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The Morning Risk Report: Bank Accused of Breaching Money Laundering Laws—23 Million Times
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Westpac breached Australia’s money laundering laws more than 23 million times between 2013 and 2019, Austrac alleged. PHOTO: BRENT LEWIN/BLOOMBERG NEWS
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Good morning. Australia’s second-largest bank has been accused of the biggest breach of the country’s money laundering and terrorism financing laws in history, including failing to detect transfers that may have been used to facilitate child exploitation in Asia.
Westpac Banking Corp. allegedly breached money laundering laws more than 23 million times, including failing to report in a timely way about $7.5 billion in international transfers, Australia’s financial-intelligence agency said in a court filing Wednesday. Each individual breach could attract a fine of up to $21 million Australian dollars (US$15.7 million).
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“We know we have to do better,” said Westpac Chief Executive Brian Hartzer, telling reporters that the bank agreed with the statement of claim filed by the Australian Transaction Reports and Analysis Centre, or Austrac.
The alleged infractions, which occurred between 2013 and 2019, were “the result of systemic failures in its control environment, indifference by senior management and inadequate oversight by the board,” Austrac said in court documents. “They have occurred because Westpac adopted an ad hoc approach to money laundering and terrorism financing risk management and compliance.”
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From Risk & Compliance Journal
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Sculptor Capital Management, previously known as Och-Ziff, is based in Midtown Manhattan. PHOTO: CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL
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Former Och-Ziff Executive Sentenced to Prison
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A former top executive of Och-Ziff Capital Management was sentenced to three months in prison after pleading guilty in May to making a false statement to the Federal Bureau of Investigation, Risk & Compliance Journal's Dylan Tokar reports.
The case against Michael Leslie Cohen, a former executive managing director of the hedge fund’s European office, stemmed from a foreign bribery investigation into Och-Ziff, which was renamed Sculptor Capital Management in September.
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Swedbank May Have Breached Sanctions Against Russia, SVT Reports
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Swedbank AB may have violated U.S. sanctions against Russia by facilitating the transfer of about 10 million Swedish kronor ($1 million) from gun maker Kalashnikov to a U.S. subsidiary in Florida, according to a report by Swedish state broadcaster SVT.
Meanwhile, the Swedish lender could face a fine of $1.5 billion related to investigations into anti-money-laundering compliance, according to Morgan Stanley. Analysts from Keefe, Bruyette & Woods Inc. have estimated potential penalties of about SEK8.7 billion.
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Foreign Bribery Leniency Program Gets Minor Adjustment
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The U.S. Justice Department made several clarifications to its foreign bribery leniency program, in a move officials said was part of a continuing initiative to be transparent to companies. The changes, announced Wednesday, concern language describing how companies can voluntarily disclose possible Foreign Corrupt Practices Act violations, and what information they are expected to share with prosecutors.
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Braskem is one of the Brazilian companies that has been caught up in allegations of corruption. PHOTO: BRUNO ROCHA/ZUMA PRESS
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The former chief executive of Brazilian petrochemical company Braskem SA was arrested for his alleged role in what U.S. prosecutors called a scheme to divert $250 million in company money into a secret slush fund used to pay bribes to government officials. José Carlos Grubisich, who served as CEO from 2002 through 2008, was arrested Wednesday at Kennedy International Airport in New York. A three-count indictment unsealed Wednesday in federal court in Brooklyn charges him with money-laundering conspiracy and conspiracy to violate antibribery and books-and-records provisions of the Foreign Corrupt Practices Act.
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The Trump administration has given permission to some U.S. suppliers to Huawei Technologies to resume shipping to the Chinese telecom giant, easing export restrictions while U.S. negotiators struggle to wrap up the first stage of a trade deal, the Commerce Department confirmed Wednesday.
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Grubhub Chief Executive Matt Maloney says his food-delivery rivals need to charge more sales taxes on their delivery fees. They disagree. Delivery fees administered by companies like Uber Technologies’s Uber Eats division, Postmates, DoorDash and Grubhub are receiving increasing attention from local officials who have watched the industry grow quickly in the past several years. Food-delivery companies were projected to charge $10.4 billion in delivery fees in the U.S. by 2023, compared with $4.4 billion in 2017, according to analysts at Cowen & Co.
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Former Baltimore Mayor Catherine Pugh was indicted on federal wire-fraud and tax-related charges stemming from her self-published “Healthy Holly” children’s books, which were at the heart of a political scandal that prompted her resignation in May.
