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Exception Tracking Spreadsheet (TicklerTrax™)
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Top Story Compliance Related

10/04/2021

Canada makes AML/CFT progress

The Financial Action Task Force (FATF) has issued a report that indicates Canada has taken a number of actions to strengthen its framework to combat money laundering and terrorist financing since the 2016 assessment of Canada’s AML/CFT measures.

10/04/2021

Webcast host charged by SEC

The Securities and Exchange Commission has announced charges against Mark Melnick, the host of a stock trading webcast, for spreading more than 100 false rumors about public companies in order to generate illicit profits.

According the SEC complaint, filed in the United States District Court for the Northern District of Georgia on September 30, 2021, Melnick received advance notice of companies about which another scheme participant planned to spread false rumors, and then shared the companies’ names with subscribers to his online trading room. Melnick advised the subscribers that he had taken positions in the companies, while other scheme participants also spread the false rumors through real-time financial news services, financial chat rooms, and message boards. These false rumors caused the prices of the subject companies’ securities to rise temporarily. Between January 2018 and January 2020, Melnick allegedly spread and/or traded around the false rumors over 100 times, generating more than $374,000 in illicit profits. The other scheme participants also traded around the false rumors, generating significant profits.

10/04/2021

OCC CRA evaluations released

The Office of the Comptroller of the Currency on Friday released a list of Community Reinvestment Act performance evaluations that became public in September. Of the 14 evaluations listed, ten were rated Satisfactory. We congratulate the four institutions that received Outstanding ratings:

10/01/2021

OFAC removes Kingpin Act designations, adds FAQ

OFAC has removed four Kingpin Act designations and added an Iran-related FAQ. For details, see the BankersOnline September 30, 2021, OFAC Update.

09/30/2021

FTC sending $2 million to defrauded consumers

The Federal Trade Commission has announced it is sending 8,843 checks totaling more than $2 million to consumers who were harmed by a company that charged them money for “funding” to pay for expensive and often ineffective training programs, but instead opened multiple credit card accounts in their names.

According to the FTC's complaint against Seed Consulting, LLC (which also operated under the names Seed Capital and Foundation Funding) was pitched by training companies as a way to get “funding” to people who wanted to start a business or become a real estate investor. The complaint alleged that Seed didn’t actually provide any funds to consumers but instead charged them $3,000 or more to apply for numerous credit cards on their behalf, with total credit lines of more than $50,000, a practice known as “credit card stacking."

Seed agreed to settle the FTC’s case in January 2021. Each check recipient will receive $232.12.

09/30/2021

Houston property owners charged with FHA violations

HUD has announced hat it has charged the owners of several residential properties in Houston, Texas, with violating the Fair Housing Act by refusing to rent a house for use as a group home for persons with mental disabilities. The Fair Housing Act prohibits housing providers from denying housing to persons with disabilities or subjecting them to discriminatory terms or conditions. This prohibition includes the refusal by owners of rental properties to permit their use for operation of group homes that allow persons with disabilities to live in the community.

09/30/2021

U.S. and Qatar target Hizballah financiers

The U.S. Department of the Treasury on Wednesday announced the United States, through OFAC, and the Government of Qatar both designated in coordinated actions a major Hizballah financial network based in the Arabian Peninsula.

The United States designated Hizballah as a Foreign Terrorist Organization on October 8, 1997, and as a Specially Designated Global Terrorist on October 31, 2001, and the Gulf Cooperation Council designated Hizballah as a terrorist organization on March 2, 2016. Yesterday, Ali Reda Hassan al-Banai, Ali Reda al-Qassabi Lari, and Abd al-Muayyid al-Banai were designated as Specially Designated Global Terrorists for having materially supported Hizballah.

Abd al-Rahman Abd al-Nabi Shams, Yahya Muhammad al-Abd-al-Muhsin, Majdi Fa’iz al-Ustadz, and Sulaiman al-Banai were designated as SDGTs for having materially supported Ali al-Banai.

Qatar-based AlDar Properties was designated for being directly or indirectly owned, controlled, or directed by Sulaiman al-Banai.

Identification information for the designated individuals and entity are available in BankersOnline's September 19, 2021, OFAC Update.

09/29/2021

SEC halts securities fraud scheme

The Securities and Exchange Commission has announced that it filed an emergency action and obtained an asset freeze, among other relief, against Richard Xia (aka Yi Xia) and his company, Fleet New York Metropolitan Regional Center LLC (formerly known as Federal New York Metropolitan Regional Center LLC), for committing securities fraud in connection with two real estate projects in Queens, New York.

The SEC's complaint alleges that from 2010 through late 2017, Xia, through Fleet, fraudulently raised more than $229 million through five EB-5 offerings from more than 450 investors. The funds were allegedly raised for Xia's two real estate development projects – the Eastern Mirage project and the Eastern Emerald project. According to the complaint, the offering materials made material misrepresentations regarding the sources of financing for the projects, the experience of the projects' development and construction team, the scope of the Eastern Emerald project, and the existence of lease agreements among several entities that Xia owns and controls. Additionally, Xia allegedly misappropriated approximately $17 million in Eastern Mirage investor funds, and at least $11.8 million in Eastern Emerald investor funds.

BOL note: The EB-5 Visa program, administered by U.S. Citizenship and Immigration Services, provides certain foreign investors who can demonstrate that their investments are creating jobs in the United States, with a potential avenue to lawful permanent residency.

09/28/2021

Wash trading scheme halted by SEC

The Securities and Exchange Commission has announced it has charged a Florida resident and his friend for engaging in a fraudulent scheme designed to collect liquidity rebates from exchanges by wash trading put options of certain "meme stocks" in early 2021.

According to the SEC's complaint, starting in late February 2021, Suyun Gu became aware of the increased market volume and volatility driven by so-called "meme stocks" – stocks that were being actively promoted on social media platforms. Gu allegedly then devised a scheme to take advantage of the "maker-taker" program offered by exchanges by trading options of these stocks with himself.

Under the maker-taker program, a trade order that is sent to an exchange and executes against a subsequently received order makes liquidity and generates a rebate from the exchange. In contrast, an order that immediately executes against a pre-existing order takes liquidity and is charged a fee.

09/28/2021

FTC bans bogus debt collectors

An Atlanta-based debt collection company and its owners will be permanently banned from the debt collection industry under the terms of a settlement with the Federal Trade Commission. In its complaint against Critical Resolution Mediation, LLC, along with Brian Charles McKenzie and Tracy Dottrice Warren, the FTC alleged that the defendants and their agents threatened consumers with arrest and imprisonment and tried to collect debts that consumers did not actually owe. Critical Resolution’s collectors regularly posed as law enforcement officers, attorneys, mediators, or process servers, lending credence to their threats about supposed unpaid debts. In many cases, the defendants were attempting to collect on so-called “phantom” debt—debts that either were never owed—or debts that were no longer owed.

In addition to banning all of the defendants from the debt collection industry, the settlement also prohibits the defendants from misrepresenting whether they are attorneys or affiliated with a law firm or whether a consumer owes a debt of any kind. They are also prohibited from making any misleading claims while selling a product or service. The settlement also requires the defendants to destroy all consumer information they have within 30 days and prevents them from profiting in any way from that information.

The defendants are required to pay more than $266,000 to the Commission as part of the settlement. The total monetary judgment of more than $3 million is partially suspended upon that payment due to the defendants’ inability to pay. If the defendants are found to have misrepresented their financial condition, then the full amount of the judgment will be immediately due.

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