Anti Money Laundering Blog

The German Federal Financial Supervisory Authority (BaFin), the supervisory authority for financial institutions in respect of money laundering legislation, is investigating Deutsche Bank’s business relations with the family of Malaysian potentate Abdul Taib Mahmud.

BaFin has launched investigations into the Deutsche Bank as regards its business relations with the Malaysian Taib family, which has been confirmed by the German Federal Ministry of Finance.

Finance Minister Wolfgang Schäuble, the Federal Ministry of Finance representative, stated that the Ministry requested BaFin to explain and check the situation and, if the Financial Supervisory Authority considers it appropriate, to instigate supervisory measures. The Authority has already started clarifying the situation.

The Bruno Manser Fonds, the Hamburg “Rettet den Regenwald”(Rainforest-Rescue) Association and the Society for Threatened Peoples drew the attention of the government of Germany to the Deutsche Bank’s close business ties with Abdul Taib Mahmud and demanded to freeze all Taib assets in Germany.

Since 2004, Deutsche Bank has processed transactions worth hundreds million EUR for the Sarawak government and is engaged in a joint venture in Malaysia with the Cahya Mata Sarawak company (CMS). CMS is controlled by the Taib family. CMS and Deutsche Bank are the principal shareholders of the finance company K & N Kenanga Holdings, domiciled in Kuala Lumpur, with its subsidiary Kenanga Deutsche Futures, an accredited broker at the Malaysian stock exchange.

Under the provisions of the existing anti-money laundering legislation, the India’s Enforcement Directorate is pursuing 1 269 cases. The government is mulling amendment and strengthening of the Act aimed to combat terrorist financing and other suspect transactions.

According to Indian Minister of State for Finance S S Palanimanickam, of the 1 269 cases registered as on March 31, 2011, 11 cases fall under the Unlawful Activities (Prevention) Act, on account of their suspected connection with terrorist financing. He said: “The number of money laundering cases registered by the Directorate of Enforcement under the PMLA has increased from 1 014 cases as on March 31, 2010, to 1 269 cases as on March 31, 2011, based on Scheduled Offences registered and reported by the concerned agencies”.

Palanimanickam said: “The government is proposing amendments to the Prevention of Money Laundering Act. The proposed amendments are at a draft stage and are yet to be finalised”.

He added that India is a member of the Financial Action Task Force (FATF), the Asia/Pacific Group on Money Laundering (APG), the Eurasian group on combating money laundering and financing of terrorism and the Egmont Group of Financial Intelligence Units.

The UK’s Financial Services Authority (FSA) has announced that 2 banks in Britain are being investigated for lax money-laundering controls. Also, other banks are likely to be handling the proceeds of corruption and other financial crime.

According to the FSA, it had referred 2 banks to its enforcement division for “serious weaknesses” in “high-risk” customer management.

The FSA published a review of how banks manage money-laundering risks adding that it is being considered “whether further regulatory action is required in relation to other banks, and further cases may be referred for enforcement”. The regulator stated: “Around a 3rd of banks, including the private banking arms of some major banking groups, appeared willing to accept very high levels of money-laundering risk if the immediate reputational and regulatory risk was acceptable”.

It is worth noting that ma of the failings identified by the FSA are the same as those it spotted 10 years ago when deposed Nigerian strongman Sani Abacha, his family members and associates used 42 UK bank accounts to turn over USD 1.3 billion (GBP 806.2 million) in 4 years.

The FSA said that more than 1/2 of banks visited this time around failed to have meaningful due diligence measures in higher-risk situations. Also, they failed to identify or record negative information about customers.

Around 1/3 of banks visited dismissed serious allegations about their customers without adequate review, and more than 1/3 failed to identify customers as “politically exposed persons” (PEPs), who are considered the most vulnerable to corruption because of their public prominence.

According to the FSA, 3/4 of banks did not always manage high-risk customers and PEP relationships effectively, and needed to do more to protect themselves from money laundering.

In an investigation into the suspected laundering of more than GBP 200 million, 15 people have been arrested across England.

To achieve this, as part of a long-running investigation, more than 250 officers from HM Revenue and Customs (HMRC) and police raided properties in Greater Manchester, Merseyside, Yorkshire and Nottingham.

According to HMRC, the activity was obviously related with money laundering.

HMRC’s deputy director for criminal investigation, Alan Lee, said that this operation was an HMRC-led investigation that targeted money laundering offences. Further details were be provided because the investigation is continuing.

In accordance with police statistics, a 30% increase in the number of cases of money laundering was reported in Sweden for 2010. Such result is the reason to establish a new agency with a view to combat money laundering in this country.

The figures that were released by the financial crimes police (Finanspolisen) reveal that the number of reported money laundering cases in Sweden increased by 3 000 to a total of 12 000 reported cases in 2010.

Sweden has been criticised for not doing enough to fight the problem. Now, the Swedish National Council for Crime Prevention considers the possibility to set up a national financial intelligence centre to be shared by Swedish Police, Customs, Tax agency and Economic Crime Authority. Daniel Vesterhav, researcher at the crime prevention council, said that this way it would be possible to free up resources, make use of each of the authorities’ expertise and increase the quality of operative intelligence.

