Federal prosecutors in New York charged Turkish bank Halkbank Tuesday with participating in a multibillion-dollar scheme to evade U.S. sanctions against Iran.
Prosecutors allege that proceeds from the sale of Iranian oil and gas to Turkey were deposited at Halkbank, which then used various sanction-busting schemes to make some $20bn of the funds available to the government of Iran, including facilitating sham purchases of food and medicine by Iranian customers.
Halkbank has in the past denied violating US sanctions. Halkbank said in a statement that the charges were filed as part of the Trump administration’s sanctions imposed this week on Turkey in response to Ankara’s military offensive against the Kurdish forces. The US on Monday announced sanctions on several Turkish ministers and departments, and raised tariffs on the country’s steel exports.
The bank quits offering correspondent banking services to Malta by the end of the year.
Deutsche Bank has come under intense regulatory scrutiny across the globe over its processing of dirty money, some of which came about as a result of its correspondent banking relationships.
In parallel with these Deutsche Bank scandals, Malta has, over the past few years in particular, gained a reputation as a high-risk jurisdiction.
Aivar Rehe was reported missing on 23.09.2019 after leaving his home to go jogging.
Two days later he was found dead in the garden of his home near Tallinn (the capital of Estonia).
He was the ex-CEO of Danske Bank Estonia, the bank at the center of “the biggest money laundering scandal in the history of Europe”, currently investigated in Europe and the USA. Although “there have been credible threats in recent months to his life”, the police considered that he committed suicide. Public opinion is sceptical.
Mr Rehe was a witness in the ongoing investigation but not, at the time of his death, a suspect.
19.09.2019, Arab News – Lebanon’s Jammal Trust Bank forced to close by US sanctions, accused of helping fund Hezbollah
Jammal Trust Bank is accused of helping to fund the Hezbollah movement in Lebanon.
The bank had been established in 1963, has 25 branches in Lebanon and representative offices in Nigeria, the Ivory Coast and Britain. It had 80.000 customers.
Jammal Trust Bank (JTB) was added to the US list of terrorist financiers at the end of Augsut 2019 – meaning US sanctions were placed on it. This automatically cut the bank from its corresponding bank in the US and its access to dollars.
Hizbollah is funded by Iran, a transnational business network, and, according to the US, a globe-spanning crime network. But it also enjoys domestic support from Shia communities who view it as a resistance movement. The movement controls key ministries in the Lebanese government, with its allies winning more than half the seats in last year’s parliamentary elections. The west is split over whether or not to classify Hizbollah’s political arm as a terrorist organisation, as the US and UK do.
23.08.2019, internationalinvestment.net – Deutsche Bank fined $16m by the USA for hiring ‘unqualified relatives’ of politicians
The US Securities and Exchange Commission (SEC) alleged that Germany’s largest lender had hired relatives of foreign government officials in order to win or retain business in Asia and Russia at their request, in violation of the Foreign Corrupt Practices Act.
Between at least 2006 and 2014, it said Deutsche employed relatives of executives working at state-owned enterprises in China and Russia with the “primary goal” of generating business for the company such as initial public offerings.
15.08.2019, European Central Bank – AS PNB Banka in Latvia was failing or likely to fail – The Bank will be closed
- AS PNB Banka (formerly Norvik Banka until Nov. 2018) was the 6th largest bank in Latvia, with total assets of €550 mil
- The bank was founded in April 1992 and is privately owned.
- AS PNB Banka had been called on by the competent authorities to restore compliance with prudential requirements on several occasions and given sufficient time to take measures. The bank consistently failed to implement remediation measures.
- The ECB took over direct supervision of AS PNB Banka on 4 April 2019, at the request of the Financial Capital and Markets Commission.
- On 11 July 2019 the ECB issued an early intervention decision, requiring the bank to address its capital shortfalls and other deficiencies according to a specific timeline.
- On 12 August 2019 the ECB concluded an on-site inspection, which identified a substantial provisioning shortfall and found objective elements indicating that the assets of the bank were less than its liabilities.
