AML Weekly – 31 May 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.


For some it might seem that the bitcoin bear market is weakening as the price is stuck below the $40,000.00 mark; however, the data shows that there are signs of a looming price increase as investors are taking direct custody of their assets. The decreased value might be off putting to some, but it again brings opportunity for whales to buy big as another Wallstreet suite, Carl Icahn, says that “[he is] not looking at what to buy … [but he is] just looking at the whole business and how [he] might get involved with it.” With and Non-Fungible Tokens (NFT) getting a closer look from the Financial Industry Regulatory Authority (FINRA) and DOGE sailing at a steady pace, which tries to bridge the gap between DODGE and NFTs raises $5M.

China host a large deal of crypto miners due to the low energy costs, especially in regions like Sichuan where rigs are operating on hydro power; however, a recent crackdown on crypto mining has forced miners to pull out of Beijing. This mass halt on mining has now raised some eyebrows and sparking concerns that the stringent regulations by the Chinese government may make bitcoin mining more centralised. The crackdown has not stopped all mining activity in China, as there are still blocks being hashed notwithstanding the call for ceasefire.


Despite the continued budding in the market cap of digital assets, some regulatory concerns loom as the Coindesk team delves into the harmonisation of privacy coins, exchanges and regulation, watch the panel pick apart the Trump-era crypto proposal that aims to collect data of cold wallets and impose CTRs. Further afield in the US, the Securities and Exchange Commission (SEC) has filed charges against five individuals for their alleged involvement in the $2B Bitconnect Ponzi scheme. As the world of compliance may have become one of the most complex, data may be the cure to our poison. Burnmark, in association with CUBE, complied an motivating report on how the influx of data in a ‘Go Digital’ world has influenced the compliance space.


Malta has showed improvement in fighting money laundering (ML) and terrorist financing (TF) as MONEYVAL in a report cited its increased compliance from “partially compliant” to “largely compliant” and “compliant” for 9 of the Financial Action Task Force (FATF) Recommendations. An excellent podcast by Brian Kindle of the Association of Certified Financial Crime Specialists (ACFCS) interviewing Andrew Corbett, sheds some light on how we can improve post pandemic as more fraudsters and money launderers adapted quickly to the pandemic.

The Association of Certified Anti-Money Laundering Specialists (ACAMS) in their ACAMS Europe today newsletter deals with a reminder that AML can be misused and zooms in on the Egmont Group’s admonition. It is never an enjoyable topic when children are brought into the AML and compliance discussion, however, the British site OnlyFans is failing to prevent underage users from selling and appearing in explicit videos, despite the site claiming their age verification system goes over and beyond the regulatory requirements. BBC News debunks the site’s claims and has obtained credible sources confirming how easy it is to cheat the site’s verification system, i.e., using grannies ID.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) wants more commitment from the digital asset players in the AML/CFT sector as there has been only 456 registrations since 2017. The call comes from the institutions mandate to monitor financial transactions to identify ML, organized crime, tax evasion, welfare fraud and terrorism financing. Last week we dealt with the sentencing of two individuals that were running a schooling scam, this week a must read is the National Endowment For Democracy (NED) whitepaper titled Reputation Laundering In The University Sector Of Open Societies that delves into these types of schemes, but on a much higher level. In the US, the Senate Caucus on International Narcotics Control (SCINC), is drawing its attention to the multi-billion dark economy and its role in moving drug profits through the global financial system. The SCINC will now be targeting real estate, hedge funds and attorneys in a corporate transparency push.


In South Korea, there has been growing concerns from Gov. Lee Ju-Yeol of the Bank of Korea who stated that the leveraging of crypto trading might threaten their financial system, as “an excessive level of leveraged cryptocurrency trading puts households at risk of financial damages considering the instability.” The Deutsche Bank AG is struggling to shake the bad vibes as the Federal Reserve is this time locking horns with the bank due to its compliance programs not being up to snuff and failing to adhere to a number of the accords with US regulators.

The European Banking Authority (EBA) has launched public consultation into how key stakeholders should cooperate and exchange information in relation to AML/CFT, in line with provisions laid down in the Capital Requirements Directive (CRD). The Reserve Bank of New-Zeeland has filed court papers against TSB Bank for failing to fix faults in its systems that it was warned about in 2016. This again attests to the the importance of not only developing policies and procedures, but actually implementing and enforcing them to the T.

