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FINANCIAL CRIME DIGEST July 2020 FINANCIAL CRIME DIGEST July 2020 Diligent analysis. Powering business.™ aperio-intelligence.com FINANCIAL CRIME DIGEST | JULY 2020 ISSN: 2632-8364 About Us Founded in 2014, Aperio Intelligence is a specialist, independent corporate intelligence frm, headquartered in London. Collectively our team has decades of experience in undertaking complex investigations and intelligence analysis. We speak over twenty languages in- house, including all major European languages, as well as Russian, Arabic, Farsi, Mandarin and Cantonese. We have completed more than 3,000 assignments over the last three years, involving some 150 territories. Our client base includes a broad range of leading international fnancial institutions, law frms and multinationals. Our role is to help identify and understand fnancial crime, contacts, cultivated over decades, who support us regularly integrity and reputational risks, which can arise from a lack in undertaking local enquiries on a confdential and discreet of knowledge of counterparties or local jurisdictions, basis. As a specialist provider of corporate intelligence, we enabling our clients to make better informed decisions. source information and undertake research to the highest legal and ethical standards. Our independence means we Our due diligence practice helps clients comply with anti- avoid potential conficts of interest that can affect larger bribery and corruption, anti-money laundering and other organisations. relevant fnancial crime legislation, such as sanctions compliance, or the evaluation of tax evasion or sanctions We work on a “Client First” basis, founded on a strong risks. Our services support the on-boarding, periodic or commitment to quality control, confdentiality and respect retrospective review of clients or third parties. for time constraints. We offer robust, cost-effective solutions, providing our clients with work of the highest Our investigations practice advises clients in a wide range quality at favourable rates. of complex disputes and other contentious matters, including complex cross-border asset tracing claims, Please do not hesitate to get in touch with us if you would litigation support, internal investigations, market like to know more about Aperio’s services or discuss how intelligence, supply chain analysis and country risk we might be able to help you: assessments. Our team has specialist knowledge of and access to a very Email [email protected] or fnd out broad range of public and proprietary data sources, as well more at: aperio-intelligence.com as a longstanding network of reliable, informed local 1 aperio-intelligence.com FINANCIAL CRIME DIGEST | JULY 2020 CONTENTS ENFORCEMENT 3 LEGISLATION 76 SPECIAL FEATURE 27 CONSULTATIONS 85 REPORTS AND SPEECHES 29 LITIGATION AND CASE LAW 90 GUIDANCE AND ANNOUNCEMENTS 45 PRESS AND MEDIA 96 INTRODUCTION Welcome to the July issue of the Financial Crime Digest, which provides concise analysis of the most signifcant fnancial crime related developments from around the world. To receive the publication direct to your inbox every month, please sign up here. We are also currently developing an online platform, which provides more comprehensive coverage of fnancial crime developments. If you would like more information on the new platform or our services please email [email protected] EDITOR’S PICKS ENFORCEMENT page 4 REPORTS AND SPEECHES page 29 07 July 2020 29 July 2020 New York regulator fnes Deutsche Bank over US report reveals how loopholes in art industry Epstein ties and correspondent relationships helped Russian oligarchs evade sanctions with Danske Estonia and FBME Bank SPECIAL FEATURE page 27 LEGISLATION page 76 31 July 2020 06 July 2020 Germany follows new pattern with draft human UK introduces human rights sanctions regime rights and environmental due diligence law DATES FOR THE DIARY see all events AUGUST AUGUST European Commission's consultation on its FATF consultation on Recommendation 1 26 AML action plan closes 31 closes AUGUST AUGUST UK Solicitors Regulation Authority consultation US FINRA request for comments on AI 26 on its business plan closes 31 whitepaper closes 2 aperio-intelligence.com FINANCIAL CRIME DIGEST | JULY 2020 ENFORCEMENT International operation dismantles encrypted communication platform used by criminals Europol announced on 2 July that a joint operation behind EncroChat was found to be operating from servers in conducted in cooperation with several international law France. In April 2019, the French and Dutch authorities enforcement agencies, including the UK’s National Crime brought the case to Eurojust and a joint investigation team Agency (NCA), the French and Dutch law enforcement and (JIT) agreement was signed. judicial authorities, and Eurojust, has