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Hospitals are pushing back against the Trump administration’s new health-pricing disclosure rule, with the industry planning a legal challenge to block it. The rule would require hospitals to disclose the secret rates they negotiate with insurers for all services.
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Wirecard denies all allegations of improper accounting practices. PHOTO: WOLFGANG RATTAY/REUTERS
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Shares of Wirecard AG, the German electronic payments company whose accounting practices in Asia are under investigation, fell Wednesday after it emerged that an auditor hadn’t fully signed off on its Singapore arm’s most recent accounts.
The company, which denies all allegations of improper accounting practices, said the lack of a final opinion from Ernst & Young for Wirecard Singapore Pte’s accounts didn’t affect the audit of the parent firm for 2017 and 2018.
The company has been dealing with questions over its Asian accounting practices following a series of articles in the Financial Times this year. The company has denied the allegations, which related to how it records revenue and fictitious invoicing. The Singaporean police’s Commercial Affairs Department later opened an investigation and seized files from the company’s local offices.
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People in Karaj, west of Tehran, on Monday walked past buildings that were burned during protests triggered by the authorities’ decision to raise gasoline prices. PHOTO: MASOUME ALIAKBAR/ISNA/ASSOCIATED PRESS
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Tehran has moved to quell violent unrest sparked by a fuel-price increase by handing out cash stipends to the poor and orchestrating pro-government demonstrations to marshal support for a policy intended to boost the sanctions-hit economy.
The new measures, which the government said had taken effect on Tuesday, come amid reports of a rising death toll and more arrests of protesters in Tehran and other major cities, where demonstrators burned and destroyed banks, gas stations and security bases.
The moves show how Tehran is struggling to address the public’s deep discontent while balancing its books. The government is struggling to prop up living standards as its oil-dependent economy comes under pressure from U.S. sanctions.
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‘We want any issues with the process and the fair procedures aired out now,’ Helen Dixon, Ireland’s data-protection commissioner, says about the WhatsApp case. PHOTO: SEAN AND YVETTE FOR THE WASHINGTON POST/GETTY IMAGES
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A decision in Ireland’s privacy investigation into Facebook’s WhatsApp has been delayed because the company’s lawyers raised concerns about how the regulator will share potentially sensitive commercial data with authorities in other European countries.
Ireland’s Data Protection Commission will need a few weeks to respond to WhatsApp’s questions, the regulator’s head, Helen Dixon, told WSJ Pro Cybersecurity on Wednesday on the sidelines of a privacy conference. As a result, Ms. Dixon said a decision would likely come in early 2020 instead of the end of this year, as she had previously flagged.
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General Motors’ suit is related to a federal probe into corruption in the United Auto Workers’ top ranks and Fiat Chrysler’s possible involvement. PHOTO: JEFF KOWALSKY/BLOOMBERG NEWS
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General Motors filed a federal racketeering lawsuit Wednesday against Fiat Chrysler accusing it of corrupting union negotiations, in an unusual legal dispute between crosstown rivals.
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Meanwhile, United Auto Workers President Gary Jones has stepped down from the top role and is retiring from the union, his lawyer said Wednesday, in another unsettling change to the union’s top ranks.
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New York ride-hailing business Juno USA LP filed for bankruptcy protection, blaming its demise on minimum wage regulations and mounting lawsuits from drivers, riders and competitors.
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Canadian National Railway Co. is seeking support from workers to have the government appoint an arbitrator to end an impasse in contract negotiations that triggered a strike Tuesday.
Also...
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Jeff Wilke, CEO of Amazon’s consumer business, in June. PHOTO: JOE BUGLEWICZ/BLOOMBERG NEWS
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For decades, General Electric was America’s breeding ground for corporate chiefs. Executives who rose through the conglomerate’s ranks in its heyday and passed through its rigorous management program went on to run behemoths such as Home Depot and 3M.
In the Big Tech era, Amazon has become the incubator for CEOs and entrepreneurs. At the core of Amazon’s ethos is a scrappy startup mentality that encourages employees to constantly innovate and challenge the way things are typically done.
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A finance chief’s service on another company’s board could enhance the quality of financial reporting for his or her own company, new academic research suggests.
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Harrods started using Apple Music for Business in its London store a few weeks ago. PHOTO: HARRODS
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Apple Music is getting into the business of music for business. The No. 2 music-streaming service by subscriptions has been quietly piloting a version of Apple Music for use in businesses including Levi Strauss and Harrods stores. Apple has joined with PlayNetwork Inc., which specializes in providing music for commercial use.
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Insurance brokerage Aon has agreed to acquire startup CoverWallet, as insurers are competing to figure out how to sell insurance to small businesses online.
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