Mueller Investigation: Laundering in Washington?

 In AML Surveillance, Anti-Money Laundering, Political Corruption, Risk, Trending

Last week, Global RADAR reported on a probe launched into a controversial Uranium sale made between the United States and Russia during Barack Obama’s tenure as U.S. President in 2010. While centering on the opening of this investigation into potential misconduct involved with the sale, the article also touched on one of the more pressing issues seen in the United States today; that of alleged Russian involvement in the outcome of the 2016 presidential election. These claims have now led to the introduction of a separate investigation, one headed by Robert Mueller, special counsel for the United States Department of Justice. Mueller is currently serving to oversee the investigation into any ties/coordination between individuals associated with the campaign of President Donald Trump and Russian government officials, as well as any possible interference with the election by either party altogether. While still in its early stages, the investigation has already led to indictments against Trump’s former campaign chair Paul Manafort, as well as Manafort’s business associate Rick Gates. According to recently released reports, the indictment contains charges dating back further than ten years, with Manafort and Gates being accused of “making millions of dollars lobbying for a pro-Russia campaign in Ukraine and laundering that money through various offshore accounts and shell companies in order to hide its origins and avoid paying U.S. taxes” (Ben-Achour & Scott, 2017).

According to NBC News article “Manafort faces charges that are tough to beat”, cited in BSA News Now on November 1st, 2017, the main complaint in this case:

“alleges the washing of illegal money from unregistered lobbying activities for Ukrainian officials with ties to Moscow for the purpose of evading income taxes and engaging in other criminal activity. The complaint alleges that to hide payments from their consulting work in the Ukraine, Manafort and Gates laundered money through dozens of United States and foreign corporations, partnerships and bank accounts” (Mandell & Cevallos, 2017).

 

It has been alleged that Manafort, who has pleaded not guilty to all charges thus far, used the laundered funds (which amount to more than $18 million) to make lavish purchases, which include luxury cars, designer clothing, and high-priced real estate. Experts from the financial industry have viewed these attempts at laundering as quite “unsophisticated”, especially when considering they came from men of Manafort and Gates lofty stature. For the count of conspiracy to commit money laundering alone, the pair face a maximum sentence of 20 years in prison if convicted.

Although largely unrelated to the primary motive that warranted the investigation, many believe that the move to indict Manafort and Gates was made by Mueller and Co. primarily to gain information on higher-ups in the Trump administration, as well as anything that could tie Trump to collusion with Russia. That being said, the charges against the men are far from fabricated, as there is believed to be a very lengthy list of transactions and other financial information made directly by, or involving, these individuals to support the indictment. Money laundering is widely considered to be one of the more simple financial crimes to prove, thus the paper trail left by Manafort and Gates is expected to lead to their demise in the courtroom. This has many believing that a plea negotiation could soon be in the works, where more pertinent information may be released that pertains to Russian involvement in the election.

It is believed that President Trump expected the indictments against Manafort and Gates, but he was reportedly left “seething” following the announcement that his former foreign policy adviser George Papadopoulos pleaded guilty to making false statements to the FBI earlier this year, and is currently cooperating with Mueller’s Russian probe – leaving Republicans blindsided. Papadopoulos, who joined the Trump campaign in March of 2016, admitted to lying to federal agents about his relationship with a professor who had substantial ties to Russian government officials. Documents that include personal emails unveiled at Papadopoulos’s plea hearing earlier this month (he had admitted his guilt in secrecy early in October) show that “that the Russian government offered help to Mr. Trump’s candidacy and campaign officials were willing to take it” (Apuzzo, Goldman, Schmidt, & Rosenberg, 2017). Investigators are currently looking into the hacking of Democratic accounts by Russian operatives in 2016 and whether anyone close to President Trump participated in the effort. The next several months are shaping up to be rather eventful in Washington, and Global RADAR will be covering the Russia investigation and the case against Paul Manafort thoroughly in the weeks to come.

Weekly Roundup

Commonwealth Bank’s Old-School Approach to Banking

 

The Commonwealth Bank of Australia (CBA) announced that it will be taking a new approach to the tech-centered banking movement seen across the globe in recent years. The bank plans to move towards the development of better relationships with its customers through a greater reliance on regulatory technologies, an important custom they believe has been overlooked by most large-scale financial institutions (FI’s) for the better part of the last two decades. According to Andrew McMullan, head of Customer Decisioning at CBA, the company hopes to “recreate that relationship that the customer had with the bank or the banking manager back in the 1970’s”, a much more up-close and personal one that would mutually benefit the bank and its respective customers (McLean, 2017). Due to CBA’s large client base and 1,000+ branches located throughout Australia, the FI understands that the use of technology to better understand and meet the needs of its customers is paramount for its overall success and ability to continue its growth in the future. This technology is also valuable in that the company operates through online channels, making the ability to reach customers who are not visiting physical branches all the more vital.

