Europol levels up its fincrime approach, corruption scandals are emerging in California and the chips are down for a casino in Singapore.
We share our financial regulatory highlights from the week of 8 June 2020.
Europol Launches New Body
Europol has launched its new European Financial and Economic Crime Centre (EFECC), aimed at providing operational support for EU bodies and Member States against financial crime.
The EFECC will also help with financial investigations, the details of how that support will be administered has not yet been supplied, but just by providing a central hub of information it could be a powerful tool for individual FIUs. It would also help with seizing 98.9% of criminal profits that are missed by investigations according to previous Europol reports.
Emergency funding due to the COVID-19 pandemic highlighted how easily and frequently public funds are targeted by financial criminals. It’s hoped that the EFECC will work to catch criminals who access these types of funds in the future by helping investigators follow the money trail and restore the money to where it should be.
The new body has been launched to a fanfare of support from various EU bodies and Tim Adams, President and CEO of the Institute of International Finance (IIF) gave his support and urged for policymakers to continue their focus in this vein, he commented: “The creation of the European Economic and Financial Crime Centre (EFECC) at Europol is a critical step to counter the threats posed by illicit flows through the international financial system. The IIF, and the industry broadly, has called for an intelligence-led approach to financial crime, and meaningful initiatives like EFECC are essential to improving outcomes.”
So there are high expectations for the impact that the EFECC will have on financial crime in Europe. It’ll be interesting to see how it works to restore stolen funds and strengthen the industry.
Claims of Corruption in California
An investigation into the former director of San Francisco’s Department of Public Works, Mohammed Nuru, has widened. US federal officials confirmed on Monday that charges are being brought against three more people — a city official and two city contractors.
The scandal first broke in January, when Nuru was charged, along with restaurateur Nick Bovis, with honest services wire fraud. He and Bovis had allegedly conspired to bribe a San Francisco Airport commissioner; they would receive a lease to run a restaurant in the airport, and in return, the commissioner would receive money and travel perks.
Prosecutors alleged then that Nuru had participated in several other schemes. Their continuing investigation into those has led to these latest charges.
Sandra Zuniga, the director of the city’s Fix-It Team and Nuru’s girlfriend, allegedly knew about his schemes and helped launder the funds, including by making deposits into her personal bank accounts — over $135,000 in cash and $8,000 in checks over a period of six years. Prosecutors say she then made several transactions on behalf of Nuru, including paying the mortgage on Nuru’s vacation home.
The second of the three charged — Balmore Hernandez, CEO of the construction engineering company, AzulWorks — stands accused of supplying Nuru with $250,000 worth of labor and materials for the construction on his personal properties in exchange for help winning public contracts, including one for which he received over $1.9 million.
Finally, Florence Kong, who owns a construction company and a construction debris recycling company, is charged with lying to the investigators looking into Nuru’s activities. According to prosecutors, Kong showered Nuru with gifts, including cash, a luxury watch and meals out, and installed a gate for Nuru’s vacation home — all to help her secure city contracts. While Kong denied this, recorded calls allegedly show otherwise.
The scope of this probe may widen still, and it’s a reminder that corruption is just as much a local issue as it is an international one. Indeed, while much attention is paid to those public officials who abuse their power on a state or federal level, it’s equally important to apply a heightened level of scrutiny on local PEPs.
Does the House Always Win?
Singapore’s Marina Bay Sands Casino is being probed by the US Department of Justice for money laundering violations regarding its top gamblers.
Investigators are compelling the former compliance chief of the casino to produce records related to these violations including through gambling junkets and third-party lending via casino credit according to a subpoena seen by Bloomberg News.
The casino is also facing an investigation from Singapore’s Casino Regulatory Authority. Marina Bay Sands offers money-transfer services to its customers and according to the regulator the casino needs to ensure that these transfers “remain free from criminal influence or exploitation.”
The investigation comes following allegations from a gambler last year, Wang Xi, who sued Marina Bay Sands hoping to recover $9.1 million that he said was sent to other casino customers in 2015 without his approval.
Marina Bay has some prior form for this behavior, an internal investigation by the casino revealed that some of its staff had failed to follow appropriate transfer procedures. Some employees had filled in payment details on pre-signed or photocopied authorization forms. It’s a common method when carrying out fraud in a money-handling business, although not necessarily the case here.
The casino’s investigation also uncovered several cases in which original documents were destroyed. It’s not a positive indicator when such things happen, especially in a company where there have been six different compliance heads within the last decade.
Singapore is not considered to have a particularly effective compliance regime around its casinos. The FATF Mutual Evaluation Report (MER) in 2019 rated Singapore’s casino compliance as only partially compliant, with customer due diligence checks being inadequate and that AML/CFT requirements were not necessarily enforced in law.
The MER has spurred Singapore to tighten its casino regulation so, for now, it’s unclear just how these investigations may end for the Marina Bay Casino and whether or not Singapore will crackdown on the issue.