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Connecticut Department of Banking Issues Advisory on Money Transmission

By Andrew N. D'Aversa on July 29, 2022
Posted in ATMs, Money Services Business, Money Transmitter, Prepaid Account Provider, Virtual Currency
The Connecticut State Capitol Building

On July 20, 2022, the Connecticut Department of Banking (the “Department”) issued a Consumer and Industry Advisory on Money Transmission (the “Advisory”).  The Department believes the Advisory was necessary for two reasons.  First, the Department notes the “significant disruption to traditional money transmission systems” caused by the “increased use of…

Wirecard: A Scandal

By Mary K. Treanor on July 16, 2020
Posted in Financial Crimes Enforcement Network (FinCEN), Money Services Business, Prepaid Account Provider, Whistleblower

“Germany’s Enron” Continues to Stagger Forward

It’s time to talk about Wirecard AG. In many respects, it’s yet another accounting fraud scandal – albeit a massive one. But now, inevitably, it also has become a money laundering scandal, courtesy of German law enforcement authorities – and also now U.S. authorities – which are looking into the alleged misuse of shell companies to facilitate the pursuit of pornography, gambling and marijuana distribution. And it’s a story that clearly will be with us for some time, like the Danske Bank disaster. We surely will be blogging on this scandal going forward.

The fallout from the massive, years-long accounting scandal involving Wirecard, the German-based fintech giant, recently has blossomed to implicate alleged money laundering failures by the company and even systemic failures on the part of German regulatory authorities. Wirecard, a payment processor publicly valued more than some of the world’s largest banks, has been in a free-fall since a bombshell report by the Financial Times (“FT”) on February 7, 2019 revealed Wirecard’s widespread accounting fraud after being tipped off by a whistleblower.

As with the Dankse Bank scandal, a whistleblower allegedly was instrumental in causing the financial house of cards to collapse. This is also a story of investigative journalism and its consequences. Please check out this YouTube video by a FT reporter describing the efforts by himself and his colleagues to investigate Wirecard, and what he believed occurred as a result.

This June, Wirecard filed for insolvency and disclosed that it owed creditors almost $4 billion and that 1.9 billion euros – two-thirds of the company’s 2019 revenue – was missing from its accounts. In an effort to calm investors, Wirecard announced earlier this month that James Freis – previously the director of the Financial Crimes Enforcement Network (“FinCEN”) – would serve as the new CEO just after German authorities arrested Wirecard’s longstanding CEO, Markus Braun, for his alleged role in the scandal. Wirecard initially hired Fries as a Compliance Officer but, in a shocking turn of events, appointed him as interim CEO the very next day.

Despite these efforts, Wirecard’s legal troubles continue to grow and new reports emerged last week implicating the company in various money laundering schemes entirely unrelated to the accounting fraud. In an even stranger twist: with the details of both scandals emerging, the spotlight has turned to the alleged inaction of Germany’s regulatory authorities – putting aside the issue of Wirecard’s own auditors – and how they can and should prevent future scandals.
Continue Reading  Wirecard:  A Scandal

Popular Video Game Serves as a Reminder of Regulatory Risks of In-game/In-app Virtual Currencies

By Brad Gershel on January 29, 2019
Posted in Anti-Money Laundering (AML), Prepaid Account Provider, Virtual Currency

“V-bucks,” the in-game virtual value currency of the wildly popular video game, Fortnite, is reportedly being used to launder the proceeds of stolen credit cards. An investigation by The Independent reveals that discounted V-bucks are being sold in surprisingly large quantities on the dark web – the relatively hidden section of the internet only accessible using special software. Yet these purportedly ill-gotten gains are also being spread throughout the open web, albeit on a smaller scale, through advertising on well-known social media platforms.

It has been acknowledged for years that gaming currencies offer an attractive prospect to commit money laundering. Indeed, a 2013 report for the United Nations Office on Drugs and Crime revealed that online games were becoming increasingly popular venues for criminals to “clean” their money through “the opening of numerous different accounts on various online games to move money.” Among the most common methods was the transfer of in-game currency to associates in other countries, who would then exchange it for fiat currency.

In light of such news, we discuss the factors that determine whether in-game and in-app virtual currencies, such a V-bucks, may be subject to the nation’s traditional anti-money laundering (“AML”) rules and regulations.
Continue Reading  Popular Video Game Serves as a Reminder of Regulatory Risks of In-game/In-app Virtual Currencies

Proposal to Add Prepaid Products to Cross-Border Reporting

By Kevin D. Leitão on June 19, 2017
Posted in Anti-Money Laundering (AML), Bank Secrecy Act (BSA), Currency and Monetary Instrument Report (CMIR), Prepaid Account Provider, Virtual Currency

Part III of the Analysis of the Combatting Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017

As we recently blogged, Senators Chuck Grassley (R-Iowa) and Diane Feinstein (D-California) introduced on May 25, 2017 a bill, S. 1241, entitled the Combatting Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017. Although most sections…

Senators Propose the Combatting Money Laundering, Terrorist Financing, and Counterfeiting Act

By Peter D. Hardy on June 11, 2017
Posted in 18 USC 1956, 18 USC 1957, Bank Secrecy Act (BSA), Bulk Cash Smuggling, Correspondent Bank Accounts, Criminal Enforcement, Intent to Conceal, International Tax Evasion, Money Services Business, Offshore Account, Panama Papers, Prepaid Account Provider, Terrorism Financing, Virtual Currency

Senators Chuck Grassley (R-Iowa) and Diane Feinstein (D-California) introduced on May 25, 2017 a bill, S. 1241, entitled the “Combatting Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.” Although it is of course impossible to know whether this bill ultimately will be enacted into law, the bill addresses a lengthy catalogue of important issues…

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Money Laundering Watch

by the White Collar Defense/Internal Investigations Group at Ballard Spahr LLP

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Ballard Spahr’s Anti-Money Laundering Team represents a broad range of financial institutions.  We help clients establish and refine AML policies and procedures; prepare for and respond to regulatory exams; conduct due diligence for lending and acquisitions; and conduct internal investigations and respond to administrative, civil or criminal investigations, government enforcement actions, and related civil ligation by private parties.

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