A win for Shah would have sparked a wholesale review of the way banks handle and report their internal suspicions of money laundering… The Shah battle raised the burdensome scenario of banks having to justify every suspicious activity report (SAR) that they filed. The banking industry files the vast majority of the 250,000 or so SARs that reach SOCA each year. Under UK law bank employees risk committing criminal offences if they fail to report money-laundering suspicions.

At least some good news for HSBC on their anti money laundering activities; the US branch is still under scrutiny for its internal AML processes.

http://www.reuters.com/article/2012/05/17/us-hsbc-shah-relief-idUSBRE84G1EP20120517

In 2009, CBS reported on secret accounts in Israel (..) and Switzerland held by the Palestinian Investment Fund. Check out the interview with Mohammed Rachid on the CBS site.

http://www.businessweek.com/ap/2012-05/D9UPRPDO2.htm

http://www.cbsnews.com/2100-18560_162-582487.html

James Ibori had been one of Nigeria’s most influential politicians as governor of oil-rich Delta State from 1999 to 2007. Police accused him of siphoning off an estimated $250 million of state funds. The money was spent on extravagant mansions, cars, hotels and a private jet, among other things, police said.

The corruption was allegedly performed by inflating state contracts, kickbacks and the direct theft of money from state accounts via employees in his inner circle.

The UK froze around $89 million of ‘his’ assets, and is working to return the funds to Nigeria. One of his advisors has already been sentenced for money laundering in the UK. The Economic and Financial Crimes Commission (EFCC) in Nigeria is also ready to present it case to give it to Ibori, according to a statement.

“The bulk of the criminal charges against the former governor are still before courts in Nigeria and there are no plans to vacate those charges. Moreover, the former governor didn’t steal alone. There were accomplices and as recent as two weeks ago, some persons who allegedly assisted him to launder stolen funds were questioned by the Commission. EFCC is determined to bring all Ibori accomplices to book, no matter how long it takes”,the statement added.

http://en.wikipedia.org/wiki/James_Ibori

http://online.wsj.com/article/SB10001424052970204653604577249342334596400.html?mod=googlenews_wsj

http://allafrica.com/stories/201203010327.html

Ransom money is increasingly flowing into the legal financial system, while the laundering of the proceeds of piracy is causing consumer prices to rise steeply in the Horn of Africa and the surrounding area. ..”Piracy money is also being reinvested into criminal activities that are not limited to piracy. Drugs, weapons and alcohol smuggling, as well as human trafficking, also benefit from the proceeds of piracy.”..

Last year, we posted how pirates divided the loot. Remember the the 50% of the booty that goes to the ‘men behind the pirates’? Any news on who they are? Do pirates still pay (financial) tribute to the Islamist militia Al-Shabab? Anyway, SEAL teams (remember the Italian cruise ship Melody that got hijacked?) still seem like a better deterrent than money laundering controls. We still feel we should also follow the money.

http://financialcrimeonline.com/archives/351

http://financialcrimeonline.com/archives/213

http://www.unodc.org/unodc/en/frontpage/2012/February/ransom-money-being-laundered-by-pirates-affects-stability-in-the-horn-of-africa-says-unodc-chief.html?ref=fs1

http://www.cbc.ca/news/world/story/2012/01/25/somalia-rescue-pirates.html

The charges involve the use of forged documents to get credit at one of Iran’s top financial institutions to purchase assets, including major state-owned companies.

“Owners of the Aria Investment Development Company … took the first step towards gaining wealth through using incorrect connections with executive and political elements and paying bribes … Dozens of instances of bribe payments to staff and managers of banks have taken place under various titles,” state TV’s website quoted the indictment as saying.

The indictment said company managers undermined the country’s economic security through engaging in organized fraud and paying large amounts of bribes to illegally accumulate several billion dollars.

“Not only did they prevent the progress and the increase of production and national wealth, they inflicted damage to people’s trust and healthy economic activity,” state TV’s website quoted the indictment as saying.

State TV said the top defendant has been charged with being “corrupt on earth,” an Iranian legal term meaning that the defendant is an enemy of God, and which carries the death penalty.

http://www.lasvegassun.com/news/2012/feb/18/ml-iran-bank-fraud/?hpap

In 2004, Ms Subramaniam allegedly helped herself to just over $72,000 over 21 fraudulent transactions. Then, in 2009, she has allegedly paid millions for goods at her favourite stores – jewellery store Paspaley, Chanel, Hugo Boss, Bulgari, and Georgio Armani. It is claimed she directly deposited more than $7.6 million from ING into Paspaley’s account this year, another $98,452 to Chanel and more than $3.3 million into Bulgari, court documents reveal. But the total bills at those were allegedly much higher – Paspaley, for example, sold her a whopping $16 million worth of pearls. Ms Subramaniam also allegedly used her maiden name to buy seven Sydney properties on her wild spending spree – four apartments on Bondi Beach, which together cost her $9.35 million, and three in Kirribilli with a price tag totalling $4.55 million. How about that for a shopping spree?

To the police she mentioned that her sloppy manager failed to notice any of the fraudulent transactions. The now 42-year-old bought eight apartments for more than $15 million but left seven vacant and didn’t charge rent on the eighth. She spent more than $11 million on jewellery she didn’t wear or even remove from the boxes. And she lavished gifts on shop assistants, including expensive pens, clothing and a payment of $1.3 million to help one worker buy a property, according to press reports.

