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BlogThis Week in Compliance

Founder and former FTX CEO arrested, indicted on eight fraud charges

By Brad Fulton

Welcome to This Week In Compliance - GAN’s weekly news roundup, where we curate the latest stories on compliance and anti-corruption to keep you informed. This week, the founder and former CEO of crypto exchange FTX has been arrested and charged with fraud. Read the full story and more news below.

Top Story

Founder and former FTX CEO arrested, indicted on eight fraud charges

Sam Bankman-Fried, the 30-year old founder and former CEO of FTX, a cryptocurrency exchange platform, was arrested and charged with eight counts of fraud relating to the bankruptcy of his company. Bankman-Fried was arrested in the Bahamas and is to be extradited to the United States. FTX, the Nassau-based platform which allowed banking and exchange of popular cryptocurrencies, suffered financial meltdown and bankruptcy last month due to what experts called a ‘complete lack of corporate compliance controls’ going back years, to at least 2019. Bankman-Fried and other FTX execs are accused of using investors funds to fund political motives, as well as purchasing houses, cars, and other lavish goods for employees, friends, and family.

Government

Turkish businesmen sanctioned over Iran military oil exchange

The Biden administration handed down sanctions this week to more than two dozen Turkish businesses and their associates, who are accused of purchasing and funding the purchase of hundreds of millions of dollars of oil for the Islamic Revolutionary Guard Corp (IRGC), a terror-listed unit of the Iranian military. Sitki Ayan, along with several others, allegedly used multiple corporate entities, including some energy companies, to conceal the exchange of money to the IRGC. The IRGC was placed on the U.S. terror watchlist in 2019.

Former NY construction union leaders plead guilty to taking bribes

The former leader of a New York construction union, along with 10 other union leaders and members, pleaded guilty this week to accepting bribes against the interests of the union workers. While working in leadership positions for the 200,000 member construction organization, James Cahill and his associates accepted dozens of bribes to unfairly influence decisions that went against the interests of the union members. The bribes, totaling more than $200,000 USD, went to secure project contracts, influence the collective bargaining process, and decreased the wages of union workers. Cahill and the other leaders involved face up to 20 years each in prison.

Business

Russian money laundered through Silicon Valley, new report says

A new investigative report by the San Francisco Standard found that money laundering initiated by Russian oligarchs was rampant in Silicon Valley companies and San Francisco real estate firms. Among others implicated in the report, the Standard uncovered more than $28M USD of oligarch Suleyman Kerimov’s fortune was laundered through a veritable “oligarch industrial-complex”, which funneled the funds into real estate and startups. The report found that using a network of accountants, lawyers, and other business associates who “turn a blind eye to” the origins of the fortunes they are paid to handle, oligarchs are able to free their money from the bounds of a sanctioned country.

Ericsson’s corporate monitorship extended

Swedish telecom giant Ericsson has had its corporate monitorship extended to June 2024 this week. The new date extends the original monitorship by one year, which was originally handed down as part of a $1B USD bribery settlement in late 2019. The Justice Department notified the company that it was in breach of its agreement last year by failing to be transparent about financial documents and other information. The company says it welcomes the monitorship extension and will use the additional time to improve its risk management and compliance frameworks.

Danske Bank agrees to $2B USD money laundering fine

Danske Bank has reached a settlement with U.S. and Danish authorities after being implicated in one of the world’s largest money laundering scandals. The multinational, Danish financial company plead guilty to accusations of bank and civil securities fraud. As part of the guilty plea and agreement, the company must pay $2B USD in fines. The case against Danske Bank goes back to a 2018 investigation which found inadequate anti-money laundering controls that allowed a large portion of the funds that flowed through the bank’s division in Estonia was of suspicious origin.