AML Weekly – 26 July 2021

In this report we observe and track all relevant events that have unfolded in the Anti-Money Laundering (AML) and digital asset space in the past seven days.


It has been a busy week in both the crypto and AML space as Bitcoin recovered somewhat despite Musk doubling down on Dogecoin and Ethereum in a new plan to beat Bitcoin. Notwithstanding his confidence in other crypto, Musk still would like Bitcoin to succeed and is still a firm believer of “the most entertaining outcome is the most likely one.” Coindesk ran a motivating piece on Europe’s new AML laws and provided clarity on what is actually proposed. As reports flooded the media claiming that the EU is banning anonymous crypto wallets, the proposed effects of the legislation is in essence that it will only impact third-party custodians and not software or hardware wallets. The antagonistic provision is contained in article 58 which reads: “Owners and beneficiaries of existing anonymous accounts, anonymous passbooks, anonymous safe-deposit boxes or crypto asset wallets shall be subject to customer due diligence measures before those accounts, passbooks, deposit boxes or crypto-asset wallets are used in any way.” This, however, still raises some concerns on the follow-on effects as it may inevitably lead to the ringfencing of individual’s decentralized financial freedom.

UK is taking its first steps to implement the Financial Action Task Force (FATF) travel rule for cryptoassets and has made it clear that it should be applied consistently across the financial services industry, regardless of the technology being used to facilitate transfers. In the wake thereof, an open consultation has been launched to review the  UK’s AML/CTF regulatory and supervisory regime. The key takeaway from the consultation paper is that “cryptoasset firms will need to put in place systems for ensuring that personal information of the originator and beneficiary of a cryptoasset transfer is transmitted and received alongside the transfer, in an appropriate format.” It is still a long way to go before the regulation will be in full force; however, stakeholders must come to the party rather sooner than later.

In an interesting article, Elliptic followed a real-life case where REvil (malware) was used in the attack. Elliptic assist private individuals and law enforcement to trace the money and potentially freeze the funds or identify the individuals behind the attacks. In the real-life case, the first step was to infect the victim with REvil malware, after which the victim receives a file with the ransomware note / instructions. The victim is then directed to access a portal where the ransom amount and payment instructions are given – there is even a chat support where the victim can obtain clarity on instructions similar to an e-comers website. As soon as the payment is made, decryption software is provided to the victim which can be used to gain access to the compromised software. Once the payment was received, the cybercriminals  laundered the funds through a string of transactions to break the transaction trial.


BlockFi is being accused of offering unregistered securities as Alabama regulators put forward that the lending platform’s interest accounts are in fact unregistered securities. Alabama Securities Commission (ASC) has issued a show-cause order to provide cause why the platform should not be forced to cease and desist from selling “unregistered securities”. The platform is still in consultation with the regulator and stated that “[it] stance hasn’t changed — the BlockFI Interest Account is not a security.” Switzerland has introduced a new terrorism law, which may infringe on political activists. The law, which contains a new definition of terrorism, has sparked some concern as it may target Tamil activists in Switzerland. Swizz government has denied these claims as it is of the view that “to be a potential terrorist, one must represent a real danger.”

China has been accused of being behind the cyber-attacks directed at the exchange servers of Microsoft, which effected 30,000 organizations globally. China has, however, denied allegations of hacking and says it opposes all forms of cyber-crime. NatWest has now blocked all credit and debit card payments to crypto exchange Binance until further notice. Nike has been under the spotlight for quite some time now as the EU zoned in on the organization following the Dutch tax arrangement revelations in the Paradise Papers which alleged that the footwear giant gained an unfair advantage over competitors when it signed deals with Dutch authorities in 2006 and 2010. General Court of the European Union rejected Nike’s arguments that it is being singled out and ruled that: “[t]he General Court does not accept any of the arguments put forward and dismisses the action in its entirety.”


Former Ethereum developer Virgil Griffith has been arrested again – his arrest follows as he allegedly violated his bail conditions and signing into his Coinbase account. A UK man has been arrested in Spain for his alleged connection in the July 2020 hack of Twitter that resulted in the compromise of over 130 Twitter accounts. In Brazill, police have a arrested two individuals and seized USD$33 million from two individuals and 17 companies who allegedly sold Bitcoin to fictitious companies fabricated to facilitate their creators’ access to the banking system.

Police have also arrested a suspect in Bosnia who has been linked to murder and believed to be a member of one of the two most dangerous criminal clans and a former Indonesian fisheries minister has been jailed and sentenced for 5 years for bribery in lobster exports. The UK has also now imposed asset freezes and travel bans against 5 individuals to ensure they will no longer be able to channel their money through UK banks or enter the country. The listed individuals are Teodoro Obiang Mangue of Equatorial Guinea, Kudakwashe Regimond Tagwirei of Zimbabwe, Alex Nain Saab Morán and Alvaro Enrique Pulido Vargas of Venezuela and Nawfal Hammadi Al-Sultan of Iraq.


It has been a busy week in both the crypto and AML space we as we look at the new EU AML laws, UK’s first steps towards FATF’s travel rules and a ransomware case analysis. We also have a look at Switzerland’s new anti-terrorism law and the court ruling on a probe of Nike’s alleged tax avoidance.

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