‘Bad banks didn’t know their client base and outsourced screening,’ says UK regulator Sarah Pritchard who tells them to expect a knock on the door.

Black bin liners stuffed with £700,000. An International deal for PPE kit. A widow transferring money to her online love interest. What do these cases all have in common, ask British Financial Conduct Authority director Sarah Pritchard this week? They all had links to financial crimes and should have raised SARs, she said. She told delegates fighting fincrime is about upholding standards and “boosting our competitiveness.” Firms should calibrate their fincrime systems to the right risk level and expect spot checks from the authority. Domestic PEPs should generally be treated as lower risk “and we will act immediately if we see firms persistently acting disproportionately.”

Pritchard also told fincrime professionals the FCA was stepping up testing of firms’ risk-based systems, using data and tech to do so.  Recent testing of firms’ compliance with sanctions was driven by data and tech.  “We asked firms to test their own controls against a sample data set, and then selected those for a visit who had not picked up what we were expecting. More effective use of artificial intelligence will bolster our toolkit in the future,” she said. This was an example of the FCA taking a risk-based approach – not a tick box approach “and we expect the same from firms. When we did this testing, we found good practice and bad. Good firms knew their client base, knew who they were dealing with and calibrated their sanctions alerting systems to UK as well as international sanctions lists. 

“Bad firms didn’t – they left their screening to outsourced entities, didn’t understand the corporate structures for their corporate client base, and hadn’t calibrated monitoring to UK sanctions requirements,” she added.  “So, in summary, those who carry out tick box compliance exercises should not be surprised to find a surprise visitor from the #FCA on their doorstep. Never be afraid to question if your firm has the right risk calibration – checking if it is proportionate – whether it is too high or too low.” We have the full address below.

Meanwhile, the authority on Wednesday also published its top five advices for banks and fintechs to continue to adhere to Britain’s sanctions regime on Russia. We carry a report on the advice.

Elsewhere we learned the UAE is mulling extraditing members of the Kinahan organised crime cartel as part of its efforts to get off FATF’s grey list. And in Singapore there have been arrests in the $92M money laundering case. Up in Scandanavia there are reports that Sweden’s increasingly violent crime gangs are using Spotify to launder money.

This week we also have a compelling Special Report from Milind Tiwari on the growing cases of crime involving the food industry. Read his report below.

Switzerland back in the fincrime news for the third week in a row as it was announced the head of regulator FINMA is stepping down due to the stress of the job. And in other news, the ‘Fighting Online & Cyber Fraud Summit 2023’ taking place in Dublin on November 29 next has announced that Revolut’s Head of Financial Crime and Fraud, Aaron Elliot-Gross has been added to the stellar line up of speakers. You can’t afford to miss this conference, more information on booking your place below.

Now for your top headlines so far this week:

SARAH PRITCHARD'S ADDRESS AT THE FINANCIAL CRIME SUMMIT 2023: Black bin liners stuffed with £700,000. An International deal for PPE kit. A widow transferring money to her online love interest… What do these cases all have in common? They all had links to financial crimes and should have raised SARs. So said FCA executive director Sarah Pritchard this week. She told delegates fighting fincrime is about upholding standards and “boosting our competitiveness.” Firms should calibrate their fincrime systems to the right risk level and expect spot checks from the authority. Domestic PEPs should generally be treated as lower risk “and we will act immediately if we see firms persistently acting disproportionately.” Her  speech here: Sarah Pritchard’s address at The Financial Crime Summit 2023

WHAT THE FCA EXPECTS FROM BANKS ON SANCTIONS: BRITISH regulator the Financial Conduct Authority has published new advice on an adhering to the country’s sanctions regime. The authority “the unprecedented size, scale, and complexity of sanctions imposed by the UK Government and international partners since Russia’s invasion of Ukraine, has further increased our focus on firms’ sanctions systems and controls.” The FCA said it had been engaged in a substantial programme of work assessing the systems and controls relating to sanctions compliance for over 90 firms across a range of sectors. Read the story here: UK regulator publishes 5 top advices to ensure banks and fintech adhere to Russian sanctions regime

FCA REVIEW ON PEPS: Britain’s financial watchdog said on Tuesday it has launched a formal review into how banks conduct mandatory extra checks on “politically exposed” customers (PEPs) and their families for money laundering risks. The Financial Conduct Authority (FCA) said that, while it cannot change the law which requires PEP checks, its review would consider whether banks were being heavy-handed in applying the rules and how they decided to close accounts of PEPs, their family members or close associates. “We have already persuaded some firms to improve their approach and we will use this review to identify if we need to provide further guidance to firms,” Sarah Pritchard, the FCA’s executive director for markets, said in a statement. Read the full story here: Britain’s FCA launches formal review of how UK banks carry out checks on ‘politically exposed’ customers

SINGAPORE SEIZES MONEY LAUNDERER'S ASSETS: Police in Singapore investigating a major money laundering operation have seized S$125 million ($91.79 million) from the bank accounts of one of ten foreign suspects accused in the case. About S$92 million and S$33 million were seized from bank accounts held by Turkish national Vang Shuiming at Credit Suisse Singapore and Bank Julius Baer respectively, according to a police affidavit presented in the high court on Tuesday. The total value of assets seized by investigating authorities now stands at S$1.8 billion, according to prosecutors. Read the full story here: Singapore police seize money launderer’s assets in Credit Suisse and Julius Baer banks in S$1.8 billion case

