This month’s top stories:
- Singaporean government will review Formula One contract after transport minister charged in rare ministerial corruption case;
- Banks in the UAE, China, and Turkey respond to US threat of secondary sanctions on foreign financial institutions by curtailing transactions with Russia and tightening compliance requirements; and
- UAE and Uganda removed from Financial Action Task Force grey list, whereas Kenya and Namibia added.
EUROPE
EU: New EU Anti-Money Laundering Authority to be based in Frankfurt, Germany
On 22 February, the European Union announced that the bloc’s new Anti-Money Laundering Authority (AMLA) will be based in Frankfurt, Germany. AMLA is part of a wider initiative from the EU to strengthen the bloc’s anti-money laundering and counter-terrorist financing capacities, and will serve as the EU’s supranational authority to combat these crimes and other illicit financial activities in the EU. The body will employ more than 400 staff members and will begin operations in mid-2025. In December 2023, the European Council and Parliament provisionally agreed on the body’s regulatory framework, which is expected to be formally approved by the European Parliament in April 2024. The EU has so far relied on national regulators to enforce bloc-wide legislation, with mixed results.
RUSSIA AND CIS
Russia: US, UK and EU sanction hundreds of Russia-linked individuals and entities on second anniversary of Russia’s invasion of Ukraine and following the death of opposition politician
On 22 and 23 February, two years after Russia’s full-scale invasion of Ukraine and one week after the death of Russian opposition politician and activist Alexei Navalny, the US, UK, and EU adopted a range of additional sanctions targeting the Russian war effort. In total, at least 800 entities and individuals are included across the three jurisdictions’ new sanctions packages. These designate entities operating within Russia’s military-industrial complex; its metals, diamonds, energy and electronics sectors; its financial infrastructure; and its unmanned aerial vehicle (UAV) procurement network. The EU additionally targeted individuals and organisations in Russia and Belarus which it alleges are involved in Russia’s illegal deportation and military re-education of Ukrainian children. As part of these sanctions, the US and UK also targeted individuals and entities from 11 third countries including China, Serbia, the UAE, and Liechtenstein. These third-country persons are suspected of involvement in the export and transshipment of technology, equipment, spare parts, and weapons to Russia; and in facilitating the global movement of precious metals of Russian origin.
Russia: Banks in the UAE, China, and Turkey respond to US threat of secondary sanctions
In February 2024, Russian outlets reported that large banks in the UAE and China had halted transactions with Russia out of fear of becoming sanctioned by the West. Some Emirati banks have also started to close accounts for Russian companies and individuals. The banks are understood to have changed their position after US President Joe Biden signed an executive order in December 2023 under which foreign financial institutions might lose access to the US financial system if they facilitate significant transactions with the Russian military-industrial complex. Some banks in Turkey have also tightened their compliance requirements in response to the executive order, thereby disrupting trade between Russia and Turkey.
MIDDLE EAST AND NORTH AFRICA
UAE: Financial Action Task Force removes UAE from financial crime watch list
On 23 February, the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, announced that it had removed the UAE from its grey list. The FATF grey list includes countries that are deemed to have deficiencies in their systems for combatting money laundering, financing of terrorism and illegal arms deals, but that have agreed to cooperate with the organisation to address these deficiencies. The UAE was added to the list in March 2022, after the FATF cited serious deficiencies in the state's measures against sanctions evasion, money laundering and terrorist financing. The FATF explained the UAE has made significant progress in improving its anti-money laundering and counter terror financing regimes, and therefore would no longer be subject to the organisation’s increased monitoring process. The incumbent UAE Minister for Foreign Affairs, Sheikh Abdullah bin Zayed Al Nahyan, stated that the UAE was committed to consolidating its approach and position within the world’s financial system by adhering to all international laws and conventions.
