FINANCIAL CRIME DIGEST January 2021 Diligent analysis. Powering business.™ aperio-intelligence.com FINANCIAL CRIME DIGEST | JANUARY 2021 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 | JANUARY 2021 CONTENTS ENFORCEMENT 3 CONSULTATIONS 72 REPORTS AND SPEECHES 16 LITIGATION AND CASE LAW 75 SPECIAL FEATURE 29 PRESS AND MEDIA 77 LEGISLATION 31 ESG 88 GUIDANCE AND ANNOUNCEMENTS 46 INTRODUCTION Welcome to the January issue of the Financial Crime Digest. To receive the publication direct to your inbox every month, please sign up here. We are 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] Aperio Intelligence’s next webinar ‘Fraud Trends in the Pandemic: Challenges for Business’ will take place at 13.00 on 10 March. Hosted by Aperio’s Director of Investigations, Paul Doran, our panel of guest speakers will share their views on how the pandemic has created opportunities for fraud in the corporate sphere and more widely. Please register your interest here. EDITOR’S PICKS ENFORCEMENT page 3 GUIDANCE AND ANNOUNCEMENTS page 46 08 January 2021 19 January 2021 Deutsche Bank to pay US prosecutors $130m EU Commission's sanctions strategy includes to settle FCPA violations and spoofng case implementation and enforcement database SPECIAL FEATURE page 29 CONSULTATIONS page 72 31 January 2021 19 January 2021 The role of privacy enhancing technologies in UK Treasury select committee publishes combatting fnancial crime written evidence to economic crime inquiry DATES FOR THE DIARY see all events FEBRUARY FEBRUARY UK FCA digital sandbox pilot on preventing FATF virtual plenary - 22-25 February 10 fraud and scams 22 FEBRUARY FEBRUARY Deadline for submissions to UK Treasury G20 fnance ministers and central bank Select Committee inquiry into the future of governors meeting 2 19 fnancial services 26 aperio-intelligence.com FINANCIAL CRIME DIGEST | JANUARY 2021 ENFORCEMENT Deutsche Bank to pay US prosecutors $130m to settle FCPA violations and spoofng case In addition to these FCPA violations, the bank is alleged to have knowingly failed to implement sufcient internal accounting controls that would have potentially stopped the facilitation of corrupt payments, and purportedly generated $35.4 million in profts related to three consultants engaged in corrupt acts. The DOJ investigation also concluded that a Deutsche Bank internal audit in 2009 identifed numerous business development consultant transactions as red fags and issued recommendations which were ignored, as well as a 2011 internal audit that identifed control failures pertaining to the The US Department of Justice (DOJ) announced on 8 bank’s anti-corruption programme. January that Deutsche Bank Aktiengesellschaft has agreed to pay over $130 million as part of a deferred prosecution The alleged commodities fraud case took place between agreement (DPA) to resolve investigations into commodities 2008 and 2013, during which traders on the Deutsche Bank fraud allegations and alleged breaches of the Foreign precious metals desk in New York, Singapore, and London Corrupt Practices Act (FCPA). The bulk of the payment, $85 purportedly committed spoofng by deceiving market million, consists of criminal penalties to the DOJ and $43.4 participants with false information about supply and demand million to the Securities and Exchange Commission (SEC), with numerous orders placed and then quickly cancelled. $1.2 million in victim compensation, and $681,480 in Two traders were found guilty of wire fraud in the case in a criminal disgorgement. federal court in Chicago in September 2020, while a third pleaded guilty in 2017 to conspiracy and a fourth awaits trial The DOJ concluded that an for fraud and conspiracy. The FCPA investigation is being internal audit identifed carried out by the US Postal Inspection Service, while the commodities fraud case is under continued investigation by numerous BD consultant the Federal Bureau of Investigation (FBI). transactions as red fags and The resolution with Deutsche Bank is based on factors, issued recommendations which including the company’s failure to voluntarily disclose the conduct and the nature and seriousness of the offence, were ignored which included corrupt payments, wilful violations of the FCPA, and commodities trading violations in three countries. According to a charge sheet fled in the US District Court for Deutsche Bank received credit for its cooperation with the the Eastern District of New York, between 2009 and 2016, the investigations and for its remediation. bank is alleged to have wilfully conspired with third-party consultants through its own agents and employees to DOJ press release maintain false records, books, and accounts on bank assets and transactions by concealing bribes paid in Saudi Arabia as SEC press release consulting fees and concealing millions of dollars indirectly paid to a foreign ofcial in Abu Dhabi. DOJ charges 3 aperio-intelligence.com FINANCIAL CRIME DIGEST | JANUARY 2021 FinCEN fnes Capital One National Association $390 million for AML violations The US Financial Crimes Enforcement commercial regional bank acquisition Pucillo made over 20,000 transactions Network (FinCEN) announced on 15 that consisted of approximately 250 totalling $160 million through his January that it has issued Capital One, cheque cashers between New York and Capital One accounts without the bank National Association (Capital One) with New Jersey, with criminal charges fling timely STRs. a $390 million civil penalty for wilfully against multiple customers and and negligently violating the Bank numerous compliance and money FinCEN also reported on Capital One’s Secrecy Act (BSA) and 31 CFR Chapter laundering risk warnings from negligent failures to fle 50,000 CTRs on X regulations by processing millions of regulators. In the reported period, the $16 billion in cash processed by the dollars of suspicious transactions, suspicious transactions processed that Cheque Cashing Group because of an some linked to fnancial crimes and went unreported included transactions inadequate internal system that did not organised crime proceeds. by tax evaders, launderers, and register armoured car cash shipments organised crime groups. as cash withdrawals, which should have According to FinCEN, Capital One triggered a report to FinCEN. The admitted to its fndings that the FinCEN Director Kenneth Blanco called regulator purportedly took the fnancial fnancial institution failed to implement Capital One’s failures “egregious” and institution’s remediation and and maintain necessary anti-money said the fnancial institution “allowed cooperation with investigators into laundering (AML) measures, failed to known criminals to use and abuse our account when determining the $390 fle thousands of suspicious activity nation’s fnancial system unchecked, million penalty, in addition to the bank reports (SARs), and negligently failed to fostering criminal activity