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  • Former Venezuelan state-owned oil company procurement officer pleads guilty

    Financial Crimes

    On October 30, a Texas businessman, who was a former procurement officer for PDVSA, pleaded guilty to conspiracy to launder the bribe payments he and his co-conspirators at PDVSA received for directing PDVSA business to a Miami-based supplier. The scheme involved false invoices, false e-mail addresses, and shell companies with a Swiss bank account.

    For prior coverage of the company's actions, please see here.

    Financial Crimes Anti-Money Laundering

  • Swiss banker sentenced to 10 years in Venezuelan state-owned oil company embezzlement and bribery scheme; official pleads guilty in same scheme

    Financial Crimes

    On October 29, a former banker was sentenced to serve 10 years in prison for his role in a scheme to launder funds embezzled from a Venezuelan state-owned oil company. The banker had pleaded guilty to one count of conspiracy to commit money laundering on August 22, 2018. He admitted to using his position at the bank to attract clients from Venezuela. He helped some of those clients launder proceeds from the company's foreign-exchange embezzlement scheme using false-investment schemes and Miami real estate. The PDVSA money was originally obtained through bribery and fraud. 

    Two days later, on October 31, a former executive director of financial planning at the Venezuelan state-owned oil company pleaded guilty to charges related to his role in the same scheme. He admitted to accepting $5 million in bribes to give priority loan status to a French company and Russian bank. The former executive was paid with the proceeds of the same foreign-exchange embezzlement scheme. He admitted that he ultimately received $12 million in bribes for his participation in the embezzlement scheme and laundered that money with a co-defendant through a false-investment scheme. He is expected to be sentenced on January 9, 2019.

    Financial Crimes Bribery Anti-Money Laundering

  • CEO of Haitian development and reconstruction company charged in bribery scheme

    Financial Crimes

    On October 30, the DOJ charged a dual U.S.-Haitian citizen with conspiracy to violate the FCPA, commit money laundering, and violate the Travel Act, as well as substantive Travel Act violations. The individual is a licensed attorney and the CEO of a Haitian development and reconstruction company. The indictment is part of an ongoing case against a retired U.S. Army colonel who was indicted in 2017 related to an alleged plan to solicit bribes from potential investors for infrastructure projects in Haiti. (For prior coverage of the charges against the colonel, please see here.) According to the indictment, at a meeting in 2015, the citizen and retired colonel met with undercover FBI agents posing as potential investors in the development project, and allegedly asked the agents to invest $84 million in the project. The colonel told them that 5 percent of that total would be paid to Haitian officials to secure approval for the project. The colonel allegedly planned to disguise the funds through a non-profit he controlled. The FBI then wired money to the non-profit.

    Financial Crimes Bribery FCPA Anti-Money Laundering Travel Act

  • FinCEN updates list of FATF-identified jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On October 31, the Financial Crimes Enforcement Network (FinCEN) issued an advisory reminding financial institutions that, on October 19, the Financial Action Task Force (FATF) updated two documents that list jurisdictions identified as having “strategic deficiencies” in their anti-money laundering and combatting the financing of terrorism (AML/CFT) regimes. (See previous InfoBytes coverage here.) The first document, the FATF Public Statement, identifies two jurisdictions, the Democratic People’s Republic of Korea and Iran, that are subject to countermeasures and/or enhanced due diligence (EDD) due to their strategic AML/CFT deficiencies. The second document, Improving Global AML/CFT Compliance: On-going Process - 19 October 2018, identifies jurisdictions with strategic AML/CFT deficiencies that have developed an action plan with the FATF to address those deficiencies: the Bahamas, Botswana, Ethiopia, Ghana, Pakistan, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, and Yemen. Notably, the Bahamas, Botswana and Ghana have been added to the list due to the lack of effective implementation of their AML/CFT frameworks. FinCEN urges financial institutions to consider both the FATF Public Statement and the Improving Global AML/CFT Compliance: On-going Process documents when reviewing due diligence obligations and risk-based policies, procedures, and practices.

    Financial Crimes FinCEN Anti-Money Laundering Combating the Financing of Terrorism FATF

  • FINRA fines broker-dealer firm for AML program deficiencies

    Financial Crimes

    On October 29, the Financial Industry Regulatory Authority (FINRA) entered into a Letter of Acceptance, Waiver, and Consent (AWC), fining a broker-dealer $2.75 million for identified deficiencies in its anti-money laundering (AML) program. According to FINRA, design flaws in the firm’s AML program allegedly resulted in the firm’s failure to properly investigate (i) certain third-party attempts to gain unauthorized access to its electronic systems, and (ii) other potential illegal activity, which should have led to the filing of Suspicious Activity Reports (SARs). FINRA notes that this failure primarily stemmed from the firm's use of an inaccurate “fraud case chart,” which provided guidance to employees about investigating and reporting requirements related to suspicious activity where third parties use “electronic means to attempt to compromise a customer's email or brokerage account.” Consequently, FINRA alleges that the firm failed to file more than 400 SARs and did not investigate certain cyber-related events. Among other things, FINRA also asserts that the firm failed to file or amend forms U4 or U5, which are used to report certain customer complaints, due to an overly restrictive interpretation of a requirement that complaints contain a claim for compensatory damages exceeding $5,000.

    The firm neither admitted nor denied the findings set forth in the AWC agreement, but agreed to address identified deficiencies in its programs.

