AMLAnti-Terrorist Financing

The US designates a new Pakistani terrorist group

By April 5, 2018 No Comments

A dangerous embrace – The US designates a new terrorist group in Pakistan

On Monday, OFAC designated Pakistan’s Milli Muslim League as a terrorist organization. It is alleged that the group, which poses as a political party, is a branch of Lashkar-e Tayyiba (LeT), the infamous Pakistani terrorist group that was responsible for the 2008 Mumbai terrorist attack. This action comes after months of increasing frustration from the US and international organizations at Pakistan’s fruitless fight against terrorism. Earlier this year FATF re-added Pakistan to its “gray list” after it failed to do enough to stop illicit finance linked to terrorism.

Both actions could damage Pakistan’s access to international finance, but it hasn’t objected too much. Recently the country has been moving away from relying on US aid and instead has been pivoting to China for economic support. This should raise concerns in the international community for two reasons. Firstly, the US has long been seen as the world’s enforcer of AML/CFT rules, if their actions no longer have clout then international rules can more easily be broken. Secondly, if China slowly becomes a new economic crime authority we risk a country with a questionable human rights record controlling access to finance. Pakistan may be behaving badly but the US must ensure its actions don’t have negative long-term effects for the global AML/CFT regime.

A bad week for criminals using cryptocurrencies

Walking up to an ATM that is spewing out cash is an extremely rare event for most people. It is less rare however, if you are a member of a hacker group using malwares to command ATMs to do so. One such group was arrested last week, after reportedly attacking over 100 financial institutions over five years making $1billion from this and other methods. They covered their tracks using prepaid cards tied to crypto-wallets to launder the money they stole. Adding further evidence to the argument that cryptocurrencies are becoming a ubiquitous tool for criminals everywhere.

Or are they? Last week also saw the dethroning of Monero as the “anonymous” cryptocurrency of choice for criminals.  A research paper followed by this shorter article in Wired explained how Monero coins can be traced due to flawed logic in how the coins are mixed. Allowing researchers and potentially law enforcement to track the origin of coins and the transaction they have been used in. This research, much like when Bitcoin was revealed as traceable, is a big step forward for those who espouse the dangers of anonymous cryptocurrencies and a big step backwards for those more interested in privacy, whether they be criminals or not.

When the snow thaws – Canada tries to get rid of money laundering

Criminals often go to countries with a clean financial crime reputation but relaxed controls to launder money without arousing suspicion. Canada is considered one such location and when money is laundered there the process is colloquially known as “snow-washing”. It wasn’t until recently that the extent of Canada’s money laundering problem was revealed. Last year, a huge scandal involving Chinese high rollers at the River Rock Casino in British Columbia caused public outrage. Since then the provinces’ lawmakers have been trying to figure out how to solve the problem.

This week, they made some progress. David Eby, the Attorney General of British Columbia received a long awaited report on AML deficiencies in the casino sector, which although not public, gives 48 clear recommendations on how to clean up the industry. Any changes to legislation or guidance are likely to go further, with Eby also targeting the luxury car and real estate sectors in his review of controls. Improvements to nationwide information sharing are also likely to be included after Eby appeared in front of a federal committee on the topic last week. Once completed, this review will likely bring in big changes and will hopefully make it considerably more difficult for criminals to “snow wash” their money.

 

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