This week, a clarion call for transnational cooperation was sounded by regulators and law enforcement agencies worldwide, as FATF reported that almost half of jurisdictions are lagging in regulating crypto asset trading; a global organised crime watchdog warned that sanctioned Russians could launder funds via illicit gold; and South African police worked with Interpol to bust a global cybercrime gang.
Find out more on these stories below.
FATF urges increased monitoring of AML/CFT regulation among its members
The global money laundering watchdog, the Financial Action Task Force (FATF), released its report on member states’ compliance with the organisation’s standards on 19 April 2022. The report covers FATF’s fourth round of mutual evaluations of member states’ compliance with its 40 recommendations on anti-money laundering (AML) and counter-terrorist financing (CFT) policies, and the first document of its kind to be released publicly.
Among FATF’s findings on adherence to its recommendations were policies intended to regulate cryptocurrencies, also known as virtual assets (VAs), and cryptocurrency businesses, or virtual asset service providers (VASPs). The report outlined the following findings about VASPs among its members on page 28:
- 9% were non-compliant, and 37% were partially compliant - meaning that 46% of members require enhanced monitoring.
- 28% were largely compliant, and 26% were fully compliant - meaning that 54% are approaching or meeting the FATF standards.
Overall, FATF’s report recognised that 76% of countries have deployed its 40 recommendations, up from 36% in 2012. However, it was highlighted that the setup of shell companies and high profile AML/CFT violations which transcend jurisdictions are continuing challenges for many countries.
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Global organised crime watchdog warns that sanctions-hit Russians could launder funds via the illicit gold trade
The international, non-governmental body Global Initiative against Transnational Organised Crime (GI-TOC) warned that the well-travelled avenue of global illicit gold trade presents an attractive opportunity for Russian oligarchs and businesses, who are feeling the pressure of US, UK, and EU sanctions imposed since the invasion of Ukraine, to make, move, and access funds.
In it's report on Russians, sanctions and illicit gold published on 7 April 2022, the GI-TOC explained the potentials of illicit gold markets for evading sanctions as follows:
- Gold can be moved manually, extraneous to digital finance monitoring mechanisms, such as SWIFT messaging, which makes the flow of funds hard to track.
- Gold can be laundered relatively easily by disguising its origins or simply not declaring it, which could enable Moscow to illegally cash in foreign gold reserves on the illicit market, freeing up funds for sanctioned Russians, or even financing further military operations.
The report added that any sanctioned bad actor in the world could potentially exploit illicit gold markets for nefarious ends. GI-TOC concluded by recommending that “developing targeted responses to tackle abuse of gold markets will not only be critical to maximise the effectiveness of responses, but also to minimise unintended harms.”
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South African investigators collaborate with the US and Interpol to bust transnational fraud and money laundering gang
A gang suspected of swindling a US-based company of approximately £360,000 was taken down in raids across Johannesburg, South Africa earlier this month.
The South African Serious Commercial Crimes Unit known as the Hawks, together with US Secret Service agents dismantled the organised crime group (OCG) through a series of raids throughout Johannesburg in mid-April 2022.
The raids, conducted with support from Interpol, apprehended key members of the OCG, originally from Nigeria, suspected of defrauding a US-based business of about £360,000.
The operation, which formed part of Interpol’s Global Financial Crime Task Force (IGFCTF) initiative, culminated in seven arrests of alleged central figures in the OCG, who are additionally suspected of perpetrating online romance scams.
Interpol’s Financial Crime and Anti-Corruption Centre (IFCACC) acting director, Rory Corcoran, commended the success of the operation, noting that “the Johannesburg arrests highlight the importance of international cooperation between INTERPOL and its global law enforcement partners to target and disrupt the criminal syndicates involved in all forms of financial crimes and corruption.”
The multi-national law enforcement operation builds on the arrest of several so-called ‘Black Axe’ gang members in Cape Town in October 2021. The Black Axe gang is believed to stolen up to £4.98m from vulnerable romance scam victims. IFCACC, meanwhile, has helped Interpol member state investigators to seize over £4.23m stolen through romance scams and business email compromise rackets.
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