Sri Lanka FIU signed MOUs with FIUs of Philippines and Nepal

The Financial Intelligence Unit (FIU) of Sri Lanka recently signed Memoranda of Understanding (MOU) with FIUs of Philippines and Nepal to share financial information to facilitate the investigation and prosecution of persons suspected of money laundering and terrorist financing.

The signing ceremony was held in Brisbane, Australia during the Annual Meeting of the Asia Pacific Group on Money Laundering, said the Central Bank of Sri Lanka in a press release.

FIUs have been established in more than 130 countries as dedicated institutions to facilitate fight against money laundering, terrorist financing and other unlawful activities.

In Sri Lanka the FIU was established in 2006 under the Financial Transactions Reporting Act (FTRA) No.6 of 2006 and now operates in the Central Bank of Sri Lanka.

It also said money launderers and terrorist financiers are most often internationally connected and operate across borders. Financial intelligence and authorities also need to be internationally organized to fight these activities. Therefore, there is a need for FIUs to co-operate with each other and to exchange information.

MOUs will facilitate greater co-operation and co-ordination among FIUs in the exchange of financial intelligence.

The FIU-Sri Lanka has already entered into MOUs with Malaysia, Afghanistan, South Korea and Indonesia. Arrangements are currently being made to sign similar MOUs with other FIUs in the region including India, Bangladesh and Japan.

Source: Isria

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Azerbaijan approves Regulation on Financial Monitoring Service under Central Bank

By his decree from 16 July of the year President Ilham Aliyev has endorsed the Regulation on the Financial Monitoring Service under the Central Bank that is the main point in realization of the Law on counteraction to legalization of money and property received by criminal way and terrorism financing.

The Presidential Administration’s press service informs that the Central Bank was charged with approving Agency’s structure and staff for 15 days and solving issues following the decree. The Cabinet was given a month to make the proposals for bringing the appropriate legislative acts in compliance with the decree, make together with other bodies of executive power the relevant amendments to the standard and legal acts and solve the matter of material and technical maintenance of the Service.

Earlier Rufat Aslanli, the chairperson of the State Securities Committee and the head of the law-maker group, said that after adoption and commencement of the Draft Law, Moneyval (the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures) published a statement which covered positive results and achievements of Azerbaijan.

A Moneyval’s plenary session also made a decision to empower its office with the right to halt monitoring of Azerbaijan in case of the latter implements all decisions covered by presidential decree on law application. Among these decisions are approval of the Charter of Financial Monitoring Body under the Central Bank of Azerbaijan, adoption of relevant amendments to the Administrative and Criminal Codes.

The plenary session also decided to transfer to its Bureau the right to stop the monitoring of Azerbaijan in case the latter implements all decisions covered by the presidential decree on law application, in particular if Azerbaijan approves the Charter of the Financial Monitoring Body and passes draft amendments and additions to the Administrative and Criminal Codes.

Earlier this year Financial Action Task Force (FATF) called the member states and other countries to be extremely careful in deals with persons and financial organizations residing or located in Azerbaijan.

Moneyval’s next session will be held at the end of 2009 and Azerbaijan will have a chance for full removal of monitoring on simplified system.

On 24 February 2009, President of Azerbaijan Ilham Aliyev signed the Draft Law on counteraction to legalization of the money and property received by criminal way and terrorism financing adopted by the Parliament on February 10. The decree says of establishment of Financial Monitoring Service under the National Bank and gives a month to the NB to develop and submit the Regulation on the Service.

In its public statement passed on 12 December 2008 the FATF appealed financial institutions of other countries to be extremely careful in deals with Azerbaijan and carry out due check of clients to remove risk of money laundering/terrorism financing. To the Expert Group appeal it was indicated to re-consider the Bill on Counteraction to ML/TF passed in the second reading in Azerbaijan as it fails to conform to key international standards to the large extent and adopt immediately complex legislation complying with the requirements.

Rosfinmonitoring’s notification can aggravate realization of financial operations between Russia and Azerbaijan.

In its evaluation Moneval also pointed out that the country fails to fulfill structural, legislative and institutional requirements when certain type of institute is lacking in the country.

Out of the 40 FATF standards there were recognized Azerbaijan’s non-conformity in fight against breaches on money laundering, audit of clients, politically persecuted persons, new technologies and face-to-face business, non-standard deals, reporting on suspicious deals, internal control, audit, sanctions, foreign branches and subsidiaries, management and relations with clients, lack of a body on FIU, on statistics, freezing and confiscation of terrorist funds, non-profit organizations.