resulted in the dismantling of one of the largest encrypted global A large number of suspects have been arrested not only in communication networks used exclusively by criminals, the JIT member states, but also in several countries which EncroChat. were not participating in the JIT but were particularly affected by the illegal use of these phones by individuals active in EncroChat offered a secure mobile phone instant messaging organised crime, including in the UK, Sweden and Norway. service, with 60,000 users worldwide and around 10,000 The NCA states that 746 arrests have been made in the UK users in the UK. The provider was mainly used for organising and £54 million in criminal proceeds have been seized so far. and coordinating the distribution of illicit commodities, money laundering and plotting rival criminals’ The interception of EncroChat messages ceased on 13 June assassinations. In exchange for £1,500 for a six-month 2020, when the provider realised that a public authority had contract, EncroChat members would receive a phone with no penetrated the platform and sent a warning to all users to other conventional smartphone functionality than pre-loaded dispose of the phones. apps for instant messaging and a kill code which wipes voice over IP (VOIP) calls remotely. Europol press release In 2017, French police and judicial authorities began Eurojust press release investigating phones that used the EncroChat tool, after regularly discovering such equipment in operations against NCA press release organised crime groups. According to Europol, the company 3 aperio-intelligence.com FINANCIAL CRIME DIGEST | JULY 2020 New York regulator fnes Deutsche Bank over Epstein ties and correspondent relationships with Danske Estonia and FBME Bank accounts in New York, despite the fact that it was repeatedly put on notice about Danske Estonia’s control failings, and even after an internal risk management team gave Danske Estonia the highest risk rating. The NYDFS states that Deutsche Bank “failed to properly monitor account activity conducted The New York State Department of Deutsche Bank “failed to properly Financial Services (NYDFS) announced monitor account activity conducted on on behalf of the on 7 July that Deutsche Bank AG has behalf of the registered sex offender agreed to pay $150 million in penalties despite ample information that was registered sex as part of a consent order for publicly available”, which resulted in the offender despite compliance failures in processing processing of hundreds of transactions transactions by Jeffrey Epstein and that “should have prompted additional ample information relating to its correspondent banking scrutiny in light of Mr. Epstein’s history”. that was publicly relationships with Danske Bank Estonia In addition to this, procedural failures and FBME Bank. occurred, which included conditions available” placed on Epstein’s accounts by a Epstein died in August 2019 in federal Deutsche Bank reputational risk group Similar issues pervaded Deutsche custody while awaiting trial on charges not being communicated or being Bank’s relationship with FMBE, in which of operating a global child prostitution misinterpreted, resulting in a lack of enhanced AML checks revealed the ring. Prior to his arrest, Epstein engaged conditional enforcement. former Tanzanian-based bank was not in hundreds of transactions using improving its quality controls. Deutsche Deutsche Bank, including settlement The consent order also covers failings Bank continued to do business with payments totaling $7 million, payments by Deutsche Bank to properly monitor FMBE until being ordered to cease its to alleged co-conspirators, direct the activities of foreign bank clients - relationship by the US Financial Crimes payments to multiple women in Eastern Danske Estonia and FBME Bank - with Enforcement Network in 2015, in an Europe that were consistent with public respect to their correspondent and action upheld by a court order in 2017. allegations of wrongdoing, and over dollar clearing business. According to $800,000 in suspicious cash the NYDFS, Deutsche Bank failed to New York Department of Fi... withdrawals. take appropriate action to prevent Danske Estonia from transferring Deutsche Bank consent ord... According to the regulator, in regard to billions of dollars of suspicious the failings relating to Epstein, transactions through Deutsche Bank 4 aperio-intelligence.com FINANCIAL CRIME DIGEST | JULY 2020 UK designates 47 individuals and two entities under new global human rights regime The UK Foreign and Commonwealth minister Aleksey Vasilyevich against the Rohingya people and Ofce (FCO) announced on 6 July that Anichin, prosecutors, investigators, other ethnic minorities 47 individuals and two entities have judges
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