Financial Services – European Sanctions Enforcement

October 21, 2024October 21, 2024 by Mark Handley

Netherlands – sanctions compliance fine on trust services provider upheld

The Rotterdam District Court has largely upheld a fine of €95,000 imposed on a trust services provider by the Dutch National Bank.

The DNB’s investigation started in 2019, and the fine was originally imposed on 2022.

The fine related to compliance failings including both money laundering and sanctions failures. The firm’s policies and procedures were insufficient and there was a lack of proper identification of the UBO and of ongoing diligence.

On appeal the fine was reduced to €90,250 due to an argument that the investigation process had been unduly lengthy,

October 2, 2024October 2, 2024 by Mark Handley

UK – FCA fines bank £29m for sanctions compliance failings

The UK’s Financial Conduct Authority has today fined Starling Bank £28,959,426 for sanctions compliance failings.

The Final Notice states that the bank became aware in January 2023 that its screening was being done against a small sub-set of the Consolidated List of sanctions targets.

The FCA described the compliance program at Starling as “shockingly lax”.

The FCA also noted that the fine would have been £40,959,426 without Starling’s agreement to resolve the matter.

September 27, 2024September 27, 2024 by Mark Handley

UK – OFSI imposes £15,000 civil penalty

The UK’s Office of Financial Sanctions Implementation has today issued notice of a civil monetary penalty it has imposed on a company called Integral Concierge Services Limited (“ICSL”).

The penalty was for £15,000.

The fine related to 26 payments made to, or received from, a designated person under the UK’s Russian sanctions. The payments related to property management including collecting rent, paying for maintenance, and ICSL taking its own management fees. The designated person was not named.

The company did not initially self-disclose, but did then cooperate including by disclosing breaches that had not yet been identified by OFSI.

The company also breaches the reporting requirements under several general licences, but OFSO chose to not fine in relation to those breaches but rather to treat those failures as aggravating factors.

September 26, 2024September 26, 2024 by Mark Handley

Germany – seizure of 47 crypto exchanges being used for sanctions circumvention

Germany’s Federal Criminal Police have seized the infrastructure of 47 Russian-language no-KYC cryptocurrency exchanges.

The website announcing the action (called “Operation Final Exchange”) states: “We have found their servers and seized them – development servers, production servers, backup servers. We have their data – and therefore we have your data. Transactions, registration data, IP addresses

Our search for traces begins. See you soon“.

It is being reported that the seizures, while certainly targeting a range of financial crimes, were also driven by the use of these exchanges as a means of circumventing sanctions, particularly by designated Russian banks.

It is likely that this Operation Final Exchange will generate substantive financial intelligence and further enforcement actions.

September 25, 2024September 25, 2024 by Mark Handley

Luxembourg – CSSF imposes fine for sanctions compliance failings

Luxembourg’s financial services regulator, the CSSF, has today announced a fine of €40,000 on Dock Financial S.A.

The fines relates to AML and sanctions compliance failings identified as part of an on-site inspection between December 2021 and November 2022.

In relation to sanctions, the CSSF has found that:

“A substantial part of the EMI’s client portfolio was not subject to name screening controls on a daily basis, over a substantial period of time, thus constituting a failure to comply with the obligation to detect persons, entities and groups subject to restrictive measures in financial matters without delay so that the necessary restrictive measures can be applied to them in line with all United Nations Security Council resolutions, acts adopted by the European Union (resolutions and acts directly applicable in Luxembourg) and national regulations“.

This was identified as a breach of CSSF regulations requiring detection of designated persons.

July 31, 2024 by Mark Handley

Luxembourg – Financial Crime Unit’s report of sanctions investigations

Luxembourg’s Financial Intelligence Unit (the CRF) has published its Annual Report which includes statistics on sanctions-related SARS and investigations, as well as an indication of funds frozen as part of these investigations.

- 160 instances of suspicion of breaches of sanctions reported since 24 February 2022:
  - 23 were in 2022;
  - 100 were in 2023; and
  - 36 so far in 2024
- 15 information requests have been sent out by the CRF in relation to possible sanctions evasion:
  - 2 in 2022;
  - 13 in 2023; and
  - no indication of the number sent so far in 2024.
- the CRF has also blocked €45,958,887.91 in relation to two suspected cases of sanctions evasion. No further details were provided.

July 12, 2024 by Mark Handley

Luxembourg – CSSF imposes fine for AML and sanctions compliance failings

The Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg has imposed fines of €109,000 and €17,200 for compliance failings on abrdn Investments Luxembourg S.A.

The fine of €17,200 related to failings in relation to AML/CFT, and included in these failings was failure to “perform initial name screenings controls against international and European financial sanctions lists”.

The CSSF had conducted on-site inspections in 2020.

July 11, 2024 by Mark Handley

Lithuania – company operating crypto exchange fined €8.23m for EU sanctions violations

Lithuania’s Financial Crimes Investigation Service has imposed a fine of €8.23m for breaches of the EU’s sanctions and a fine of €1.06m for breaches of Lithuania’s Law on the Prevention of Money Laundering and Terrorist Financing.

The company fined is UAB Payeer. The press release notes that the company did not cooperate with the investigation and did not provide responses to questions raised.

The investigation commenced after an inspection in 2023 that was conducted after Payeer commenced its operations in Lithuania.

Payeer operated a crypto exchange at Payeer.com which allowed customers to make transfers to or from Russian banks that were designated under EU sanctions.

The AML fine relates to the failure to conduct KYC and the failure to report suspicious transactions.

The press release notes that Payeer had revenues of more than €164m during the 1.5 years of its breaches, but does not note what proportion of this came from prohibited activity.

June 28, 2024 by Mark Handley

Italy – investigation into financial transfers to Russia

As part of its Annual Report, the Unità di Informazione Finanziaria per l’Italia within the Bank of Italy has announced investigations into suspicions of illicit money flows from Italy to Russia via third countries.

No further details are available at this time including the amounts at stake, the identities of the third countries, or whether a referral has been made to the criminal authorities.

It is also unclear whether the transfers are alleged to have been made for or on behalf of designated persons.

May 6, 2024 by Mark Handley

Estonia – bank to contest FIU’s €300,000 fine for breaching sanctions

LHV Pank in Estonia has today issued a press release to say that it intends to challenge a fine of €300,000 imposed on it by the FIU for breaching EU sanctions.

According to the press release the fines were imposed in relation to three incidents (two in 2022 and one in 2023) where the bank is accused of insufficiently rigorous due diligence and of permitting a transaction in breach of sanctions.

The press release does not state which sanctions regime the conduct relates to.

The bank says it takes regulatory compliance seriously and will challenge the fine in court.