Source: ABC.AZ

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U.S. vs. UBS: A Fight Over Secret Swiss Bank Accounts

By Helena Bachmann / Geneva

Switzerland — the land of chocolate, watches and neutrality — isn't known for flexing its muscles in a heated standoff with another country. But now it finds itself pitted against the U.S. in a David and Goliath–style imbroglio that could damage diplomatic and economic relations between the two for years to come. On one side, the U.S. Department of Justice is accusing Swiss banking giant UBS of helping wealthy Americans hide billions of dollars from the tax man and insisting that the bank reveal their identities. On the other, the Swiss government is threatening to step in to protect the country's famous secrecy laws. The two have until Aug. 3 to come up with an agreement — or continue the fight in court.

UBS has been under investigation by the Department of Justice since last summer for allegedly helping wealthy Americans hide $200 billion in undisclosed offshore accounts to evade taxes. To absolve itself of criminal charges, the bank, one of the world's largest wealth managers, agreed to pay a $780 million penalty and release the names of 250 clients whom the Internal Revenue Service suspected of evading taxes.

But that wasn't enough to end the bank's troubles. In February, the Department of Justice filed a civil lawsuit against UBS seeking the identities of 52,000 more Americans suspected of stashing a total of $15 billion at the bank. This time, the Swiss were having none of it. Citing bank-client confidentiality guaranteed in the Swiss constitution, Switzerland's government has forbidden UBS from complying. It has also threatened to "take control of the data at UBS" to prevent the bank from handing the accounts over to the Americans.

The Swiss claim that the U.S. proceeding against UBS breaks the terms of the treaty between the two countries that permits an exchange of information on tax matters only in individual cases where a specific and justified request is made. "The blocking order that the Swiss government is prepared to issue would be a first, but it's a reasonable step to take in light of the IRS's threatened disregard for international treaties and provisions of Swiss law," says James Nason, spokesman for the Swiss Banking Association (SBA), a trade group for Switzerland's financial institutions.

The case was due to reconvene in Miami on July 13, but an eleventh-hour temporary reprieve was granted over the weekend, with a U.S. federal court postponing the ruling until Aug. 3 to allow both countries to negotiate a settlement.

In the meantime, the U.S. government's insistence on enforcing its laws on foreign soil doesn't sit well with the Swiss. "The U.S. seems to prefer the role of an increasingly obnoxious tyrant," says Andy Sundberg, a retired businessman and founder of the Geneva-based American Citizens Abroad, an advocacy group for expatriate U.S. citizens. "It is obsessed with humiliating this small country, forcing it to betray the principles of its own constitution."

Sundberg says that with the IRS intensifying its hunt for alleged tax evaders, Swiss banks, fearful of potential legal problems, are closing the accounts of resident Americans and refusing to open new ones. Both UBS and Switzerland's second largest bank, Credit Suisse, have told Americans to move their money into specially created units registered in the U.S., or lose their accounts. Many smaller Swiss banks are simply turning away Americans.

While the long-term damage to UBS may be difficult to gauge, experts say its reputation as a reliable institution has taken a beating. "Clients worldwide have lost trust in UBS's ability to protect their privacy," says Teodoro Cocca, former professor of asset and wealth management at the Swiss Banking Institute in Zurich. "This will affect UBS's attraction for wealthy clients — the main franchise of the bank."

But others are confident that the damage will be limited to UBS. "We don't foresee any negative impact on the Swiss banking industry as a whole," says Martin Naville, CEO of the Zurich-based Swiss-American Chamber of Commerce, an organization that helps Swiss companies in the U.S. and U.S. companies in Switzerland expand their businesses. "It's the cleanest system in the world, with strict laws on money laundering, terrorist finances, corruption and other illicit activities."

The future of Swiss banking secrecy, long a bone of contention among Switzerland, the U.S. and the European Union, also looks to come through this scandal unscathed. In a recent SBA poll, 91% of respondents favored the protection of their privacy in financial matters. "It's an expression of mutual trust between the Swiss state and its citizens," SBA's Nason says. "The government is able to secure its tax revenues without having to trample on privacy by demanding an automatic right of forced entry into bank accounts. The Swiss take great pride in this arrangement and reward it with a very high level of taxpayer honesty."

The U.S., however, has warned Switzerland that if a deal is not reached in the UBS case, it will "vigorously pursue" the matter and may even seize the bank's American assets. But such an aggressive response "might destabilize UBS and have a major impact on the American economy, so the U.S. government should proceed at its own risk and peril," says the Swiss-American Chamber of Commerce's Naville, who points out that both countries have "a lot at stake" in each other's economies. Switzerland is the U.S.'s 15th largest export market and, with almost $149 billion spent in 2008, its fourth largest recipient in terms of direct investment. Switzerland, for its part, invested nearly $195 billion in the U.S. last year.

