Collaborating to Get Results
FraudNet was Founded in 2004 and operates under the auspices of the Commercial Crime Services of the International Chambers of Commerce(ICC)
-a Paris-based world business organization with offices in 90 countries.
Last month the United States Treasury Department’s Office of Foreign Assets Control (OFAC) announced it had reached a US$639 million agreement with a financial institution to settle alleged breaches of US economic sanctions.
The Department said that from June 2009 until May 2014 the organisation had processed 9,335 transactions totalling US$438 million, the majority of which involved Iran-related accounts maintained by one of its branches.
The transactions also involved persons or countries subject to OFAC’s comprehensive sanctions programmes including Burma, Cuba, Sudan, and Syria.
The financial institution is also said to have processed online banking instructions for residents of comprehensively sanctioned countries by the US.
That case is by no means unique. In recent years, other companies have also paid a hefty price for falling foul of sanctions.
Financial institutions and businesses therefore need to be equipped with proper intelligence before pursuing any dealings which could see them paying out millions as a result of breaching these measures, albeit inadvertently.
Impact on trade finance
Recent data from Commercial Crime Services’ (CCS) International Maritime Bureau (IMB) points to the fact that high rates of trade finance fraud, such as misrepresented bills of lading, are related to sanctions.
The Iran trade accounted for over 90 percent of the misrepresented bills of lading referred to IMB in 2017 and the number of referrals in 2017 were double those seen in 2015.
This trend was most likely due to the uncertainty around the Joint Comprehensive Plan of Action (Iran nuclear deal) and the future direction of the US administration’s sanctions regime.
Indeed, new sanctions imposed by the US against Iran early this month does not help reassure the business world that the sanctions might come to an end any time soon.
Rather, CCS says any such expectations of sanctions being lifted has been reversed. “Today the sanctions have increased, and the business and banking world is having to adapt to these changes,” CCS says.
There are severe penalties for breaching sanctions, even through unintended involvement in schemes which attempt to bypass these regulations. This is in addition to the many other risks which businesses face in an uncertain trading environment.
What are the changes and challenges?
CCS has organised a lecture on Sanctions Compliance, focusing on the changes and challenges it brings, to be held on June 20 in London.
The 19th Annual CCS Economic Crime Lecture will look at the risks in this rapidly changing environment and highlight some of the warning signs and preventative measures that can be adopted.
The main speaker, David McLean, is Head of Financial Sanctions Enforcement at the Office of Financial Sanctions Implementation, part of HM Treasury in the UK.
McLean leads its enforcement, compliance and counter-terrorism functions. He has set up the framework for monetary penalties for financial sanctions breaches and oversees the investigative processes which have resulted in the first penalties being issued.
He has worked across government, law enforcement and the financial services sector to prevent attempts to break the law and ensure breaches are fairly, proportionately and robustly enforced.
Other members on the panel are David Hughes and Simon Taylor.
Hughes is a partner in commercial litigation and fraud at Stewarts, a London City law firm while Taylor is a founding partner of Forensic Risk Alliance, an international consultancy specialising in forensic accounting, data analytics and eDiscovery.
For more details about the Economic Lecture contact CCS at +44 (0) 207 423 6960 or email email@example.com
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