China shuts down cryptocurrency exchanges and bans ICOs
On 4 September, 2017, the People's Bank of China announced an immediate ban on initial coin offerings ("ICOs"), dubbing ICOs as illegal fundraising. As part of the ban, Chinese authorities have called on individuals and organisations to refund investors for any amount raised through ICOs. The move is aimed at protecting investors and dealing with risks appropriately. Following this, on September 15, 2017 Chinese authorities ordered Beijing-based cryptocurrency exchanges to cease trading after uncertainty of the digital currency's future in China caused its price to dramatically plunge. Exchanges were also told to stop allowing new user registrations as of the same day and to submit a plan for the winding down of their operations. Action by regulators aims to limit risk in the rapidly growing industry as it could be used for illegal actions and rules need to be put in place to support the development of truly legal digital currencies.
China to cooperate with IAP to locate corrupt fugitives overseas
Prosecutors in China have announced that they will begin intelligence sharing and joint investigation cooperation with the International Association of Prosecutors ("IAP") to locate Chinese fugitives who remain at large in other countries. The Ministry of Public Security has recently revealed that an estimated 900 Chinese officials and directors from State-owned companies have escaped to countries such as the United States and Canada to avoid punishment, due to a lack of bilateral extradition treaties or differences in legal systems. According to figures provided by the Supreme People's Procuratorate ("SPP") since 2014, 174 corrupt officials have returned to face trial with 1.9 billion yuan (approximately $392 million) in illegal funds confiscated.
Executives sentenced to life imprisonment for $7.6 billion Ponzi scheme
Two executives of who directed a large Ponzi scheme have been sentenced to life imprisonment. Both individuals have been sentenced for fraudulently fundraising $7.6 billion from an estimated 900,000 investors through an online peer-to-peer lending platform, Ezubao. Ding Ning, Ezubao’s founder and chairman of the platform’s holdings company Anhui Yucheng, has been fined 100 million RMB (approximately $15 million) in addition to his life sentence. He has been charged with fraud and crimes including precious metals smuggling and illegally possessing firearms. Ding Dian, the brother of the chairman, was also sentenced to life imprisonment and fined 70 million RMB ($10.7 million). Twenty-four others involved in the scheme have also received sentences of three to fifteen years' imprisonment.
BRICS countries to strengthen anti-corruption coordination
Following its ninth summit, leaders of the BRICS countries (Brazil, Russia, India, China and South Africa) have announced that they will strive to coordinate their approach and encourage a stronger global commitment to prevent and combat corruption on the basis of the United Nations Convention Against Corruption and other relevant international legal instruments. The BRICS countries have pledged to further support the BRICS Anti-Corruption Working Group in light of the negative impacts of corruption on economic growth and sustainable development. The efforts will extend to matters related to asset recovery and persons sought for corruption.
China issues guidelines to curb money laundering, terrorism financing and tax evasion
China's state council has issued guidelines on improving supervision to curb money laundering, terrorism financing and tax evasion. By 2020, China aims to improve laws and regulations and co-ordinate the work of different government departments. The state council has also announced it will increase monitoring of abnormal cross-border capital movements in order to combat cross-border financial crime. China has also announced it is to implement UN Security Council resolutions against terrorism financing.
Prosecutors call for death penalty in Ocean Bank case
Prosecutors have sought the death penalty for Nguyen Xuan Son, former Chairman of the State-owned oil and gas group PetroVietnam, and the life imprisonment of Ha Van Tham, former Chairman of Ocean Bank, for allegations of corruption and mismanagement in Vietnam's largest corruption case which is believed to have caused $69 million in losses. Son and Tham are accused embezzling approximately $11 million from Ocean Bank. An additional 49 bankers and businessmen also face imprisonment with sentences ranging from 18 months to 27 years.
New regulations issued to curb money laundering and terrorism financing
On 13 September 2017, Bank Indonesia ("BI") issued new regulations to curb money laundering and terrorism financing. The regulations aim to control actions of credit card issuers, digital money providers, remittance and money transfer companies as well as financial technology start-ups. The latest developments follow on from Indonesia's commitment to combat money laundering which successfully led to its removal from the Financial Action Task Force's ("FATF") blacklist. Under new regulations, service providers are required to hold an up-to-date list of alleged militants, radical organisations and individuals linked to the proliferation of weapons of mass destruction in order to cross check with bank customers. Providers must also assess customer risks depending on the country of origin of an incoming money transfer or the destination of an out-going transfer and must not engage with shell banks. A financial service provider that fails to comply with the rules will face revocation of its licence and directors, commissioners or stake holders banned from financial service business for five years.
Second Indonesian judge sentenced
Patrialis Akbar, a former Constitutional Court judge, has been sentenced to 8 years' imprisonment for receiving bribes. This is the second time a Constitutional Court judge has been imprisoned for bribery. A panel of judges ruled that Akbar was guilty of recieving thousands of dollars from a meat importer to influence the outcome of a judicial review case. Akbar has denied any wrongdoing.
South Korea taking measures to regulate electronic currencies
On 3 September 2017, South Korea's top financial regulator, the Financial Services Commission ("FSC") announced it would increase measures to prevent money laundering unauthorised financing and other illicit transactions using digital currencies. The following measures will be taken: banks will be required to strictly check the personal information of individuals who work at digital currency exchanges; banks will conduct due diligence to ensure that the exchanges have effective internal control procedures and will be required to report suspicious transactions to authorities.
Four senior officials arrested for embezzling government funds
On 13 September 2017, four high-ranking officials were arrested for purportedly embezzling RM40 million (approximately $9.6 million) of government funds. The funds represented 53% of RM75 million (approximately $18 million) the government fund allocated for 2016 and 2017 for financial assistance and skills training to school leavers, unskilled and unemployed individuals.
India named as most corrupt country in APAC region
A recent survey by Transparency International has revealed India as the most corrupt country in the Asia-Pacific ("APAC") region, placed ahead of Vietnam, Thailand, Pakistan and Myanmar. In the survey India recieved a 69 per cent bribery rate, where across five of six public services (schools, hospitals, ID documents, police and utility services), more than half of respondents have had to pay a bribe. The 18 month long survey by Transparency International was concluded after consulting more than 20,000 individuals in 16 countries.