2020 saw one of the major financial frauds of modern times, do you know what it was?

How 1MDB fugitive Jho Low tried to bargain for his freedom

The year 2020 has witnessed one of the major financial frauds of our times i.e the tentacular 1MDB scandal in Malaysia. Goldman Sachs has agreed to pay a staggering three billion US Dollar fine, Malaysian ex-Prime Minister Najib Razak has been jailed, and investigations have been conducted across at least three continents.

A Malaysian national named as Jho Low, is the fugitive mastermind behind the 1MDB criminal scam and he is wanted by the US, Malaysia and Singapore.

LINK: www.aljazeera.com/features/2020/11/16/how-1mdb-fugitive-jho-low-tried-to-bargain-for-his-freedom

Which two people received a 39 month sentence and a 48 month prison term after major tax fraud probes into the so-called Panama Papers?

US DoJ receives two guilty pleas in the Panama Papers investigation

Several countries launched money laundering and tax fraud probes after the major 2016 leak baptised Panama Papers and the US was one of the first nations to delve into the complex network of offshore shell companies and nominee directors. In February 2020, after a 4-year investigation, the US DoJ finally received guilty pleas from two defendants: a Massachusetts-based accountant, for a total of 8 counts including tax evasion, fraud, identity theft, money laundering and “willful failure to file Reports of Foreign Bank and Financial Accounts”, and a German-Guatemalan bi-national, for a total of 9 counts of the same nature. The former was sentenced to 39 months in prison, while the latter received a 48-month prison term.

LINK: www.justice.gov/opa/pr/us-accountant-panama-papers-investigation-sentenced-prison

Which aircraft manufacturer paid more than three billion Euros in fines relating to the discovery of a major bribery affair?

Airbus agrees deal on bribery investigations in UK, US, and France

In January 2020, the French aircraft manufacturer reached a settlement with three regulators – US Department of Justice, UK Serious Fraud Office and the French National Financial Prosecutor’s Office (Parquet National Financier). The company paid more than EUR 3 billion in fines relating to a major bribery affair in the company’s civil aviation division and misconduct of its third-party vendors.

LINK: www.theguardian.com/business/2020/jan/28/airbus-bribery-investigations-uk-us-france-sfo

Which Russian billionaire lost a lawsuit against four Nordic banks in January?

Russian Billionaire Loses Lawsuit Against Nordic Banks

In January 2020, Boris Rotenberg, a close associate of President Putin and his circle, lost his lawsuit against four Nordic banks, including Nordea, Svenska Handelsbanken OP Group and Danske Bank. The oligarch, who is bi-national (Russia / Finland), argued that as he held two citizenships, the banks could not consider him as a sanctioned individual and had to process his transactions and not refuse them. Rotenberg was also ordered to pay the legal fees accumulated by the four banks. The case has been considered an important precedent with regards to claims around the applicability of sanctions regimes in complex cases.

LINK: www.bloomberg.com/news/articles/2020-01-13/helsinki-court-rules-in-favor-of-banks-in-rotenberg-case

Germany’s greatest tax robbery resulted in costs of at least five billion Euros. What was the notorious ‘cum-ex’ affair?

Former London bankers convicted after Germany’s ‘greatest tax robbery’

The Bonn court sentenced two London bankers to suspended prison terms and one of them would also pay a substantial fine, in a trial related to the notorious “cum-ex” affair. The scheme was designed for tax evasion purposes and suggested high speed trading of shares “on or just before the dividend record date”. Refunds were then demanded for the capital gains tax.

According to the judge, there were no loopholes in German laws to allow this kind of trade and they were merely illicit. The cost of the “cum-ex” scandal for the German state budget was estimated to be at least EUR 5 billion.

LINK: www.theguardian.com/world/2020/mar/19/former-london-bankers-convicted-after-germany-greatest-tax-robbery

What are the six pillars of the European Commission AML Action Plan that was adopted in May?

EU adopts an AML Action Plan

In May 2020, the European Commission finally unveiled its AML Action Plan based on six pillars. The Action Plan pillars include an EU single rulebook targeting the harmonization of regulations across Member States, as well as an EU-level supervision which led to an agreement by EU ministers to create an EU AML supervisory body. Clear definition of the scope, coverage, and responsibilities of this additional layer of supervision is yet to come.

LINK: ec.europa.eu/info/publications/200507-anti-money-laundering-terrorism-financing-action-plan_en

Which bank failed to properly verify Jeffrey Epstein’s account activity, settling with the authorities on the 7th July?