One of the initial moves CBA plans to make involves the unveiling of updated, high-tech ATM machines powered by a decision-making engine that looks across many other customer relationships and channels. The ATM’s will ultimately allow the company to gain more feedback from, and information on, their customers, which they believe will allow them to enhance the overall customer experience. These ATM edits also come in the wake of the Australian Transaction Reports and Analysis Centre (Austrac) alleging CBA has been involved in “serious and systemic non-compliance” with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The claims stem from over 50,000 reported breaches of the Act directly related to CBA ATM machines and the failures in reporting cash transactions of over $10,000 made through these “intelligent” deposit machines.

Lobbying for EU AML Law Reform Underway 

Graft allegations against South African president Jacob Zuma came about this summer due in large part to his business and personal relations with South African business family, the Gupta’s. The ties have led to widespread claims of “corruption, undue influence and of state capture – a term which is used to allege that the government undertakes activities and decisions, decides some high level appointments, and determines control of some state enterprises, for the Gupta family’s direct or indirect benefit, or in agreement with the family” (Wiki, 2017). The Gupta’s and Zuma have vehemently denied the allegations thus far. Last week, Neena Gill, the spokesperson for the UK Labour Party’s economic affairs in the European Parliament, called for a review of the EU’s anti-money laundering (AML) regulations following widespread concerns over the potential involvement of EU banks in the allegations against the Gupta family. In lobbying for the strengthening of the EU’s AML laws, the main area Gill believes needs change is the governing of EU FI’s active in third countries. Due to the EU’s status as South Africa’s primary development and trade partner, this strengthening is seen as necessary in order to halt further money laundering in UK-headquartered financial institutions.

Investigations are currently underway by the UK’s Financial Conduct Authority (FCA) looking into “UK banks that have done business with the Gupta families and members of SA’s government” (Cronje, 2017). Gill hopes that these investigations will begin to target other European FI’s that may be implicated as well. In other news, the United States Federal Bureau of Investigation (FBI) has also opened an investigation into the Gupta family’s potential ties to U.S. entities.

Global RADAR will provide an update on the findings of the investigations as further information becomes available.

 

China Steps Up Its Real Estate AML Enforcement

The Chinese government recently announced its plans to unveil new anti-money laundering measures aimed at preventing the country’s now-thriving real estate market from becoming a hub for illegitimate money. In a joint statement on the budding legislation, the China Banking Regulatory Commission and the People’s Bank of China proclaimed that they will be seeking to increase financial transparency as it relates to the Chinese housing market, and will also increase scrutiny over money laundering practices and similar illicit activity in this sector. The Commission stated that greater emphasis will be placed on property developers, agents and banks, each of which “have an obligation to perform due diligence on potential buyers, including the source of their funding and their intentions” (Che, 2017).

Although detailed customer information is often more difficult to obtain than one might think, the Commission is pushing for the aforementioned entities to require potential home-buyers to use their legitimate forms of identification and their own bank accounts to pay for properties, as opposed to other means of purchase. China has been riddled with cases of fake identification being used to facilitate the purchases of high-profile properties throughout the country using dirty money, thus the need for reporting of potentially suspicious transactions and suspected money laundering cases is likely to aid immensely in directly targeting the issues at hand. These updated reporting requirements on cash payments will now need to be reported to the “China Anti-Money Laundering Monitoring and Analysis Center, the central bank’s anti-money laundering arm, within five working days after the payments occur” (Che, 2017).

Citations

Apuzzo, Matt, Adam Goldman, Michael S. Schmidt, and Matthew Rosenberg. “Paul Manafort, Who Once Ran Trump Campaign, Indicted on Money Laundering and Tax Charges.” The New York Times. The New York Times, 30 Oct. 2017. Web.

 

Che, Pan. “Quick Take: Regulators Take Aim at Money Laundering in Real Estate.” Quick Take: Regulators Take Aim at Money Laundering in Real Estate -Caixin Global. 1 Nov. 2017. Web.

Cronje, Jan. “Call to Strengthen EU Money Laundering Laws over Gupta Graft Allegations.” Fin24. 31 Oct. 2017. Web.
Mandell, Meredith, and Danny Cevallos. “Manafort Faces Charges That Are Tough to Beat.” NBCNews.com. NBC Universal News Group, 30 Oct. 2017. Web.

McLean, Asha. “Commonwealth Bank Wants to Take Banking Back to the 1970s.” ZDNet. ZDNet, 31 Oct. 2017. Web.

Scott, Amy, and Sabri Ben-Achour. “Follow the Money: Why the First Indictment Is Full of Money Laundering, Tax Fraud and Nothing on Russia.” Marketplace. 20 Oct. 2017. Web.

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