Financial Crime Summary: Q1 + Q2 2019



Each quarter*, Laven looks at the most interesting and relevant financial crime news to give an idea of the ongoing regulatory approach against money laundering and terrorist financing. This allows us to make clients and other regulated firms aware of the potential risks they face. We also provide alerts on any preventative measures firms can take. Passages are linked throughout to more in-depth articles should our readers want to explore certain aspects of the report further.

Muddy Waters vs Burford Capital

Successive blows have been traded between litigation funding giant Burford Capital and US Hedge Fund Muddy Waters in what has been described as one of the ‘most extraordinary financial battles in recent years’. This began with Muddy Waters announcing on twitter that they would start the process of shorting Burford claiming that recent data published proves they have been ‘egregiously misrepresenting it’s ROIC (Return on Investment Capital) and IIRs (Internal Rate of Return), as well as the state of its overall business’. Following this announcement and subsequent tweets, the Burford share price plummeted by 65% in 24 hours.

In retaliation, on the 12th of August Burford published a detailed analysis giving evidence that “illegal market manipulation” on their stock had taken place over the 6th and 7th of August in the form of spoofing. Spoofing is the process of placing significant amounts of sale orders for stocks just below the asking price and then cancelling these orders causing the price of the share overall to decline. Although Burford’s analysis does not directly state that Muddy Waters was responsible for the spoofing, they do heavily imply this through the activities coinciding with Muddy Waters’ attacking tweets. Muddy Waters has since hit back with an article of its own stating that Burford’s response is “nothing more than distraction and thin excuses”.

In response to this, a spokesperson for the FCA has said that they are “aware of these matters” and that they will be undertaking “wide-ranging enquiries” in relation to the various allegations made. They further added that they will be using “the wide range of data and resources at our disposal”.

Danske Bank

In an update to the infamous money laundering scandal from the Estonian branch of Danske Bank that took place earlier this year; Estonian prosecutors have seized 2 million euros from a former Danske Bank Employee after an investigation into alleged money laundering.

Authorities in Denmark, Estonia, Britain and the United States are further investigating payments totalling 200 billion euros that were made through the tiny Estonian branch of Denmark’s largest bank. This money flowed from Russian and Azerbaijani sources through the Estonia-based branch from 2007 to 2015 and has been described as ‘possibly the largest money laundering scandal in the world’ by Frances Coppola writing in Forbes.

FCA Fine

By far the largest fine levied by the FCA this year was against Standard Chartered Bank. A huge £102 million fine was handed out for Anti-Money laundering “breaches in two higher risk areas of the business”. The FCA found a serious and sustained breach relating to customer due diligence and ongoing monitoring. This was on top of the $947 million fine demanded by American agencies bring the overall order to pay to $1.1 billion.

According to the FCA examples of their shortcomings included:

  • Opening an account with 3 million UAE Dirham in cash in a suitcase (just over £500,000) with little evidence the origin had been investigated.
  • Failure to collect sufficient information on a customer exporting a commercial product which could, potentially, have a military application.
  • Not reviewing due diligence on a customer despite red flags such as a blocked transaction from another bank.


The FCA has been very active in the first half of 2019, handing out many significant fines as the constant threat of money laundering grows. As this shows, it is important for firms to stay up-to-date with new rules, regulations and software to avert any risk to their business and the wider public.

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How can we help?

At Laven our consultants can help identify the actions your firm needs to take to ensure you are compliant with new regulations, provide training to staff, assist in drafting new policies and procedures that need to be put in place, as well as assisting with your ongoing compliance using our compliance software.

*This tradition follows in the footsteps of the compliance firm CPA Audit which merged with Laven in February 2019. 

Sites Reviewed for this bulletin:

Financial Conduct Authority (FCA)

Prudential Regulation Authority (PRA)

British Bankers’ Association (BBA)

European Securities and Markets Authority (ESMA)

Commodities Futures Trading Commission (CFTC)

Financial Action Task Force (FATF)

HM Treasury (HMT)

Joint Money Laundering Steering Group (JMLSG)

National Crime Agency (NCA)

BBC Business

Telegraph Finance

Financial Times

New York Times



The Guardian


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