Germany fines JPMorgan €45 million for anti-money-laundering failings
Euronews
Germany's financial regulator, BaFin, has imposed a €45 million fine on JPMorgan for deficiencies in the bank's anti-money laundering systems. The Frankfurt branch of JPMorgan Chase & Co. failed to submit suspicious transaction reports promptly between October 2021 and September 2022.
This €45 million penalty marks the highest fine ever levied by BaFin against a financial institution, surpassing the previous record of €40 million imposed on Deutsche Bank in 2015.
The regulator emphasized that the bank "culpably breached its supervisory obligations" regarding internal procedures for identifying potentially illicit activities, resulting in delays in reporting these transactions "without undue delay." The fine became definitive on 30 October, according to BaFin's announcement.
According to Germany’s Money Laundering Act, financial institutions are required to report any transactions that may be associated with money laundering or terrorist financing to the country's Financial Intelligence Unit (FIU). Timely reporting enables authorities to investigate and, if warranted, escalate the matter to law enforcement.
BaFin highlighted that in instances of systematic violations, fines can be determined based on a bank's total revenue, potentially resulting in substantial penalties, such as the one imposed on JPMorgan.
Irish regulator fines Coinbase Europe 21.5 million euros over monitoring failures
Reuters
Ireland's central bank has imposed a substantial fine of € 21.5 million ($25 million) on the Irish subsidiary of cryptocurrency exchange Coinbase Global for violating anti-money laundering and counter-terrorist transaction monitoring regulations.
The Irish regulatory body revealed that the penalty stemmed from significant flaws in Coinbase Europe's transaction monitoring system, which failed to adequately oversee over 30 million transactions totaling more than €176 billion over the course of one year.
Furthermore, the central bank noted that Coinbase took nearly three years to complete the necessary reviews on the transactions in question, which ultimately led to the identification and reporting of 2,708 suspicious transactions for further investigation. The flagged transactions were linked to serious criminal offenses, including money laundering, fraud, drug trafficking, cybercrime, and child sexual exploitation, as cited by the central bank.
In its defense, Coinbase acknowledged that it unintentionally introduced three coding errors in its transaction monitoring system, resulting in five out of 21 scenarios used to detect red flags failing to screen all transactions properly during 2021 and 2022. The company stated that it rectified these coding issues within two to three weeks of their discovery.
The fine was reduced from an initial 30.7 million euros as a result of a settlement discount, taking into account Coinbase Europe's average annual revenue of 417 million euros for the relevant period.
Ex-Capula Compliance Head Says Fund Expensed Art, Private Jets
Bloomberg
The former chief US compliance officer of Capula Investment Management has filed a lawsuit against the hedge fund, alleging wrongful termination after voicing concerns regarding the mismanagement of artwork expenses, private jet travel, and questionable trading practices.
Igor Abramov took legal action against the London-based firm in Manhattan federal court, asserting that he faced retaliation and was let go in July for suggesting that the $32 billion company may have been breaching SEC regulations related to pass-through expense disclosure, conflicts of interest, and the safeguarding of investor funds.
Abramov's claims spotlight the problematic expense structures increasingly adopted by leading multistrategy funds. His lawsuit indicates that he aimed to ensure compliance with SEC regulations regarding proper client disclosure. According to Abramov, he encountered resistance from senior managers when he requested details on expenses billed to the Capula Multi-Strategy Master Fund Ltd., and was subsequently directed to modify the prospectus to indicate that artwork and private jet travel were “currently” exempted from pass-through charges.
Furthermore, Abramov reported receiving a similar lack of support when he highlighted potential cross-trading issues among Capula's funds, asserting that such practices could breach SEC regulations if they favored one fund over another to the detriment of the opposite.
