Friday News Flip 06 May 2016


OTTO Perez Molina, the jailed ex-president of Guatemala is facing more charges of corruption, fraud and money laundering regarding an infrastructure project to build a container terminal at the country’s largest port. His former vice-president Roxana Baldetti is a co-defendant.

Brazil’s biggest corruption scandal keeps netting more big fish. Now the speaker of the lower house of Parliament has been removed from office and placed under investigation for corruption.

THIS article discusses the keenly awaited US Supreme Court judgement in McDonnell (I mentioned this debate here) and why the criminal law does poorly in dealing with political corruption when gifts are exchanged for access and ‘ingratiation’.


HOW can an MRI affect a criminal sentence? The answer, according to a geneticist who’s also a law professor, is that brain imaging can help show a defendant’s capacity to improve behaviour after treatment (e.g. the removal of a brain tumour) in such a way as to prevent re-offending. As a result the court may choose a non-custodial sentence with treatment orders rather than imprisoning the defendant.

Neuroscience is increasingly being used both by defence attorneys and prosecutors in the US. Its use has grown to the extent that in some cases, according to the article, the court has held defence counsel to be ineffective for failure to adduce neuroscientific evidence.

When it comes to trial proceedings (as opposed to sentencing), one might think that the growing wealth of detail about how the brain works would boost the effectiveness of the insanity defence, but neuroscience at trial is currently most effective in assessing fitness to stand trial rather than bolstering defences.

ARTHUR Budovsky, the founder of Liberty Reserve, an online bank which laundered an estimated $88 billion using a virtual currency is sentenced to 20 years in prison and to pay a $500,000 fine. His co-defendants get 3 to 5 years. The higher sentence is partly because the judge felt Budovsky showed ‘no genuine remorse’ for his crimes.


WHERE the Iran and P-5+1’s nuclear deal ran smack into AML regulations: it seems a by-product of the continually tightening global anti-money laundering system is that the Iran Nuclear deal’s mutual obligations became harder to fulfill. Banks that were previously fined for failing to comply with sanctions against Iran are reluctant to deal with the country even though the UN, the US and other Western countries have given them the green light.

COLOMBIAN authorities arrested Nidal Waked, a man they tout as the world’s most-wanted money launderer.

REMEMBER the 1MDB scandal? Well in the wake of Singapore bringing money laundering charges against a former banker in the course of investigating 1MDB, the ‘big three’ Singaporean banks (DBS Group, OCBC and UOB) are converging to try and work out a country-wide information sharing system that will make Customer Due Diligence (CDD) more efficient and thorough.

The banks would apparently pool data at a newly created registry, though they still have to work through client confidentiality concerns. It sounds like a promising idea. But from my (criminal law) perspective one question is who would be liable if failures or incorrect information in the new registry lead to failures in AML controls at the banks themselves. The current legal model championed by the FATF and implemented in most jurisdictions requires each financial institution to conduct its own CDD but allows reliance on 3rd parties where certain criteria (set out in FATF recommendation 17) are met. So the question is whether the new registry of info would be viewed as outsourcing CDD (which falls outside the scope recommendation 17) or as a 3rd party relationship since the information is basically one bank giving access to client information to other banks. Whichever way one sees it, the ultimate responsibility for the due diligence remains with the individual institution that is seeking to begin or continue a business relationship with the customer in question.

It also remains to be seen how much data will be shared given that certain high-risk customers and transactions demand enhanced CDD under AML rules.