Featured Case Studies

EU investigation into “golden passports” reveals money laundering, tax evasion risks

The European Commission has published the findings of its investigation into EU members’ citizenship and residency schemes which revealed financial crime risks, such as money laundering and tax evasion, associated with the programmes.

There exists a lack of transparency in how the schemes are operated and a lack of cooperation among member states further exacerbates these risks, the probe found.

Following the study, the Commission has urged member states to ensure that applicants for investor citizenship and residency, dubbed “golden passports” and “golden visas” respectively, comply with EU anti-money laundering rules.

 

Analysis: FATF’s assessment of the UK’s anti-money laundering systems draws criticism

The much-anticipated Financial Action Task Force (FATF) mutual evaluation of the United Kingdom’s anti-money laundering and counter terror financing regime is out, and with it has come much praise from UK government officials, not least HM Treasury Minister John Glen, who said: “The report recognises that the UK’s AML/CTF regime is the strongest of the over sixty countries assessed by FATF and its regional bodies.”[1]

Combating money laundering in European banks: Highlights of a key whistleblower’s testimony

The European Parliament’s Special Committee on Financial Crime, Tax Avoidance and Tax Evasion (the Committee) recently held a hearing on “Combating Money Laundering in European Banks” to discuss a number of recent cases on money laundering in financial institutions based in the EU[1].

Naturally, the main focus of the Committee’s deliberations was on Danske Bank.

The British government claims to be focussing on its ability to seize the proceeds of organised crime, but the response remains piecemeal, underfunded and poorly coordinated

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At the end of January 2017, the UK’s Financial Conduct Authority announced its largest ever penalty for anti-money laundering failures. It fined Deutsche Bank £163 million ($204 million) for lacking ‘an adequate AML control framework’ between 2012 and 2015. US regulators levied an additional $425 million against the bank for the same issue.

Specifically, Deutsche is alleged to have facilitated $10 billion in Russian ‘mirror-trades’ which could have been used to launder money and evade Russian capital controls. This KYC360 case study explains how mirror trading works.

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Transaction laundering is a catch-all term for a wide range of money laundering methodologies involving e-commerce websites.

This KYC360 case study explains how transaction laundering can work.

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Hawala (Arabic for ‘transfer’ or ‘trust’), is an informal system of money transfer that predates the modern banking system by many centuries. It is defined by the Financial Action Task Force as an ‘alternative remittance system’ for transferring money from one location to another outside banking channels. Dating back to 8th Century Silk Road traders, or perhaps even earlier, it has had a significant influence on the development of modern financial systems, particularly on the legal principle of the ‘agent’.

This KYC360 case study illustrates how the hawala system works.

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As part of their recent, highly detailed investigation into Russian involvement in brutal deaths on British soil, BuzzFeed News described an interesting methodology for disguising the source of funds for investing in a legitimate venture.

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A graphic showing the AML fines levied against financial institutions around the world in the last 5 months.

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Financial crime risk is generally thought of as being associated with banking and real estate, but no professional services firm is immune.

This KYC360 case study shows how engaging firms for “sham” litigation can be used to launder funds.

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The ‘Russian Laundromat’ (a term coined by the team of journalists at the OCCRP who uncovered it) was a complicated scheme, run between 2010 and 2014, to launder up to $80 billion out of Russia. It was based on fictitious debts between companies in the jurisdictions to which criminals and corrupt Russian officials wanted to send their money. The debts between these companies were authenticated by Moldovan judges, such that all transfers were backed by a European court order and appeared exceptionally ‘clean’.

This KYC360 graphic case study explains how the Russian Laundromat worked.

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An investment fund can be utilised by those seeking to launder money. Investment funds are particularly suitable for money laundering where a large sum of illicit money is already within the financial system.

This KYC360 case study explains how investment funds can be used to launder money.

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A syndicated loan is a loan made by a group (or “syndicate”) of lenders who together provide funds for a single borrower.

This KYC360 case study explains how syndicated loans can be abused for money laundering purposes.

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