This week sees super-sized moves against financial crime being made by three of the world’s superpowers, as the USA’s President Biden pressures the Treasury to strip the American real estate sector of the ultimate beneficial ownership declaration exemption it currently enjoys, China’s financial regulators follow up on last month’s cryptocurrency transaction ban by busting a £90.7m money laundering gang, and Russia’s President Putin cues tolerance for cryptocurrency trading in the future.
Find out more on these stories below.
Biden wants US real estate’s exemption from ultimate beneficiary declarations revoked to plug $2.3b money laundering gap
US President Joe Biden is pushing to close the gap that the real estate sector represents in the country’s AML regime, as part of an initiative to “significantly bolster” the US government’s powers to oppose corruption and financial crime.
According to a report by Washington-based research and advocacy agency, Global Financial Integrity (GFI), at least $2.3b (£1.68b) was laundered through real estate deals in the USA during the period 2015 to 2020. Amongst GFI’s damning findings regarding US real estate deals were that over 50% of them involved politically exposed persons (PEPs) and 82% used anonymous shell companies. The report also noted that the US is the only significant G7 member which does not require ultimate beneficial ownership declarations from realty agents.
The report follows Biden’s National Security Study Memorandum of June 2021, which made stamping out corruption a matter of national interest. The memo proposed eliminating all illicit financial flows, freezing the assets of individual offenders and organised crime groups, and restoring stolen wealth to victims where possible. Included in the proposals is revoking the anonymity currently allowed in real estate sector deals, which has seen PEPs, oligarchs, and drug dealers from all over the world surreptitiously purchase properties from Alaska to Illinois, and Boston to Beverly Hills.
Reviewing the Biden memorandum, international law firm O’Melveny & Myers noted that “where the Justice Department finds evidence of misconduct, companies should also expect to see an increase in the number and scope of monitorships imposed, the prevalence of which had nose-dived during the last [Trump] administration.”
Read more on this story in the Miami Herald.
China continues cryptocurrency crackdown by busting £90.7m money laundering gang
Police in Zunyi, a city in China’s southwestern Guizhou province, have broken up a criminal gang which exploited cryptocurrency exchanges to launder ¥800m (£90.66m) of stolen money. The bust was the culmination of a two-month operation by authorities which included the arrest of 100 suspects and the resolution of 332 cases of telecom fraud throughout China.
The investigation and arrests were prompted by a directive from the Chinese cabinet, the State Council. The accused posed as a recruitment agency, trading through multiple accounts on the Binance, Huobi, and OKEx cryptocurrency exchanges. Pilfered funds were laundered through telecom fraud- amongst other financial crimes- while the gang attempted to avoid detection by using almost 500 bank cards and only transacting in small amounts.
The operation follows the vigorous and extended crackdown on crypto-mining and trading announced in late September, which itself upped the ante on May’s ban on cryptocurrency trading by three powerful state-backed financial organisations. Meanwhile, China’s WeChat messaging app appears to have followed the lead of social media platform Weibo and search engine Baidu by blocking new searches for Binance, Huobi, and OKEx.
Read more on this story on CoinDesk.
Russia’s President Putin signals acceptance of crypto trade amid global concerns about money laundering and other financial crime
Russian president Vladimir Putin made the cautious assertion that cryptocurrency “has value,” in an interview with CNBC at a plenary session during the Russian Energy Week. He qualified the statement, however, by noting that although cryptocurrency “has the right to exist and can be used as a means of payment… but trading in oil, say, or other primary materials and energy sources… it's too early to talk about this yet.”
The Central Bank of the Russian Federation, meanwhile, has repeatedly cautioned potential investors over the volatility of crypto exchange markets. Russian legislation around digital finances forbids trade in cryptocurrencies which are not backed by real assets within the country, although buying and selling on foreign platforms is currently permitted.
Speaking after a lecture at MGIMO University earlier in the week, Deputy Finance Minister Alexei Moiseev reiterated the Russian authorities’ position, citing the maintenance of control of the state currency as a motivating factor. "Of course, a Russian citizen can have a wallet open outside the Russian Federation, but it is operations within the Russian Federation that they will be subject to bans, I think, for the entire foreseeable future, due to the fact that this is financial sovereignty," he said.
The open-ended stance of the Russian Federation on the future of virtual currency trading comes amidst a global flurry of activity around cryptocurrency exchanges, with China clamping down hard on them, the USA considering easing some restrictions, and Sweden already allowing trade in crypto.
Read more on this story on Bloomberg.
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