As the clock ticks toward the Aug. 3 deadline, the Swiss are hoping that the future of their secrecy laws is something they can still bank on.

Source: TIME

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India has working groups with 27 countries to counter terror

There are Joint Working Groups (JWGs) on Counter-Terrorism between India and 27 countries and regional organisations including the US, Germany, Pakistan and the European Union, Lok Sabha was told today.

As part of its global cooperation to counter terror, JWGs have been established with 27 countries and regional organisations to provide a forum to share information and assessments, technologies and strengthening of multi-lateral efforts to combat terrorism, Minister of State for External Affairs Preneet Kaur said while replying to a question.

Noting that JWG has served as a useful platform, she said it addresses common concerns such as drug-trafficking, financing of terrorism, bio-terrorism, aviation security, cyber security and extradition.

Other countries with which India have JWGs include France, Australia, Italy, Singapore, China, the UK, Egypt, Poland and Russia.

Nepal: Strip maps pertaining to 96 per cent of the Nepal-India boundary have been jointly finalised and initialled, Kaur said.

Both the countries have also agreed to establish local level mechanisms to address any boundary concerns, she said.

Myanmar: India and Myanmar are in discussions to undertake road projects including one from Zawkhather (Mizoram)/Rhi into Myanmar, Kaur said.

Besides providing a valuable cross-border link between India and Myanmar, these roads also enhance bilateral trade and tourism, she added.

Source: Business Standard

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FinCEN Seeks Comments on AML Plan for Non-Bank Mortgage Lenders and Originators

The Financial Crimes Enforcement Network (FinCEN) today issued an advance notice of proposed rulemaking (ANPRM) to solicit public comment on a wide range of questions pertaining to the possible application of anti-money laundering (AML) program and suspicious activity report (SAR) regulations to non-bank residential mortgage lenders and originators.

“As primary providers of mortgage finance who generally deal directly with consumers, these lenders and originators are in a unique position to assess and identify money laundering risks and possible mortgage fraud while directly assisting consumers with their financial needs and protecting them from the abuses of financial crime,” said FinCEN Director James H. Freis, Jr.

In April, the Department of the Treasury and FinCEN coordinated an inter-agency effort with the U.S. Department of Justice (DOJ), the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and state officials to announce new initiatives to target foreclosure rescue scams and loan modification fraud. These initiatives are helping to coordinate information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions and educate consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam. FinCEN is seeing the results of these efforts with banks already filing SARs under the guidance issued in April. Utilizing the initiative’s advanced targeting methods, FinCEN has so far made 10 case referrals, involving over 80 suspects, to law enforcement investigators. FinCEN, at the request of civil and criminal law enforcement, is also contributing to 35 ongoing investigations, involving multiple suspects and hundreds of Bank Secrecy Act reports.

This coordinated effort combined with today’s announcement that FinCEN is considering applying AML program and SAR regulations to non-bank residential mortgage lenders and originators comes when millions of vulnerable homeowners are seeking assistance under the Administration’s Making Home Affordable program. These initiatives will help prevent criminal actors from perpetrating predatory schemes.

In FinCEN’s recently issued mortgage fraud reports, SAR analysis showed non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings. In addition, although its focus is limited to gathering information relevant to the possible AML responsibilities of this industry sector, this ANPRM is complementary to ongoing regulatory reform and consumer protection initiatives, as regulators and consumer protection agencies also benefit from the data provided by SARs.

SARs filed with FinCEN by financial institutions are a critical source of information for law enforcement in investigating and prosecuting mortgage fraud related crimes. FinCEN believes that new regulations requiring non-bank residential mortgage lenders and originators to adopt AML programs and report suspicious transactions could augment FinCEN’s initiatives in this area. In addition, in 2008, the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) became law. Among other things, the SAFE Act requires the development of a nationwide licensing system and registry for certain mortgage professionals that may serve to complement any related FinCEN efforts in the future.

“Broad public input through this ANPRM will aid policymakers seeking to ensure the appropriate regulatory regime for this industry sector,” noted Freis. “These financial professionals are ideally positioned to contribute to the promotion of safety and integrity in the U.S. mortgage marketplace.”

Under the Bank Secrecy Act, FinCEN can issue regulations requiring financial institutions to keep records and file reports determined to have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism. Federally regulated depository institutions are already required to have AML programs. This ANPRM considers adding companies that perform certain services with respect to residential mortgages, analogous requirements to those that currently apply to depository institutions performing those same services.

