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.
BTC AND DIAMONDS, FCA WARNINGS, MALTA, MINING, FBI REPORT AND EL SALVADOR
In a very interesting development, Sotheby’s has announced that it will accept either bitcoin or ethereum as payment for a rare 101.38-carat pear-shaped diamond with an estimated sale price of between $10m and $15m. The diamond will go on sale in a single-lot live sale in Hong Kong on 9 July 2021. The Financial Conduct Authority (FCA) has updated its list of 100+ crypto firms that appear to be carrying on crypto asset activity but are not registered with the FCA for anti-money laundering (AML) purposes and extended its final date for temporary registrations to March 2022.
It has been a sad turn for Malta as the Financial Action Task Force (FATF) has finally pulled the trigger and voted to add Malta on its grey list (the list of untrustworthy jurisdictions). Being added to the shaming list has far-reaching repercussions on the country’s economy, impacting banking, ease of doing business and the island’s attractiveness to foreign investors. Following the four-month moratorium issued in May 2021, Iran has now seized 7,000 crypto mining computers from an abandoned factory in Tehran.
The Federal Bureau of Investigation (FBI) in a great initiative has now released its first annual report on elderly fraud. The aim of the report is to educate the public and provide as much information on the types of frauds targeting seniors, as in 2020 alone, they received a total of 791,790 complaints with reported losses exceeding $4.1 billion. In a Ledger mailing scam, criminals are mailing altered Ledger devices to steal cryptocurrency of unsuspected users. The altered device seems to contain a malware program that will send all information to the receiver upon activation. El Salvador will now issue all adults with $30 in Bitcoin as nation unveils details to make crypto legal tender.
BINANCE AND CHINA, CBA, BANKS, SRA FINES, CA TAX FRAUD AND AFRICRYPT
Japan is at it again, as its Financial Services Agency (FSA) issued a warning against Binance alleging that the entity is not registered to do business in the country; however, Binance has come back strong stating that: “Binance does not currently hold exchange operations in Japan, nor do we actively solicit Japanese users.” In Sydney, some controversy has emerged as it has been reported that Commonwealth Bank of Australia (CBA) used temporary contractors on its financial crime team who had to cut compliance corners in order to comply with the entities stringent Key Performance Indicators (KPIs). The bank, however, terminated their employment upon being made aware of their uncontroversial practices. This once again shows that internal compliance regulation and policies must be aligned to a company’s own performance indicators.
Belgium government and banks will now work closer together to curb money laundering. The move from the Financial Sector Federation, Febelfin pushes AML Consultation Platform that aims to merge public and private efforts and will now scrutinize suspicious accounts together and share information on money laundering risks, criminal activity, and protection practices. The Solicitors Regulation Authority (SAR) is clamping down on firms who are not complying and fulfilling their AML obligations. The authority has issued fines to six firms which took more than a year to comply with new regulations. Despite a drive by the Canadian Revenue Agency (CRA) to audit the rich to combat tax evasion, its data shown that the audits super-rich have resulted in zero prosecutions or convictions.
Africrypt, an investment firm exclusively focused on cryptocurrency and blockchain technology located in South Africa, is still under investigation as the founders Raees and Ameer Cajee have allegedly absconded with Bitcoin valued at $3.6bn. The founders have now denied any involvement in a heist and have sticked to their guns on the fact that the money was lost as a result of a hack.
BUSTS, ARERSTS, SEIZURES, CHARGES, AND SENTENCING
A BIG bust this week as Toronto police seize $61M in drugs and arrest 20 in a large international operation named ‘Project Brisa.’ As part of the seizure, the following was confiscated: 444 kilos of cocaine; 182 kilos of crystal meth; 427 kilos of marijuana; 300 oxycodone pills; $966,020 in CDN currency; 21 vehicles, including 5 tractor-trailers and 1 firearm. Mexico’s former Secretary of Public Security, Genaro Garcia Luna, has been linked illicit shell companies holding property in Texas via a Delaware shell company. 8 individuals have been arrested with the support of Europol, in Parris, in connection with a large-scale financial fraud and money laundering across Europe with total losses amounting to at least €13 million. Mumbai NCB arrested Makarand who is also known as the “Cryptoking” for allegedly procuring drugs on the darknet from Europe by using bitcoin.
20 have been charged and arrested by New Zeeland police officials after seizing $10m in assets and 44kg meth. Nicaraguan police arrested Honduran national David Elías Campbell and seized more than $400,000 in cash, eight vehicles, two motorcycles and a pistol. Honduras will now request that he be returned from Nicaragua to face illicit association and money laundering charges. The Metropolitan Police have seized £114m worth of cryptocurrency; however, the exact nature, kind and location of crypto seized remains a secret for now. It has been reported that operation was carried out by their Economic Crime Command team in connection with money-laundering offences.
Dominic Thorncroft, was found guilty at Southwark Crown Court for laundering the proceeds of an investment fraud worth £850,000 involving more than 60 victims.
AML TAKE HOME
This week we see further integration of crypto into our day to day lives, as we can now buy a 100-carat diamond with BTC or ETH. There is also a move by governments and regulators to play catchup as updated lists are being promulgated of non-regulated players and seizure of mining rigs in suspended jurisdictions. We also have a look at the biggest crypto heist coming from South Africa and the biggest drug bust in Toronto. One thing is for sure, the AML and compliance sphere will only get more interesting and more complex as the crypto space continues to grow.