SUB-SAHARAN AFRICA
Madagascar: Former Chief of Staff to Madagascan President convicted of bribery by UK court
On 20 February, Romy Andrianarisoa, the former Chief of Staff to the President of Madagascar, was convicted of bribery at Southwark Crown Court in London after an investigation by the National Crime Agency (NCA), the UK’s serious and organised crime agency. Andrianarisoa and her associate, French national Philippe Tabuteau, were charged with bribery after requesting payments from Gemfields Group Ltd, a UK-based gemstone mining company, in exchange for their help in securing a mining joint venture with the Government of Madagascar. Andrianarisoa and Tabuteau reportedly met Gemfields employees several times between 2021 and 2023, and requested fees amounting to GBP 225,000, in addition to a 5-percent equity stake in the proposed joint venture. After Gemfields reported their concerns regarding possible corruption to the NCA, Andrianarisoa and Tabuteau were arrested in London in August 2023. Tabuteau pled guilty in September 2023, while Andrianarisoa denied the charges. Her sentencing is scheduled for 18 March 2024.
Sub-Saharan Africa: Kenya and Namibia added to FATF grey list, Uganda removed
On 23 February, the FATF added Kenya and Namibia to its list of jurisdictions under increased monitoring, popularly known as the ‘grey list’, following a review of their respective global anti-money laundering (AML) and counter-terrorist financing (CTF) regimes. Both countries were found to have strategic deficiencies in their AML and CTF regimes, and are therefore subject to increased financial monitoring by the FATF. On the other hand, Uganda was removed from the FATF grey list after demonstrating significant progress in strengthening its AML/CFT regimes. Inclusion on the FATF grey list can have a negative impact on foreign direct investment, and organisations may require increased due diligence procedures when transacting with entities and individuals from jurisdictions on the list.
AMERICAS
Mexico: The New York Times reveals unpublicised US inquiry into alleged ties between Mexican president’s allies and drug cartels
On 22 February, The New York Times reported that US law enforcement officials had investigated close allies of Mexican President Andrés Manuel López Obrador (AMLO) after multiple confidential informants alleged links between them and Mexican drug cartel operatives. The newspaper emphasises that it is unclear whether the claims were corroborated. The US never opened a formal investigation into AMLO. The New York Times cited anonymous US officials who claimed that the Department of Justice declined to open an official investigation due to the political implications of investigating a top US ally. AMLO denied the allegations.
El Salvador: Former anti-corruption body discovered scheme involving allies of Salvadorean president in 2021
On 29 January, an investigative digital magazine in El Salvador reported that before its dissolution in June 2021, the International Commission against Impunity in El Salvador (CICES) – an anti-corruption organisation formed by El Salvador in conjunction with the Organisation of American States – found that officials close to President Nayib Armando Bukele Ortez (Bukele) had benefitted from a COVID-19 corruption scheme. Companies connected to the officials had reportedly been disproportionately favoured in tenders, had inflated contract prices, and had misused public funds. CICES was dissolved three months after escalating its findings to El Salvador’s prosecutor’s office, which does not appear to have acted on the claims.
ASIA PACIFIC
Singapore: Government will review Formula One contract after transport minister charged in rare corruption case
On 5 February, the Singaporean government announced it would review its contract for the Formula One Grand Prix after Transport Minister Subramaniam Iswaran was charged in a rare ministerial corruption case on 18 January. Iswaran faces 27 charges including corruption, receiving gifts as a public servant, and obstructing the course of justice. He is accused of having received items worth about SGD 385,000 (USD 286,000) between 2015 and 2022 from Malaysian property tycoon Ong Beng Seng – some allegedly in return for helping the latter advance his business interests. The review of the Formula One contract is motivated by the fact that Ong owns the rights to the race in Singapore and that Iswaran chaired then advised the race’s steering committee. A government spokesperson clarified that there was no indication that the Formula One contract had been structured to the state’s detriment. Iswaran has denied the charges but resigned from his ministerial post and from the ruling People's Action Party prior to the indictment. Ong was also arrested last year but has yet to be charged. Ong has not responded publicly to the allegations.
India: Supreme Court scraps anonymous election funding system to improve transparency
On 15 February, the Indian Supreme Court scrapped an anonymous election funding system to introduce greater transparency in campaign financing. Under the system known as electoral bonds and introduced in 2017, donors buy bonds from a government bank to donate to a political party of their choice – which then swaps the bonds for cash. Critics have argued that electoral bonds have allowed unlimited and anonymous donations to political parties, and hindered the public’s right to identify political donors. The Supreme Court ruled the system unconstitutional, and ordered the bank to stop issuing new electoral bonds. The court also directed the bank to provide details of all bonds purchased since 2019 to the country’s election watchdog.
