nature. A single property transaction was involved, but again, the residential property was located outside London. The purchaser was seeking to acquire the leasehold interest of a medium sized flat in a seaside town which he intended to occupy as a second home. So far so good, but matters became complicated when the purchaser informed the estate agent that if he instructed a solicitor to look after the conveyancing aspects, the purchase monies would be transferred directly into the vendor’s bank account. Although there was no suggestion that the purchaser was intending to use cash to settle any part of the purchase price, nevertheless the case raised certain issues. Normally, purchase funds would be paid by the purchaser to his solicitor, and subsequently transferred to the vendor’s solicitor’s account on exchange, and then completion. The fact that the purchaser wished to circumvent his solicitor raised a concern about the provenance of the monies, but it did not mean that the monies were necessarily tainted as criminal property. A question arose as to whether the vendor’s estate agent should make enquiries of the purchaser to see whether the concern about the provenance of the monies could be assuaged. It would certainly be helpful if a purchaser could put forward an explanation which was credible, coherent, and consistent, however unlikely this might seem at first blush. Today, following the introduction of the Money Laundering Regulations 2017, the legal exposure for the vendor’s estate agent is much sharper than it was at the time when this case arose. This is because regulation 4(3) imposes a new obligation on an estate agent to regard himself as entering a business relationship with the purchaser as well as the seller, thereby triggering an obligation to undertake customer due diligence on the purchaser as well as the vendor. Hitherto, it was only the vendor who fell to be treated by the estate agent as his customer for the purposes of entering a business relationship. As an aside, it should be noted that regulation 4(3) raises an issue as to exactly when in terms of timing an estate agent is required to undertake due diligence on a purchaser, in addition to the pre-existing question—which has never been properly addressed—of when a business relationship is established by an estate agent in relation to the vendor who is unquestionably his client.

Swiss bank accounts

The next four cases involve central London properties, and three of the purchases involved “politically exposed persons” (PEP) from Eastern European and African states. Suspicions about money laundering screamed out from the facts of the first London case, which did not involve a PEP. The purchaser offered to acquire a super-prime residential property, but he had an arrangement in mind. The buyer said he would proceed with the transaction if the vendor agreed to raise the purchase price by £2 million, and then arrange for £2 million to be placed in a Swiss bank account established to the vendor’s order. No more needs to be said.

Politically exposed persons

The three cases involving PEPs were more sophisticated. In the first of these cases, the purchaser exchanged contracts on an incredibly high value super-prime residential flat in central London. Shortly thereafter he informed his counterparties that he was not proceeding with the purchase because the developer had decided to buy out the purchase contract by purchasing back the freehold immediately following completion, giving the purchaser a tidy six figure sum as part of the process. The concern was that the purchaser and vendor were acting in concert, using the purchase and buy-back agreements to launder illegally obtained monies through the London property market. If asked about the source of his monies at a later stage, the PEP purchaser could confidently and truthfully assert that he had derived the funds from the sale of high value residence in central London, where “top-end” estate agents and firms of solicitors had been involved.

The second PEP case also involved the purchase of a prime residential flat in central London. In a classic sign of potential money laundering, shortly before exchange of contracts the purchaser informed his property professionals that a third party should be named as the purchaser. It is true that the third party, who was also a PEP, had been named as an individual and it was not a company which was being substituted, but the explanation for the change was unconventional. The purchaser explained that he was buying the flat as a present for the third party, in return for a similar present located in a foreign country which the third party had given the purchaser at an earlier time. It is impossible to know in this type of situation the true position. Sometimes, independent evidence can be obtained to corroborate unusual or unexpected explanations, but the property professionals are left in a dilemma. The low threshold meaning of suspicion in the money laundering legislation is especially challenging. In terms, a suspicious activity report will need to be filed in circumstances where there are reasonable grounds for recognising that the monies have been derived from criminal conduct. The nature of the criminal conduct does not need to be identified.

