BDO's AML Watch

Crypto Scam is Running Rampant in the Cayman Islands

• Crypto criminals have defrauded residents of the Cayman Islands out of millions of dollars through an elaborate scam known as "pig butchering," prompting warnings from authorities about the sophistication of these schemes. A specialized law enforcement unit in the Cayman Islands has received numerous reports of residents and individuals overseas, including those associated with crypto companies registered on the island, falling victim to these scams. The Cayman Islands Bureau of Financial Investigation (CIBFI) was established to address international pressure for more proactive measures against global financial crime. These scams involve luring victims into digital relationships, building trust, and convincing them to invest in cryptocurrency platforms controlled by fraudsters who eventually disappear with the funds. While the scam affects victims worldwide, the Cayman Islands seems to have a higher proportion of victims, attributed to its crypto business and affluent population. Victims typically lose between CI$50,000 and CI$150,000, and the scams often involve elements of romance, investment, and cryptocurrency fraud. The fraudsters use third-party money-laundering services to obscure and funnel the stolen funds within a vast network, with much of it ending up in Chinese crime syndicates in Southeast Asia. The CIBFI, composed of 11 experts, including cryptocurrency transaction specialists, collaborates with international agencies like Interpol and Europol to investigate these complex financial crimes.
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Caribbean Nations Retain Top Spots in Citizenship By Investment Index

• St Kitts and Nevis has claimed the top position in the 2023 Citizenship by Investment (CBI) Index, outperforming 11 other nations with active CBI programs, such as Antigua & Barbuda, Austria, Cambodia, Dominica, Egypt, Grenada, Jordan, Malta, Saint Lucia, Turkey, and Vanuatu. The Caribbean nations of St Kitts and Nevis, Dominica, Grenada, Saint Lucia, and Antigua and Barbuda occupy the top five spots in the index, underscoring the attractiveness of CBI programs in the Caribbean region. The CBI Index, now in its seventh edition, provides comprehensive insights into the world's leading investment migration programs and serves as a valuable tool for global investors seeking to compare CBI programs. The index assesses CBI programs based on nine key pillars, encompassing Standard of Living, Freedom of Movement, Minimum Investment Outlay, Mandatory Travel or Residence, Citizenship Timeline, Ease of Processing, Due Diligence, Family, and Certainty of Product. It offers a data-driven and practical means of evaluating CBI programs, aiding individuals in making informed investment choices.
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Anti-Money Laundering Assessors Visit Jersey

• International assessors are conducting a two-week evaluation in Jersey to assess the effectiveness of anti-money laundering and counter-terrorism financing measures. A team from Moneyval, a European monitoring body, is examining Jersey's legal framework and enforcement processes to determine compliance with global standards in tackling financial crime. The island hopes to avoid being placed on a "grey list," which would entail increased monitoring. The results of the assessment will be disclosed in May 2024, following private interviews with various stakeholders and an examination of how anti-money laundering laws and processes are implemented. Jersey has been preparing for the evaluation for three years, updating laws and enhancing cooperation between the government and the finance industry. Being placed on the "grey list" could harm the island's international reputation, affect its credit rating, and increase the cost and complexity of doing business for local institutions.
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Singapore Seizes More Than $2 Billion as Massive Money Laundering Probe Widens

• Singaporean authorities have reported seizing or freezing assets valued at over S$2.8 billion (around $2 billion) in a major money laundering investigation, surpassing the previously disclosed S$2.4 billion. The probe continues with interviews of residents and foreigners. Singapore is considering stricter immigration checks to combat illicit inflows. Singapore's clean governance image has been questioned after asset seizures and the arrest of 10 foreigners from China for alleged forgery and money laundering related to scams and online gambling. While lawmakers seek tighter anti-money laundering rules, Singapore is cautious about overly harsh measures. It convicted over 240 individuals for money laundering from 2020 to 2022, seizing assets worth over S$1.2 billion. Singapore remains a significant cross-border wealth hub, receiving $1.5 trillion in 2022, ranking third globally after Switzerland and Hong Kong. Singaporean banks are intensifying scrutiny of clients with Chinese origins and dual citizenships, reviewing account activity. Some international banks are closing accounts for clients with dual citizenships, including Cambodia, Cyprus, Turkey, and Vanuatu.
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• Russian coin swap services pose significant risks related to sanctions and anti-money laundering (AML) practices, despite their claims of AML compliance, according to a recent research report by Elliptic. The report states that many Russian over-the-counter (OTC) services use standard AML policy templates rather than developing their own. Elliptic analysts discovered at least eight Russian coin swap services with nearly identical AML policies, even though they don't require any know-your-customer (KYC) information from users. These services often offer money laundering capabilities on Russian cybercrime forums and are associated with banks facing sanctions. Additionally, North Korean hacker groups have reportedly been using Russia-based exchanges to launder stolen cryptocurrencies.
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