The Week Of: July 20, 2020

This week’s news and stories of interest to the AML community. If you prefer a news roundup plus other AML/KYC content sent to you, subscribe to This Week Today – our weekly newsletter.

UK lawyers face new fee to support fight against economic crimes

Larger law firms in the UK will pay a new levy of £100-200 per £1 million of revenue to support the government’s economic crime plan.

The fee will be paid by firms subject to anti-money laundering regulations. In the legal profession, this includes lawyers and firms supervised by the Law Society, Bar Council, Chartered Institute of Legal Executives and Council for Licensed Conveyancers, according to Legal Futures, a legal news source. The £100 million Treasury hopes to raise with the levy is additional to ongoing public sector funding.

“Businesses, such as banks, law firms, and casinos, are already required to take steps to address the risk that they are used by criminals to launder money,” according to the newly published consultation.

“They work alongside the public sector to tackle money laundering. But, through the actions in the plan, both public and private sectors have committed to go further.”

Read more from Legal Futures.

U.S. House passes AML reforms in defense spending bill

Is this the end of anonymous shell companies in the U.S.? The House of Representatives approved a defense spending bill that includes an amendment to require companies to disclose their true owners at the point of creation.

Lawmakers in the Senate have introduced a similar ultimate beneficial owner amendment, though it’s unclear if it will be included in that body’s own defense spending bill.

The House amendment also contains a measure to improve cooperation between financial institutions and law enforcement. In a letter to House Speaker Nancy Pelosi last year in support of the bill, the American Bankers Association shared how the significant amount of data shared with law enforcement and the lack of feedback given on the value of this data was a source of frustration within the industry.

“These changes will assist the banking industry and could relieve some of the compliance burdens that hinder banks’ ability to serve their customers,” the ABA wrote. “Equally important, knowing which threats are the greatest concern for law enforcement will help the industry focus resources in the most effective way to support the law enforcement community.”

Read more from American Banker.

Private equity, hedge funds pose huge risk for money laundering: FBI

A leaked FBI document says that “threat actors” are likely using investments offered by hedge funds and private equity firms to bypass traditional AML programs to launder money. “Threat actors” includes criminals as well as hostile foreign powers.

The FBI document, which was published in May, says that current AML programs “are not adequately designed to monitor and detect” such illicit activity within the industry and that complicit fund managers will likely expand their criminal activities. The agency says more regulatory scrutiny is needed, including compelling private investment funds identify and disclose ultimate beneficial owners of investments.

Examples of such schemes in the document include:

  • an unidentified Mexican cartel operating out of California that paid individuals to open up hedge fund accounts;
  • a New York based hedge fund that “received more than $100 million in wire transfers from an identified Russia-based company allegedly associated with Russian organized crime”; and
  • a former partner of a major US law firm who helped launder more than $400 million from a fraudulent cryptocurrency investment scheme.

As noted above, the House of Representatives recently voted to approve a defense spending bill that includes an amendment that would effectively end anonymous shell companies in the U.S.

Read more from OCCRP.