Archive for the ‘Anti-Money Laundering. General Information’ Category

Money Laundering in sports: Football, Gambling, and Money Laundering

Friday, May 23rd, 2014

Recently, Springer Publishing issued a title to explore football and sports as a cover for money laundering and other financial crimes. The new book is called Football, Gambling, and Money Laundering: A Global Criminal Justice Perspective. Its author Fausto Martin De Sanctis explores how sports are a robust and growing front for a number of illegal activities.

On June 12, São Paulo, Brazil begins hosts the 2014 FIFA World Cup. The event will be held the 20th time, and this is one of the largest sporting competition on worldwide. However, behind competition and the glitz, and glamor, there may be money laundering and other financial crimes taking place.

Sports is not only a path to fame for athletes, a source of national pride for fans and a past time for many, but also a convenient cover for corrupt enterprises. The book shares on how crimes take place, how they are able to flourish, what steps are currently being taken and what should be done to confront sports-related financial crimes.

As an authoritative reference on the topic, Football, Gambling, and Money Laundering will appeal to academics, law enforcement officials, judges, prosecutors and law makers alike. The book identifies possible loopholes in existing international legislation for money laundering in sports, and describes proposals to prevent and monitor illegal gambling activities, specifically in football. Exposing a side of sports that is often left hidden to the world, this new title is also written in an accessible way, even for non-experts.

Fausto Martin De Sanctis holds a Doctorate in Criminal Law from the University of São Paulo’s School of Law (USP) and an advanced degree in Civil Procedure from the Federal University of Brasilia (UnB) in Brazil.

Financial fraud was highest in 2011

Thursday, April 12th, 2012

According to suspicious activity reports (SARs) submitted to the Financial Crimes Enforcement Network (FinCEN), 2011 was a year all-time high in alleged claims of money laundering, debit card fraud, mortgage loan fraud, consumer loan fraud, and casino fraud.

Since 2007, the SAR numbers have ranged from 1.2 million to 1.3 million. In 2011, their number increased to more than 1.5 million. According to analysts, these fraud cases can be directly related to the financial meltdown.

Curt Novy, a mortgage and real estate analyst in San Diego, Calif, said that the financial meltdown lasting from 2007 to 2009 “uncovered all the skeletons” that were present in the marketplace, from mortgage financing to Ponzi schemes. He also noted that these frauds are overlooked in a good economy, but, during an economic downturn, people take a closer look at the books. “Massive fraud isn’t discovered in good times,” he explained. “It’s when the market changes, and financial institutions start looking closer, when the checks stop coming in, they take a closer look at what’s going on.”

Many of the fraud cases are large and complex, therefore investigators suspect it may take the next decade for reviewing them. Some cases involve hundreds of properties, which can take 3-4 years to compile evidence in preparation for a trial.

While fraud peaked in 2011, the FBI is only pursuing 3% of the total 90 000 suspected mortgage loan fraud cases. The FBI is choosing to investigate the large-figured cases.

FBI financial crimes chief Tim Gallagher told ABC News said: “About 70% of our cases are more than a million dollars. We are going after big fish as far as putting cases together, and we’re going after people on the inside because of fiduciary responsibility and the element of trust that they’re violating and doing the most damage”.

Annual Anti-Money Laundering & Anti-Fraud Conference hosted by Western Union

Friday, September 17th, 2010

From September 13 to September 16, the Western Union Company has been hosting in Denver its fifth Annual Anti-Money Laundering & Anti-Fraud Compliance Conference. This is the annual conference that brings together Anti-Money Laundering (AML) compliance officers from the largest agents of Western Union in the United States and Canada with federal and state regulators and law enforcement. For the first time it was launched in 2006 with the intention to educate Western Union Agents on anti-money laundering best practices, regulations and law enforcement trends. Since its introduction, it has become one of the largest anti-money laundering/anti-fraud conferences in North America.

Western Union, which is a money services business financial institution, provides its services through a broad network of third-party agents including banks, postal organizations, grocery stores and other retailers. The Anti-Money Laundering & Anti-Fraud Compliance Conference has the goal to improve the effectiveness of Western Union Agents at preventing money laundering and fraud, and features presentations of the financial services industry’s federal regulators and law enforcement in the U.S. and Canada.

President of the Western Union Stewart Stockdale said in his comments: “We clearly understand our responsibility to protect consumers and the global financial system from potential abuse, and that is what this conference is focused on… At Western Union, we view anti-money laundering as a core part of our business, and also as a competitive advantage.”

Mexico to pass new anti-money laundering legislation

Tuesday, August 31st, 2010

President of Mexico Felipe Calderon proposed new legislation aimed at fighting money laundering and cash smuggling and at preventing Mexican cartels from using billions in U.S. drug profits to finance their criminal organizations. Legislation introduced by  the Mexican president administration and named “unprecedented” by Calderon includes the following measures:

– It would be illegal to purchase real estate in cash;
– The purchase of vehicles, boats, airplanes and luxury goods would be limited to 100,000 pesos (about US$7,700) in cash. Violation of this rule would lead to being sentenced in prison up to 15 years.

