Switzerland Clamps Down on Fincrime

May 1, 2020 4 minute read

Switzerland sees a huge increase in money laundering reports, North Korea receives renewed recognition as a cybercrime threat and healthcare meets money laundering in the US.

We share our financial regulatory highlights from the week of 27 April 2020.

Swiss AML Tip-Offs Increase by 25%

Switzerland is condemned as the “grandfather of the world’s tax havens, one of the world’s largest offshore financial centers, and one of the world’s biggest secrecy jurisdictions and tax havens,” by the Tax Justice Network.

So it’s almost surprising to see that up until November 2019 saw a 25% year-on-year increase in possible money laundering reports, according to MROS, the nations’ money laundering reporting department.

A significant amount of the cash covered in the MROS report is suspected to have involvement in various corruption and fraud offenses. Popular predicate crimes for money laundering.

The European nation is ranked third, behind the Cayman Islands and the USA, on the 2020 Financial Secrecy Index.

In the report, MROS stated the importance of working with other FIUs in the fight against financial crime, organized crime and terrorism. In 2019, MROS received a total of 844 inquiries from FIUs in 103 countries, slightly more foreign requests for information than in the previous year (795 inquiries from 104 countries).

Switzerland is showing the world how seriously it takes financial crime and that the nation’s financial system is not open to abuse by financial criminals. Hopefully, these report numbers will increase and convictions will soon start making headlines.

North Korea and Cybercrime

The FBI and FinCEN have issued stark warnings on the prevalence of DPRK-backed cybercrime.

North Korea has been increasing its cybercrime efforts lately and taking advantage of the fear caused by the global pandemic. However, the nations’ operations had been ramping up for some time already.

In March, FinCEN issued an advisory warning that FATF’s alterations to its AML/CFT control-deficient countries would impact businesses’ regulatory obligations in the US. The advisory drew particular attention to obligations regarding North Korea and Iran.

Iran and North Korea are now subject to a call for action due to a FATF document that recommends specific countermeasures for these two nations, stating: “FATF further calls on its members and urges all jurisdictions to apply effective counter-measures, and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions, to protect their financial sectors from money laundering, financing of terrorism and WMD proliferation financing (ML/TF/PF) risks emanating from the DPRK.”

The FBI more recently issued specific guidance on the cyber threat posed by North Korea stating that: “The DPRK’s malicious cyber activities threaten the United States and the broader international community and, in particular, pose a significant threat to the integrity and stability of the international financial system.”

North Korea is described as having the capability to disrupt critical infrastructure for the US. Given the global pandemic that could be especially damaging in the current environment and the hostile nation is recognized as targeting the financial sector in particular. It’s one of the methods that the DPRK has used to continue raising funds in spite of sanctions from the UN Security Council.

Money laundering is a key tool for North Korea to transfer funds raised through cybercrime. During this period of heightened concern, firms must remain vigilant to indications of money raised by illicit activities to prevent themselves from unwittingly breaking sanctions.

Guilty Plea in US Pill Mill Scheme

An ex-doctor’s former office manager and romantic partner pleaded guilty to conspiracy charges for her role in a scheme to illegally distribute opioids, the US Attorney’s Office of the Western District of Pennsylvania announced on Friday, April 24.

Prosecutors say Marcia Ramsier Arthurs assisted formerly licensed physician Paul Michael Hoover in setting up a pill mill scheme out of Coraopolis, Pennsylvania, a small suburb of Pittsburgh. From March 2015 to June 2018, the two California residents made the trip to a small rented office in Pennsylvania every three months, where they wrote prescriptions for oxycodone and other opiates in exchange for cash. Throughout the year, they submitted false claims to Medicare and Medicaid for reimbursement as well as received payments and mailed prescriptions from California to Pittsburgh-area residents.

The couple hid, then laundered the proceeds from the scheme using safes, safety deposit boxes, bank accounts registered to shell companies and a real estate purchase in Nevada.

Finally, from 2012 to 2018, Arthurs and Hoover conspired to defraud the Social Security Administration. Hoovers claimed a disability prevented him from working, and Arthurs deliberately misrepresented her living and financial situation to receive benefits.

Arthurs, whose sentencing is scheduled for September, faces up to 20 years in prison and a fine of $1 million. Her co-conspirator, Hoover, has already pleaded guilty and is serving11 years and four months in prison for his role in the scheme.