Banks face new US Anti-Money Laundering Measures

January 9th, 2014

The Justice Department has put Wall Street on notice that it intends to introduce additional enforcement actions against banks that have not done enough to fight the flow of illicit funds into the United States’ financial system.

A top Justice Department official said that banks have stepped up efforts to guard against money laundering in the wake of several high-profile federal enforcement actions, but the United States is still finding problems as it investigates banks.

Banks have come under increasing pressure from regulators and law enforcement to bolster their anti-money-laundering efforts as part of a broad attempt to eradicate money laundering by going after the financial institutions they say enable such activity.

In 2012, HSBC Holdings PLC paid $1.9 billion after admitting violations of the Bank Secrecy Act and other laws. Regulators also reached a smaller settlement with Standard Chartered PLC and cited Citigroup Inc. and J.P. Morgan Chase & Co. for deficient money-laundering controls. Citigroup and J.P. Morgan said they are working to fix the issues. Last year, the Federal Reserve cited problems with the anti-money-laundering program at M&T Bank Corp., delaying a proposed merger.

The increased focus on banks is a shift for law enforcement, which traditionally added money-laundering charges when prosecuting alleged drug dealers or mobsters for other crimes. It also went after specific individuals or institutions that allegedly helped them launder money in specific instances.

Republic Bank on Guyana and Belize blacklisting

January 2nd, 2014

A regional anti-money laundering body has called on Caribbean countries to “consider implementing counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Belize and Guyana.”

The counter measures amount to a financial blacklisting of the countries. These means that all financial transactions between T&T and Guyana and Belize will be placed under much greater scrutiny. Also, wire transfers and other payments could be delayed or denied.

Republic Bank executive director, Nigel Baptiste, answered the questions on the impact of the counter measures on trade and payments between T&T and the affected countries: “These measures will undoubtedly negatively affect trade and payments between the countries as the enhanced monitoring will result in longer turnaround time, higher costs and possibly the refusal of accepting payments where information requirements are not met.

He said: “Where correspondent and other banks or parties restrict the types of business being done, this will negatively affect trade income and payments and may lead to investors withdrawing from Guyana and Belize.”

The virtual blacklisting of Belize and Guyana is a directive of the Caribbean Financial Action Task Force (CFATF), an organisation comprising 29 jurisdictions in the Caribbean Basin region that have agreed to implement international standards on Anti-Money Laundering and Combating the Terrorist Financing.

Cayman joins OECD Convention on fighting Tax Evasion

December 10th, 2013

The Organization for Economic Cooperation and Development (OECD) /Council of Europe Convention on Mutual Assistance in Tax Matters has been extended to the Cayman Islands. This will be effective as of January 1, 2014.

The convention on tax assistance provides for all possible forms of administrative co-operation between jurisdictions in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion. This co-operation ranges from exchange of information, including automatic exchanges, to the recovery of foreign tax claims.

Currently, more than 50 jurisdictions adhere to this convention.

Offshore company registrations number decreases

August 7th, 2013

According to legal services consultancy the Applebly Group, the majority of offshore jurisdictions showed a decrease in offshore company incorporation activity in the 2nd half of 2012 as compared with the 1st half.

However, company registrations in some jurisdictions seem optimistic. The report, which looks primarily at the data for the last 6 months of 2012, revealed that despite tough economic conditions, levels of new company registration activity in one major offshore jurisdiction continued to increase – Bermuda reported a 7% increase in activity as compared with the 1st half of 2012.

Nevertheless, the on-going weakened economic conditions continued to influence the overall market in the 2nd half of 2012. There were 37,881 new offshore company formations in the jurisdictions covered by the report, a decline of 3.6% from the 2nd half of 2011, and a deeper decrease of 11% on the preceding 6 months in 2012.

Taking into consideration the entire year, the overall number of new company registrations for the majority of jurisdictions stayed flat in 2012. This proved to be a year of consolidation following large increases in annual new incorporations between 2009 and 2011.

As to the total number of active companies, most jurisdictions showed little movement from the previous year as new company formations cancelled out the numbers leaving the registries. Hong Kong saw a 9% increase in the total number of active registered companies, with the local register there breaking through the one million mark for the 1st time. The Mauritius and Cayman registries are steadily returning to their pre-recession peaks, experiencing a 3% and 1% rise respectively.

After a busy 1st half of the year, jurisdictions including the Cayman Islands, the Isle of Man, Mauritius and the British Virgin Islands were approximately 10% down in the latter half.

Also, according to the report, the British Virgin Islands is the jurisdiction that continues to dominate offshore new company registration activity by volume. It has consistently maintained a 6-fold lead ahead of its nearest comparator, the Cayman Islands.

The United Kingdom and Hong Kong continue to show signs of recovery. Hong Kong in particular showed significant growth between H1 and H2 2012 with a 7% increase in registrations. Both Hong Kong and the UK registrations are above those recorded in 2009.

Global AML Software Market 2013 Report published by Research and Markets

July 7th, 2013

Research and Markets has announced the addition of the “Global Anti-money Laundering Software Market 2012-2016” report to their offering.

According to the report, global AML Software Market is expected to grow at a CAGR of 11.3% over the period 2012-2016. This report has been prepared based on an in-depth market analysis with inputs from industry experts. It covers the Americas, and the EMEA and APAC regions analyzing the Global Anti-money Laundering Software market landscape and its growth prospects in the coming years. The report also discusses the key vendors operating in this market.

