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Banks stay one step behind regulations

Capital One admits to AML failures, the Vatican bank convicts a former senior official and Australian banks helped wash money for cartels.

Antonis Melis
January 22, 2021

Capital One admitted to AML/BSA failures and have been handed a fine of $390 million.

The Vatican bank has sentenced a former senior official and his lawyer to 9 years in prison after being accused of embezzling millions of Euros between 2002 – 2007.

And Cocaine cartels used numerous methods to launder $500 million in illicit funds through Australian banks, in a multi-faceted money laundering scheme.

Find out more on these stories below.

Capital One fined for anti-money-laundering deficiencies

The US Treasury department fined Capital One for “wilfully failing to implement and maintain” effective anti-money-laundering (AML) controls.

Capital One admitted to allegations that related to a check-cashing group acquired by Capital One in 2006, when it bought North Fork Bank.

The Financial Crimes Enforcement Network (FinCEN) assessed a $390 million penalty but agreed give Capital One credit for a $100 million penalty paid to the Office of the Comptroller of the Currency in 2018.

FinCEN said Capital One’s actions caused “millions of dollars in suspicious transactions to go unreported in a timely and accurate manner, including proceeds connected to organized crime, tax evasion, fraud, and other financial crimes laundered through the bank into the U.S. financial system.”

The process of admitting and then paying a fine seems to be too easy for banks. Should there be more severe punishments for financial institutions that “wilfully” fail in keeping up with regulations?

Former Vatican banker convicted of money laundering and embezzlement

On Thursday, the Vatican court convicted a former senior official at the Vatican bank and his lawyer for embezzlement and money laundering. The two were accused of embezzling millions of Euros through real estate deals between 2002 – 2007.

The two were ordered to pay the Vatican bank damages of more than €20 million, and were sentenced to just under 9 years in prison.

The Vatican said the convictions were the product of legislation enacted in 2018 to bring it up “to international standards for combating money laundering, corruption and other serious crimes.”

The main goal of these convictions was to send a strong signal that the church was determined to get its financial house in order.

Aussie banks laundered $500m for cocaine cartels

South American cocaine cartels used Australian banks to launder $500 million through a sophisticated money-laundering scheme. The money was routed to multiple destinations, such as South-East Asia and the Middle East.

The cartels used their illegal profits to buy high-end electronics that were shipped overseas in containers to move the funds and disguise their origins. This scheme ran between 2014 – 2017 and funnelled more than $100 million through Australian banks each year.

Australian Border Force confirmed the existence of the scheme in answers to a series of questions from The Australian Financial Review.

Read their answers here.

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