First Enforcement Action by a Regulator Against a Financial Institution for Dealings with Jeffrey Epstein

According to the US law enforcement, Deutsche Bank AG bank did not properly verify Jeffrey Epstein’s account activity, despite information regarding his misconduct being publicly available. The bank agreed to settle with the US authorities on July 7th, 2020.

Regulators also claimed that the bank should have paid additional attention to several transactions, including “settlement payments totalling over $7 million, as well as dozens of payments to law firms totalling over $6 million for what appear to have been the legal expenses of Mr. Epstein and his co-conspirators”

LINK: www.dfs.ny.gov/reports_and_publications/press_releases/pr202007071

The EU opened infringement proceedings against which eight member states for delays in 5AMLD implementation?

Anti-Money Laundering: Commission urges 8 Member States to transpose the 5th Anti-Money Laundering Directive

In February 2020, the European Commission opened infringement proceedings against eight Member States for delays in 5AMLD implementation. European “black sheep” such as Cyprus, Romania, Hungary and Portugal but also notable were the Netherlands, Slovakia, Slovenia and Spain. They all received their notice letters and were required to respond by taking appropriate measures within two months. Only Cyprus has not communicated any transposition measures and infringement proceedings are pending against 22 Member States.

LINK: ec.europa.eu/info/publications/anti-money-laundering-directive-5-transposition-status_en

How large were the fines paid by nine companies when the UAE cracked down on illicit flows in October?

Nine jailed and fined millions in UAE over Dh306 million money laundering case

The UAE continues its crackdown on illicit flows after having sanctioned more than 200 law firms for AML regulations breaches in October 2020. A month later, the Emirati authorities sentenced nine individuals to prison terms ranging from 7 to 10 years and fined nine companies following a EUR 70-million money laundering probe. The firms paid around EUR 11.5-million fine each and their ill-gotten gains were confiscated. According to the prosecutors, the successful outcome of this operation was due to the thorough analysis of companies’ financial transactions that seemed inconsistent with their activities.

LINK: www.khaleejtimes.com/news/crime-and-courts/9-jailed-fined-millions-in-uae-over-dh306m-money-laundering-case

Fictitious transfers of football players totalling ten million Euros were discovered in February, where was the football club based?

Corrupted football officials cornered in Spain

High-profile sports have been recently recognised as high-risk sector. In February 2020, Spanish police arrested two football agents, employed by a renowned representation agency, for high-scale money laundering and tax evasion. The agents organised fictitious transfers of football players through a football club in Cyprus, for tax evasion purposes and the laundered proceeds invested in Spanish real estate and other luxury items totalled 10 million Euros. The operation was backed by the Europol and the Spanish Tax Agency

LINK: www.europol.europa.eu/newsroom/news/corrupted-football-officials-cornered-in-spain

Which global online gambling company was fined more than £11 million for failings linked in VIP customers?

Betway to pay more than £11 million for failings linked to ‘VIP’ customers

Betway, a global online gambling company, was fined in March 2020 by the UK Gambling Commission for serious deficiencies in its AML processes. The company failed to conduct appropriate verifications regarding the source of funds of its VIP clients, one of which deposited more than GBP 8 million and lost over GBP 4 million during four years of gambling. Another client held 11 separate accounts and was already on the radar of the company’s Risk & Fraud team, but no further action was taken. According to the regulator, it is highly probable that the monies used for gambling had been derived from crimes. The Betway, the gambling operator, agreed to pay GBP 11 million as a financial penalty, in addition to the implementation of a set of relevant AML measures.

LINK: www.gamblingcommission.gov.uk/news-action-and-statistics/news/2020/Betway-to-pay-11.6m-for-failings-linked-to-%27VIP%27-customers.aspx

Which Maltese bank had to release twelve million Euros of frozen assets following a failure to prosecute by police?

Almost half of Satabank’s ‘suspect’ clients not prosecuted

12 million Euros were released as the freezing orders related to the accounts of 25 clients of the Maltese bank remained unprosecuted. The orders had been initially issued following a request from the Maltese law enforcement due to the suspected illicit financial flows, but no further action was taken. The Maltese Finance Minister urged for the creation of an independent financial crime regulator / enforcement body as a Moneyval report evaluated the country’s police as the “weakest link in Malta’s battle against financial crime”. Following a thorough investigation, numerous serious AML deficiencies were identified within Satabank and the control over the institution was passed to EY.

LINK: timesofmalta.com/articles/view/almost-half-of-satabanks-suspect-clients-not-prosecuted.788684

Which ex-CEO did China sentence to a thirteen year prison term for accepting bribes?

