The Week Of: September 28, 2020

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

New guidelines to battle maritime wildlife trafficking to be developed

A proposal from the Kenyan government to develop guidelines to prevent and suppress wildlife smuggling via international shipping was approved by member states of the International Maritime Organization (IMO).

The guidelines are to be developed among government agencies, the private sector and the NGO community with a goal of promoting “stronger due diligence, transparency and responsibility-sharing by all players in the maritime transport.”

It is estimated that between 70 and 90% in volume of wildlife products are illicitly trafficked by sea, including over 90 tonnes of pangolin scales and 15 tonnes of elephant ivory that were seized in 2019 alone. Traffickers exploit legitimate transport services to move bulky, non-perishable contraband around the world.


Europe’s AML chief defends record in wake of FinCEN Files report

European Commission Executive Vice President Valdis Dombrovskis found himself on the defensive after BuzzFeed’s explosive FinCEN Files report was published last week.

Dombrovskis is the former Prime Minister of Latvia. During his term as minister between 2008 and 2014 Latvian banks attracted billions of dollars in illicit money. The ICIJ says that international criminals had long known that Latvia was an easy way to launder vast amounts.

One bank alone, Bank of New York Mellon, filed suspicious activity reports to the U.S. Treasury Department that flagged $7.1 billion in suspicious transactions that had flowed through Latvia’s Regional Investment Bank between 2006 and 2015.

BNY Mellon also separately reported $1 billion in suspicious funds running through Meridian Trade Bank, now known as Industra Bank, between 2000 and 2014 and $29.2 billion through a third bank, Expobank, between 2006 and 2016.

Dombrovskis told ICIJ that he tackled money laundering and closed loopholes during his time as Prime Minister and that Latvia’s financial system was closely scrutinized before it was allowed to adopt the Euro as its currency in 2014.

Read more from the ICIJ.

Crypto news

A major survey found that financial firms and governments are skeptical of cryptocurrencies and see them as risky and rife for use in money laundering and sanctions evasion.

The findings suggest a struggle for the crypto industry to gain acceptance, according to Reuters. Nearly all respondents to the survey by the Royal United Services Institute were worried about crypto being used for money laundering. Only a fifth of respondents viewed virtual currencies as an opportunity.

As governments grapple with regulating the industry, FinCEN chief Ken Blanco warned banks to start taking their crypto risk exposure seriously.

In a speech to the virtual 2020 ACAMS conference in Las Vegas, Blanco said that it wasn’t just exchanges or money services businesses with crypto risk exposure—banks need to be thinking of their own exposures. “These are areas your examiners, and FinCEN, will ask you about when assessing the effectiveness of your AML program,” he said.

Meanwhile, the IRS is adding a crypto question to its 1040 form for the 2020 tax year. The question asks filers if they had acquired a financial interest in any virtual currency; taxpayers must check “Yes” or “No.”

“Many Bitcoin owners have adopted a ‘Play dumb and hope for the best’ strategy when it comes to taxes,” says Fortune. “But now that strategy—never a great idea at the best of times—is riskier than ever[.]”

The change to the 1040 is seen as a trap by the IRS for those who “feign ignorance” of their reporting requirements, according to the Wall Street Journal. Although millions of Americans own cryptocurrency accounts, fewer than 150,000 filed crypto returns last year.