Structuring, smurfing and plain old tax evasion: This month’s top financial fraud news

March 16, 2017

HSBC: Lawyers for the U.S. government and HSBC Holdings have appealed to federal courts to block the release of report that shows how the bank is improving its money laundering controls. Dean Moore, a 53-year old Pennsylvania chemist, whose home is being foreclosed by HSBC, is leading the push for publication of the report. According to Moore, the monitor’s report on how the bank is doing in fixing its compliance and money-laundering issues is relevant to his case.

Western Union: According to an investigation by the Federal Trade Commission, Western Union was aware of the hundreds of millions of dollars being sent to China over a five-year period in structured transactions that were designed to avoid the reporting requirements of the Bank Secrecy Act. To make matters worse, much of the money was being sent by illegal immigrants to their human smugglers. Western Union has agreed to pay a settlement of $586 million for its criminal violations including willfully failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud. In the meantime, human traffickers will now find it harder to move money.

Manco & Manco Pizza: One of the owners of a popular Jersey shore pizza restaurant chain was sentenced to 15 months in jail for structuring financial transactions to avoid reporting requirements and to commit tax evasion.

Sun Life Financial Investments Bermuda: The financial company was fined $1.5 million for failing to comply with the country's regulations against money laundering and terrorist financing. According to the regulator, the company breached their requirements to: 1) apply proper customer due diligence measures; 2) monitor ongoing business relationships; 3) cease transactions where it is not possible to apply customer due diligence measures; 4) apply enhanced due diligence; and 5) establish and maintain appropriate and risk-sensitive policies and procedures.

Canadian real estate market: Tightening capital controls in China is forcing foreign real estate buyers to rely on smurfing to buy Canadian properties. Regulations in China only allow Chinese citizens to convert up to USD $50,000 of yuan per year. This is not sufficient for most foreign property purchases, which is forcing many to resort to smurfing, a practice where—for a fee—family, friends, strangers and underground banks wire large amounts of money in small sums to separate bank accounts abroad to avoid scrutiny from financial regulators. While monies may not have been obtained illegally, smurfing is seen as a form of money laundering and is considered a crime in many jurisdictions.

Merchants Bank of California: The California bank has been fined USD $7 million for willful violations of several anti-money laundering rules when providing services for check cashers and money transmitters without proper oversight to detect or report any suspicious activity. According to FinCEN, the bank also failed to conduct due diligence on foreign correspondent accounts. Over a three-month period, Merchants processed USD $192 million in high-risk wire transfers through some of these accounts. The bank used to provide wire transfer services to Somalia, one of the most corrupt countries in the world, but it had to end the service after pressure from the U.S.

To receive more AML and fraud stories, email aml@caseware.com to sign up for the CaseWare Analytics blog newsletter.

 

About Anu Sood:

Anu Sood is the Director of Product and Corporate Marketing at CaseWare Analytics and is responsible for the company’s global marketing strategy. Prior to CaseWare Analytics, Anu worked in various roles in the high-tech industry and her accomplishments range from writing software for telephone switches to launching a new global satellite communication service. Anu has extensive experience in strategic marketing, corporate communications, demand generation, content marketing, product management, product marketing and technology development. 

Connect:    Anu Sood

« Back to Blog

Add new comment

Plain text

  • No HTML tags allowed.