“As from 15.08.2019. at 21.00 the bank must completely cease the provision of financial services, including the execution of customer payments. Such a decision is taken to avoid the outflow of bank’s funds. This means that as from now operations of JSC “PNB Banka’s” cards, online banking and ATMs have been suspended.”
21.07.2019 – The 4th EU AML Directive was finally transposed into the Romanian legislation
On 21.07.2019, the new AML law was published in the Official Gazette – Law no. 129/2019.
Romania was the last country in which the EU Directive was not yet transposed. It should have been adopted in June 2017.
The Financial and Capital Market Commission (FCMC) has fined Rigensis Bank, the Baltic country’s 11th biggest bank by assets, 1 million euros ($1.1 million) for lax anti-money laundering controls.
The fine was “for infringements of regulatory requirements regarding the prevention of money laundering and terrorism financing”.
Failures to verify beneficial owners and establish true origins of deposits were among the violations.
Rigensis Bank mainly serves non-resident clients from countries such as Russia and Belarus.
Meanwhile, Latvia’s central bank governor Ilmars Rimsevics, a top policy-maker at the European Central Bank, has been accused of accepting a bribe. He denies any wrongdoing.
The prosecutor has charged KBC Bank and KBC Group with money laundering, in the case of the family behind the Engels doors and windows construction family, based in Lokeren.
The charges relate to the importation, over the course of 13 years, of millions of euros previously hidden in a secret Swiss bank account. The money was brought into the family’s account with KBC. Some members of the family paid tax and fines on repatriation of the sums concerned, but others did not. The charges relate to three brothers from the Engels family and their mother.
The prosecutor alleges that the bank ought to have been aware of something illegal going on as the money was brought in from Switzerland.
Western Union has agreed to pay $401,697 to settle its potential civil liability for 4,977 apparent violations of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR). Western Union voluntarily self-disclosed the apparent violations to OFAC.
Between December 9, 2010, and March 13, 2015, Western Union processed 4,977 transactions totaling approximately $1.275 million, which were paid out to third-party, non-designated beneficiaries who chose to collect their remittances at a Western Union Sub-Agent in The Gambia, Kairaba Shopping Center (KSC), an entity that was designated by OFAC on Dec. 9, 2010.
06.06.2019, Institute for Science & International Security – 56 countries involved in violating UNSC Resolutions on North Korea – including France & Malta (EU countries)
The UN Panel of Experts on North Korea report annually cases of proven or alleged sanctions violations of the 10 UN resolutions on North Korea that have been passed by the Security Council since 2006. This year’s report, covering the period February 2018-February 2019 present 56 countries involved in alleged violations of the sanctions against DPRK:
Algeria*, Belize, Botswana, British Virgin Islands, Cambodia, China, Comoros, Congo (Democratic Republic of), Côte d’Ivoire, El Salvador, Equatorial Guinea, Eritrea, France, Georgia, Ghana, Guinea, Honduras, Hong Kong, India, Indonesia, Iran, Laos, Lebanon, Libya, Madagascar, Malaysia, Malta, Mexico, Mozambique, Myanmar, Namibia, New Zealand*, Nicaragua, Nigeria, Panama, Philippines, Poland, Russia, Serbia, Seychelles, Sierra Leone, Singapore*, South Africa, Sudan, Syria, Taiwan, Tanzania, Thailand, Togo, Tunisia, Uganda, United Arab Emirates, Vietnam, Yemen (Houthi faction), and Zambia.
(*Indicates that a country took remediating, prosecutorial action during the reporting period to rectify or penalize one or several alleged sanctions violations).
16.05.2019, The New York Times – Europe Fines 5 Banks $1.2 Billion for Their Roles in Foreign Exchange Cartels
The European Commission said Thursday that it had fined Barclays, Citigroup, JPMorgan Chase, Mitsubishi UFJ Financial Group and the Royal Bank of Scotland a combined 1.07 billion euros, about $1.2 billion, for their roles in foreign exchange trading cartels.
“Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day,” Margrethe Vestager, Europe’s commissioner for competition policy, said in a statement on Thursday. “The behavior of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”
31.03.2019, Reuters – Raiffeisen Bank International AG (RBI) fined 2.75 million euros by Austria’s Financial Market Authority (FMA)
The FMA said in a statement published on its website on Friday that it imposed the fine for “inadequate checking of the identity of the beneficial owner and failure to regularly update the necessary documents, data and information required to be able to understand ownership and control structures with regard to high-risk customers in specific individual cases”.
30.03.2019, Reuters – Nordea provides 95 million euro for possible fine for alleged money laundering
Nordea Bank, the Nordic region’s biggest lender, booked a 95 million euro provision for a possible fine for alleged money-laundering, while posting a bigger-than-expected drop in its first-quarter operating profit.
Media linked the bank to about €700m suspicious money flows from Russia and other former Soviet states.
Goldman Sachs’s London unit has landed a £34.3m fine from the UK financial watchdog for misreporting more than 220m transactions over a 10-year period.
The fine is the largest handed out by the UK Financial Conduct Authority for transaction-reporting failures under European rules known as Mifid, topping the £27.6m fine UBS received earlier this month from the regulator for similar errors.
Prosecutors in Milan have begun a formal investigation into alleged money laundering involving Dutch bank ING Groep NV’s Italian business.
ING had no immediate comment on Tuesday on the investigation, which was launched after prosecutors received requests for assistance from other European countries, where dozens of people had reported online scams, the source added.
Those being investigated by Milan prosecutors were carried out using various online accounts and the stolen money ended up in accounts opened at ING in Milan, the source said.
The Italian central bank, which made checks from October until the start of 2019, has told ING that it is not allowed to take on new customers in Italy after failing to prevent money laundering transactions through its accounts.
One of the largest banks in Sweden, Swedbank, may have been used for extensive, systematic money laundering for nearly a decade. A total of USD 5.8 billion is said to have been funneled between suspect accounts in Swedbank and Danske Bank in the Baltics.
Of this, USD 26 million is linked to the Russian tax fraud that was exposed by accountant Sergei Magnitsky, exposure which lead to his death. This fraud prompted the enactment of the Magnitsky Act in the United States in 2012, which imposed sanctions on a number of implicated Russian citizens.
Standard Chartered is putting aside $900m (£690m) for potential fines involving investigations in Britain and the US.
The money will cover separate investigations into breaches of US sanctions and foreign exchange trading issues.
It also covers a £102.2m fine from the UK’s Financial Conduct Authority related to financial crime controls.
Switzerland’s largest bank was convicted of illegally helping its wealthy clients in France to hide billions of euros from French tax authorities between 2004 and 2012 and launder the proceeds.
UBS denied any wrongdoing and the case could drag on for years if appealed by the Swiss bank, which has set aside $2.46 billion to cover potential losses from litigation and regulatory requirements.
The French trial follows a similar case in the United States, where UBS accepted a $780 million settlement in 2009 and in Germany, where it agreed to a 300 million euro fine in 2014.
Estonia has told Danske Bank to close its branch in Tallinn before the end of 2019 after a money-laundering scandal.
“We acknowledge that the serious case of possible money-laundering in Estonia has had a negative impact on Estonian society and finds it best that Danske Bank discontinues its Estonian banking activities,”.
The Danske Bank branch must close within eight months and repay its clients their deposits.
26.12.2018, Reuters – Morgan Stanley unit to pay $10 million fine for anti-money laundering violations
FINRA fined the U.S. brokerage unit of Morgan Stanley $10 million on Wednesday for compliance failures in the firm’s anti-money laundering program – the lapses spanned more than five years, from January 2011 until April 2016.
ACPR watchdog said it had discovered 75 transfers carried out by the Banque Postale from 2009 to 2017 involving 10 people whose assets had been frozen, nine of them in the wake of anti-terror investigations.
It did not identify the individuals or provide details of their suspected activities.
The Banque Postale agencies, often housed in post offices across the country, allow people to make fast cash transfers even if they don’t have an account at the bank.
The ACPR said the bank had failed to put in place measures to check whether people were subject to asset freezes before allowing them to use the service.
The Banque Postale said it would appeal the ruling, adding that subsequent verifications had determined that “none of the operations themselves constituted money laundering or terrorism financing”.
