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Welcome to the October 2024 summary of news you can use as your bank or other financial institution attempts to stay up to date on the world of BSA/AML compliance. Our monthly series of curated news about financial crime developments, resources and stories.
In this edition, four main stories emerge:
- Two Russian nationals charged for operating billion-dollar money laundering services
- China set to enhance its AML law
- Ripple gains approval to expand blockchain payments to the UAE
- FCA fines Starling Bank £29 million for failings in financial crime controls
Two Russian nationals for operating billion-dollar money laundering services
On September 26, 2024, The US Department of Justice charged Russian national Sergey Ivanov with one count of conspiracy to commit and aid and abet bank fraud for providing payment processing support to the carding website Rescator, and one count of conspiracy to commit money laundering for laundering proceeds from the carding website Joker’s Stash.
Russian national Timur Shakhmametov, known online as “JokerStash” and “Vega,” was charged in the same indictment with similar counts to commit the same crimes. Together, the pair enabled $1.5 billion in money laundering transactions. While their web server infrastructure has been seized, the pair remain free and living beyond US jurisdiction.
The U.S. Department of State issued reward offers up to $11 million through its Transnational Organized Crime Rewards Program for information leading to the arrest and/or conviction of Ivanov and others involved in the operation of his money laundering services, and for Shakhmametov and others involved in the operation of Joker’s Stash.
Read more here:
China set to enhance its AML law
China is set to enhance its ability to monitor new types of money laundering risks as emerging technologies have made detecting these activities more difficult, according to Wang Xiang, an official with the Standing Committee of the National People’s Congress. As the top legislator for this issue, Wang said at a news conference that a draft amendment to the Anti-Money Laundering Law aims to address the growing challenges posed by new technologies and sectors.
Major enhancements to the AML law include:
- Expanding the definition of money laundering to include activity that conceals the proceeds and profits from any criminal activity, including terrorist
- Placing AML obligations onto specified non-financial institutions, including real estate developers, accounting firms, law firms, notary offices, and more.
- Requiring entities and individuals to cooperate with financial institutions and specified non-financial institutions in the conduct of Know Your Customer (KYC) processes in accordance with law.
Read more here:
Anti-money laundering law enhanced (chinadaily.com.cn)
China goes over AML law; Hong Kong mulls licensing regime (coingeek.com)
Ripple gains approval to expand blockchain payments to the UAE
The cross-border blockchain technology firm Ripple has received in-principle approval from the Dubai Financial Services Authority (DFSA) to expand its end-to-end payment system, making it the first blockchain payment firm to receive approval from the DFSA.
Ripple services were earlier limited to the Dubai International Financial Centre (DIFC), a special economic zone in the country that collaborates with new technology firms and startups before the DFSA allows them to expand services to wide user bases. The approval happened only one month after Ripple partnered with DIFC to accelerate blockchain adoption.
Ripple utilizes the XRP token for liquidity and allows partner banks to transfer funds with minimal cost. Yet, customers don’t have to buy or sell XRP to perform transactions. Instead, the payment network does it internally and allows the transfer of fiat currencies, such as the U.S. Dollar or Euro.
Read here for further details:
Ripple Receives Approval For Further Expansion in the Middle East (finews.asia)
Ripple Gains In-Principle Approval To Expand Payments Network to UAE (msn.com)
FCA fines Starling Bank £29 million for failings in financial crime controls
On October 2, 2024, FCA fined Starling Bank £28,959,426 for financial crime failings related to its financial sanctions screening. It also repeatedly breached a requirement not to open accounts for high-risk customers.
When the FCA reviewed financial crime controls at challenger banks in 2021, it identified serious concerns with the anti-money laundering and sanctions framework in place at Starling. The bank agreed to a requirement restricting it from opening new accounts for high-risk customers until the situation improved. Yet, Starling failed to comply and opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.
According to Therese Chambers, Joint Executive Director of Enforcement and Market Oversight for FCA, “Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.”
Read more here:
FCA fines Starling Bank £29m for failings in their financial crime systems and controls | FCA
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