Crypto takes the limelight as a scandal reaches new heights, superyachts are just one extravagant purchase for the super-rich and shell companies are losing ground in the USA.

We share our financial crime highlights from the week of 21 October 2019.

Crypto Capital Crime

The president of Crypto Capital, Ivan Manuel Molina Lee, has been arrested by Polish authorities on suspicions of money laundering and being involved in an international drug cartel.

Polish authorities asserted that Molina Lee was laundering money for Columbian drug cartels using a cryptocurrency exchange, but neglected to mention which exchange was used.

Polish prosecutors released a statement saying, in part: “This the largest effort by Polish prosecutors to secure losses associated with illegal activity…The effort was a combined effort between Polish and international special forces.”

Crypto Capital is a payment processor based in Panama with links to Bitfinex and other significant cryptocurrency exchanges. The payment processor has at over $850 million worth of funds from Bitfinex. On October 21, iFinex, Bitifinex’s parent company, filed a discovery application to regain access to the money.

The application was made due to the funds supposedly being located in accounts in Poland, Portugal, the UK and the USA. This information came to light after Bitfinex CFO, Giancarlo Devasini was given documents by Ravid Yosef, a man associated with Crypto Capital, detailing the location of the funds across multiple banks.

This also seems to be the latest in the Tether/Bitfinex saga that started earlier this year in April. Bitfinex was accused of using funds from stablecoin operator, Tether, to cover an $850 million shortfall.

Superyachts of the Rich and Corrupt

400 money laundering and corruption cases have been analyzed by Transparency International – revealing just what ill-gotten money is spent on.

The list includes 421 luxury homes – valued at £5 billion in total, seven private jets, three superyachts, 327 different high-end private school fees, a box at Chelsea FC and at least one hovercraft. It’s not a particularly shocking list, except for the hovercraft – that was unexpected.

Over £300 billion was laundered in the cases researched. Almost all of the suspicious cash is embezzled from public funds by corrupt officials and politicians. The analysis reveals who the companies are and the sheer volume of dirty money at play in somewhat concrete terms.

It may be 400 cases but this is still just scratching the surface of a globally corrupt flow of money that has its upper limits estimated at $2 trillion.

Several laundromats are likely to be involved as only £300,000 of funds were linked to the infamous Troika Laundromat scheme that aimed to move £3.5 billion out of Russia. That’s just a fraction of the money at play in this particular analysis.

As the numbers reach staggering amounts — the UK’s financial system is sure to feel the pressure, Duncan Hames, Director of Policy at Transparency International commented: “We have shed light on who these companies are and how they have become entangled in some of the biggest corruption scandals of our time.” Scandals that have been facilitated by the UK’s regulatory landscape.

Opening Shells in the US

The US House of Representatives passed a bill Tuesday that would disclose the owners of shell companies, helping to curb money laundering and other financial crimes.

Titled the Corporate Transparency Act of 2019, the bill would require US corporations and limited liability companies to report the names of their owners and influential stakeholders. Companies would also need to file annually with and report changes in ownership to FinCEN, the US Treasury Department bureau responsible for fighting financial crime.

However, there are exceptions; companies with a physical office in the US, over 20 full-time employees and over $5 million in gross receipts would be exempt, as the possibility that these companies are anonymous shell companies is lower.

The onus to report this information would shift to business owners, lessening the burden on financial institutions, and allow FinCEN to identify and take action against companies that opt not to disclose ownership data — a departure from current practice.

Approved amendments would potentially offer financial institutions additional relief. These include a review of the Bank Secrecy Act’s overall value and several measures to facilitate information sharing, both between the government and financial institutions and from one financial institution to foreign branches, subsidiaries or other financial institutions. It also paves the way for future revisions to streamline the currency transaction and suspicious activity reporting process.

Lawmakers approved the measure by a nearly party-line vote of 249-173, with 25 Republicans joining most of the Democratic Party in voting for it — only five Democrats voted against. Opponents cite insufficient privacy protections and the additional regulatory burden it would place on small companies. It’s a concern President Trump shares, even though he expressed general support for the bill.

Its fate in the Senate is uncertain. But similar legislation, the aptly named ILLICIT CASH Act, was introduced in June and is under consideration, indicating an increased willingness to tackle this issue.

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