High Value Banknotes have become the THE CURRENCY OF CHOICE for criminal and terrorist networks


Director of Compliance Programming & Strategic Accounts at ACFCS (Association for Certified Financial Crime Specialists)

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High-value banknotes have become the “currency of choice” for criminal and terrorist networks and there’s a case for removing them from circulation, according to Rob Wainwright, director of Europol. Speaking at a conference in London on terrorism financing, Wainwright said the availability of high denominations makes it easier for criminals to smuggle and hide large sums of cash. His comments followed the publication of a report by Peter Sands, the former chief executive officer of Standard Chartered Plc, which said the 500-euro ($556) note, the $100 bill, Switzerland’s 1,000-franc note and Britain’s 50-pound note should be eliminated to make it harder for criminals, terrorists, tax evaders and corrupt officials to transfer funds. More than $2 trillion in money related to illegal activities is moved globally each year, with corruption amounting to another $1 trillion, according to Sands’ report, “Making it Harder for the Bad Guys.” Despite efforts by authorities to detect and intercept these, less than 1 percent of illicit flows are seized. “The scale of such illicit money flows is staggering,” Sands wrote in the paper, published by Harvard Kennedy School, where he’s an academic. While not calling for the complete elimination of cash, the predominant payment method of smaller transactions, he described high denominations as an “anachronism” given the availability of electronic payment methods. Sands said eliminating high-denomination notes would disrupt the “business models” of criminals, tax evaders and terrorists. He called for agreement by the Group of 20 nations on the issue, which would include all the issuers of high-denomination notes, bar Switzerland, Singapore and Hong Kong (via Bloomberg).


Harry Markopolos, who initially warned the SEC about Bernie Madoff's Ponzi scheme, revealed he's working on three multibillion-dollar schemes, including one that will be bigger than Madoff's.Markopolos first submitted evidence to the SEC in May 2000, eight years before the Madoff fraud was revealed. Markopolos told ABC News that he has found three new schemes that are multibillion-dollar pyramids of fraud. In an explosive statement, he indicated that one of the three schemes would be bigger than Madoff’s and that one can’t stop them. However, Markopolos declined to identify the names of the scams until he provides the information to government investigators. Highlighting the plight of gullible investors, he said: “Everybody wants to believe in the holy grail of finance, risk-free returns, and they keep investing in Ponzi schemes.” Reacting to the new revelation, the SEC said in a statement that it has initiated significant reforms to trim the chance that such frauds could go undetected in the future. The regulator said it aggressively pursues Ponzi schemes and similar misconduct and has stepped up surveillance and new safeguards for investor assets and established an enhanced whistleblower program, (via Business Insider).


Attackers use stolen data to loot over 100,000 electronic filing PINS from US Internal Revenue Service – Using social security numbers and other stolen personal identifying information, identity thieves were able to obtain more than 101,000 electronic filing PINs from the Internal Revenue Service’s online e-filing application. The attack occurred in January, but was only announced earlier this week. The pilfered PINs will likely be used to further other financial crime schemes, such as filing false income tax returns. While the IRS has stated that the personal information used to obtain PINS in this breach didn’t come from its systems, the tax agency is no stranger to cyberattacks – last year, a breach tied to its “Get Transcript” online portal allowed attackers to make off with social security numbers and other data on more than 300,000 taxpayers (via PCWorld).
The bigger picture: As aggregators of personal data that can be valuable in a wide array of cybercrime and fraud schemes, government agencies continue to be a tempting target for cyber threat actors, and many are still struggling to mount an effective response. President Obama’s proposed budget, released earlier this week, includes $19 billion earmarked toward initiatives to strengthen cyber defenses. At the same time, the huge volume of personal data exfiltrated in previous breaches over the last 18 months– from Anthem to the Office of Personnel Management – have given identity thieves a tremendous source of raw material to work with.


Bigger spends, changing tones, complex systems – Compliance consultants examine shifting nature of ‘culture of compliance’ – As part of a series on culture and compliance, the Wall Street Journal asked three compliance experts how they thought companies were reacting to an increased regulatory focus on the “culture of compliance.” Anti-corruption consultant Richard Bistrong noted that companies were often focusing not only on having the right “tone from the top” and policies and procedures in place, but gaining a better understanding of how that tone was being perceived and understood from the rank and file. He also noted that companies who truly planned on committing themselves to compliance also had to embrace the business realities and impact on the bottom line that can sometimes accompany that decision. Other experts commented on challenges around implementing a culture of compliance across disparate and sometimes silo’ed lines of business and system, and noted that in the near term, costs related to compliance are likely to increase (via the Wall Street Journal, subscription required).