The Week Of: October 26, 2020

This week’s news and stories of interest to the AML community. 

FinCEN issues first penalty against Bitcoin mixer for AML violations

The Financial Crimes Enforcement Network (FinCEN) last week issued its first ever penalty against a Bitcoin mixer for AML violations.

Larry Dean Harmon, the founder and primary operator of Helix and Coin Ninja, was given a $60 million fine for violating Bank Secrecy Act regulations. He is currently being prosecuted on charges of conspiracy to launder monetary instruments and operating an unlicensed money transmitting business.

Bitcoin mixers, or tumblers, are services that mix several Bitcoin transactions and then disperse them in a manner that makes it difficult to trace their origins. Harmon and his companies conducted more than $300 million in virtual currency transactions for customers who used the mixers as a way to pay for things like drugs, guns, and child pornography on the dark web, according to FinCEN.

Read more from Fincen.gov

Europol reports on the challenges of fighting human trafficking in the digital era

Modern technology has significantly impacted and broadened criminals’ ability to traffic human beings for different types of exploitation, according to a new report released by Europol.

People trafficking has transformed into a new ‘business model’ with further advantages for criminal exploiters. The report says that these include “increased anonymity… the possibility of reaching a broader audience (in terms of victims and clients), geographical mobility, and the ability to control victims from a distance.”

One way human traffickers target their victims, who in EU Member States are mostly adult females, is through bogus recruitment advertisements that use online profiling to shape their strategies. Criminal networks even go so far as to create websites of fake employment agencies with live webchats that they promote on social media.

While technology has made access to potential victims easier, it also leaves digital footprints for law enforcement to follow.

Investigators are able to discover information on identities, roles, structures, locations and criminal assets from the online activity of suspects. Another valuable source of digital evidence is the financial transactions made by criminal members to upload online advertisements.

[…]

While law enforcement agencies are becoming more skilled in the use of digital technologies and forensics to combat [trafficking in human beings] crimes, the constant development of new technologies and change in business models used by traffickers keeps the race going between traffickers and law enforcement.

Read more from Europol.

UN report: company ownership remains opaque in Southeast Asia

A report by the United Nations Office on Drugs and Crime says that Southeast Asian countries need to provide more detailed information on beneficial ownership to stop the illicit flow of money in the region.

Beneficial ownership registries are important tools in fighting money laundering and the financing of terrorism.  A lack of transparency has allowed much of Southeast Asia to become a magnet for fincrime. Close to $100 billion a year has been generated in the region from activities such as the illegal trafficking of timber, drugs and migrants, according to the UN report.

“While transparency in the banking sector is somewhat regulated,” the report says, “countries in Southeast Asia are considered to be very secretive when it comes to the transparency of ownership of legal entities and other forms of wealth.”

The report concludes that countries in Southeast Asia need to make sure information on owners is recorded and verified. If not, “law enforcement will continue to encounter significant challenges in their investigations and financial institutions will struggle to carry out reliable due diligence on their customers.”

Read more from ICIJ.