The Luanda leaks reveal more questionable money transfers from Angola, Brisbane students are defrauding the elderly and American healthcare clinics have been subjected to money laundering.
We share our financial regulatory highlights from the week of 31 August 2020.
Luanda Leaks Reveal More Angolan Activity
The Luanda Leaks have resulted in some high profile revelations such as the alleged embezzlement and money laundering of $2 billion of Angolan public money by Isabel dos Santos.
Further information uncovered in the leaks has resulted in Swiss authorities freezing approximately $900 million in seven accounts belonging to Angolan business executive, Carlos Manuel de São Vicente and members of his family. However, only one of the accounts remains frozen now the case has become public.
The executive has maintained his innocence regarding the money laundering charges, communicating through a lawyer that he has always acted in accordance with the law.
São Vicente is the former chairman and CEO of AAA Seguros. 10% of the company was owned by Sonangol, the state-run company which held a monopoly on Angola’s oil industry during President José Eduardo dos Santos’ rule, beginning in 2001.
$900 million was transferred from the company to São Vicente’s personal accounts between 2012 and 2019 according to allegations made by the Swiss authorities in 2018. Authorities were alerted to the suspicious money movement due to a transfer of $213 million.
“It was […] unusual for the CEO and chairman of the board of directors, even though he enjoyed, as in the present case, a power of individual representation of the company, to have in his favor funds belonging to a company, even more so, to an insurance company regulated by the State,” prosecutors wrote.
Criminal proceedings in Switzerland often move without much media noise due to their secretive nature and the story has only recently come to light.
São Vicente argues that the $213 million which triggered the freezing of accounts and criminal investigation was partial repayment of a loan from the company to him. However, the contracts used to prove his position were created after the transfer and requests from the bank for more information.
Angola has not responded to a Swiss request for legal assistance, according to court documents.
International Student Scammers
Elder abuse is a common aspect of money laundering scams across the globe. And that has recently been highlighted in Australia; hundreds of older Australians have fallen victim to a multi-million dollar phone scam that was run, in part, by two international students in Brisbane.
Detective Senior Constable Brett Weder said the majority of victims had been “vulnerable, elderly people” typically over 60, with the oldest victim being 95 years old.
The two students managed to illicitly obtain A$3 million using cold calling technology.
Elder abuse is a growing concern in Australia with 6 in 10 Australians concerned that it will affect someone they know and 87% of Australians wanting the government to do more to tackle the issue.
11 people have been charged across 25 offenses since Australia’s Financial and Cyber Crime Command, specifically its Criminal Assets Disruption Team, began investigating the use of cold calling in May 2019. The investigation, aka Operation Romeo Taper, has seen significant work done to uncover an international syndicate scamming money from over 150 victims and distributing it into 1000s of money muled Queensland-based accounts before moving the money offshore.
The police are yet to determine the exact role that the international students played in the scam and the students are due to appear in court on 28 September 2020.
The scam consisted of cold calling victims and convincing them that the callers are a financial or telecommunications company, tricking the victims to download a piece of software granting the callers access to their computers or device and having the victim access their bank account on the compromised device. As a result the scammers obtained the victims bank details and login details and drained the account.
Elder abuse is expected to increase across Australia as the nation’s ageing population continues to grow. AUSTRAC has suggested that putting protections in place for this issue should be a concern for approved-deposit taking institutions such as mutual banks.
It’s a start in tackling the problem but as the population gets older it creates a wider market of potential victims for bad actors to take advantage of. Suspicious matter reports (SMRs) are increasingly making reference to the abuse of money held in accounts of elderly people and further protections are needed. Transaction monitoring for the elderly is going to pose a different set of requirements and lower thresholds for suspicious behaviour as more elderly individuals are exposed to those who’d take advantage of them.
Laundering Health Care Kickbacks in NYC
The former manager of several New York City medical clinics, Aleksandr Pikus, will spend 13 years behind bars for his role in a multi-year money laundering scheme, US officials announced on 31 August 2020. In addition, Pikus must pay a restitution fine of $39.4 million and forfeit just over $2.6 million.
For nearly a decade, Pikus managed a series of medical clinics within the New York City boroughs of Brooklyn and Queens that functioned as fronts for an elaborate scheme to steal millions of dollars from the government-funded Medicare and Medicaid programs. According to the Department of Justice, the 45-year-old “kingpin” of the scheme colluded with several medical professionals, referring Medicare and Medicaid beneficiaries to them in exchange for illegal kickbacks. Funds received through the claims submitted to those programs — amounting to around $96 million — were then cashed at local check-cashing businesses and laundered through shell companies Pikus and others controlled.
That money, which was never reported to the IRS, was used to line Pikus’s own pockets and the pockets of his co-conspirators, as well as to bribe patient recruiters with kickbacks. Fake invoices further served to cover the tracks of the individuals involved — more than 25 of whom have already pleaded guilty or have been convicted for their role in the scheme.
Abuse of the Medicare and Medicaid programs has been a longstanding problem for the US government. This case is simply the latest reminder that financial institutions are the first line of defense. Therefore, having effective KYC and AML detection methods — for both customers and non-customers — as well as a solid transaction monitoring system is critical.