The third PEP case can be differentiated from the first two PEP cases since in this case the PEP was a person who was clearly identifiable as a person who was holding office in an African state. Often, an individual is classified as a PEP because he is a family member or close associate of a person holding office. In this regard, property professionals will always need to have systems in place to enable them to identify whether a party to a transaction is a PEP. Failure to identify a PEP constitutes a breach of the money laundering regulations, and it may lead to the property professional undertaking customer due diligence at the wrong level. Although the African officer holder had been open about his identity, his suspected money laundering modus operandi was clever. Instead of acquiring a single high value property, the purchaser divided his resources and purchased five smaller residential properties, using different estate agents and solicitors for each purpose. The property professionals did not know of each other’s existence, although if customer due diligence had been undertaken properly, it would have become obvious that his income as an office holder in the African state could not have sustained one of these purchases, let alone five. The property professionals were vulnerable to criminal prosecution in this case.

Unquestionably, property professionals remain in the sights of regulators and law enforcers. The National Crime Agency considers the number of suspicious activity reports made by estate agents to be “relatively low” (National Risk Assessment 2017, paragraph 8.16), and as widely report, HM Revenue & Customs has been imposing substantial fines on estate agents for failing to comply with anti-money laundering legislation. The most serious contravention will involve a failure to spot suspicious circumstances, and the message is clear. Property professionals must keep their eyes peeled not only for obvious signs of money laundering but also for more subtle indications.

https://www.lexology.com/library/detail.aspx?g=b477af04-f6b2-4374-b6be-11befa444984

1000 Bitcoins Seized in Landmark Israeli Money Laundering Case

By Conor Maloney

The cybercrime division of the State Attorney’s office of Hebron, Israel indicted local resident Hilmi Git on Monday for allegedly using over 800 Israeli credit cards to carry out 20,000 fraudulent transactions and laundering the money using bitcoin.

The indictment, filed in the Tel Aviv district courts, alleges that the transactions they claim Git made amount to over $280,000 and that he laundered over $8 million over the course of ten years. The $8 million dollars was stored in the form of bitcoin, and the state seized at least 1,071 BTC — funds that will be confiscated pending conviction.

Git’s alleged operation spanned 10 years and many different forums and websites which the State Prosecutor claims he set up to launder money, facilitate credit card fraud through a wide network of criminals, instruct others how to remotely access computers to rob funds, and defraud unwitting visitors to his sites.

Through one scam he apparently pretended to sell cheap mobile phones but would block users from the website after receiving payment and cut off contact with them. He would then take over the user’s profile and post messages in their name seeming to confirm receipt of their goods, luring in more victims.

Even more serious was the credit card fraud operation through which Git allegedly offered free and premium memberships to clients buying access to credit cards from Git to commit fraud. The report also claims that he published guides on his site instructing users on how to hack and rob people online as well as offering tools enabling them to do so. Local media outlet Calcalist reports that Git’s indictment contained a quote from him saying:

“We are thieves. Anywhere we can take money, we’ll take it, whether it’s from Israel, the US, or even the moon.”

The state will file to continue holding Git in custody to prevent him from regaining control of his online crime empire, stating that internet access will “enable him to continue carrying out the criminal enterprise he established over the past decade,” saying Git will “not hesitate to commit fraudulent offenses against innocent victims.”

The wallet seizure marks the first time in Israeli history that bitcoin funds have been seized by police, and upon conviction a legal precedent may be set for the state confiscation of cryptocurrency assets.

Other countries have already handled illicit bitcoins in the same way, with the US government seizing 512 BTC and 512 BCH in January from a drug dealer on the dark web and auctioning off the currency and other assets. A similar incident took place in Finland in February where 2000 bitcoins were seized from an alleged drug dealer.

Top Latest Japan World Business Sports Entertainment Opinion Lifestyle Features Photos Videos Japan struggles to hamper int’l cryptocurrency money laundering operations

TOKYO — Loose overseas regulation of virtual currencies has prompted increased money laundering among some designated Japanese organized crime groups, with the Mainichi Shimbun confirming one case where a total of some 30 billion yen was funneled through various overseas exchanges since 2016.