According to the report, out of the 14,500 companies in Sweden obliged to report possible money laundering crimes within their own organisation, 90% of reports come from banks, foreign exchange companies and other money handling businesses.

It should be noted that no single tax adviser out of Sweden’s 159 obliged to report potential money laundering crimes to police filed any report in 2010.

On February 18, in order to step up its pressure on corruption in Afghanistan, the United States sanctioned a major Afghan money-exchange outfit as it was suspected of laundering billions of USD in drug money.

The US Treasury Department sanctioned the New Ansari Money Exchange. According to the authority, the money-exchange outfit was the center of a network of individuals, money-exchange houses and other businesses operating in Afghanistan and the UAE.

In a statement released in Washington, the US Treasury Department claimed that between 2007 and 2010, the New Ansari Money Exchange used billions of USD transferred in and out of Afghanistan for concealing illicit narcotics proceeds. New Ansari transfers money to its Dubai subsidiaries – Green Leaf General Trading LLC and Al Adal Exchange. Afterwards, they transfer money through US and international financial systems.

The US Drug Enforcement Administration Administrator Michele Leonhart said: “The New Ansari network is yet another example of money launderers exploiting legitimate financial systems to launder their ill-gotten gains, including illicit drug proceeds, as part of their criminal enterprise”. He added: “Cash is the ultimate commodity for these criminal networks, and these proceeds often fuel insurgent activity and corruption, while undermining the authority of developing governments.”

A Lebanese bank has denied accusations by the United States’ Treasury Department that claims the bank is involved in laundering hundreds of millions of USD on behalf of a drug kingpin. Also, the bank has rejected accusations that it has links with Hezbollah, the Lebanon-based militia.

On February 10, the US Treasury Department described the Lebanese Canadian Bank in Beirut as a “financial institution of primary money laundering concern.” According to the US authority, it had reason to suggest that managers at the bank were complicit in money laundering by Ayman Joumaa, an alleged trafficker accused by US authorities of shipping drugs. Also, the Treasury’s action in designating the Lebanese Canadian Bank (LCB) exposed links between the bank and Hezbollah, which is listed as a terrorist organization by the USA.

The bank’s chairman, Georges Zard Abou Jaoude, said that the bank had no relationship with Hezbollah as well as with anyone designated by the US Treasury Department.

It was widely discussed in 2006 that a famous Australian actor Paul Hogan had been under investigation for money laundering.

The Australian Crime Commission became suspicious that the star of one of the most successful Australian movies ever was using offshore tax havens in order to conceal his wealth. As a result, the actor was subjected to a 5-year tax investigation which was dropped in November 2010.

Recently, it has been announced that the world-famous Crocodile Dundee is planning to sue the Australian government for more than GBP 50 million (up to USD 80 million) for damaging his reputation in this tax probe.

According to Hogan’s lawyer Andrew Robinson, his client is to sue the Australian government for loss of earnings as ‘his earning potential and reputation has been decimated in the international community and it has had that level of effect on his position”.

Gibraltar’s Police officers suspect money laundering scheme to be carried out by a British national through Belize-registered company holding a bank account in Gibraltar.

52-year-old Nasser Heikal, a British national born in Lebanon, has been arrested by Royal Gibraltar Police Financial Crime Unit officers because of money laundering suspicion.

Gibraltar’s Police made a statement to announce that this money laundering case is related to the laundering of the proceeds of a ‘boiler room’ operation that had targeted UK victims between November and December 2010.

The financial investigation identified up to GDP 80 000 that have allegedly been laundered by Heikal with the help of a Belize-incorporated company through a bank account in Gibraltar.

An Australian businessman has been sentenced to 8 years and 6 months in jail in the New South Wales Supreme Court. This decision was made after the businessman was convicted of money laundering and tax fraud.

After a 5-week trial which followed investigations into the use of offshore tax structures under Project Wickenby, Michael Milne was found guilty on November 19. He was found guilty of offences related to money laundering and tax evasion. The crime involved the use of an offshore tax haven structure.

The offshore tax haven structure hid assets and income in a complicated series of transactions that involved Swiss and Dutch entities. So, it allowed evading tax payable on a capital gain of more than AUD 7.5 million.

According to Tax Commissioner Michael D’Ascenzo, tax evasion through the use of illegal offshore tax haven schemes is unfair to businessmen and the community who do the right thing. So, the sentencing showed the seriousness of tax evasion. He said that “this result serves as a clear warning to people who use offshore structures to defraud the tax system that they face significant consequences for their actions”.

Mr D’Ascenzo said: “Every defrauded tax dollar means less funding for community services including health, education and other government funded programs. This result serves as a clear warning to participants and promoters of illegal offshore schemes that they face significant and very serious consequences for their actions.”

Project Wickenby is a cooperative partnership between the ATO, Australian Federal Police, Australian Crime Commission, Australian Securities and Investments Commission and the Commonwealth Director of Public Prosecutions, with support from the Australian Transaction Reports and Analysis Centre, the Australian Government Solicitor and the Attorney-General’s Department.