The ANPRM, as submitted to the Federal Register, is available on www.FinCEN.gov. Comments are due to FinCEN 30 days after publication in the Federal Register.

Source: RealEstateRama

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UK real estate agents need to join new AML register

All estate agents in the UK must register with a new anti-money laundering register that is being launched at the end of this month.

The Office of Fair Trading is reminding agents that it will be compulsory to belong to the register by the end of January 2010. Any agent who is not registered by then will be operating illegally.

The Money Laundering Regulations, which came into force on December 15, 2007 also apply to buyers' agents and relocation agents. Failure to register whilst carrying on business as an estate agent could result in prosecution and jail.

As the actual registration process will take around 45 days, the OFT is asking agents to apply to join the register as soon as it is open on July 31 and at least by the end of November as it expects a mad rush at the end of the year.

Agents will have to pay £115 per office, capped at £2,300 for a firm with 20 or more branches. There will be an annual fee payable after that, although the actual amount has yet to be decided.

While anti-money laundering laws do not include letting agents, the OFT is also warning that they do apply to letting agents under certain circumstances. If a letting agent deals in premium leases where companies 'purchase' leases for, usually, one or two years on behalf of their employees then they will need to register. This particular method of renting is popular with corporates such as American banks relocating personnel on assignments to the UK.

Money laundering regulations will also apply to letting agents who accept double instructions where the landlord/seller instructs them to market the property for sale or for rent.

Letting agents are also bound by the Proceeds of Crime Act 2002 which means that if they have suspicions about a landlord or tenant who might be money laundering, they have a legal duty to report those suspicions.

Source: Property Wire

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"Australians Laundered Millions Through Nz Accounts"

Two Australian entrepreneurs who laundered millions of dollars through New Zealand banks are to pay the Australian Tax Office over $NZ40 million in tax and penalties.

A former director of Murchison Metals and backer of the Sydney Swans, Phillip Grimaldi, will pay more than $A36m in tax and penalties, and Sydney property developer Garry Bonaccorso has agreed to pay $A3.5 million after the pair funnelled millions of dollars through a series of New Zealand bank accounts.

The money was disguised as consultancy and management fees when it left Australia, and was then sent back disguised as a loan, the Sydney Morning Herald reported today.

Eight ANZ accounts and two at Bank of New Zealand were used as part of the scheme.

Mr Grimaldi had $A14.3 million in these New Zealand accounts, while Mr Bonaccorso had $A220,000 in them.

More than $A1.25 million in an ANZ account in Auckland in the name of International Finance Trust Company was from the sale of 300,000 shares in Murchison Metals in June 2007.

Mr Grimaldi used the proceeds of the scheme to buy a $A300,000 Bentley, a $A645,000 boat and to fund a shopping spree at British retailer Harrods.

A separate court action has been brought by the New South Wales Crime Commission in the NSW Supreme Court, alleging that the funds are the proceeds of crime.

If they are found to have committed fraud the two men face up to five years in jail.

Both invested in the alleged money-laundering scheme, which was promoted by the Australian accountant Robert Agius, 59, based in Vanuatu.

The tax avoidance and money-laundering scheme was exposed by a joint taskforce of the federal police and the Tax Office, which has been tapping phones and raiding offices.

The pair are the largest clients of Mr Agius so far to face court orders to pay unpaid taxes.

According to a statement filed by a federal police investigator, Arthur Moerman, in the criminal case against Mr Agius, the scheme was a "round robin scheme".

An "initial analysis of all foreign company bank accounts operated by Mr Agius" indicated that more than $A100 million had been moved through them on behalf of hundreds of clients since November 2000.

Mr Grimaldi is alleged to have used Vanuatu companies, including RLB Investments, Iron Investments, Iron International and International Finance Trust Company to evade tax. RLB Investments was a big shareholder in Murchison Metals.

International Finance Trust Company made more than $10 million in payments to Mr Grimaldi in the two years to 2008.

A fortnight ago Justice Minister Simon Power told Parliament that New Zealand had been used to launder millions of dollars of criminal proceeds, as the Anti-Money Laundering and Countering Financing of Terrorism Bill passed its first reading on a unanimous vote.

"Last year, I am advised, New Zealand was used by an offender to launder almost $120 million from Australia through New Zealand and into Vanuatu," he said.

Source: guide2.co.nz

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US warns banks of terror financing in Pak, Iran

The United States has warned banks and other financial institutions in the country against shortcomings in measures against money laundering and terror financing in five nations, including Pakistan and Iran.

