by Elfriede Sixt

Recently, the European Funds Recovery Initiative (EFRI) was joined by a group of more than 30 European1 people who fell victim to highly sophisticated and devious “boiler room” scams, which are currently coming from China and especially from its financial center, Hong Kong. The scammers routinely abuse the reputation of this Asian financial metropolis. By doing some research on this kind of scams, we have come to learn that with being a wonderful gateway between mainland China and the rest of the world and with being a known prospering investment place for Chinese technology companies, Hong Kong has clearly set the perfect grounds for immense fraud activities at the expense of unsuspecting Europeans for many years now. Evidently, hundreds, if not thousands, of Europeans have been transferring millions, if not billions, of their life-time savings to Hong Kong banks, trusted so it seemed in a safe and developed banking environment. Media reports about this kind of fraud occurring in Hong Kong date back to 20151.

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The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published the results of its Fast Track Peer Review (Peer Review) which assessed the events leading to the collapse of Wirecard AG and the supervisory response by BaFin (Bundesanstalt für Finanzdienstleistungaufsicht) and the Financial Reporting Enforcement Panel (FREP). The Peer Review focuses on the application by BaFin and FREP of the Guidelines on Enforcement of Financial Information (GLEFI) and on impediments to the effectiveness of the German two-tier supervisory system for financial reporting in the specific context of the Wirecard case. The Peer Review, based on the assessment, identifies a number of deficiencies, inefficiencies and legal and procedural impediments. These relate to the following areas: the independence of BaFin from issuers and government; market monitoring by both BaFin and FREP; examination procedures of FREP; and the effectiveness of the supervisory system in the area of financial reporting. The Peer Review provides recommendations to address these shortcomings.  Continue reading…

by Geert Vermeulen

The FinCEN files have caused quite some commotion recently. A large amount of secret information about suspicious transactions has been revealed and we are still working our way through the information. Most of the newspaper articles commenting on the FinCEN files focus on what went wrong at the banks. And as with many of these X-leaks, Y-papers and Z-files, the revelations will likely lead to a number of prosecutions, more legislation and stricter supervision. But what do we see when we take a step back and look at it from a distance? Above all, we see a lot of suspicious transactions. That was to be expected, of course, because that was the reason why these transactions were reported to FinCEN in the first place. You could also say that the system is working! And perhaps the banks on the other side of the transaction reported them as well? We don’t know. Continue reading…

Mr. Ladislav Hamran has been re-elected as President of Eurojust, the European Agency for Criminal Justice Cooperation. National Member for the Slovak Republic at Eurojust, Mr Hamran (47) was elected during a recent virtual meeting of Eurojust’s College for a new term of four years. Continue reading…

The Financial Conduct Authority (FCA) has published final rules banning the sale of derivatives and exchange traded notes (ETNs) that reference certain types of cryptoassests to retail consumers. The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the: 

inherent nature of the underlying assets, which means they have no reliable basis for valuation prevalence of market abuse and financial crime in the secondary market (eg cyber theft) extreme volatility in cryptoasset price movements inadequate understanding of cryptoassets by retail consumers lack of legitimate investment need for retail consumers to invest in these products  

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by Ahsan Habib

Criminals have long been coming up with creative and innovative ways to launder their illicit funds. When they started exploiting video games to satisfy their bad intentions, we the Risk Managers thought, maybe this is their last unconventional way of wrongdoing. But our thought has been proven wrong. In reality, bad actors did not stop their ‘winning race’. Yes, I am pointing at video games and the chocolate industry. Bad actors did not even spare these innocent products; rather to some extents they put question marks on the faces of online video games and chocolates. Continue reading…

The Banca d’Italia announced today that the ban on onboarding new customers at ING Italy, imposed in March 2019 has been removed. The decision follows the comprehensive steps undertaken by ING Italy to strengthen its processes and management of KYC compliance risks. Following an inspection by the Banca d’Italia, which had identified shortcomings in AML processes, in March 2019 ING Italy was banned from taking on new customers. Existing customers in Italy have continued to be fully served throughout the period.  Continue reading…

An alleged criminal network of copyright infringement hackers was recently dismantled by US authorities and their counterparts in 18 countries where they also received a great amount of support from Eurojust and Europol. This criminal network was known for pirating movies and distributing the illegal digital contents around the world. In a great coordinated effort, more than 60 servers were taken out of service in North America, Asia and Europe and several members of the criminal network were apprehended and taken in by the authorities. This crime group’s illegal activities ended up having significant negative effects, costing tens of millions of USD in losses annually to the US movie, television and other entertainment industries. Continue reading…

by Ahsan Habib

Sanctions cannot bring about success in isolation. The dialogue with the target country must be ongoing, both at the official and diplomatic level and via view exchanges with citizens and opposition groups in the target country. I would like to start with remembering the fairytale (which was quite familiar to me when I was a young child back home in Bangladesh) in which a little girl had a choice of three beds in which she could take a nap. The father’s bed was too hard, the mother’s was too soft, and only the baby bear’s bed was comfortable enough for her in which to fall asleep, finally she picked the bear’s one. Undoubtedly, those who impose sanctions should recall that Goldilocks (that little girl in the fairytale ‘Goldilocks and the Three Bears’) only slept soundly when she found the bed that was neither too soft nor too hard. Sounds weird at the beginning!! Trust me, it’s not weird, but rather relevant. Continue reading…