At ACAMs in Las Vegas last week, a live survey taken by over 1000 attendees listed “resource allocation” as the greatest challenge facing the US anti-money laundering community today. This is hardly surprising as regulators call on entities to perform a greater number of checks and transaction volumes continue to rise. For large financial institutions this is a headache, for smaller institutions the demands of AML compliance can put them out of business. Cue a sigh of relief then from such firms when, last week, five US regulators signed an integrity statement on “Sharing Bank Secrecy Act Resources”.
The statement gives the support of regulators to small institutions who want to pool their BSA/AML resources and explains a few ways in which they can do so. The statement mainly concentrates on ways in which financial institutions can share personnel to conduct risk assessments, training and other compliance work. It briefly infers that banks could pool technology-based resources but doesn’t expand on what this means in practice. Some smaller institutions may find this frustrating as compliance technology can eat up a large part of a compliance team’s budget. It is important to note that the statement only applies to institutions with a community focus and who are at a “low risk” of money laundering. For such institutions, the statement could be a welcome relief.
The identity of the “foreign banker’s wife” who found herself at the center of the UK’s first Unexplained Wealth Order (UWO) trial was revealed today. Last week, Zamira Hajiyeva made headlines after she lost her appeal against the government to keep her £22 million ($29 million) property, as she couldn’t plausibly explain where the money had come from to purchase the property. UWOs have been hailed as a crucial tool in the UK’s plan to fight corruption and wider international financial crime. They were introduced via the Criminal Finances Act which was passed into law last year.
While UWOs often grab headlines for their value in fighting international and transnational crime, their use for domestic crime is sometimes overlooked by the media. Last week, the Police Service of Northern Ireland called on the government to allow the use of UWOs in Northern Ireland as they could then be used against paramilitary groups who make money extorting local communities. The prison service in England also announced last week that they will be introducing a new economic taskforce to seize the assets and accounts of crime bosses who profit while being in prison. It would appear that in the UK a consensus is growing that the best way to bring down criminals is to aim straight for their wallets.
APT38, a North Korean state-backed hacking group, have a penchant for attacking the SWIFT inter-bank messaging system. On Monday, FireEye, a well known cyber-security company, released a report into the group’s most recent activity. Two years on from the Bangladesh Bank heist they have continued to use their malwares to steal money, most recently from banks in Vietnam, Taiwan, Mexico and Chile. The report estimates that they have redirected stolen funds to the tune of $1.1 billion to the heavily sanctioned rogue nation.
The report details the typical attack lifecycle of the group but unusually it also explains how the group moves the money once it’s been stolen. The group set up bank accounts using fake names and direct transactions away from the victim bank. They then move the money from these accounts to accounts in another country often borrowing the names of government agencies or NGOs to give the transactions an air of legitimacy. In one case APT38 used multiple transactions under the name of a South Korean NGO to transfer $100 million between accounts, which eventually ended up back in North Korea. The report concludes that APT38 “is most likely an effort by the North Korean government to supplement their heavily-sanctioned economy”. As sanctions remain intact, expect to see this sanctions policy side-effect continue to fester.
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