If passed, new anti-money laundering law by Calderon would counter the common practice in Mexico, when even in legitimate transactions people prefer cash to avoid being taxed.

Senior Mexican official who investigates financial crimes, states that criminals in this country are increasingly using cash transactions to launder their vast profits. This official, as well as his U.S.  counterparts say that the criminals use billions of dollars in cash to buy airplanes, ranches and businesses to circumvent new Mexican laws that require banks to report large cash movements.

According to the National Drug Intelligence Center, each year Mexican drug cartels and their suppliers from Colombia generate, launder and remove from the U.S. US$18 billion to US$39 billion, largest part of it is transported in cash. It is stated in the recent report by Douglas Farah, a consultant for the Woodrow Wilson International Center for Scholars, that “very little is effectively being done to either impede the movement of drug money into the formal economy or significantly reduce the flow of bulk cash across the U.S.-Mexico border.” No more than 1 percent of this cash is seized by U.S. and Mexican agents.

Isle of Man’s authorities inform on the new Anti-Money Laundering Code

Tuesday, August 24th, 2010

The Department of Home Affairs of the Isle of Man informed all designated non-financial businesses and professionals operating in the island about the Proceeds of Crime (Money Laundering) Code 2010 that will enter into force on September 1, 2010. 

Speaking about the letter informing on the new anti-money laundering legislation, Home Affairs Minister of the British Crown Dependency said that one of the purposes of writing it was ‘to remind people of their responsibilities under anti-money laundering legislation, which was first introduced in September 2007’. Another purpose was to inform the persons and businesses required to comply with the legislation where they can access details of the new Code. He added that ‘compliance with AML laws is essential in ensuring the island is protected from people who would use it for laundering of funds for criminal or terrorist related purposes’, and for maintaining the international reputation of the island.

The Financial Supervision Commission of the Isle of Man also provided information about the update of the
Anti-Money Laundering and Countering the Financing of Terrorism Handbook
, in which new guidance on the new anti-money laundering code was included. Additional amendments have been made to suit the recommendations of the International Monetary Fund.

India became full member of the Financial Action Task Force

Tuesday, August 17th, 2010

India has been welcomed as full member of the Financial Action Task Force (FATF), and became the 34th country member of organization. Since February 2007, India has participated as an observer at FATF, having made its first steps in obtaining full membership. Since 2009, the country took important steps to meet FATF guidelines. The laws amended or passed by the Parliament of India to follow the requirements of FATF (among them the Prevention of Money Laundering (Amendment) Bill, 2009 aimed to combat money laundering, terrorist financing as well as cross-border economic offences) are now in line with FATF 40+9 recommendations, having enabled India’s entering into the organization.

US Charge d’Affaires in India Steven J White said in his comments on India’s membership in FATF that the country ‘has made significant progress over the last several years in moving toward an anti-money laundering and terrorist financing (AML/CFT) regime that meets international standards, and has committed itself to continue to improve its AML/CFT system.’

Money Laundering and Multinationals

Sunday, April 18th, 2010

As all the world makes attempts to fight money laundering, many countries are now requiring insurers to get additional information from their customers with a view to screen out possible launderers. For multinationals who are interested to do business in these countries, this means providing their insurers with a variety of documents obtaining the insurance they need.

It goes without saying that most multinationals are legitimate businesses and they are unlikely to use their insurer to launder money. Still, the insurance industry is vulnerable. In its National Money Laundering Strategy for 2007 report, the US government noted that the insurance industry has undergone a transformation and that it may appear increasingly attractive to money launderers. A range of investment services featuring financial products that can be purchased and subsequently transferred, redeemed, or sold, are now offered by agents and broker, which, according to the report, provides new opportunities for money laundering. The report says that numerous money laundering methods have been used to exploit insurance products, primarily life insurance and annuities.

To remind, some countries have been taking measures to crack down on the problem and improve their reputation in the international community. So, the governments of these countries are requiring insurers to obtain documents and take other actions to ensure not being used by criminal organizations to help launder illicit funds. Imposing these requirements on insurers is carried out by Mexico, Brazil, Argentina, Colombia and Malaysia.

For example, before getting insurance, multinationals with operations in Mexico must provide a number of documents including the following: a certified copy of the act of incorporation, federal taxpayer’s registry, a document that proves the address of the company in Mexico, a certified copy of the document showing the legal authority of the company’s representatives; a copy of the official identification of the legal representative, such as passport or card of military service. If the parent company in the US or Canada is included on the Mexican policy as a named insured or beneficiary, each non-Mexican company that is included under the admitted policy also will have to provide the insurer with similar documentation.

