The fight against financial crime raged on worldwide this past week, as the Japanese government were reported to be planning stiffer rules to stop criminals laundering money using cryptocurrencies; South African tax authorities took aim at tax evaders who plunder the profits of wildlife crime; and the U.S. Department of Justice charged three criminals over a multi-million-dollar scam sandwiched between the ledgers of a New Jersey deli.
Find out more on these stories below.
Japanese government plans to tighten remittance rules for crypto exchanges in effort to counter money laundering
The Japanese government’s plans to stiffen cryptocurrency exchange remittance rules, a measure aimed at countering criminals using the digital platforms to launder money, was reported by a national newspaper, the Nikkei, on 27 September 2022.
The planned new rules would require crypto exchanges to share client data, including names and addresses, when cryptocurrency is transferred from one platform to another.
The move is intended to enhance the tracking abilities of Japanese authorities and to help them apprehend the illicit financial flows of criminals currently abusing the relative anonymity of crypto exchange transfer rule.
It would also help bring Japan in line with the global financial crime watchdog, the Financial Action Task Force’s (FATF) 16th Recommendation, the so-called ‘travel rule’, which aims to counter crypto-based financial crime and align digital currency transfer reporting requirements with those expected of traditional financial institutions.
The new rules will be included in Japan’s Act on Prevention of Transfer of Criminal Proceeds. A bill proposing the amendments are scheduled to be debated in the country’s parliament in October 2022, with implementation looming as soon as May 2023.
Digital currency exchange operators who do not honour these new obligations when they arrive are potentially set to face criminal penalties and other sanctions.
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South African Revenue Service deploys specialised units against tax evaders profiting from wildlife trafficking
The South African Revenue Service (SARS), the government tax and customs agency, is engaging specialised internal units to help hunt down those who are not compliant, specifically those benefitting from tax evasion and/or the proceeds generated by wildlife trafficking and its associated financial crimes. The units will focus on auditing suspected wildlife crime-linked tax evaders and other criminals.
The news followed SARS’ announcement on 22 September 2022, World Rhino Day, that a multi-agency law enforcement operation had netted several arrests, which resulted in the seizure of assets and cash. Subsequent tax investigations resulted in criminal charges, legal recovery of goods, and civil actions being taken against the accused, whose ranks included rhino poachers.
SARS Commissioner Edward Kieswetter lamented not only the threat that wildlife trafficking presents to endangered species like the rhinoceros and the pangolin, but also the negative effect that it has on South Africa’s tourism industry, which employs 1.1 million people and generates R268m (4.3%) of South Africa’s GDP annually.
SARS concluded its statement by noting that “on the rhino day, it is encouraging that SARS acting with other law enforcement is working hard to preserve this national heritage while dealing with crimes of tax evasion and wildlife trafficking and money laundering.”
US authorities charge three with fraud and money laundering in $100m scheme set in New Jersey deli
Prosecutors alleged that the trio orchestrated an international market manipulation scheme which involved inflating the value of a company linked to a small-town Paulsboro delicatessen to the tune of approximately $1m.
All three of the accused- James Patten, Peter Coker Sr, and his son Peter Coker Jr (who is still at large)- were charged with having committed securities fraud and with conspiring to commit both securities fraud and manipulate securities prices. Patten was charged further with additional counts of securities manipulation, wire fraud, and money laundering.
Prosecutors alleged that between 2014 and September 2022, the trio engaged in ‘match and wash trades’, whereby the perceived value of shares is illegally and deliberately misrepresented, effectively benefitting both those buying and selling, through two companies run by Hometown International: the Deli and E-Waste Corporation. Hometown’s value was bumped up by 939%, while E-Waste’s increased by 19,900%. The deli’s paltry turnover, however, totalled less than $40,000 per year.
As well as the prison sentences and significant financial penalties the accused face if convicted, the US Securities and Exchange Commission (SEC) has filed a separate civil complaint against the trio, which seeks to enforce further financial penalties and future restrictions on their trading activities.
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