The Week Of: September 14, 2020
This week’s news and stories of interest to the AML community.
Fewer banks working with cannabis industry
A report from the Financial Crimes Enforcement Network (FinCEN) shows that fewer financial institutions are working with the cannabis industry compared to the beginning of the 2020 fiscal year, when the decline began.
Through June 30, 695 banks and credit unions provided banking services to marijuana-related businesses. There were 739 banking with MRBs in December 2019.
What has led to the decline? The clearest answer is the pandemic, which has disrupted businesses around the world. Indeed, some MRBs may have shut down. The FinCEN report also noted that several filers are taking longer than the 90-day follow on Suspicious Activity Report (SAR) filing requirement–some are in fact taking 180 days or more to file a continuing activity report. After 90 days, a bank or credit union is no longer counted as providing banking services until a new guidance-related SAR is received.
FCA dropped half of its criminal money laundering cases in 2020
The UK’s Financial Conduct Authority dropped half of its AML probes since the beginning of the year and has yet to bring a single criminal prosecution, according to the Financial Times.
The law firm Eversheds Sutherland obtained the data via a freedom of information request. It found that the FCA suspended seven of 14 criminal investigations into suspected AML regulatory breaches since January, “including two ‘dual-track’ cases that could have resulted in either criminal or civil proceedings and five ‘single-track’ probes that focused solely on criminality.”
The discontinuations stand in contrast to comments made by FCA Director of Enforcement Mark Steward in April 2019 that it was time to “to [give] effect to the full intention of the money laundering regulations which provides for criminal prosecutions.”
“We need to enliven the jurisdiction if we want to ensure it is not a white elephant and that is what we intend to do,” Steward said at the time.
Use of money mules thrives in the pandemic
The number of criminal schemes relying on money mules has spiked since the onset of the pandemic in the United States, the New York Times said, fueled by billions of dollars in available relief money and millions of unemployed people in need of work.
Schemes used for money laundering increased by 609 percent from a year ago while online human resources schemes—where criminals pose as potential employers—rose by 295 percent.
Many of these schemes are based overseas and there is a need to move money to the fraudsters’ home country. Since banks have made it more difficult to launder money over the years, mules are increasingly sought after.
The Times talks to several recently laid off people who were duped into taking part in these schemes. Some were asked to wire money from their personal banking accounts, while others were tasked with shipping goods that were bought with stolen money to overseas destinations, where they would then be resold.
Unfortunately, enforcement is difficult, as the Times noted that the perpetrators behind one scheme shut down their web site and disappeared by the time they were reported.