Estonia has arrested 10 former employees of the local branch of Danske Bank (DANSKE.CO) as part of an international investigation into alleged money laundering.
uthorities in Denmark, Estonia, Britain and the United States are investigating payments totaling 200 billion euros ($229 billion) made through the tiny Estonian branch of Denmark’s largest bank between 2007 and 2015.
The arrests announced by Estonia’s state prosecutor mark the first concrete action by authorities against suspects in the unraveling money laundering scandal.
UBS (NYSE:UBS) has agreed to pay $15 million total fine to FINRA, SEC and FinCEN.
FINRA found that, from January 2004 to April 2017, UBSFS (UBS Financial Services Inc.) processed thousands of foreign currency wires for billions of dollars, without sufficient oversight. UBSFS’s AML surveillance systems failed to reasonably monitor billions of dollars in foreign currency wires flowing through customer accounts, including hundreds of millions of dollars in foreign currency wires to and from countries known to be at high risk for money-laundering. For example, for foreign currency wires to and from certain accounts, UBSFS’s AML surveillance systems did not capture the number and identity of customers, the number and dollar value of the transfers, whether the transfers involved third parties and whether the transfers involved countries known for money-laundering risk. UBSFS’s failure to monitor these high-risk transactions went undetected for more than eight years until discovered in 2012, and the firm failed to implement a reasonable system until April 2017.
With respect to UBSS (uBS Securities LLC), FINRA found that, from January 2013 to June 2017, the firm failed to reasonably monitor penny stock transactions that its Swiss parent routed to UBSS for execution through an omnibus account.
German police have raided Deutsche bank’s Frankfurt headquarters and offices in several other locations. The raid is part of an investigation into revelations in the Panama Papers that the bank may have been involved with money laundering via a subsidiary in the British Virgin Islands.
Update: According to Financial Times – “Prosecutors in Frankfurt suspect that Deutsche from 2013 to 2018 helped wealth management clients to transfer dubious funds into a Deutsche Bank vehicle based in an offshore tax haven (British Virgin Island) without flagging potential money laundering to law enforcement authorities.
Two Deutsche Bank managing directors and further unspecific employees are in the crosshairs of the investigation. The prosecutors stress that no member of the management board has been targeted.”
According to US authorities Societe Generale executed billions of dollars of “illegal and non-transparent transactions” to entities in sanctioned countries, including Iran, Sudan, Cuba and Libya between 2003 and 2013.
More than $12.5bn of “improper, non-transparent” payments executed by SocGen involved Iran, while a further $7.7bn of “impermissible” transactions involved the bank’s Cuban credit facilities. The bank used “cover payments” to avoid detection of many of the Iran payments, whereby it would strip out details about the underlying parties in payment messages sent to its New York branch.
12.11.2018, the EU Official Journal – The Directive on combating money laundering by criminal law was published
- gives a clear definition of what criminal activity means;
- establishes minimum rules on the definition of criminal offences and sanctions relating to money laundering. Money laundering activities will be punishable by a maximum term of imprisonment of at least 4 years, and judges may impose additional sanctions and measures (e.g. temporary or permanent exclusion from access to public funding, fines, etc.). Aggravating circumstances will apply to cases linked to criminal organisations or for offences conducted by obliged entities during their professional activity;
- includes the possibility of legal entities to be liable for certain money laundering activities which can face sanctions (e.g. exclusion from public aid, placement under judicial supervision, judicial winding-up, etc.);
- removes obstacles to cross-border judicial and police cooperation.
Member States must transpose this Directive into their national legislation by 03.12.2020.
12.11.2018, the EU Official Journal – The New Cash Control Regulation was published in the Official Journal
The new regulation extends the definition of cash to cover not only banknotes but also other instruments or highly liquid commodities such as cheques, traveller’s cheques, prepaid cards and gold. The regulation is also extended to cover cash that is sent by post, freight or courier shipment.
The new legislation extends the obligation of any citizen entering or leaving the EU and carrying cash to a value of €10 000 or more (the same as in the previous Regulation from 2005) to declare it to the customs authorities. The declaration will be required irrespective of whether travellers are carrying the cash in person, in their luggage or means of transport. At the request of the authorities they will have to make it available to be checked.
