Businessman charged in $1.8m fraud and money laundering scheme
Amadou Kane Diallo, CEO of Virtual Advisors LLC and Liquide Inc, has been indicted for wire fraud and money laundering in the Central District of California. The indictment alleges that Diallo deceived investors by soliciting investments for his companies under false pretenses and misusing their funds for personal gain.
According to court documents, Diallo misled at least 11 individuals, promising business opportunities in various sectors such as technology, healthcare, real estate, and services to the African diaspora. He falsely represented that investor funds would be used to benefit the investors or serve as an incentive for attracting institutional investors. Additionally, Diallo allegedly fabricated claims of raising substantial amounts of money for another investment firm and its real estate fund, which were untrue.
The indictment reveals that Diallo diverted nearly $2 million from the victim-investors. Instead of utilizing the funds as promised, he allegedly spent the money to support his extravagant lifestyle, including rent payments for his residence, luxury vehicle purchases, high-end clothing, extravagant dining experiences, membership fees for fitness clubs and spas, and hosting lavish events for foreign government officials.
Diallo faces 19 counts of wire fraud and two counts of money laundering.
CFTC consults on Risk Management Program
The Commodity Futures Trading Commission has published an advanced notice of proposed rulemaking (ANPRM) seeking public comment on potential amendments to the Risk Management Program (RMP) requirements in CFTC Regulations 23.600 and 1.11 (collectively, RMP Regulations) applicable to swap dealers and futures commission merchants.
Commissioner Christy Goldsmith, in separate comments regarding the proposed consultation said: “The Commission seeks public comment in its reassessment of its risk management frameworks. I am particularly interested in comment on the following areas: 1) Technology Risk; 2) Cyber Risk; 3) Affiliate Risk; 4) Risk related to segregating customer funds and safeguarding counterparty collateral; and 5) Climate-Related Financial Risk”.
ASIC fraud charges
Former directors of Berndale Capital Securities Pty Ltd, a collapsed retail over-the-counter derivatives provider, are facing charges related to dishonest conduct and the misuse of company funds. Stavro D’Amore and Daniel Kirby have been accused by ASIC (Australian Securities and Investments Commission) of unlawfully transferring more than $1 million from Berndale to benefit themselves, associates, and other entities. It is alleged that Mr. D’Amore used some of the misappropriated funds for personal residential property deposits.
The charges also include accusations of providing false statements and misleading documents to ASIC and an auditor regarding overseas bank accounts that supposedly held Berndale funds. Additionally, Mr. Kirby is alleged to have fabricated evidence related to these overseas bank accounts during Federal Court proceedings.
Berndale, as a holder of an Australian financial services license, was required to maintain a specific level of net tangible assets and submit audited financial reports. ASIC claims that the overseas funds and accounts in question either did not exist or were significantly inaccurate.
The case is scheduled to be heard in August. .
FCA policy statement on debt packagers
The FCA has confirmed it is banning debt packager firms from receiving remuneration from debt solution providers.
Feedback to its CP 23/5, showed “overall support for the proposal to ban debt packagers from receiving referral fees. A number of respondents supported our combined evidence base and said the ban needed to be implemented as quickly as possible because of the high risk of harm to consumers and current cost-of-living challenges.”
As a result of the changes, the Consumer Credit Sourcebook is being amended and the ban on debt packagers applies immediately with all firms required to comply by 2nd October.
How to submit better SARs
The UK’s National Crime Agency (NCA) has published new guidance on submitting better quality Suspicious Activity Reports (SARs).
Stressing that the guidance should be read in conjunction with guidance found on the NCA website – www.nationalcrimeagency.gov.uk, the new guidance includes sections on:
- how to submit a SAR
- basic structure of a SAR
- obtaining a defense against money laundering or terrorist financing
- general guidance
As well as useful examples, good practice tips and further contact details.
PRA publishes May digest
The Prudential Regulatory Authority has published its May update listing key developments from the month. This issue includes coverage of:
- Prudential Regulation Authority Business Plan 2023/24
- CP9/23 – The Bank of England’s approach to enforcement: proposed changes and clarifications
- PS6/23 – Model risk management principles for banks.
ESAs publish greenwashing updates
The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have published their progress Reports on greenwashing in the financial sector.
The ESMA progress report assesses which areas of the sustainable investment value chain (SIVC) are more exposed to the risk of greenwashing. This assessment is meant to help market participants in preventing and mitigating greenwashing, and to support ESMA and National Competent Authorities (NCAs) in prioritizing supervisory actions and regulatory intervention.
The findings show that misleading claims may relate to all key aspects of the sustainability profile of a product or an entity – from governance aspects to sustainability strategy, targets and metrics or claims about impact. The report also provides sector-specific assessments for key sectors under ESMA’s remit such as issuers, investment managers, benchmark administrators and investment service providers.
The EBA progress report highlights the issue of greenwashing in the banking sector and its impact on various financial institutions. The report reveals a significant increase in potential cases of greenwashing across all sectors, including EU banks. It also indicates a growing sense of climate accountability, with companies facing greater scrutiny for their environmental policies, climate impact, and disclosures. Pledges regarding future environmental, social, and governance (ESG) performance are identified as the most susceptible to greenwashing, followed by ESG strategies, objectives, labels, and certificates.
Both regulatory authorities and market participants acknowledge that greenwashing poses significant risks to reputation and operations, including potential litigation. Currently, the materiality of greenwashing is seen as low or medium for banks and medium or high for investment firms, but it is expected to increase in the future. The report suggests that certain regulations and supervisory measures, such as rules against unfair communication and marketing, the EU sustainable finance framework (including the EU taxonomy and ESG disclosures), and EBA guidelines, can contribute to addressing greenwashing. However, challenges remain in terms of implementing these tools effectively, including the need for adequate data and methodologies. Additionally, the report highlights that the sustainable finance regulatory framework is still under development or in early stages of implementation, which means that some of the benefits of these rules may not be fully apparent yet.
Finally the EIOPA Progress Report provides initial views on greenwashing from an insurance and pension perspective including on how it occurs, its impact, challenges related to its supervision as well as its implications for the regulatory framework. It also covers:
- How greenwashing occurs in the insurance and pensions sectors
- Impact of greenwashing
- Supervision of greenwashing
- Regulatory framework.
Tackling greenwashing and ensuring a sustainable conduct of business framework is one of EIOPA’s priorities as reflected in its 2022-2024 sustainable finance activities plan.
A selected summary of key developments for regulated financial institutions
Access all of our daily regulatory content by using the login button below.
To find out more about how CUBE can help your business click here.