THE DARK SIDE OF OUR DINNER PLATE: Consider a world where the olive oil drizzled on our salads might be funding nefarious activities, and the convenience store around the corner could be a front for money laundering. It sounds like a plot from a crime novel, yet the reality is closer than we might believe. The cost of fraudulent activities within the food sector ranges between $40-49 Billion. To put it in perspective, the profits generated from fraudulent activities within the food sector rival those from cocaine trafficking, but with significantly lower risks. Find the full story here: The dark side of our dinner plate: A nexus of crime and money laundering

DUBAI MULLS EXTRADITION OF KINAHAN CARTEL: IRELAND's police Commissioner has travelled to the UAE as part of efforts to have members of the Kinahan organised crime group extradited back to Europe. Garda (Irish National Police) Commissioner Drew Harris met with the Commander in Chief of the Dubai Police to discuss bringing members of the Kinahan family before the courts. The gang members have been based in Dubai for several years and successfully evaded arrest there despite being sanctioned by US authorities and three of them carrying $5M bounties each. Mr Harris has travelled to the United Arab Emirates city with the organised crime commander Assistant Commissioner Justin Kelly to explore how Kinahan cartel leaders could be flown back to Ireland. Find the full story here: Dubai mulls extradition of Kinahan cartel chiefs in its efforts to move of FATF’s grey list

*** The 'Fighting Online & Cyber Fraud Summit 2023' takes place on November 29 at the Royal Dublin Society convention centre in Dublin, Ireland. Leading speakers and panellists include top European fraud detective Pat Lordan and Revolut’s Head of Financial Crime and Fraud, Aaron Elliot-Gross. Click on the link here to purchase your or your department’s ticket:*** 

Register here

Sponsor summit. Contact James Treacy ; jtreacy@amlintelligence.com

FINMA'S CHIEF RESIGNS: The head of Switzerland’s financial regulator has resigned due to "permanent stress levels", months after orchestrating Credit Suisse’s rescue by UBS. On Wednesday, the Swiss Financial Market Supervisory Authority (FINMA) announced Urban Angehrn would step down at the end of September. Mr Angehrn said the “high and permanent stress level” of the job “had health consequences” for him, according to The Financial Times. Read the story here: Swiss regulator FINMA’s chief resigns over stress levels of job

INSIGHT ON SWEDISH CRIMINAL GANGS: Sweden's criminal gangs behind an upsurge in bombings and shootings in recent years are laundering money through Spotify, a Swedish newspaper claims. According to an investigative report in Svenska Dagbladet, criminal networks have been paying for misleading Spotify streams of songs by artists with ties to gangs for several years using money obtained from drug deals, robberies, fraud, and contract killings. As a result, they get paid by the platform for the high number of streams. The Guardian reports in addition to an anonymous police investigator, four members of separate Stockholm gangs confirmed the newspaper's information. Find the piece here: Swedish criminal gangs launder money through fake Spotify streams

MALAYSIA SEEKS RETURN OF EX-GOLDMAN BANKER: Malaysia wants a former Goldman Sachs banker convicted last year in New York of helping loot billions of dollars from its 1MDB sovereign wealth fund to return to the country before starting his 10-year U.S. prison sentence. U.S. District Judge Margo Brodie in Brooklyn on Tuesday delayed Roger Ng's scheduled Sept. 6 surrender date by one month to Oct. 6, after federal prosecutors said they needed more time to talk with Kuala Lumpur about first letting him stand trial on charges there. Read the story here: Malaysia seeks return of ex-Goldman banker convicted in 1MDB case

WHAT'S GOING ON WITH ACAMS?: INTEREST continues to grow regarding rumoured changes taking place at training company ACAMS - with claims that executives have left or are departing the company. As rumblings emanate within the AML community around a change of direction at ACAMS, AML Intelligence has asked the U.S based company for clarification on what’s next. Attempts have also been made to gain information on the firm’s potential new direction from its French private equity owner, Wendel, based in Paris. Wendel spent more than €300 million to control the firm in 2022 and is now the key influence at the Miami HQ.  Find the story here: What’s going on at ACAMS? Company silent on speculation of changes at the top as rivals circle

INCOMING SCRUTINY FOR WORLDCOIN: Increasing numbers of governments around the world are scrutinising Worldcoin, a crypto project co-founded by OpenAI CEO Sam Altman that was launched in July. Almost 2.3 million people globally have signed up to have their irises scanned by Worldcoin's "orb" devices in exchange for a digital ID and free cryptocurrency. Altman says its ID will allow users to, among other things, prove online that they are human, notably in a future world dominated by artificial intelligence. Find the story here: Scrutiny of iris-scanning crypto project Worldcoin grows

GOLDMAN BANKER BANNED FOR LIFE : Singapore's central bank, the Monetary Authority of Singapore (MAS), said on Tuesday that it had issued a lifetime ban against Ng Chong Hwa, the former managing director of Goldman Sachs (Singapore) embroiled in the 1MDB scandal. The order follows the conviction of Ng, who is also known as Roger Ng, in the United States for conspiracy to launder money embezzled from the Malaysian state 1Malaysia Development Bhd, or 1MDB, and violation of the U.S. Foreign Corrupt Practices Act (FCPA). "Mr Ng's severe misconduct has given MAS reason to believe that it would be contrary to public interest to allow him to carry on business as a representative," MAS said. Find the story here: Singapore’s central bank bans ex-Goldman banker Ng for life over 1MDB

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Stephen and the team at AMlintelligence.