Wildlife Trafficking, Payment Fraud in the EU, Fentanyl in Canada, and Much More

This week, the US State Department issued a report on wildlife trafficking, The European Central Bank published a report on payment fraud, and Health Canada discussed the dangers of the increase in domestic fentanyl production. John and Elliot discuss these items and others, including a fraud warning from the FBI, the AML law passed in Singapore, and more.

Wildlife Trafficking, Payment Fraud in the EU, Fentanyl in Canada, and Much More - Transcript

Elliot Berman: Hi, John. How are you today?

John Byrne: Morning, Elliot. I guess I was wrong your Brewers, they're really good. But for some reason, the Nats seem to have their partial number. So we did see the Nats win that game on Sunday. I guess they took two out of three, but I'd put my money with the Brewers to go pretty far in the playoffs.

At least that's what we would all hope.

Elliot Berman: Yeah. They were in Atlanta last night and won 10 to nothing. I'll take that. Yeah. They're an interesting team. Enjoying watching them, but they're not your classic juggernaut. They seem to have this mosaic of players.

They've had 17 or 18 different pitchers start, some of those are bullpen games where, somebody throws an inning and then that counts against the total. In past years, they've just had this strong four to five person rotation. And this year because of injuries and trades it's been a little different, but they're piecing it together and they're fun to watch.

John Byrne: Number of things, both globally and domestically, and we're only covering some of those, but wanted to highlight a couple for everybody. One is the State Department, in consultation with the Secretary of the Interior and Commerce since 2017, have had to file a report to Congress on the categories of wildlife trafficking.

As everybody knows wildlife trafficking continues to be a serious transnational crime. And this particular report is comes out of the Task Force on Wildlife Trafficking that's co chaired by the Secretary of State and a variety of other federal departments, and the report is designed to give readers an understanding of some of the countries, as they describe them focused countries and countries of concern.

So both are categories where, based on the data, and the information there's illegally sourced wildlife and wildlife products that occur in some countries. The laws if they're in place at all, they're not strong, that, that sort of thing. Pretty short report, I think it's eight or ten pages, and just want to highlight a couple things.

The focus countries, and there's statutory criteria, and they say it doesn't reflect a positive or negative judgment on the listed countries, but it goes through the the criteria, which you all of you can read for yourselves. But the countries are I'll just mention a few Brazil, Kenya, Columbia, Vietnam, Zimbabwe.

Then there's also countries of concern, and that's also based on metrics that are created under the statute. And some of those countries that are listed include Cambodia, Cameroon, Madagascar, and Nigeria. And they do say toward the end of this that more than one of these countries have taken affirmative steps to strengthen enforcement. But there are serious and sustained efforts to prevent and prosecute wildlife trafficking that are still needed.

Again, interesting report. Just issued, as I mentioned, from the State Department with those other partner agencies, and it is available on the State Department website.

Elliot Berman: Another thing that came out of a federal agency in the US is the FBI issued a warning to folks that there are scammers who are posing as employees of cryptocurrency exchanges to steal funds from the unsuspecting victims.

And they reach out in an unsolicited call or other communication and convince the recipient of the call, the target of the scam to give access to their crypto wallet to allow transfers or to transfer cryptocurrency out of their wallet to the scammers. As we know, and we've talked about this a lot this year fraud is an ever-growing problem and it reaches wherever there is value.

And so this is an indication of just one more face of this. So for those of you in our audience who work with clients be aware of this scam.

John Byrne: Sticking with scams and frauds, the European Central Bank in collaboration with the European Banking Authority issued their 2024 report on payment fraud. It's a fairly short report with some good charts and graphs. It's about 30 to 35 pages long with appendices, and it assesses payment fraud by the industry across the European economic area.

So it's different categories. They say that card fraud, for example, has predominantly occurred for remote transactions, while the majority of overall card payments were conducted non remotely. Card payment frauds seem to predominantly occur with fraudulent payment orders issued by the fraudster with the specific reasons mostly being the use of lost or stolen cards in the case of non remote card fraud and card details theft in the case of remotely conducted fraud.

They also look at countries that have improved fraud prevention, and they talk about those that use what they call SCA, or Strong Customer Authentication, and those that do that, the fraud levels are a lot lower. And then also other tools would be what they call CSC, which is common and secure open standards of communication.

