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Money laundering and terrorist financing have been thrust further into the spotlight over the last 12 months. One notable legislative change is the implementation of the UK’s Economic Crime Act. In the US, the Biden administration has continued to focus on strengthening laws and regulations to tackle illicit financial flows and modernising, building and enhancing regulatory and enforcement frameworks, particularly in the crypto space. Companies are directing more attention toward compliance, including anti-money laundering efforts. Having the right processes, programmes and policies in place is key. Regular internal training programmes should be carried out to ensure staff members understand the risks and their own responsibilities.

UNITED STATES

Guidehouse

“The threat and complexity of financial crime continues to grow as transformation of global payment infrastructure continues. The worldwide adoption of instant and contactless digital payment methods has provided bad actors the opportunity to take advantage of weaknesses in the newer digital systems. Financial crimes involving cyber security have become increasingly sophisticated and harder to detect as cyber criminals are getting more creative in their methods by using a combination of technology and social engineering.”

CANADA

McCarthy Tétrault LLP

“In line with global trends, financial crime continues to grow in frequency and complexity in Canada. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s financial intelligence unit, reported that it generated 2292 unique disclosures of actionable financial intelligence in 2022 in support of money laundering and terrorist financing investigations across Canada and around the world, which was the second-highest number of disclosures it has produced in a single year. The shift to electronic transactions has also had implications for organised crime by creating new opportunities, or expanding existing opportunities, for the perpetration of fraud.”

CAYMAN ISLANDS

Ocorian Law (Cayman) Limited

“The Cayman Islands is a sophisticated international financial centre with a historically developed anti-money laundering (AML) regime. Its financial services offering has a strong focus on institutional business and it is often the jurisdiction of choice for investment fund, structured finance, acquisition, joint venture, borrowing and insurance vehicles and other sophisticated entities. As global financial crime has grown in frequency and complexity, the AML regime of the Cayman Islands has evolved significantly to combat it and to protect the jurisdiction’s standards and reputation.”

UNITED KINGDOM

Efficient Frontiers International Ltd

“Criminals are increasingly smart and organised; the ability to hide in plain can be advantageous. As cash is decreasingly used in the wider economy, there is a pivot toward more innovative methods of money laundering. Financial institutions (FIs) need to be able to spot what does not make sense, be informed of new typologies, cooperate across the financial system and with law enforcement, and adapt to using machine learning where it makes sense to do so. A lack of transparency in beneficial ownership is a subject which has been tackled by most UK and European firms since the introduction of the Money Laundering Directives.”

FRANCE

Quinn Emanuel Urquhart & Sullivan LLP

“As reported by the AML/CFT Advisory Board (COLB) in its ‘2019 AML National Risk Analysis’, France is particularly exposed to various criminal threats related to tax and social benefits fraud, organised crime, particularly human and drug trafficking networks, the utilisation of new technologies, such as fraudulent international wire transfer orders and fake investment scams, and corruption. All of these fraudulent behaviours are considered by French authorities to be the greatest ongoing money laundering-related threats in France.”

NETHERLANDS

Norton Rose Fulbright LLP

“The Netherlands is a major international financial centre with a large and globally interconnected financial system. From the recent mutual evaluation report of the Netherlands published by the Financial Action Task Force (FATF), fraud- and drug-related offences are considered major predicate offences that account for more than 90 percent of the proceeds of crime in the Netherlands. A variety of methods are used to launder proceeds, including licenced banks, financial intermediaries, dealers in high-value goods, purchasing real estate or using companies or underground banking and unlicenced payment service providers.”

GERMANY

Freshfields Bruckhaus Deringer LLP

“There is a debate in Germany as to whether financial crime is rising considerably, or whether it is merely being prosecuted much more vigorously than in the past. Prosecutions and convictions for money laundering are increasing sharply. The police statistics for 2021 report 1757 new investigations for money laundering, a 33.2 percent increase in just one year. Germany’s Financial Intelligence Unit, the authority responsible for analysing suspicious activity reports, has identified the real estate sector, the gambling industry, VAT fraud, specifically through the use of ‘missing traders’, organised crime, trade-based money laundering, cash purchases of high-value goods, and the use of cryptocurrency as the main risk areas for money laundering in Germany.”

SWITZERLAND

Pestalozzi Attorneys at Law Ltd

“On 12 October 2022, the Swiss Federal Council instructed the Federal Department of Finance (FDF) to draft a bill aimed at increasing transparency around the beneficial owners of legal entities by end of June 2023 at the latest. This bill should strengthen prevention and prosecution of financial crime and, in turn, the integrity and reputation of Switzerland as a main financial hub. In particular, the bill will introduce a central register to identify beneficial owners and new obligations when it comes to financial crime risks.”

AUSTRALIA

Herbert Smith Freehills

“It is somewhat difficult to ascertain the rate of growth of financial crime in Australia because criminals are motivated to disguise the profits of crime. However, in 2022, it was estimated that economic crime costs the Australian economy up to AU$60.1bn per year. Nevertheless, we can identify some key trends in financial crime. Technology changes provide new and changing opportunities for criminal activities. Scams remain a key concern in Australia, with the Australian Securities and Investments Commission (ASIC) stating that Australians lost more than $242m to investment scams in the first half of 2022.”

CONTRIBUTORS

Efficient Frontiers International Ltd

Freshfields Bruckhaus Deringer LLP

Guidehouse

Herbert Smith Freehills

McCarthy Tétrault LLP

Norton Rose Fulbright LLP

Ocorian Law (Cayman) Limited

Pestalozzi Attorneys at Law Ltd

Quinn Emanuel Urquhart & Sullivan LLP