    Financial Crimes FINRA Anti-Money Laundering Supervision Third-Party

  • OFAC targets Singaporean persons for assisting North Korea in evading U.S. sanctions

    Financial Crimes

    On October 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it made three additions to the Specially Designated Nationals (SDNs) List pursuant to Executive Order 13551, which empowers the United States to block the property of certain persons with respect to North Korea. OFAC said the decision was designed to reinforce the U.S.’s ongoing “commitment to safeguard the international financial system and implement existing UN Security Council [ ] resolutions.” OFAC’s additions identify one Singaporean individual and two Singapore-based entities found to have helped North Korea evade U.S. sanctions—either directly or indirectly—by allegedly engaging in money laundering, counterfeiting goods or currency, smuggling bulk cash, trafficking narcotics, or engaging in other forms of illicit economic activity involving or supporting the North Korean government or any senior official. As a result, all assets belonging to the identified individual and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

    In a related action, the DOJ unsealed a federal indictment against the Singaporean individual who was charged with fulfilling millions of dollars in commodities contracts for North Korea and defrauding several financial institutions in hiding those illicit transactions using international front companies, including entities previously identified as SDNs for supporting the North Korean regime’s illicit activities. The indictment’s charges include conspiracies to (i) violate international sanctions; (ii) commit bank fraud; (iii) commit money laundering; and (iv) defraud the U.S. The charges also include counts of bank fraud and money laundering.

    See here for previous InfoBytes coverage on North Korean sanctions.

    Financial Crimes Department of Treasury OFAC North Korea Sanctions

  • OCC announces enforcement action against bank for previously identified BSA/AML compliance deficiencies

    Financial Crimes

    On October 23, the OCC issued a consent order assessing a civil money penalty (CMP) against a national bank for deficiencies in the bank’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. The deficiencies allegedly resulted in violations of the BSA compliance program and suspicious activity reporting (SAR) rules that led to the issuance of a 2015 consent order, violations of the 2015 order, and additional violations of the SAR rule and wire transfer “travel rule.” According to the 2018 order, the bank allegedly, among other things, (i) failed to “timely achieve compliance” with the 2015 order; (ii) failed to file the required additional SARs; and (iii) initiated wire transfer transactions containing inadequate or incomplete information.

    Under the terms of the 2018 order, the bank agreed to pay a $100 million CMP. The order notes that the bank has undertaken corrective actions to remedy the identified BSA/AML-related deficiencies and enhance its BSA/AML compliance program.

    Financial Crimes OCC Bank Secrecy Act Anti-Money Laundering SARs

  • FATF updates standards to prevent misuse of virtual assets; reviews progress on jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On October 19, the Financial Action Task Force (FATF) issued a statement urging all countries to take measures to prevent virtual assets and cryptocurrencies from being used to finance crime and terrorism. FATF updated The FATF Recommendations to add new definitions for “virtual assets” and “virtual asset service providers” and to clarify how the recommendations apply to financial activities involving virtual assets and cryptocurrencies. FATF also stated that virtual asset service providers are subject to Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations, which require conducting customer due diligence, such as ongoing monitoring, record-keeping, and suspicious transaction reporting, and commented that virtual asset service providers should be licensed or registered and will be subject to compliance monitoring. However, FATF noted that its recommendations “require monitoring or supervision only for purposes of AML/CFT, and do not imply that virtual asset service providers are (or should be) subject to stability or consumer/investor protection safeguards.”

    The same day, FATF announced that several countries made “high-level political commitment[s]” to address AML/CFT strategic deficiencies through action plans developed to strengthen compliance with FATF standards. These jurisdictions are the Bahamas, Botswana, Ethiopia, Ghana, Pakistan, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, and Yemen. FATF also issued a public statement calling for continued counter-measures against the Democratic People's Republic of Korea due to significant AML/CFT deficiencies and the threats posed to the integrity of the international financial system, and enhanced due diligence measures with respect to Iran. However, FATF will continue its suspension of counter-measures due to Iran’s political commitment to address its strategic AML/CFT deficiencies.

    Financial Crimes Digital Assets FATF Anti-Money Laundering Combating the Financing of Terrorism Cryptocurrency Fintech Customer Due Diligence SARs

  • OFAC issues temporary extension of Ukraine-related General Licenses

    Financial Crimes

    On October 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13F and 15A, which extend the expiration date of previous Ukrainian-based general licenses to December 12 for wind-down transactions for certain companies that otherwise would be prohibited by Ukraine-Related Sanctions Regulations.

    GL 13F supersedes GL 13E and authorizes, among other things, activities “ordinarily incident and necessary” for (i) the divestiture of the holdings of specific blocked persons to a non-U.S. person; and (ii) the facilitation of transfers of debt, equity, or other holdings involving specified blocked persons to a non-U.S. person. GL 15A, which supersedes GL 15, relates to permissible activities with the designated company and its subsidiaries, and applies to the maintenance and wind-down of operations, contracts, and agreements that were effective prior to April 6.

    Visit here for additional InfoBytes coverage on Ukraine sanctions.

    Financial Crimes OFAC Ukraine Sanctions

  • FFIEC releases updated BSA/AML InfoBase website

    Financial Crimes

    On October 18, the Federal Financial Institutions Examination Council (FFIEC) released a newly updated Bank Secrecy Act/Anti-Money Laundering (BSA/AML) InfoBase website, which provides examiners and financial institutions access to BSA/AML examination procedures and resources, including the BSA/AML Examination Manual. According to the FFIEC, the InfoBase will “provide just-in-time training for new regulations and for other topics of specific concern to examiners within the FFIEC's member agencies.”

    Financial Crimes FFIEC Bank Secrecy Act Anti-Money Laundering Examination

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