Financial Regulatory Forum

Standard Chartered case highlights competing agendas of compliance, legal departments in firms

By Julie DiMauro

NEW YORK, Aug. 13 (Thomson Reuters Accelus) – The sanctions evasion case against Standard Chartered PLC highlights a governance disconnect at many financial services firms between the legal and compliance departments and their perceived obligations, with the former being focused on the letter of the law and the latter on its spirit.

Standard Chartered’s general counsel sent emails to the bank’s compliance officer that “embraced a framework for regulatory evasion,” according to the case filed against the bank last Monday by New York’s top financial regulator.

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U.S. chases elusive currency-detection technology

By Brett Wolf

ST. LOUIS, May 4 (Thomson Reuters Accelus) – To combat money laundering and contain the drug war raging along the U.S.-Mexico border, U.S. authorities are seeking technology that can detect the hoards of cash that smugglers try to spirit abroad.

But as results come in on initial development efforts, it is uncertain whether the technology is within reach.

“Right now we don’t know if it’s even feasible to make it work,” said John Verrico, a spokesman for the U.S. Department of Homeland Security’s and Technology Directorate. “There is a whole lot that has to be considered before we can say we have viable technology.”

Vigilance over politicians’ accounts urged as cash flows from Middle East

By Martin Coyle

LONDON, March 1 (Complinet) – An international financial crime watchdog has been urged not to relax its stance on monitoring political officials in the light of the desperate scramble to freeze the assets of deposed leaders in the Middle East and North Africa.

Global Witness, an anti-corruption pressure group, said it was “worrying” that the inter-governmental Financial Action Task Force, through a consultation exercise launched in October, was seeking to remove the need for banks to scrutinise family members and close associates of “politically exposed persons,” or PEPs. It added that recent events demonstrated that the regime needed to be tightened, not loosened. (more…)

US Fed cash-flow data called underused weapon in war on drugs (Complinet Special Report)

U.S. Attorney Jeffrey H. Sloman (C) of the Southern District of Florida speaks at a press conference in Miami, Florida March 17, 2010. Sloman announced a settlement that the Wachovia Bank unit of Wells Fargo & Company has agreed to pay $160 million as part of a deal to settle U.S. allegations that it laundered Mexican drug money. At left is Deputy Chief Counsel Daniel Stipano of the Office of Comptroller of Currency and at right is Mark Trouville, Special Agent in Charge, Drug Enforcement Administration, Miami Field Office. REUTERS/Joe SkipperBy Brett Wolf, Complinet

ST. LOUIS, Jan. 31 – The consumption of illegal drugs generates tens of billions of dollars for Mexico’s drug cartels each year, and the fight against it creates significant challenges for those who oversee and participate in the US financial system. The river of money flows into Mexico mostly in the form of cash, often hidden in secret vehicle compartments. The money feeds cartel operations and stokes conflicts with the government and with rivals that have killed an estimated 35,000 people during the past four years. US authorities have bolstered their efforts to halt the cross-border cash shipments, but their progress has been limited. Policymakers are desperately searching for better ways to fight the flow.

An investigation by Complinet has revealed details of how the money flows, and a potentially underused tool: the closely held “country flow” data maintained by the New York Federal Reserve Bank. The records, only recently made public, document the international flow of US cash and could help to illuminate the shadowy paths taken by drug money. They are so closely guarded, however, that experts say the ground-level investigators who could make the best use of it never see it, and the issue is so sensitive most government officials are unwilling to talk about it for attribution.

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US revises anti-money laundering manual

Bank regulators revised an anti-money laundering examination manual. But government watchdogs said financial regulators are still not doing enough outreach to local law enforcement agencies to aid in the battle against terrorist funding and drug smuggling, reports Thomson Reuters WG&L Accounting & Compliance Alert. (more…)

COLUMN – Drugs, terrorism and shadow banking: Bernd Debusmann

(Bernd Debusmann is a Reuters columnist. The opinions expressed are his own)

By Bernd Debusmann

WASHINGTON, March 26 (Reuters) – The trouble with moving big amounts of cash, from a criminal’s point of view, is threefold. It’s bulky, it’s heavy and it smells.

A stash of $1 million in mixed bills weighs around 100 pounds (50 kilos). Specially-trained dogs can sniff out bulk cash in a heartbeat.

All of which helps to explain why drug cartels and financiers of terrorism appear to have been making increasing use of what FBI chief Robert Mueller calls a shadow banking system.

Wachovia in talks with U.S. to settle probe-WSJ

   March 15 (Reuters) – The Wachovia Bank unit of Wells Fargo & Co <WFC.N> is in talks with the U.S. Justice Department to settle complaints relating to the alleged failure in bank controls that enabled Mexican exchange houses to launder drug money, the Wall Street Journal said, citing people familiar with the situation. (more…)

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