While the Japanese government has recently moved to strengthen measures against money laundering, these are limited to the country’s boundaries. Grasping the situation of money being transferred through anonymous overseas accounts is a problem that cannot be solved without international cooperation.

In a bar on the second floor of an old building just off a street bubbling with nightlife in Tokyo’s Akasaka district, a 30-something member of a designated organized crime group and a Chinese man have agreed to meet once a month. The bar is a haven for people who exchange information about virtual currencies online through members-only blogs and social media sites to meet face-to-face. Japanese and English fly back and forth with specialized terms relating to cryptocurrencies mixed in.

“There were no problems,” says a Chinese man to the gang member on a night in mid-April as he hands over a USB drive. On the drive is a data file named “ZDM” filled with numbers and English notations. This is the record of money laundering using the difficult-to-trace currencies “Zcash,” “DASH” and “Monero.”

The file begins from June 2016, and shows the gang’s capital at a total of 29.85 billion yen post-laundering. The most recent record for February shows a total of some 130 million yen run through the system via several hundred transfers. The amount was lower than normal, but due to scandals surrounding cryptocurrency exchanges at the time, the gang member simply commented, “We didn’t want to draw any attention to ourselves, so this will do.”

The men then move to a room in an apartment building within walking distance called “base camp.” There, eight men and women stare into computer screens. The Chinese national reveals they are Japanese in their 20s and 30s — mostly engineers and students. These members first convert the group’s capital to blockchain currencies such as Bitcoin and Ethereum at Japanese exchange operators. These groups spread out the virtual currency by sending the money to five or six accounts held at exchange companies that do not require identification documents like a passport to open an account, such as the Russian exchange “YoBit.”

From there, the Bitcoin or Ethereum is converted into “Zcash,” “Dash” and “Monero” — ZDM. In terms of privacy protection, trading logs in the blockchain for these three currencies are not made public, and both the sender and receiver of the money can do business anonymously. The members used several exchange operators to move the virtual currency over dozens of transactions to cover their tracks, with collaborators in Russia making the last transaction into the local physical currency.

The personnel and equipment is all provided by the gang. “We have bases just like this all over the Tokyo area,” the gang member explains. “The most important thing is to process the money in small amounts.”

It has been less than 10 years since virtual currencies came onto the financial scene. Still, the Chinese man says, “Gangs were attracted to the anonymity associated with cryptocurrencies from the beginning. Now, its use is not limited to just money laundering, but is also being used as a venture to generate capital.” Of the total of 29.85 billion yen recorded returned to the group via foreign exchange operators in the file he gave the gangster, he commented, “I was given roughly 35 billion yen. Five billion yen was the service fee.”

“It’s a typical money laundering scheme. In a way, I’m not surprised,” said a senior official at the Financial Services Agency (FSA). “If you are going to do something illegal, then everyone knows to use the ‘three anonymous siblings,'” the official continued, referring to Zcash, DASH, and Monero. In Japan, the only cryptocurrency exchange that dealt with the three siblings was scandal-hit firm Coincheck Inc., from which thieves siphoned off 58 billion yen worth of “NEM” currency. However, after Coincheck was bought out by Monex Group Inc., the new owner expressed its intention to cease trading in those virtual currencies.

The FSA now administers the revised Payment Services Act, which was introduced in April 2017. The new law required cryptocurrency exchanges to register with the agency and for users to provide proof of their identity. In addition, divided asset management and allowing for outside monitoring of accounts was also introduced. Following the Coincheck case, the FSA inspected cryptocurrency exchanges to find many problems in the anti-money laundering measures taken by those domestic firms, issueing orders to improve their business operations. .

However, even with the revised laws, nothing can be done to regulate the operating practices of exchange firms overseas. Once the money is wired abroad, it is difficult to grasp the whereabouts of the currency from Japan, especially when accounts that do not require official identification to open are used.