Commenting on the report, an analyst from TechNavio’s Enterprise Computing team said: ”The Global Anti-money Laundering Software market is witnessing a trend where many AML software vendors are focusing on enhancing their product features. Many vendors, which earlier offered single-purpose applications such as transaction monitoring or compliance reporting, are adding various other modules including KYC, entity resolution, case management and reporting, investigation tools, and customer due diligence checks to provide end-to-end AML compliance functionality. In addition, many vendors are developing sophisticated capabilities such as network analysis and historical profiling, and advanced analytics such as Bayesian learning and neutral networks.”

The report says that the technological advancements in financial institutions are the major drivers in the Global Anti-money Laundering Software market.

New Zealand’s AML legislation takes effect

July 2nd, 2013

Legislation strengthening New Zealand’s financial system against money laundering is taking effect. However, this means more paperwork for some investors.

The Anti-Money Laundering and Countering Financing of Terrorism Act, which comes into force on July 7, makes it easier to recover money gained illegally and closes loopholes used by criminals to launder money.

According to Justice Minister Judith Collins, banks, financial institutions, some financial advisers and casinos will have to verify customers’ identities, assess risks, appoint compliance officers and report suspicious or unusual transactions. She said: “The new laws don’t just help fight crime and terrorism; they also reflect sound practices that reduce financial risks for businesses while also protecting the savings and interests of their customers and investors”.

According to business commentator Brian Gaynor, the new legislation will have a major impact on the way people interact with financial institutions.

The laws will not have a major impact on individuals who deposit or invest money in their own name, unless they undertake a large number of unusual transactions. However, they will have a much bigger impact on trusts and politically exposed persons as their disclosure requirements will significantly increase.

Lebanese Bank accused of terrorism financing

June 26th, 2013

A Lebanese bank accused of laundering drug money through United States banks and routing it to the terrorist group Hezbollah will pay USD 102 million to settle a lawsuit brought in 2011 by the US government.

The government of the United States accused the Lebanese Canadian Bank of a “widespread international scheme” to use the US banking system for laundering the proceeds from drug trafficking through West Africa and back to Lebanese financial institutions with ties to Hebollah.

Michele Leonhart, head of the Drug Enforcement Administration, said that drug trafficking profits and terror financing often grow and flow together.

Evan Barr, an attorney for the bank, said in a statement that the bank is pleased to have reached a settlement with the Government of the United States, ending months of legal dispute.

According to prosecutors, the bank transferred at least USD 329 million by wire to the USA to purchase used cars that were then shipped to West Africa. It was said in the court documents that the money from the sale of the cars and proceeds from drug trafficking were funneled to Lebanon through Hezbollah-controlled money laundering operations. So, the bank played a key role in these money laundering channels and conducted business with a number of Hezbollah-related entities.

The government of the USA considers Hezbollah a foreign terrorist organization and bars US businesses from doing business with the group. In 2011, the Treasury Department designated the bank a money launderer. The government said that the bank was used routinely by drug traffickers to launder money from Central and South America, Europe, Africa and the Middle East. A Lebanese branch of France’s Societe Generale bank acquired most of the bank’s assets after the Treasury designation. Another Lebanese money exchange, Hassan Ayash Exchange Company, forfeited USD 720 000 to the government of the United States last week in order to settle claims that it participated in the money laundering scheme.

Swiss authorities report 1,500 money-laundering cases in 2012

May 24th, 2013

According to the annual report presented at the conference in Bern, Switzerland on May 14, Swiss authorities investigated several reports of terrorist financing among a high number of suspected money-laundering cases connected to banks last year.

The number involving terrorist financing rose to 15 in 2012, which is 5 more than in 2011, due to a single complex case of almost USD 8 million, according to an annual report issued by Swiss Money Laundering Reporting Office (MROS).

They were 1,585 suspected money-laundering cases that Swiss authorities disrupted in 2012, including 15 linked to terrorist financing. The past two years have seen an almost 50% increase in the number of cases compared with previous years.

Two-thirds of the cases were linked to banking, and more than 200 cases involved more than 100,000 Swiss francs (USD 104,000). The rest were mainly tied to payment services, fiduciary and asset managers.

Most of the cases were reported by a financial intermediary such as banks, credit card companies, casinos, and currency exchanges, or were based on newspaper reports or information from other third parties such as financial compliance databases.

Jersey strengthens Money Laundering Legislation

May 18th, 2013

The Jersey Financial Services Commission (JFSC) has published the results of an industry consultation on proposed revisions to the Money Laundering (Jersey) Order 2008.

The amendments to the legislation have been proposed to align the Jersey Order with certain revised recommendations from the Financial Action Task Force on Money Laundering (FATF), as well as to clarify the application in certain circumstances of simplified or, as the case may be, enhanced due diligence (EDD) measures.

HK investigates ex-chief of Corruption watchdog

May 15th, 2013

Hong Kong’s anticorruption agency called the Independent Commission Against Corruption is launching a criminal investigation of its former chief. Tong spent tens of thousands of USD on gifts for mainland Chinese officials.

The Independent Commission Against Corruption and the Department of Justice said that there were significant reason to start this investigation into allegations of possible bribery and misconduct by Timothy Tong.

Tong was a commissioner of the Independent Commission Against Corruption from 2007 to 2012. He came under fire after reports emerged he spent about HK$ 218,500 on gifts ranging from pens to crystal models of the agency’s headquarters.