AML Conference admits that Money Launderers go high-tech

Wednesday, March 17th, 2010

On March 15-17, 2010, the 15th Annual International Anti-Money Laundering Conference was held in Hollywood.

US Law enforcement officials who spoke at the event admitted that it was not easy to keep up with the changes in money laundering these days. This is because criminal organizations are early adopting new technologies. Mobile phones, prepaid cards, and online games are often used to illicit money over international borders.

For example, criminal gangs are increasingly using stored-value cards in order to move cash. These cards look and act like ATM or credit cards and they can be used all over the world. However, they require no bank account and can be activated online.

The legislation requires banks to report suspicious activity. Also, it requires those who enter the country to declare cash in excess of USD 10 000. But the cards are unregulated. Duncan Levin, an assistant U.S. attorney in New York, said: “We have made it very difficult for bad guys to walk into a bank with USD 200 000 in cash in a bag. But if you can transfer that money onto a card, you are staying a step ahead of us.”

A supervisory special agent with the U.S. Department of Homeland Security, Deborah Morrisey, recently busted the money laundering arm of a Colombian drug cartel with operations in Miami. She said that, during 9 months, the criminal group moved more than USD 4 million using stored-value cards and operated undetected until discovered by an undercover investigator. She also said that concerns are growing about mobile phones that can be used as virtual bank accounts. For example, Apple’s iPhone allows users to transfer money between 2 PayPal accounts by bumping the handsets together.

Drugs trade in Afghanistan

Tuesday, August 18th, 2009

Multibillion dollar drugs trade in Afghanistan is not a secret to anyone. According to the UN, in 2006 Afghanistan supplies about 92% of the world’s supply of opium, which is used to make heroin. Some estimates are provided in The Spoils of War: Afghanistan’s Multibillion Dollar Heroin Trade by Michel Chossudovsky. According to The Independent, in 2003 drug trafficking was the 3rd biggest global commodity in cash terms after oil and the arms trade. The IMF estimated global money laundering to be between USD 590 billion and 1.5 trillion a year, which represents 2-5% of global GDP. And it is worth remembering that a large share of global money laundering is related to the drugs trade.

However, tt appeared lately that there have been no convictions in Afghanistan against those who make hundreds of millions of USD at the top of Afghanistan’s drugs pyramid. According to Western counter-drugs officials, even in Western countries building such cases takes years. In Afghanistan, drugs industry is estimated at USD 3.4 billion, but it is suposed to have a corrupting influence on the government, therefore fighting drugs in Afghanistan is much harder. For example, President Karzai of Afghanistan recently pardoned 5 persons sentenced to 16-18 years for moving 120kg of heroin, and one of the released men was the nephew of the campaign manager to Mr Karzai’s election campaign. So, the Afghan drug mafia benefits from political protection. It is also suported by Afghanistan’s lawlessness and lack of infrastructure.

The drug-money trail is difficult to discover because of the hawala system of local money changers widely used by the drug mafia in preference to Western electronic banking. This system is based on trust. In this system, the only evidence of money transfer may be a phone call between 2 hawala dealers in different cities/countries who agree to settle the money transfer. This system is widely used across the Middle East.

Counter-drugs officials tried to arrest the 3 biggest hawala dealers in the province of Nangarhar 2 years ago, which brought the economy of the province to a halt and, as a result, the 3 criminals had to be released.

Currently, a construction boom may be seen in the capital, Kabul, which is the evidence of money laundering – laundering of drug billions into legitimate business.

Ireland announces new anti-money laundering bill

Tuesday, August 4th, 2009

Ireland moves towards implementing the European Union’s 3rd Anti-Money Laundering Directive, which it failed to implement earlier, with the publication of a new bill by the Minister of Justice. The draft legislation implements the requirements of the EU 3rd Anti-Money Laundering Directive, and has the purpose to integrate it into the Irish law.

Actually, the new document significantly changes anti money laundering regulations order in Ireland. It increases the obligations on financial institutions, lawyers, accountants and state agencies to monitor and report any suspicious activities. Also, all relevant bodies would have to implement specific anti-money laundering procedures and report suspicious transactions.

Sinead Ovenden, Director of Compliance and Regulation of Deloitte, said that the new anti-money laundering legislation has been much anticipated. In his opinion, the change to existing AML requirements means that financial services institutions can reduce the level of customer due diligence on a risk sensitive basis. The new approach will redirect resources within financial institutions to areas of higher risk.

A move towards a risk based approach to the prevention of money laundering is one of the most important changes in the Directive, which is not characteristic yet for the Irish money laundering regime.

However some specialists say that financial services institutions, particularly smaller enterprises, face a challenge if they are to implement the necessary changes before the bill is passed into law. The most controversial issue of the Directive is already named, and it is the obligation to make enhanced due diligence for politically exposed persons (PEPs).

Most banks and other financial institutions will be required to adopt the legislation once passed. This is expected to happen in the autumn. The Financial Regulator will supervise Financial Services entities under the new legislation.