India’s HDFC Bank calls bitcoin a fad as it is, in their view, too volatile; meanwhile, in Switzerland, lawmakers are being pushed to impose stringent regulations and fines on bankers as billions of clients have suffered due to their inaction. This comes after Credit Sussie’s heavy losses from the collapse of family office Archego. Bank Julius Baer & Co. Ltd has admitted in the US federal court that it conspired to launder over $36M with US officials and Fédération Internationale de Football Association (FIFA).The bank has agreed to pay $79M in penalties to resolve the investigation their involvement into the football bribery scheme.

The Australian Taxation Office (ATO) is again urging Australian tax residents to become compliant as it has recently announced that more than 600,000 Aussies might be under the misconception that they need not declare their capital gains, or that the digital asset is only taxable once converted to fiat. The ATO will now be writing to more than 100,000 of these taxpayers requesting that they review previous returns and correctly declare their digital assets and stressed that the autonomy of digital assets does not prevent a taxable event. On the litigious front, a suite has been filed against the U.S. Internal Revenue Service (IRS) by a Nashville couple based over the taxes paid for staking on the Tezos blockchain. As some might see it as a principal matter, the outcome may have far-reaching implications for how contributors to proof-of-stake (PoS) blockchains are taxed for the tokens they receive as a judgement will set future precedent.


It’s wine time at the boarder of Argentina and Brazil where numerous instances of wine smuggling have been identified and even a high profile murder. More than 80,000 bottles of wine has been confiscated and are currently being processed – this trend has been continuing since the beginning of the pandemic and resulted in some haphazard techniques to conceal the origins and quality such as fake labels and forged papers.

A rare corruption investigation into Mexico’s elites has been made public, where an number of politicians, including former President Enrique Peña Nieto, have been fingered following a federal judge’s endorsement that there is enough evidence to open an initial investigation. Another arrest in Mexico, that of Florian Tudor, has been a sigh of relief. Tudor, the alleged leader of the Riviera Maya gang, stole more that $1B from tourists by copying their bank cards and later withdrawing funds at ATM’s in other parts of the world. In Central America, El Salvador’s Texis Cartel leader Chepe Diablo, has once again escaped court dropped ML charges against him.

The new European Public Prosecutor’s Office (EPPO) is an independent body of the European Union and kicks off next week. The EPPO investigates and prosecutes crimes against EU budget and has the jurisdiction to investigate and prosecute any other illegal activity that is ‘inextricably linked’ to an offence against the EU budget. Moving to Asia where $83M has been intercepted by INTERPOL in operation against online financial crime. The operation codename HAECHI-I, saw more than 500 arrests and nearly 900 solved cases through intensive cooperation between nine countries in Asia. A sneaky invoice scheme has surfaced in Ireland where fraudsters hack into company emails and then redirect invoice payments to money mules’ bank accounts, one suspect has been arrested and is currently being held at the Lucan Garda station.

It looks like Brazill might be the new safe haven for the most wanted in the Narcos industry as a reoccurring theme emerges from the country best known for its talented football players and Amazon rainforest. The sensational theme draws from the arrest of the “king of cocaine” himself, Rocco Morabito, earlier in May 2021. Rocco’s arrest fuels the narrative as many accomplices (Nicola and Patrick Assisi, Bozidar Kapetanovic, Juan Carlos Ramírez Abadía, Pasquale Scottihave and Ronnie Biggs) have made Brazil their base of operation and have been subsequently arrested. Some justice has been brought in the notorious bitcoin for cash laundering scheme as Kais Mohammad, a.k.a. “Superman29,” was sentenced to two years in prison. This was a lucrative scheme that assisted criminals to lauder an estimated $25M, that was placed, layered, and integrated into the system through Bitcoin ATM-type kiosks.


Former Cayman Islands Football Association president, Jeffrey Webb has still not been sentenced six years after being arrested for his for his involvement in a global football corruption scandal. Webb as a key player in the case that now involves more than 40 former high-ranking officials in world football’s governing body, he has, nevertheless, agreed to pay $6,7M.


In this week’s report we can see a diverse tune where some jurisdictions are embracing the compliance space through imposing proper regulations, and others bluntly refuting same. As some financial institutions and regulatory authorities are bullying the digital asset space, a message is being sent custodians and even taxpayers, that they will not go down without a fight.

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