So these are European type terms that certainly I was not familiar with, but they put those in there too and give the amounts of frauds, the categories of frauds, and obviously strong recommendations to use various methods to authenticate the user. They go to the main findings of the total levels of fraud. They look at the application of the customer authentication, as I mentioned, overview of reported losses due to fraud, and what extent payment service users and payment service providers bore the respective costs. And then also fraud figures between domestic transactions and cross border payments.

And then the final chapter looks at country specific findings for EU member states and that looks both at absolute and relative levels of fraud. A valuable tool for the fraud prevention folks that are in our community out there, just issued I believe in the past week.

Elliot Berman: Staying with the European Central Bank, they issued a letter recently to Banque Havilland SA, which has operations in Liechtenstein and Switzerland and headquartered in Luxembourg.

The letter indicated that the bank was going to be stripped of its license to operate in its home country of Luxembourg as a result of its failure to implement changes required of it, and I'm quoting here, after it was fined 4 million Euro for anti money laundering failings by its local Luxembourg regulator back in 2018.

The result of losing its license for its home country is that in these other countries where it operates it's shutting down and liquidating the businesses in Liechtenstein and Switzerland, and also has stopped doing business in Monaco.

The reason that this caught my eye, and you and I discussed this before we started recording, is we have often talked in the US that the only statute in the US that allows the government to actually take away your banking charter are the AML statutes. And here we're seeing essentially the same thing, where the European Central Bank is saying, if you don't play by the rules in this space, we're going to take away your license, and without a license, you can't operate.

John Byrne: And sticking with other international issues, in Canada, there was a story that came out from the CBC News just the other day, in that criminal networks are shifting away from fentanyl imports to Canadian made products. The story goes that organized crime groups have moved their efforts, as I mentioned, and this briefing note was prepared for the Deputy Minister of Health of Canada, and so CBC has reported on that. Obviously, the fentanyl issue has financial implications in terms of illicit funds, so we thought that was worthy of mention because it's another way in which criminals will use financial institutions directly or indirectly.

And but this becomes much more difficult, I would assume, to track since it's being produced in the country as opposed to being brought in. And I just saw something related to that, Elliot as I was going through this.

And this is reported from the Morning Risk Report from the Wall Street Journal. And this is that China is restricting fentanyl chemicals after years of US pressure. So that's an add on there that there's new restrictions in China, something that the Biden administration has been working hard on.

So that also is relevant to what everybody globally is trying to do regarding the scourge of fentanyl.

Elliot Berman: A continuing problem unfortunately that is not going away. For those of you doing business in the Asia Pacific area, Singapore recently, just within the last week or so, passed a new anti money laundering law in an effort to bring their regime in line with FATF recommendations. So if you're doing business there, you should check that out be sure that you're aware of it.

There was one other thing. In the UK, Companies House, which is their top level corporate regulator, and the Insolvency Service, which deals with bankruptcies, both of those agencies are going to have their own AML intelligence units embedded within them.

Last week we talked about the national law enforcement agency in the UK working with a number of banks on an information sharing process to help law enforcement zero in on likely problems in the money laundering area.

A lot going on in the UK in terms of stepping up the overall gathering of intelligence and use of financial intelligence.

John Byrne: You had mentioned something that we forgot to talk about but you had pulled this information the other day, and that's OFAC has announced that they've updated and streamlined their compliance hotline page.

And so they're changing the submission process, going to start in January of 2025. And so information about that they think will be much better utilized by those that seek sanctions guidance from the public.

Elliot Berman: They're shifting to totally online, as you mentioned, come January with an enhanced tool on their website and many of us over the years have reached out to them for guidance about specific situations, and it's good to see that they're continuing to improve their ability to respond.

John Byrne: Yeah, that's all] on my end. What's the webinar for August?

Elliot Berman: Webinar for August is best practices in managing your high risk customers. It'll live stream at 1pm ET on August 22nd and you can register at our website. And John anything in the pipeline?

John Byrne: We're gonna have an interview later in the month with the head of the Antiquities Coalition. I'm looking forward to that conversation, obviously a lot to discuss. There's been a lot of concern about the lack of coverage in the art world. There's been studies there and the head of the Antiquities Coalition, Deborah Lehr, has some strong views on that. So we're going to talk to her about that and in general, what's going on in the world of antiquities trafficking and issues related to that.

Elliot Berman: Sounds good. I will not talk to you next week. I'm going on vacation, but you and our colleague Joe McNamara will have a conversation in the regular time. So John, have a good rest of the week, and I will talk to you the week of the 19th.

John Byrne: Stay safe. Enjoy yourself.

Elliot Berman: Thanks, you too.