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$2.9 billion in fines and more on the FinCEN files
Antonis Melis
October 23, 2020

Goldman Sachs is set to pay a record penalty for 1MDB ties, and a change in focus as compliance officers begin to question government and regulators as to why there wasn’t any punishment for the person responsible for the FinCEN leak.

Moving away from America, the EU will be taking legal action against Cyprus and Malta for their golden passport programmes that offer a near effortless entry for criminals to take advantage of systems within the EU.

Read more on this week’s news below.

Goldman Sachs fined record $2.9 billion to resolve 1MDB bribery scheme

One of Wall Street’s oldest and most prestigious banks earned $600 million in fees for helping 1Malaysia Development Berhad (1MDB) raise $6.5 billion to support energy development in Malaysia. Much of the money raised was eventually looted.

The bank, Goldman Sachs will now pay $2.9 billion in penalties and fees to settle federal charges over their involvement in the 1MDB bribery scheme.

The Justice Department alleged that Goldman Sachs ignored signs of fraud among some of its senior bankers in a scheme that ultimately led to a Malaysian government-backed economic development corporation being defrauded out of $2.7 billion

Should these penalties go beyond institutions and fall onto the corrupt bankers that were involved?

EU takes legal action against 'golden passport' schemes in Cyprus, Malta

The “golden passport” schemes in Cyprus and Malta allow foreigners to buy citizenship in exchange for investments of around 2 million euros and 1 million euros respectively. These passports grant nationality – and therefore EU citizenship – without requiring a genuine link with the country. These passport holders are not obliged to reside there.

This scheme has led the European Union to launch legal action against the two countries involved as these passports open holes in Europe’s fight against money laundering and financial crime. The European Commission also sent a letter to Bulgaria raising concerns about its passport-for-sale scheme.

Commissioner Vera Jourova said, “There cannot be a weak link in EU efforts to curb corruption and money laundering.”

The EU cannot ban these scams but can force countries to require “effective residence” which would mean the owners of the passports must be physically present for a regular or extended period in the territory or state concerned.

Despite potential changes to the systems, will these passports continue to offer an easy way to facilitate financial crime and money laundering?  

‘FinCEN Files’ informant harmed US anti-laundering regime and should be prosecuted, say bankers

Bank compliance officers would like to know who leaked the more than 2,000 highly confidential bank filings, known as suspicious activity reports, that led to a flurry of so-called "FinCEN Files" news articles.

Compliance professionals said that the fight against money laundering or terrorism financing depends on the submission of suspicious activity reports (SARs), and this system only works if financial institutions are confident that the documents they file with the FinCEN are secure.

The big issue is that SARs are submitted with the confidence that the information remains in a closed system. If that information were to get out it could bring unwarranted danger to compliance officers and potentially impact the reputation of financial institutions that were carrying out their regulatory duty.

Napier shared a similar sentiment on the FinCEN leaks in a webinar with RAW Compliance. See the summary here

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