If the cash is sent by other means (“unaccompanied cash”), the relevant authorities will have the power to ask the sender or the recipient to make a disclosure declaration. The authorities will be able to carry out controls on any consignments, packages or means of transport which may contain unaccompanied cash.
05.11.2018, The Guardian – The European Central Bank (ECB) withdrew the licence of Pilatus Bank, Malta
Pilatus Bank, which opened 4 years ago and was specialised on Private Banking, was officially closed down several months after its Iranian chairman and owner, Ali Sadr Hasheminejad, was charged in the US in connection with money-laundering and fraud.
The bank had also been accused of processing corrupt payments to Maltese officials by the investigative journalist Daphne Caruana Galizia, who was killed last year by a car bomb.
This law transposes the 4th AML Directive of the European Union and should have been adopted until 26.06.2017.
The process is not final and there are still a few procedural steps until the law is promulgated by the Romanian President and published in the Official Monitor. However, soon the law will be final.
The EUR 200 billion money laundering scandal is far from being over.
Deutsche Bank announced that US Department of Justice started a criminal investigation relating to the bank’s Estonian branch.
Payments totalling €200bn, many of which described as “suspicious”, had been moved through Danske Estonian branch between 2007 and 2015. This is huge, considering that the GDP of Estonia in 2017 was €27bn.
“Dutch bank ING Groep NV admitted criminals had been able to launder money through its accounts on Tuesday and agreed to pay 775 million euros ($900 million) to settle the case.
Dutch financial crime prosecutors said ING had violated laws on preventing money laundering and financing terrorism “structurally and for years” by not properly vetting the beneficial owners of client accounts and by not noticing unusual transactions through them.
The fine is not ING’s first for failing to prevent illegal transactions. In 2012 it paid a penalty of $619 million for facilitating billions of dollars worth of payments through the U.S. banking system on behalf of Cuban and Iranian clients.”
You can read the entire article here.
“Iranian lawyers asked the International Court of Justice on Monday, 27.08.2018, to order the United States to lift sanctions imposed by the Trump administration against Tehran, but Washington described the suit as meritless.
Tehran’s suit says the U.S. sanctions, which are damaging the already weak Iranian economy, violate terms of a little-known friendship treaty between the two countries – the 1955 Treaty of Amity.
The ICJ is the United Nations tribunal for resolving international disputes. Its rulings are binding, but it has no power to enforce them. In fact, they were overlooked in the past.”
23.08.2018, The New York Times – British Airways and Air France announced they will suspend business with Iran
Considering the fresh and updated European Blocking Statute, the 2 European airlines presented economic reasons for their decision – a drop in the demand.
Sure…. nobody sees the elephant in the room….
“Credit Suisse, has frozen roughly 5 billion Swiss francs ($5 billion) of money linked to Russia to avoid falling foul of U.S. sanctions, according to its accounts, further increasing pressure on Moscow.
The move by Credit Suisse underscores a widespread fear among banks of reprisals from Washington for working with targeted Russian individuals and entities.
For Russia’s elite, such steps could close off an important avenue for finance as well as a safe haven for billions of rubles of their wealth.”
You can read the entire article, here.
The Blocking Statute allows EU operators to recover damages arising from the extra-territorial sanctions within its scope from the persons causing them and nullifies the effect in the EU of any foreign court rulings based on them.
It also forbids EU persons from complying with those sanctions, unless exceptionally authorised to do so by the Commission in case non-compliance seriously damages their interests or the interests of the Union.
20.07.2018, g4media.ro, The European Commission proposes that Romania is fined a lump sum of 1.8 million EUR and 21.000 EUR for each day of delay for not implementing the 4th AMLD in due time
The Law project is in the Romanian Senate since 20.06.2018, but will enter on the day order after the holiday.
19.07.2018, The European Commission refers Romania, Greece and Ireland to the Court of Justice for not implementing the 4th AMLD in due time
The 4th AML Directive should have been transposed into national legislation by 26.06.2017. Romania and Greece did not transpose the Directive into their national legislation, while Ireland implemented a very limited part of it.