During the trial, more details emerged:

“Each  of them (the sales staff) received commissions for sales to her, and giving presents to  them, in my opinion, is consistent with her wanting to be accepted and  praised,” Judge Finnane said. “Her gifts of $1.3 million to one  shop assistant and something like $240,000 to another shop assistant are  consistent with her wanting to be loved and accepted.” The judge  said everything she did in stealing the money and using the proceeds  “points to someone who got gratification from being able to be thought  of as wealthy and generous”. He referred to her having frequent  sex with an ING supervisor and to her husband’s statement that he joined  in the sexual activity, which sometimes happened between them in motel  rooms or at their home. Subramaniam claimed to police that the  frequent sexual intercourse she had with the employee at work was part  of her ill treatment by staff. “She claims that part of the reason for engaging in fraud was resentment towards ING and her wanting revenge,” the judge said. The judge said while the sexual activity may have been abusive in her mind, it appeared to have been consensual. While she was not mentally ill, she had mental disorders that needed intensive counselling, he added. He set a maximum term of 15 years

All of this raised concerns about the internal controls at ING, and possibly at other banks.

http://www.riskmagazine.com.au/article/ing-30m-fraud-loss-highlights-internal-security-risks-122353.aspx

http://www.sbs.com.au/news/article/1625462/ing-accountant-jailed-for-45m-fraud

http://www.dailytelegraph.com.au/news/sydney-nsw/rajina-rita-subramaniam-gets-15-years-for-defrauding-ing/story-fn7y9brv-1226267620216

The main changes are:

• Combating the financing of the proliferation of weapons of mass destruction through the consistent implementation of targeted financial sanctions when these are called for by the UN Security Council.
• Improved transparency to make it harder for criminals and terrorists to conceal their identities or hide their assets behind legal persons and arrangements.
• Stronger requirements when dealing with politically exposed persons (PEPs).
• Expanding the scope of money laundering predicate offences by including tax crimes.
• An enhanced risk-based approach which enables countries and the private sector to apply their resources more efficiently by focusing on higherrisk areas.
• More effective international cooperation including exchange of information between relevant authorities, conduct of joint investigations, and tracing, freezing and confiscation of illegal assets.
• Better operational tools and a wider range of techniques and powers, both for the financial intelligence units, and for law enforcement to investigate and prosecute money laundering and terrorist financing.

Of these updates, the inclusion of tax crimes as predicate offense has been the most controversial. While everyone would agree that banks should be contributing to the detection of terrorist financing and money laundering, the monitoring of tax evasion by banks can be extremely burdensome (if possible at all), while the impact on the overall financial crime arena has not been gauged. Anyway, tax crimes are in the FATF recommendations as a predicate offense for money laundering, so member states will definitely follow suit to include tax crimes in AML requirements.

You can’t argue with that… Police departments are usually not as focused on tackling financial crime as they are on drug dealing and very visible type of crimes that directly affect our feelings of insecurity.

Underground banking is one of the areas that the gangs are exploring; it will help them in their regular ‘ business’  as it will help them in gaining some more money. Credit card fraud is another are. And imagine the network you need to cash in on stolen credit card data. Where do you go as a hacker with a couple of thousand of activated credit cards? Gangs will have the network to have soldiers go to ATM’s and withdraw cash with counterfeit credit cards.

http://fxn.ws/v6c80q

http://online.wsj.com/article/BT-CO-20110915-704594.html?mod=WSJ_qtnews_wsjcomp

http://edition.cnn.com/2011/BUSINESS/09/15/switzerland.bank.lost/index.html

How was 9-11 financed?

To plan and conduct their attack, the 9/11 plotters spent somewhere between $400,000 and $500,000, the vast majority of which was provided by al Qaeda. Although the origin of the funds remains unknown, extensive investigation has revealed quite a bit about the financial transactions that supported the 9/11 plot. The hijackers and their financial facilitators used the anonymity provided by the huge international and domestic financial system to move and store their money through a series of unremarkable transactions. The existing mechanisms to prevent abuse of the financial system did not fail. They were never designed to detect or disrupt transactions of the type that financed 9/11.

….

The best available evidence indicates that approximately $300,000 was deposited into the hijackers’ bank accounts in the United States by a variety of means. Just prior to the flights, the hijackers returned about $26,000 to one of their al Qaeda facilitators and attempted to return another $10,000, which was intercepted by the FBI after 9/11. Their primary expenses consisted of tuition for light training, living expenses (room, board and meals, vehicles, insurance, etc.), and travel (for casing flights, meetings, and the September 11 flights themselves). The FBI believes that the funds in the bank accounts held by the hijackers were sufficient to cover their expenses.The FBI, therefore, believes it has identified all sources of funding. Our investigation has revealed nothing to suggest the contrary, although it is possible that the $300,000 estimate omits some cash that the hijackers brought into the United States and spent without depositing into a bank account or otherwise creating a record.Al Qaeda funded the hijackers in the United States by three primary and unexceptional means: (1) wire or bank-to-bank transfers from overseas to the United States,

(2) the physical transportation of cash or traveler’s checks into the United States, and

(3) the use of debit or credit cards to access funds held in foreign financial institutions. Once here, all the hijackers used the U.S. banking system to store their funds and facilitate their transactions.

The exact details of the financing are still unknown, although main hijacker Atta allegedly received $100k from Ahmed Omar Saeed Sheikh from Pakistan. Unconfirmed rumors were published that Pakistani intelligence agency (ISI) in fact ordered the transfer to Atta. All in all, the exact money trail was never published.

Did we take anti terrorism financing to a level that would prevent the next 9-11? Remember Chairman Kean’s words. And remember 9-11.

http://govinfo.library.unt.edu/911/staff_statements/911_TerrFin_App.pdf

http://en.wikipedia.org/wiki/Ahmed_Omar_Saeed_Sheikh

http://financialcrimeonline.com/archives/33