China sentences ex-boss of Interpol to 13 years for bribes

In January 2020, China sentenced the ex-CEO of Interpol to a 13-year prison term. According to the prosecutors, Meng Hongwei received around $2 million in bribes while serving as a minister of public security and maritime police chief. A mysterious story involving Hongwei’s disappearance on his way between China and France in 2018 that was considered as a proof of his tensions with China. Hongwei has sued Interpol for the lack of protection and breach of obligations towards him and his family.

LINK: apnews.com/article/03d678b7b8bedeb11718489dc12da1d7

Which ex-Prime Minister was convicted of corruption, money laundering, breach of trust and abuse of power after a fourteen month trial?

Najib Razak, Malaysia’s Former Prime Minister, Found Guilty in Graft Trial

After a 14-month trial, the Malaysian ex-PM Najib Razak was convicted of corruption, money laundering, breach of trust and abuse of power. He was sentenced to a 12-year prison term and a financial penalty of $50 million. The high-ranking public official played one of the key roles in 1MDB scandal and benefited for years from the perpetrated fraud. According to the prosecutors, $1 billion was found in Razak’s personal accounts.

LINK: www.nytimes.com/2020/07/28/world/asia/malaysia-1mdb-najib.html

Fraudsters took advantage of the COVID-19 pandemic to commit a fifteen million Euro crime. What were they trading in?

Unmasked: International COVID-19 fraud exposed

In April 2020, during a joint Interpol-Europol operation, a massive EUR 15 million fraud related to the procurement of face masks was uncovered. The labyrinthine scheme used several “tools” such as compromised e-mail scams, advanced payment fraud and various money laundering channels. The websites of legitimate companies trading in masks were hacked and their identity stolen. The fraudsters, on the pretext of not having enough masks, referred the buyers to “trusted” middlemen in Ireland who in turn referred them to their suppliers in the Netherlands. An upfront payment was requested and then claimed as non-received. An emergency payment was initiated but the masks were never delivered to the buyers in Germany. The funds were recovered and the fraudsters to be arrested due to a quick and efficient cooperation between countries and their law enforcement.

LINK: www.interpol.int/News-and-Events/News/2020/Unmasked-International-COVID-19-fraud-exposed

Whose mother-in-law spent sixteen million pounds in Harrods in a money laundering operation?

Dethroned Azerbaijani Elites Made Big Investments in Europe

Zamira Hajiyeva, a mother-in-law of the Azerbaijani ex-national security minister’s son Anar Mahmudov, spent £16 million in Harrods in London. The investigation published in May by OCCRP unfolded a vast scheme of money laundering operations conducted through traditional methods such as the use of offshore shell companies in Cayman Islands and lesser known Lithuanian entities. The laundered proceeds of long-time corruption and public funds misappropriation landed in the UK and Spain (as real estate) and in Luxembourg as cash accounts. The location of the Mahmudovs is currently unknown.

LINK: www.occrp.org/en/investigations/dethroned-azerbaijani-elites-made-big-investments-in-europe

Which San Diego drug trafficker was sentenced to seventeen years in prison?

San Diego Drug and Money Laundering Cell Leader Sentenced to 17 Years

Javier Felix Bayardo was sentenced to 17-year prison term for his role in drug and money- laundering conspiracies. From 2014 to 2017, Bayardo was one of the key coordinators for drug trafficking network located in San Diego and extending across California. In addition to his prison sentence, the US law enforcement imposed a $30,000 fine together with the forfeiture executed by the court including about USD 27,000 in cash, “Las Vegas real property, two Kawasaki Jet Skis, 25 wristwatches, 26 women’s handbags, 42 pairs of women’s shoes, three large screen televisions”.

LINK: www.dea.gov/press-releases/2020/10/26/san-diego-drug-and-money-laundering-cell-leader-sentenced-17-years

Which country discovered a vast money laundering network which included eighteen real estate properties?

Former Guardia Civil led money laundering network

Spanish law enforcement has dismantled a vast money laundering network and seized multiple financial instruments and bank accounts, as well as 18 real estate properties worth EUR 3 million. An ex-Guardia Civil officer had been the mastermind behind the criminal operations, his home was searched and suitcases filled with cash were seized. The investigation started in 2018 when a whistle-blower – an individual involved in the network – alerted Customs of suspicious activity in the port of Barcelona. A dedicated taskforce discovered real estate and bank accounts relating to the suspects and found out a substantial increase in assets belonging to the criminals who also used legal entities for money laundering purposes.