In the meantime, the 5th AMLD was published.
16.07.2018, Dailymail.co.uk – Spanish Royalty again under the spotlight of money laundering accusations
“A bombshell recording of Juan Carlos’ former mistress claiming he was involved in money laundering has sparked calls for an investigation.
The former Spanish king, who abdicated in 2014 after controversies, was accused by Corinna zu Sayn-Wittgenstein who he has long been romantically linked with.”
12.07.2018, ABLV official website – On 11 July 2018, the European Central Bank decided to withdraw the license of ABLV Bank Latvia
The bank’s death started in February 2018 when FINCEN USA announced that it was considering to classify it as entity of primary money laundering concer and to forbid it to ever have a USD correspondent account.
The bank was accused by U.S. authorities of large-scale money laundering.
It was the 3rd bank in Latvia.
09.07.2018, Romanian Journal, Mediafax – The chief prosecutor of the Romanian National Anticorruption Directorate (DNA) was revoked
The President was compelled to make this decision as he had to follow the Constitutional Court decision.
The Romanian project law that transposes the 4th AML Directive of the European Union was registered in the Romanian Senate on 20.06.2018. It has 45 days for “silent adoption” and this deadline is calculated starting with 25.06.2018.
This law should have been adopted until 26.06.2017.
19.06.2018, The European Union Official Journal – the 5th AML Directive is published in the Official Journal of the European Union
While some EU Member States (Romania included) did not manage to transpose the 4th AML Directive into national legislation, the European Union moved to the 5th AML Directive. The Member States are expected to transpose it into national legislation by 10.01.2020.
You can find it here.
I made a brief presentation of the major changes brought by the 5th AMLD compared to the 4th AMLD in this video – The ABC of the EU 5AMLD.
18.06.2018, Ziarul Financiar – Artificial Intelligence meets AML and KYC in Romania (Raiffeisen Bank is the first bank to publicly state its venture in this area)
This Romanian article presents the fact that Raiffeisen Bank Romania concluded a contract with a start-up company that will develop and implement evolved KYC tools.
You can read the start of the article on the webpage of the newspaper Ziarul Financiar, but you need a paid subscription to view the entire article.
“It’s the first time the committee has slapped international sanctions on individuals for human trafficking.”
One of the human traffickers is a commander of the European Union-funded Coast Guard based in Zawiya.
It is an article worth reading and heart breaking. You can find it on the official website of CNN, together with a film that presents slave auctions.
06.06.2018, FCA UK – The Financial Conduct Authority from UK has fined Canara Bank with £896,100 and has imposed a surprising restriction, preventing it from accepting deposits from new customers for 147 days.
“The FCA found that Canara failed to maintain adequate systems and controls to manage the risk of money laundering. These failures were systemic and affected almost all levels of its business and governance structure including: (1) Senior Management; (2) Governance / Oversight; (3) three Lines of Defence; (4) Money laundering reporting function; and (5) AML systems and controls.”
The entire article can be found on the official web-page of FCA.
04.06.2018, Reuters – SOCIETE GENERALE S.A. to pay over $860 million to resolve criminal charges in the U.S. and France
According to Reuters, Societe Generale S.A. will pay over $860 million to resolve criminal charges in the U.S. and France for bribing Gaddafi-era Libyan officials and manipulating the Libor rate.
The news was launched on Monday, 04.06.2018, by the U.S. Department of Justice.
You can read more on the Reuters website.
31.05.2018, Council of Europe – Moneyval’s 2017 annual report was published on the website of Council of Europe
On 31st of May 2018, the Moneyval’s 2017 annual report was published. Besides presenting short conclusions of the reports on its member countries, it also presents the activities in which it took part in 2017. As a FSRB, it follows the direction of FATF and it was active in the field of terrorist financing fact-finding, roundtables on correspondent banking, disrupting financial flows from human trafficking, etc.
It is a good read and you can find it on the Council of Europe website.
Considering that India officially stated that it only follows U.N. sanctions, it is a good moment to reconsider how your bank tackles USD transactions with this country.
You can read more about this subject on the Reuters website.