Is money moving to Estonia suspicious?

When The Australian newspaper examined data looking at international money movements they contact us to understand the data. An astonishing 11,444% increase in money moving from Australia to Estonia is certainly headline grabbing, but is it suspicious?  Looking at macro data, such as this, does not tell the whole story, so it’s important to dig deeper.  One of the functions of financial intelligence is to provide the questions which require further investigation.  There is a clear difference between unusual transaction behaviour and suspicious behaviour.  The article can be viewed at the below link.

The Australian article

Financial Crimes Summit, 2015

We were proud to sponsor the Financial Crimes Summit held in Sydney at the end of July.  It was a great collection of industry and government representatives sharing information, concerns and solutions. With such an enormous body of information over the 2 days, we have taken the time to cut it down to some of the key takeaway messages which should provide you with some insight.  Please feel free to contact us at AML Solutions International for further information.

  1. Financial crimes involving the various new iterations of cyber crime and ID theft is a growing concern for both financial institutions and law enforcement.
  2. De-risking is currently a hot topic for financial institutions – with some consequences impacting on the alternative remitter sector struggling to remain in the regulated financial system.
  3. A point for debate revolves around the future regulatory management of the remittance sector which some industry members expect to return to its more informal hawala process of moving value without reporting.  Will this see the development of trade based hawala?
  4. We are seeing a diverse response by industry in the management of AML/CTF compliance.  Some sectors, as a result of adverse media exposure and regulatory penalties have thrown resources at the problem.  Other sections have not responded at all, preferring to offer a mirror to their head of AML compliance in order to show them the full size of their compliance team.
  5. AML/CTF compliance business units have always been viewed as costs centres rather than the opposite. Could the financial sector have a paradigm shift in their thinking and ask themselves; what is the cost of compliance versus the cost of non-compliance?
  6. Bitcoin and other crypto-currencies are here to stay and the financial sector.  The world’s’ central banks​ need to be more aware of this rapidly growing phenomenon and have a globally consistent regulatory and/or licencing approach.  One industry leader indicated that there is an estimated 153 virtual currencies in play today.
  7. We have seen a paradigm shift in law enforcement’s efforts from a national or domestic perspective to a global one.  Borders are inconsequential to crime syndicates which has impacted on the way intelligence and law enforcement approach their work.
  8. Regulators and law enforcement are moving from punishment frameworks to preventive & disruptive frameworks. As a matter of debate, Australia’s latest Mutual Evaluation Report in April 2015 noted that AUSTRAC’s compliance efforts were disruptive at best and deficient in their enforcement efforts.
  9. Law enforcement is moving from evidence gathering to intelligence & analysis.
  10. Some institutions have combined ABC, AML and fraud under the banner of financial crime.
  11. The major banks have joined forces to share fraud working group to share experiences and knowledge in the fraud environment.
  12. The next logical step should be to broaden the scope of this working group to incorporate all matters relating to AML/CTF and ABC.
  1. It is acknowledged that the single largest holding of financial information sits within the banks.  It was proposed that this financial data could be better used to conduct industry based intelligence products which can be used to inform internal risk financial crime processes.  For example, develop a number of “profiles” i.e a typical import/export business, or other cash intensive business, and their access to various financial products and analyse their transaction patterns.
  2. Transaction Monitoring Systems (TMS) traditionally focus on the unusual transactions & patterns (exception reporting), however it is now proposed the evolution of TMS should now focus on what has been historically considered usual and interrogate their databases for peer comparison and formerly usual transactions now to be considered unusual? In short, does a ‘plumbers’ financial profile at one major look the same at another major bank?  Look for the unusual in the usual.

AML/CTF deficiencies in Australia

“Australia has not implemented a targeted approach nor has it exercised oversight in dealing with non-profit organisations (NPOs) that are at risk from the threat of terrorist abuse. Authorities have not undertaken a review of the NPO sector to identify the features and types of NPOs that are particularly at risk of being misused for TF.”

This is the finding from the international delegation who recently conducted an assessment of Australia’s efforts in relation to Anti Money Laundering & Counter Terrorism Financing (AML/CTF).

The mutual evaluation report of Australia sets out how well Australia has implemented the technical requirements of the FATF Recommendations and how effective its AML/CFT system is. The report presents the key findings of the assessment team and the priority actions for Australia to improve its AML/CFT system. The report was released by FATF (Financial Action Task Force) last week.

Other findings highlight a massive hole in the oversight of non-financial businesses and professions such as lawyers, accountants and real estate agents. These key sectors are not subject to AML/CTF requirements even though they have been identified to be of high ML risk in Australia’s National Threat Assessment (2011).

There are 14 findings in the report, many highlighting good work and others indicating further improvements to be addressed.

What the above to key findings indicate is that we know that charities and non-profit organisations can be used as vehicles for moving money for terrorist purposes, however there are no controls in place. So we don’t know who is interacting with these organisations in order to determine the true extent of the risk.

Also the lack of obligations and oversight of lawyers and accountants, as gate keepers of significant financial information, means that organised crime can conduct money laundering business without any concerns through these channels. We also know that organised crime figures like to spend their money on expensive houses and cars, and yet these areas are not regulated. They have been on the drawing board since 2006 and still nothing has been done. Obviously there has been no political will to see this happen.

In 2011 the ACC estimated that at least $10 billion is laundered in Australia each year.

