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Welcome to the June 2024 summary of news you can use to help keep your bank or financial institution up to date in the world of BSA/AML compliance. This is our monthly series of curated news about financial crime developments, resources and stories.
In this edition, four main stories emerge:
- FinCEN issues new advisory on Fentanyl and a Mexico cartel
- US Federal Reserve Board issues cease and desist order against Evolve Bank
- CFO of Epoch Times arrested on money laundering charges
- Germany’s BaFin imposes fine of 9.2 million euros on N26 Bank AG for systematic AML failures
FinCEN issues new advisory on Fentanyl and La Nueva Familia Michoacana cartel
FinCEN’s June 20, 2024 Fentanyl supplementary advisory provides new red flags and trends that can be indicators of activity associated with the procurement of precursor chemicals and manufacturing equipment used for the synthesis of illicit fentanyl and other synthetic opioids.
On June 20th, Secretary Yellen announced that Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned eight Mexico-based targets affiliated with La Nueva Familia Michoacana drug cartel for trafficking fentanyl, cocaine, and methamphetamine into the United States. In addition to narcotics trafficking, La Nueva Familia Michoacana smuggles migrants from Mexico into the United States, is one of the most powerful and violent cartels in Mexico and has become a priority focus of the Mexican government in recent years.
Download the advisory here:
FinCEN Advisory FIN-2024-A002 | FinCEN.gov
US Federal Reserve Board issues cease and desist order against Evolve Bank
The “Fed” orders arise from multiple “deficiencies” in the bank’s risk management, anti-money laundering (AML) and compliance practices. Memphis-based Evolve operates an open banking division (OBD) alongside a suite of traditional banking services, through which it provides deposit accounts and payment processing services to fintechs.
According to the Federal Reserve’s order, examinations conducted in 2023 found that the bank had “engaged in unsafe and unsound banking practices by failing to have in place an effective risk management framework for those partnerships”.
The Federal Reserve has mandated that Evolve improve its risk management policies and programs to comply with AML laws and consumer protection regulations.
Read more details here:
CFO of media company Epoch Times arrested on money laundering charges
The global conservative multimedia company is in turmoil, according to NPR.
Its chief financial officer, Weidong Guan, was arrested in early June 2024 for allegedly engaging in a multi-year money laundering scheme that federal prosecutors say helped drive the company’s skyrocketing growth in revenue in recent years.
Weidong Guan has been accused of being part of a scheme to launder at least $67 million in illegally obtained funds that prosecutors allege benefited himself, the media organization and affiliated entities. Federal prosecutors also allege he directed a team in a foreign office, known as the “Make Money Online” team, that used cryptocurrency to buy prepaid debit cards loaded with fraudulently obtained funds.
According to the federal indictment, the Make Money Online team “and other scheme participants” moved the crime proceeds into accounts belonging to the media organization by using “tens of thousands of layered transactions, utilizing, among other things, prepaid debit cards and financial accounts that were opened using stolen identification information, including the personal identification information of U.S. residents.”
Days after the CFO’s arrest, the founder and CEO resigned and an interim management team is now running the company.
A status conference surrounding Guan is scheduled for June 21st in federal court.
Read here for further details:
Money laundering charges shake up The Epoch Times management : NPR
BaFin imposes fine of 9.2 million euros on N26 Bank AG for systematic AML failures
Germany’s financial supervisory authority BaFin has imposed a fine of 9.2 million euros on N26 Bank AG. BaFin found that N26 Bank had systematically submitted money laundering suspicion reports late in 2022.
The digital bank said it services more than 8 million customers in 24 markets, processing more than €100 billion (U.S. $108.2 million) in transactions per year. Credit institutions are required to report to the Financial Intelligence Unit (FIU) of BaFin if they suspect that a transaction may be related to money laundering or terrorist financing.
These suspicious activity reports must be submitted immediately to give FIU the ability to quickly take further steps if necessary, such as forwarding to law enforcement authorities.
Read here for further details:
BaFin – Announcements – Announcement of N26 Bank AG
N26 fined $9.6M for not timely filing AML reports to BaFin | News Brief | Compliance Week
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