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UK government warned that job cuts could help oligarchs launder money

Concern in the UK that a jobs-cut will encourage financial crime; a joint operation busts money laundering operation in Hungary; and Taiwan halts credit cards for cryptocurrency trades.

Napier AI
July 29, 2022

This week, campaigners raised concerns that the British government’s plan to cut civil service jobs will encourage oligarchs and kleptocrats to launder funds through the UK financial system; Hungarian authorities teamed up with Europol to smash an organised crime group engaged in fraud and money laundering; and Taiwanese financial regulators halted the use of credit cards for cryptocurrency trades as part of their tightened AML regime.

Find out more on these stories below.

Campaigners warn UK government that cutting AML enforcement agency jobs will enable oligarchs, kleptocrats, and criminals

Campaigners from at least two non-governmental organisations have voiced concerns that the British government’s plan to cut over 90,000 jobs could adversely impact the frontline agencies fighting economic crime, in turn encouraging the abuse of the UK financial system by bad actors worldwide. The comments echoed the motion tabled in the UK parliament on 16 May 2022.

The UK government’s intention to cut 91,000 civil service jobs by 2025 was first alluded to in the 2021 Autumn budget and spending review.  It claimed that the measure would “mean a more productive and agile civil service, taking advantage of new ways of working to continue to reduce inefficiencies and deliver better outcomes for the public.”

Campaigners objected to the move, claiming that slashing the staff in agencies such as the National Crime Agency (NCA) and the Serious Fraud Office (SFO) by the recommended 20 to 40% would exacerbate the UK’s £100bn per year economic crime dilemma.

Quoted in City AM, Spotlight on Corruption’s Dr Susan Hawley said that “even limited cuts would lead to a sharp drop in capacity at key economic crime fighting agencies”, while Transparency International’s Rachel Davies-Teka added that “it’s patently clear these agencies need more funding, not less…You can’t counter Putin and his cronies on a shoestring.”

Read more on this story at City AM.

Hungarian anti-economic crime unit and Europol bust business email compromise gang

Nearly one hundred suspected members of an organised crime group who specialise in business email fraud were arrested in a joint operation by Budapest Metropolitan Police and Europol in Hungary in late 2021, it has been announced.

The Anti-Economic Crime Department of the Budapest Metropolitan Police Headquarters of Hungary, together with Europol’s European Financial and Economic Crime Centre arrested the gang members in November 2021 as part of two the operations, code-named ‘Wine Cellar’ and ‘Theatre’ but delayed announcing the arrests for security reasons.

The two agencies allege that the gang defrauded 94 organisations - mostly owned at state or municipality level - of as much as EUR2.8m. Europol stated that the gang then “used a sophisticated money laundering infrastructure to hamper law enforcement’s ability to trace the illegal gains.”

Describing the methods used by the gang, Europol said they would impersonate a service company to send communications to their victims requesting invoice payments be sent to a new bank account.

“Once the payments were made to the bank accounts controlled by the criminals, the funds would be moved around to conceal their illegal origin.”

The Budapest Metropolitan Police unit had been investigating the perpetrators of the scheme since 2020 with support from Europol. The late-2021 action days saw Europol deploy anti-money laundering experts and financial analysts to assist in the forensic investigations of electronic devices seized from the gang members.

The transnational law enforcement operation followed on a similar bust in August 2021, when Europol co-ordinated Irish, Dutch, and Romanian authorities in an action which netted 23 arrests of crooks who had defrauded businesses in at least 20 countries of EUR1m. Commenting on the 2022 operation, Europol noted that it “supports the 27 EU Member States in their fight against terrorism, cybercrime, and other serious and organised crime forms.”

Read more on this story at Infosecurity Magazine.

Taiwanese financial watchdog bans credit card payments for cryptocurrency purchases in AML regime overhaul

Taiwan’s financial regulatory agency, the Financial Supervisory Commission, (FSC) has banned the use of credit cards by traders and consumers seeking to make purchases in cryptocurrencies.

According to UK Investing, in a letter issued to the banking industry association by the FSC, banks have been directed ‘to not grant the “merchant status” to virtual asset providers serving credit card holders’.

It was reported elsewhere that the FSC had requested role-players in the credit card industry to desist from “bringing on crypto platforms as merchants.” The ban extends to the use of credit cards for online trading in stocks, futures, and options, and gambling.

The most recent mutual evaluation report on Taiwan’s AML/CFT regime was published by Financial Action Task Force in 2019, and found that the island state was “compliant for 10 and largely compliant for 26 of the FATF 40 Recommendations.”

The FSC granted the concerned businesses three months to comply with the new requirements.

Read more on this story at UK Investing.

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Photo by Massimiliano Morosinotto on Unsplash

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