Click here for the full FATF report

Namibia success

We are extremely pleased to see that the Financial Action Task Force’s (FATF) International Cooperation Review Group has removed Namibia from their watchlist.  While there will be work to continue in Namibia, and indeed every country, to reduce the risk of money laundering and terrorism financing, it’s great to see progress.  We at AML Solutions International can attest to the genuine commitment by all members of the Namibian FIC to continue to improve the AML/CTF capacity across all sectors of law enforcement and regulated entities.

“The FATF welcomes Namibia’s significant progress in improving its AML/CFT regime and notes that Namibia has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2011. Namibia is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process.”

We are proud to have contributed, in some small way, to the progress of the AML/CTF capacity in that country.

Click here for the FATF announcement.

Click here for a news article from The Namibian newspaper.

AML questions reach beyond HSBC

For many, HSBC has been the public face of AML compliance breaches since it’s massive $1.8 Billion fine a couple of years ago.  By no means has it been the last of the big banks nor the largest, with BNP Paribas facing a $10 Billion fine, handed down by Regulators but the HSBC story has had greater legs than the others.  These immense actions are no doubt sending off alarm bells through various sectors of the financial industry, far beyond just the banking sector.

With that in mind, Reporting Entities of all descriptions should be paying attention, and taking appropriate risk mitigation action.  The below article asks some key questions relating HSBC which could equally be posed to other enterprises.  It is simply a case of learning from the mistakes of others.

Click here to read the article.

AML/CTF workshops in Namibia

We were pleased to have worked with the Namibian Financial Intelligence Centre over the last few months of 2014 to deliver a series of workshops helping to improve the AML/CTF capacity of law enforcement and intelligence agencies throughout the country.  13 workshops in 12 cities and towns in every corner of Namibia, reaching approximately 500 members of 7 different agencies.  It was a resounding success with 99% of participants agreeing that it was of a high quality and provided valuable information.  Namibia is now well placed to see an increase in AML related prosecutions and a stronger report card in their upcoming Mutual Evaluation Report.

AMLSI Director Todd Harland delivering a workshop in Tsumeb, Namibia.
AMLSI Director Todd Harland delivering a workshop in Tsumeb, Namibia.

Interview regarding wildlife poaching

Elephant tusks

In light of the recent UNODC Anti Wildlife Poaching Workshop in Botswana, Director of AML Solutions International, Mr Todd Harland, was recently invited to discuss the extent of illegal wildlife poaching in Africa on Brisbane radio station River 94.9.  Thanks to the host of the Great Weekender program, Danny Hoyland OAM, for providing a forum to have this serious crime brought to the attention of the people of Australia.  We trust that our contribution helps move the issue further forward and we can put an end to these crimes by following the money trails and closing down the demand.

Due to time restrictions not all topics could be fully explored and it’s important to understand some of them.  The reason for the rhino horn trade is based on a long standing, and mistaken belief, that it is an aphrodisiac.  The reality is the horn is made of the same substance as our hair and fingernails, and therefor as an aphrodisiac it’s about as effective as chewing your nails.  Rhino horn is valued at approximately $65,000 per kilogram and has been transported into Asia in suitcases on regular passenger aircraft.

Research has also shown that in a recent survey, approximately 84% of Chinese felt that ivory was a great way to display ones wealth and most people would buy some if they could. In 2010 the rate of killing elephants, for their tusks, exceeded the birth rate and so the population is now in a steady decline.  Elephant tusk is valued at approximately $3000 per kilogram and is has been seized by authorities in large shipments within sea faring cargo containers.

These are deep seated beliefs in the Asian community and as such a determined education campaign must be used to change those views while the intelligence and law enforcement community track the money flows and prosecute the organised crime syndicates who trade in these commodities.

If this is an issue that is important to you, please consider how you can contribute and start by visiting the United for Wildlife website.  Also join the conversation on Twitter and Facebook #WhoseSideAreYouOn.

Buddhist nun suspected of money laundering

In an unusual case of what you see is not always what you get, the Australian Federal Police (AFP) want to seize more than $4.3 million from a Buddhist nun’s bank accounts because they suspect she is a member of an international money laundering syndicate.

Police are alleging the nun attempted to disguise the various cash deposits into Australian bank accounts by making them at a variety of branches throughout Victoria and New South Wales.  During the placement stage of the alleged money laundering, 78 cash deposits were structured to be under the $10,000 reporting threshold. Also it is alleged that telegraphic transfers and a money changer in Hong Kong were also used to make the deposits from off-shore.

The 78 deposits amounted to over $600,000 while the entire amount in the nuns bank accounts was approximately $4 million.

This article raises some pretty clear red flag indicators for reporting entities and intelligence agencies to track to conduct their inquiries as to whether or not the behaviour is suspicious.

Click here for the full article.

US cracks down on wildlife poaching

There is a growing ground swell of support for action to be taken with regards to the massive spike in illegal wildlife poaching and smuggling.  The US ABC News network has published an article demonstrating that the US is keen to be heavily involved.

The funds raised from all forms of wildlife poaching, particularly killing elephants and rhinoceros for their tusks and horns, is big business which raises significant funds.  These profits are now known to be used by terrorist organisations to pay for their operations.  The reason for any criminal syndicate to commit crimes is simply for profit and terrorist organisations are no different.  They require these funds for all sections of their operation from the very basic logistical needs of food, shelter and transport all the way to through the purchase of weapons and maintenance of training facilities.


Click here for the full article.