An advisory informed banks and other financial institutions operating in the US of "risks associated with deficiencies in the anti-money laundering and counter- terrorist financing regimes of ... Iran, Uzbekistan, Turkmenistan, Pakistan and Sao Tome and Principe".

The advisory, issued the Financial Crimes Enforcement Network, a part of the US Treasury Department, has referred to the recent statement issued by the Financial Action Task Force (FATF) -- a 34-member intergovernmental body established to combat money laundering and terrorist financing.

Going by FATF's website, India and Republic of Korea have observer status in the body. The 34 members include the US, the UK, Japan, Italy, China, Russia and Germany.

The FATF has said that it remains concerned about the money-laundering/terrorist-financing risks posed by Pakistan.

The intergovernmental body, however, welcomed the process under way to improve the anti-money laundering/ counter-terrorist financing regime in Pakistan

Regarding Iran, the FATF had raised concerns about the country's failure to meaningfully address the ongoing and substantial deficiencies in its anti-money laundering and combating financing of terrorism regime.

Source: The Hindu

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Hong Kong launches consultation on AML legislation

The Hong Kong Special Administrative Region (HKSAR) government on Thursday launched a three-month public consultation on a proposed framework legislation on anti-money laundering in respect of the financial sectors.

The Financial Services and the Treasury Bureau (FSTB) said the initiative was a direct response to a call from the Financial Action Task Force (FATF) for Hong Kong to provide statutory backing and appropriate sanctions for customer due diligence and record-keeping requirements for financial institutions, and to put in place an anti-money laundering framework for remittance agents and money changers.

The FATF was an inter-government body created in 1989 with the mission of pushing for and setting the international standards on anti-money laundering regime.

"The proposal is intended to address the deficiencies identified by the FATF in Hong Kong's anti-money laundering regime in its evaluation completed in 2008 and will help maintain Hong Kong's status as an international financial center," said the FSTB.

The proposed Hong Kong framework prescribes the customer due diligence and record keeping requirements for financial institutions, including banks and deposit-taking institutions, among others. It also provided for appropriate regulatory powers.

It provided for criminal and supervisory sanctions, with the establishment of an independent statutory appeals tribunal.

A licensing system will also be introduced for remittance agents and money changers for anti-money laundering regulation and administered by customs authorities.

The FSTB said it was aiming at another round of consultation on the detailed proposals towards the end of the year, adding that it was expecting the introduction of the bill into the Legislative Council in the second quarter of 2010.

Source: Xinhua

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US Treasury official presses Hong Kong bankers to help curb NKorean bank access

A top U.S. Treasury official met with Hong Kong regulators and bankers Thursday as part of an effort to keep North Korea from using the international financial system to fund its nuclear program and other illicit activities.

Stuart Levey, a U.S. Treasury undersecretary who oversees the department's terrorism and financial intelligence section, met with officials from Hong Kong's de facto central bank, the Hong Kong Monetary Authority, the bank said in a brief statement to The Associated Press.

The authority refused to release details of the talks.

Levey was also meeting with executives from HSBC, the giant London-based lender with major operations in Hong Kong and elsewhere in Asia, according to a person familiar with the matter. The person spoke on condition of anonymity because of the sensitivity of the situation.

The meeting was "to remind people that there are regulations," the person said.


Levey traveled to China and Hong Kong this week to gain support for U.S. initiatives to curb North Korea's access to banks and businesses to buy and sell missile and nuclear technology. He arrived Monday in China and was meeting with government officials and private sector executives Wednesday through Friday.

However, at least one Hong Kong-based bank, the Bank of East Asia, declined to meet with Stuart.

"He requested a meeting with us, but unfortunately we were not able to meet with him," said the bank's chief executive, David Li. "We have nothing to do with North Korea."

A Treasury spokesperson did not immediately return a message seeking comment.

The international community has been struggling to rein in North Korea since the reclusive totalitarian state conducted a nuclear test in May.

The U.N. Security Council last month adopted tougher new sanctions, which North Korea defied last week with missile launches.

U.S. officials have gone after North Korea's funding before.

In 2005, the U.S. imposed financial restrictions on Banco Delta Asia, a bank near Hong Kong in the Chinese territory of Macau, over allegations it helped North Korea with money laundering and other illicit activities.

The move effectively cut Pyongyang off from the global financial system, analysts say, because banks in other countries, including North Korean ally China, did not want to jeopardize access to the U.S. financial system.

The restrictions were lifted in 2007 to nudge North Korea back to stalled nuclear talks.

Source: Los Angeles Times

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