LINK: www.euroweeklynews.com/2020/11/24/former-guardia-civil-led-money-laundering-network/

Nineteen members of which mafia group were arrested in a Calabria vote swap sting?

Italian police arrest 19 in mafia vote-swap sting

In its long-time battle against the mafia, Italian law enforcement arrested 19 members of ‘Ndrangheta’ an organised crime group operating in Calabria. The criminals used pharmacies to launder the proceeds of their crimes. Domenico Tallini, the head of regional council, was also detained on charges regarding election fraud and corruption with regards to these pharmacies.

LINK: www.macaubusiness.com/italy-police-arrest-19-in-mafia-vote-swap-sting/

Illicit funds worth $20 million were forfeited when US citizen Kenneth Zong aided which foreign power?

Justice Department Seeks Forfeiture of More than $20 Million in Assets Relating to Unlawful Use of U.S. Financial System to Evade and Violate Iranian Sanctions.

In June, the US DoJ filed a complaint against a US citizen Kenneth Zong who aided and abetted Iranian nationals to circumvent the sanctions imposed by the International Emergency Economic Powers Act and the Iranian Transactions and Sanctions Regulations. The scheme used by the perpetrators extended over four countries, including South Korea, United Arab Emirates and Georgia. The DoJ estimate of illicit funds to be forfeited will be $20 million.

LINK: www.justice.gov/opa/pr/justice-department-seeks-forfeiture-more-20-million-assets-relating-unlawful-use-us-financial

In July the US SEC entered into a $21 million settlement with which pharmaceutical company?

SEC Charges Alexion Pharmaceuticals with FCPA Violations

In July, the US SEC entered into a $21 million settlement agreement with Alexion Pharmaceuticals, an American biotech company, following its violation of FCPA provisions regarding books and records and internal accounting controls. According to the watchdog, Alexion subsidiaries in Turkey and Russia paid bribes to the countries’ respective governments to secure favourable treatment of their primary drug called Soliris. The subsidiaries falsified accounting records to hide the improper payments. The company’s Brazilian and Colombian subsidiaries also “failed to maintain accurate books and records”, the overall misconduct resulting in more than $14-million profits for Alexion.

LINK: https://www.sec.gov/news/press-release/2020-149

In May the European Commission designated twenty-two high-risk third countries for AML/CTF. How many can you name?

European Commission publishes an update of its high risk third countries in terms of AML/CTF

On May 7, the European Commission released its update regarding high risk third countries with strategic deficiencies in terms of AML/CTF and 22 countries were designated. The list was established following a new methodology, also published by the Commission, and the guidelines use the FATF list as a cornerstone and finetune the result via an independent assessment of the concerned countries’ framework. This includes an analysis of eight key areas, such as criminalisation of money laundering and terrorist financing, the availability and exchange of information on beneficial ownership of legal persons and legal arrangements and implementation of targeted financial sanctions. This year, twelve new nations have been added to the EU list.

LINK: ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-supervision-and-risk-management/anti-money-laundering-and-counter-terrorist-financing/eu-policy-high-risk-third-countries_en

Which Australian bank violated the AML/CTF Act on twenty-three million occasions?

Westpac, one of Australia’s largest banks, hit with record $920 million penalty over money laundering scandal

Westpac, one of the four main Australian banks, violated the Australian AML/CTF Act on 23 million occasions. The bank was required to pay a record-breaking AUD 1-billion fine for pervasive money laundering and lack of appropriate due diligence, controls and monitoring with regards to its transactions in Asia that afterwards revealed a major network of child exploitation. The bank declared having enhanced its AML framework, notably by expanding its anti-financial crime staff.

LINK: edition.cnn.com/2020/09/24/investing/westpac-fine-australia-intl-hnk/index.html

Why were twenty-four Chinese companies blacklisted by the US Bureau of Industry and Security?

Commerce Department Adds 24 Chinese Companies to the Entity List for Helping Build Military Islands in the South China Sea

The US continues to impose sanctions, and in August, 24 Chinese companies were put on the blacklist by the US Bureau of Industry and Security. They were blacklisted for the militarization of the artificial islands in the South China Sea that China started to create back in 2013 in order to “undermine the sovereign rights of U.S. partners in the region”. The artificial islands are equipped with modern military ammunitions, including air defence and anti-ship missiles. The sanctions imposed by the BIS function are similar to those decided by the OFAC.

LINK: www.commerce.gov/news/press-releases/2020/08/commerce-department-adds-24-chinese-companies-entity-list-helping-build