Financial Regulatory Forum

HSBC victory in Shah claim a relief to bank money-laundering monitors

By Martin Coyle

LONDON/NEW YORK, May 17 (Thomson Reuters Accelus) – Counter-money laundering officials have welcomed a London High Court decision that saw wealthy Zimbabwean businessman Jayesh Shah fail in his $300 million claim against HSBC Private Bank. Yesterday’s judgment is a relief to financial businesses  who feared the impact of a Shah victory on overhauling their processes for suspicious activity reporting.

The case focused on HSBC’s decision to block four transactions totalling more than $38 million between September 2006 and February 2007. The bank suspected Shah of money laundering and sought consent from the Serious Organised Crime Agency (SOCA), the UK’s financial intelligence unit, to proceed with the transfers. Shah claimed that the delay in carrying out his requests in part led to the Reserve Bank of Zimbabwe freezing his investments in Zimbabwe and caused him significant losses. SOCA later gave consent to the transactions as legitimate. Shah had ‘parked’ the majority of the money in his HSBC account following an attempted fraud on his Credit Agricole account in July 2006. (more…)

Squeeze on money-transfers to Somalia requires new vigilance by U.S. banks

By Brett Wolf

ST. LOUIS/NEW YORK, Jan. 27 (Thomson Reuters Accelus) – Somalis and Somali-Americans in Minneapolis, Minnesota are struggling to send money to their families now that the small, ethnic-based, money-remittance firms they relied on are no longer operating. Banks are no longer willing to process their transactions;  they worry that such transactions involving “hawala” transfer agents, commonly known as “hawaladars,” will cause the banks to run afoul of U.S.  sanctions and laws against money laundering and terrorism financing.

The hawaladars in Minneapolis and other cities that have experienced similar problems accessing bank accounts continue to seek ways to wire money to counterparts — often in Dubai, United Arab Emirates — so it can be forwarded to recipients elsewhere in the Middle East, Africa and Asia though informal  networks, experts in anti-money laundering enforcement say.  As a result, U.S. banks must beware of customers who might be running clandestine hawala operations from personal or business accounts. (more…)

  •