“It’s nearly impossible for Japan to handle the problem alone,” the FSA official explained. “Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G-20) would take the same steps toward prevention.”

Some countries are already moving in this direction. The Chinese government shut down exchange offices, while the South Korean government outlawed the practice of exchange operators issuing their own virtual currency to raise capital — or “initial coin offerings (ICO).” Meanwhile, India is set to outlaw the trade of cryptocurrencies all together, and the European Union is drafting legislation that would prioritize the protection of users. The United States is considering revisiting how the system is structured.

Still, it is unclear if all nations will take the same steps toward countering money laundering and other crimes. While the G-20 did decide in March this year to improve the system and come out with concrete measures to do so by July, it seems that it may still take time until agreement and enactment of those new rules is realized.

https://mainichi.jp/english/articles/20180514/p2a/00m/0na/002000c

American conman jailed for a year for money-laundering offences in Singapore

SINGAPORE – An American conman, who scammed a singer-songwriter behind Faith Hill’s hit “Breathe” of US$600,000 (S$788,000), was jailed for a year in a Singapore district court on Monday (April 23) in connection with money laundering offences.

Deputy Public Prosecutor Nicholas Khoo noted that the case involving David John Plate, 53, marked the first time that an overseas scammer was convicted of such offences here.

The court heard that in July 2014, Plate tricked Ms Mary Holladay Lamar, 50, a fellow American and singer-songwriter based in Britain, into believing that US$600,000 which she gave to him would be loaned to a company, Globomass Limited. She was promised repayment with interest of at least 30 per cent. Instead, Ms Lamar ended up on the brink of bankruptcy.

In an exclusive e-mail interview with The Straits Times, Ms Lamar said that she was first introduced to Plate by a long-time friend with whom she had not been in touch for four years.

She said the ordeal nearly destroyed her.

She told ST: “It destroyed my business, my relationship with my family. When (the scammers) weren’t sending the interest payments, my mother sold her only property and had only $20,000 left.”

On April 9, Plate admitted in court to one count each of abetting an alleged accomplice, who was named in court as Singapore permanent resident Sandrasegaran Vasimuthu, 56, to receive US$45,000 and to transfer US$10,000 from this amount to another man. Four other similar money laundering charges were taken into consideration during sentencing.

After making off with Ms Lamar’s money, Plate sent an e-mail on July 22, 2014 to someone named Andrew Philpott from a British firm, Captive Risk, saying that the money would be going into the company’s bank account.

Plate instructed Mr Philpott to “turn this around straight away”, providing him with details of three bank accounts for the transfer of funds.

One of them belonged to Mr Sandrasegaran’s Singapore-registered company, Aglobal Management. Captive Risk transferred US$45,000 to Aglobal’s bank account three days later.

Later on the same day, Plate e-mailed Mr Sandrasegaran, asking him to transfer US$10,000 to a Bank of America account belonging to one Todd Peterson.

DPP Chong Yonghui had earlier told the court: “The said e-mail also contained the bank account details of two other persons for the accomplice to transfer monies. In total, the accomplice was instructed to transfer monies to five bank accounts including that of the accused.”

Ms Lamar flew to Singapore on June 6, 2015 and made a police report. Plate was arrested when he arrived here on a social visit pass on Feb 23 last year.

On Monday, DPP Khoo urged District Judge John Ng to jail Plate for a year, stressing that he had made no restitution.

Plate’s lawyer, Mr Amogh Chakravarti, who was assigned under the Criminal Legal Aid Scheme, pleaded for his client to be given nine months’ jail, telling the court that his client was unable to make restitution “owing to his present financial situation.”

Ms Lamar told ST that she was ruined financially at an age when she should be retiring.

She said: “(Plate) is the man who stole Breathe. I wrote something beautiful. My music changed peoples’ lives, but he has stripped the feeling of that from me.”

Mr Sandrasegaran has yet to be charged.