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FATF finds fault with Germany’s anti-financial crime regime

FATF found Germany’s AML regime lacking; Malaysia jailed an ex-Prime Minister for financial crimes; and a UK money laundering duo were sentenced.

Napier AI
August 26, 2022

This week, anti-financial crime actors worldwide didn’t need to speak the same language to reach their shared goals, as Germany came under the microscope of global financial watchdog FATF, who found the economic powerhouse’s anti-money laundering framework wanting; Malaysian authorities jailed an ex-Prime Minister for financial crimes linked to an insolvent state-owned company; and a money laundering duo, whose targeted victims included a care home, were sentenced after an investigation by London police.

Find out more on these stories below.

FATF mutual evaluation report on Germany’s AML systems indicates flaws in its prosecution services

The Financial Action Task Force (FATF) released its 2022 Anti-money laundering and Counter-Terrorist Financing measures: Germany mutual evaluation report (AML/CFT MER 2022) on 25 August 2022.

While it acknowledged Germany’s progress over the last five years implementing reforms to its AML/CFT regime, FATF cautioned that the complexity and sheer size of the German economy - the fourth largest in the world- made it particularly vulnerable to channelling illicit financial flows, that could significantly impact the global economy, and that German authorities “need to do more to proactively and systematically investigate and prosecute ML activity in line with Germany’s risk profile.”

Elaborating on the challenges faced by the German AML/CFT framework, FATF highlighted the following as financial crime risk factors which German authorities need to proactively address:

  • Insufficient co-ordination between the more than 300 regulatory entities across the country’s 16 states
  • High cash usage
  • The prevalence of Money or Value Transfer Services (MVTSs)

Elsewhere it was reported that Germany is considering the creation of a new financial crime body which will draw in the currently disjointed domestic regulatory entities to streamline and enhance the country’s AML/CFT systems. A government official commenting on Germany’s challenges in combatting money laundering added that “we need to do better in many areas.”

Read more on this story at Reuters, and read the Germany AML/CFT MER 2022 executive summary here.

Malaysian ex-PM loses a final appeal, now faces 12 years for corruption and money laundering

Ex-prime minister of Malaysia, Najib Razak, lost his final appeal to the country’s highest court earlier this week against the 12-year sentence he received for his role in the 1Malasia Development Berhard (1MDB) scandal, which saw as much as $4.5b systematically looted from the country’s coffers in 2009, when he was both PM and chairman of 1MDB’s board.

It was alleged in 2020 that “some $731m appeared in the personal bank account of Najib just ahead of the 2013 election and is alleged to have been used to pay off politicians, his credit card bill and fund the lavish shopping habits of his wife.”

Other charges included that Malaysian businessman Jho Low, appointed into a consultancy role at 1MDB, siphoned off billions of dollars to buy properties in Beverly Hills and Manhattan, finance multiple high value luxury items such as a $260m yacht and a $35m private jet, and accrue gambling debts in Las Vegas of around $85m. A lavish, US celebrity-studded birthday party held by Low even included Britney Spears leaping out of a cake.

Additionally Najib’s stepson, Riza Aziz, may have unduly benefitted from 1MDB via millions invested in a production company he ran, which was involved in financing the 2013 film ‘The Wolf of Wall Street.’

Najib is the first Malaysian ex-PM to be imprisoned, though it was reported elsewhere that he might yet receive a royal pardon for his crimes.

Read more on this story at Al Jazeera.

Money laundering duo sentenced over scheme targeting a care home

A money laundering pair have been sentenced for their scheme linked to millions of pounds and over 20 victims, including a care home.

Naeem Khalid was sentenced to 46 months and Abiya Hussain was given an 18-month community order for their wrongdoings.

The pair pleaded guilty to a string of money laundering offences, which involved several million pounds and targeted in excess of 20 victims over several years. Among their victims were various manufacturing companies, two law firms, and an old age home.

The City of London Police’s Serious Organised Crime Team (SOCT) started investigating the duo in 2017, following a tip-off from a London bank after Abiya Hussein requested to exchange £800 worth of damaged £50 notes.

The pair admitted to laundering £283,000, while the SOCT investigation traced £548,000 lost by a manufacturing firm in a September 2015 ‘phone scam, and a further £742,000 similarly fleeced from another company during the same period. The pair now face confiscation proceedings to retrieve the illicit funds.

SOCT’s Detective Constable Ian Burdett commented that “this result shows that criminals who target innocent members of the public will face justice for their actions.”

Read more on this story at City AM.

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Photo by Maheshkumar Painam on Unsplash

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