A Guide to Anti-Money Laundering for Crypto Firms

What is cement worth?

Financial Crime Knowledge & Training

What is cement worth?

As the world watched Syria begin to fall under the control of the Islamic State (IS) in 2011, French cement company, Lafarge was concerned. They were worried about what would happen to their factory in the north of the country. How could they solve this problem? According to the results of a French investigation released last week, Lafarge paid local armed groups, some connected to the IS, €13 million to allow the plant to continue to operate between 2011-2014. Lafarge also allegedly paid ransoms to militant groups when employees of the plant were kidnapped.

The actions of Lafarge offer a startling example of terrorist financing perpetrated by a commercial entity and should be taken seriously. By 2015 extortion and “taxes” on businesses, such as those paid by Lafarge were the most significant source of revenue for IS. Revenue from captured cement plants, which eventually included the Lafarge plant earnt the group an additional $300m in 2014. What will be the cost to Lafarge? It has apologized for its actions and says it deeply regrets what happened. Eight former managers have been placed under investigation and will face charges of terrorist financing. The company will also be taken to court by French charity, Sherpa for complicity in crimes against humanity. The real cost however, will be borne by the Syrian people who will endure the legacy of IS for decades to come.

A full house of problems – how money launderers cashed in at BC casinos

When the news broke in 2017 that Chinese high rollers were using casinos in British Columbia to launder profits from drugs, counterfeit goods and human trafficking, few would have guessed the extent of the problem that would then be revealed. Last week, Canadian authorities released their report into the scandal and what they found is staggering. Systemic failures at all levels contributed to creating a situation where individuals could enter a casino and deposit between $300,000-$500,000 of “street cash” without a single eyebrow being raised.

The report details exactly what went wrong at the casinos and in the supporting regulatory framework. Having the correct tools in place to properly conduct AML processes is one failing the report highlights. It gives the example of the B. C. Lottery Corp. who purchased a system to monitor transactions built for the banking sector. The system failed to cope with the demands and needs of the gambling industry which resulted in unmanageable levels of false positives and ultimately delayed reporting. Delayed reports allowed deposits and transactions made by criminals to go unnoticed.  Hopefully, the 48 recommendations made in this report can provide solid guidance to the sector, and the “collective system failure” which allowed illicit money to flow through British Columbia’s casinos can be stemmed.

What do you need to know from last month’s FATF week?

Over 700 delegates met last week in Paris for the second FATF week of the year. There was much to discuss. Firstly, there were a number of movements on and off the organization’s watchlists. It was hardly surprising that, despite their minimal efforts to prevent it, Pakistan was placed back on the list of non-compliant states. Iran was given until October to improve its AML/CFT regime or risk facing a similar fate. Something that is likely, as the Ayatollah came out two weeks ago saying that Iran would follow its own AML/CFT rules. Iraq and Vanuatu were removed from FATF monitoring as both have made substantial gains in improving their regimes, this will hopefully give foreign investment a boost in both countries.

Less movement was made on technological issues. The FinTech/RegTech working group met, relayed recent activity and postponed any output until their next forum in September. Many had been hoping that FATF would come out with further guidance on cryptocurrencies and assets but nothing concrete materialized. Progress continued to be made on aligning the group’s counter-terrorist financing agenda and efforts to control the flow of money connected to human trafficking. This meeting may feel light on outcomes but it was certainly heavy on discussion.


Originally published July 3, 2018, updated November 17, 2021

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