Technology and the future of serious and organized crime
Serious and organized crime affects more UK citizens, more often, than any other national security threat. This is the latest from the National Crime Agency (NCA) in their report launched this week: National Strategic Assessment of Serious and Organized Crime 2018. The report, which assesses how organized crime operates in the UK states that organized crime is growing not only in size but also in complexity, driven both by technological advancement and ongoing international conflicts.
Diving into the section on money laundering, you can find out more on prominent money laundering methodologies used today. One common method involves groups amassing a bulk load of funds from smaller transactions which are then moved abroad using retail banks or money transmitters to be laundered in other jurisdictions. The report also remarks that despite Unexplained Wealth Orders, the UK remains a popular destination for corrupt PEPs from Russia, Pakistan and Nigeria to launder money using the super-prime property market and accounts registered to their relatives. The use of cryptocurrencies to launder money is described as “small but growing” and so too, is the use of Alternative Banking Platforms (ABPs). The role of technology in the UK’s future criminal landscape is perhaps, the greatest takeaway from the report. It is viewed as both driving the problem and the solution, hopefully the latter will win out.
Peru’s two largest banks in 20-year money laundering scandal
Revelations about the scale of financial crime in Peru have recently been making waves. In March, the President resigned on the eve of his impeachment vote for corruption charges connected to the Brazilian Odebretch scandal. Since then an investigation by the newspaper OjoPúblico has revealed how over $2.2bn was laundered by the country’s two biggest banks, BBVA Continental and the Banco de Crédito del Perú (BCP) for drug traffickers and other bad actors since 1998.
The reported violations of anti-money laundering norms are eye watering. From allowing drug kingpins under investigation by the US Treasury to open accounts, to employing known members of organized crime gangs to work in high-risk branches, this investigation is an important example of just how weak AML controls can be. The banks in question were even linked to Peru’s largest ever attempted shipment of drugs which involved 4.3 tonnes of liquid cocaine bound for Spain hidden within 8000 tins of artichokes. While this failure may conjure up a comical image, it is a stark reminder that weak money laundering controls are still entrenched in Latin American banks and that these failings continue to serve as a weak link into the global financial system.
Better together – Singapore’s ACIP releases its first work
On Monday the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP), a public-private partnership based in Singapore, released two best practice documents to help financial institutions comply with AML standards. The two papers are the product of the first year of the ACIP, which was established to counter the AML/CTF threats facing Singapore, brought to light by scandals such as 1MDB. The papers focus on countering two specific problems: trade-based money laundering and the risks emanating from the misuse of legal persons. They offer a range of advice on how to bolster compliance functions and processes and are essential reading for anyone doing business in the Asian region.
This first tranche of work by the ACIP has been well received by the financial sector and indicates that the group shows promise for the future. One particularly encouraging result from this work has been the repeated statements from those involved that by working together on this research, the private and public sectors have managed to break down barriers and build trust in a way not previously possible. Supporting the argument that for the fight against financial crime to be successful, all sides need to communicate and collaborate effectively.