Reflections on possible accounting fraud and money laundering constructions at Wirecard

By Dick Crijns, senior advisor AMLC

During the last two weeks I have been regularly asked questions about potential fraud at Wirecard. I noticed that everyone mentions potential accounting fraud and possible market manipulation, but in response to the open ends, questions are also asked about relationships with money laundering. Despite the fact that there is still very little that is really clear regarding the nature and scope of what has happened at Wirecard, I can see the necessary references points for more fraud, as well as a potential role for Wirecard in a money laundering scheme. In response to these questions, in this article I wish to set out a number of main points regarding the frauds and present some important background information.

As far as I am concerned, this is an open end article, which will be adapted as soon as more information is available. Even while writing it I was able to concretise certain aspects due to more information being released… Wirecard-money-laundering-perspective
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The Azerbaijani laundromat: a new money laundering machine in a familiar guise

D. Crijns, AMLC senior advisor

Most of you are familiar to the so-called Russian laundromat, a $20 billion money laundering scheme during the period 2010 – 2014. A few weeks ago, the journalist collective OCCRP published a new, similar scheme: the Azerbaijani laundromat.

In this article I will discuss four items. First the new scheme in short. Then I will deal with a special legal entity that is often used in this type of money laundering scheme, and give some examples and more detailed information. In the third paragraph I will focus on the role of the banks in the scheme and how the money actually got into the hands of the criminals. Finally, I will give examples of how the money is spent.
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the-azerbaijani-laundromat-a-new-money-laundering-machine-in-a-familiar-guise

What do assassinations, cyber hacks and disinformation have in common? They’re all weapons used by states against each other in a grey zone of harm that sits – deliberately – under the threshold of war, but could be just as dangerous if ignored.

This episode seeks to explain what the grey zone is. It includes a warning from General Sir Nick Carter, the head of the UK’s armed forces, and Ben Wallace, the defence secretary, about the danger of ignoring attacks in this murky space, while Lieutenant General Graeme Lamb, a former director of UK special forces, warns: “We’re being boiled like a frog!”

Sky News journalist Deborah Haynes then travels to Salisbury with the widow of former Russian spy Alexander Litvinenko to visit the site of one of the most high profile grey zone attacks – the poisoning of another ex-Russian agent, Sergei Skripal, and his daughter Yulia.

Lord Mark Sedwill, a former national security adviser, talks about how he led the UK’s response to nerve agent poisoning and the fake news that followed.

Finally, Eliot Higgins, founder of the investigative website Bellingcat, describes how he and his team revealed the true identities of the Russian military intelligence officers named by the UK as prime suspects in the attempted assassination. Russia denies involvement.

Interviews:
General Sir Nick Carter, chief of the defence staff
Ben Wallace, defence secretary
Lord Mark Sedwill, former UK national security adviser, former cabinet secretary
podcasts.apple.com

Grey Zone

Organized Crime, Money Laundering and Corruption!
What Does It Mean To Women?

A corporate tax haven is pretty much what most people would imagine it to be: a jurisdiction that provides facilities to help multinationals escape taxes elsewhere. More formally, we define it as

A jurisdiction that seeks to attract multinational companies by offering facilities that enable them to escape or undermine the tax laws, rules and regulations of other jurisdictions, reducing their tax payments in these jurisdictions.

Current data and research suggests that governments around the world lose over US$ 500 billion — half a trillion dollars — in tax each year due to corporate tax havens. The IMF,  for instance, recently estimated that rich countries lose some $450 billion annually to tax-haven related corporate tax dodging, while lower-income countries lose $200 billion (which represents a bigger share relative to their smaller economies).  But remember: tax losses are just one dimension of the damage. The harm that corporate tax havens inflict on democracy, on society, and on our trust in politics and markets, is incalculable.
Financial Secrecy Index – 2020 ResultsMake Taxes Work For Women

Al Jazeera Investigations:
A satirical look at the dubious characters and state officials who buy nationality as if it’s a luxury car. Al Jazeera’s Investigative Unit obtained a leak of documents that we’re calling The Cyprus Papers.

If you can afford $2.5 million to purchase a passport to Europe, then you’re probably already on someone’s rich list with at least a Porsche in the garage. The leak reveals 2,500 people who paid to become new citizens of Cyprus with the added perk of be able to live and work anywhere from Milan to Monte Carlo.

So who’s on the list? Among the names in The Cyprus Papers are convicted criminals, men on the run and political figures regarded as a high-risk for dirty money.

Find out more about The Cyprus Papers and the strange trade in nationality in our investigative data-story.

FINMA described the bank’s money laundering processes as “inadequate” and reprimanded it for a breach of its duty of due diligence in relation to anti-money laundering rules.

The Swiss financial market regulator FINMA has reprimanded Bank Syz for breaching money laundering rules involving a business relationship with an Angolan client.

“FINMA found that the bank did not make sufficient efforts to investigate the substantial growth in the client’s assets,” the financial watchdog said in a statement on September 24. “The bank did not adequately resolve issues that should have raised suspicions, even though the client was identified as having links with politically exposed persons (PEP) and the relationship was classified in this category.”

It added that the private bank had “failed to fulfil, or did not adequately fulfil, its obligations to clarify high-risk transactions by the client, which were in some cases in the tens of millions”.

FINMA described the bank’s money laundering processes as “inadequate” and reprimanded it for a breach of its duty of due diligence in relation to anti-money laundering rules.

However, it did not issue any financial penalties. The bank had reported the case to FINMA, which had led to an in-depth investigation in February. It said it would appoint an independent auditor to oversee the bank’s implementation of new compliance measures.

High salaries aren’t what they seem in Switzerland

If you are a male banker, a Swiss diplomat or a foreign CEO in Switzerland, chances are you are living quite comfortably.

“The bank attaches the utmost importance to compliance with its anti-money laundering obligations,” it told Reuters in an emailed statement. “Unfortunately, for a specific business relationship, the procedures put in place proved to be inadequate.”

Geneva probe

The affair dates back to 2018 but only recently became known through a decision by the Geneva Criminal Court, published by the Swiss justice portal Gotham City.

According to the NZZ newspaper, the case concerns Angolan-Portuguese businessman Carlos Manuel de São Vicente, who is being investigated by Geneva’s judicial authorities on suspicion of money laundering.

Based on a report of suspected money laundering submitted by Banque Syz to the Money Laundering Reporting Office Switzerland, the Geneva public prosecutor’s office ordered account freezes totalling CHF1.1 billion ($1.2 billion) at the end of 2018. Following a partial release, around $900 million remains frozen.

On July 9 the court rejected an appeal by Carlos Manuel de São Vicente to unblock the funds. On September 15 it was reported that Angola had asked Switzerland for legal assistance concerning the money frozen in Geneva and reportedly connected to the Angolan-Portuguese businessman…swissinfo.ch

Silavan Wegmann
www.w-t-w.org/en/silvan-wegmann