Compliance News | April 2022

Posted by

David Mangion

on 28 Apr 2022


This month's key compliance news includes Coca-Cola bribes, new gambling advert rules, Goldman Sachs embezzlement, illegal crypto ATMs, new PPE regulations, and more.

Compliance News | April 2022

Our pick of key compliance stories this month

Match Group wins court battle over its trademark

US tech company Match Group, which runs the world's largest portfolio of dating apps, including Tinder, OkCupid, Hinge and Match.com, has won a court battle against the UK dating app Muzmatch.

Muzmatch, based in the UK, is the world's largest Muslim dating site, but it could now lose the right to use its name following the court case.

The UK intellectual property and enterprise court ruled that Muzmatch infringed the Match Group trademark. Match Group accused Muzmatch of "piggybacking on established dating brands" by using "match" in its brand name. This meant that Muzmatch's six million users could have been misled into thinking the app was owned and run by Match Group.

A spokesperson for Match Group stated the following: "We are pleased that the court recognised what we have known to be true: that Muzmatch has unfairly benefited from Match Group's reputation and investment in its brand and was riding Match Group's coattails for undeserved gain in this highly competitive market. We have and will always protect our employees' work, creativity, and innovations."

Tips to Avoid Anti-competitive Behaviour

Block reports data breach concerning 8 million users

Block, formerly known as Square Inc., an American financial services and digital payments company, has reported a cybersecurity and data breach concerning information on more than eight million customers. The breach occurred when a former employee downloaded corporate reports after leaving the company.

The firm stated that: "Upon discovery, we took steps to remediate this issue and launched an investigation with the help of a leading forensics firm […]. We know how these reports were accessed, and we have notified law enforcement."

The exposed data contained information on users who used Cash App's investing products. The data included customers' names and Cash App brokerage account numbers. Some of the data also included portfolio value, holdings, and trading activity details on some customers. The breach did not include usernames, passwords, social security numbers or data that could identify a person.

Key takeaways:

  • The largest threat of a cybersecurity incident or information/data security breach comes from insiders in many cases. This incident reminds us of this fact.
  • Companies should ensure they have external access to employee accounts and disable them immediately upon termination of employment before an employee leaves to safeguard customer and company data.

Free Cyber Security Training Presentation

New rules ban celebrities from advertising gambling

From October 2022, gambling, lottery, and betting companies will not be allowed to promote their products, services and gaming platforms via celebrities and sports stars. The change in gambling and advertising legislation is being implemented to safeguard under-18s, young adults, and vulnerable audiences.

The Betting and Gaming Council stated that the measure is intended to "drive up standards and ensure further protections in advertising".

The new rules have been positively received by politicians, parents, and groups that campaign for awareness of gambling addiction, particularly in light of growing concerns over the impact of gambling on the general population, especially on young people.

Free Vulnerable Customers Checklist

Coca-Cola boss admits receiving £1.5m in bribes

Former Coca-Cola manager Noel Corry has admitted to receiving over £1.5m in bribes in exchange for helping specific companies win contracts over nine years.

Between 2004 and 2013, Corry provided Boulting Group with confidential company data so they could gain an edge over rivals in contract bids. He also issued fake contracts that were never fulfilled, pocketing the payments for himself. In some cases, he also had companies pay over the stipulated contractual amount and then kept the difference. The accepted bribes also included tickets to expensive entertainment events. In one case, a bribe payment consisted of more than £11k worth of Manchester season tickets paid for by the bribing companies.

In court, Corry admitted to five counts of corruption and was handed a 20-month suspended sentence. The companies that handed over the bribes were fined, and multiple directors at these companies were also fined and handed suspended sentences.

Key takeaways:

  • Contracting companies, suppliers, and third parties need to ensure they have the necessary compliance measures to prevent financial crime, including bribery and money laundering - this includes adequate internal systems and compliance training for all employees
  • Bribes can take many shapes and forms, from outright cash payments to expensive gifts or favours
    Bribery Prevention Training Presentation

Former Goldman Sachs banker guilty of conspiracy

Once Goldman Sachs' top investment banker in Malaysia, Roger Ng has been found guilty by US courts for conspiracy and money laundering under US foreign anti-corruption laws.

Ng helped former boss Tim Leissner embezzle money via the sovereign 1Malaysia Development Berhad (1MDB) initiative. This initiative was established to drive strategic long-term economic development in Malaysia to aid its economy and stimulate direct foreign investment. The 1MDB fund was connected to Malaysia's then prime minister.

The charges against Ng and his boss, Leissner, arose from a scheme in which Goldman Sachs' Malaysian unit helped 1MDB raise $6.5bn (£5bn) through three bond sales. But $4.5bn (£3.4bn) was diverted to government officials, bankers, and associates between 2009 and 2015 in bribes and payouts. It is estimated that Ng received $35m (£26.7m) in kickbacks for his role in the scheme.

This means that the embezzled monies were laundered through the fund and then used for bribes and personal profit by the accused.

Leissner faced similar charges to Ng in 2018, while Ng's verdict came through this month. As a result of the case, Goldman Sachs paid nearly $3bn (£2.3bn) in fines in 2020 after its Malaysian unit pled guilty to the corporate charges levelled against it.

AML Risk Assessment Tips

Further Russian sanctions announced by UK and US

The US and UK governments have announced a new set of sanctions on Russia following its invasion of Ukraine. These measures are intended to harm the Russian economy and punish Putin, numerous high-ranking officials and others who have benefited from his regime.

Among the US's latest sanctions are:

  • Economic measures to prohibit new investment in Russia
  • Harsh sanctions on two particular Russian financial institutions - Alfa Bank and Sberbank
  • Sanctions on major state-owned enterprises
  • Sanctions on Russian government officials and their family members, including President Putin's children and relatives of Foreign Minister Sergei Lavrov

Meanwhile, the UK has committed to ending all imports of Russian coal and oil by the end of 2022 and has imposed sanctions on Sberbank, Russia's largest bank.

Key takeaways:

  • Keep your knowledge of changes to country sanctions current - pay extra attention to Russia for the time being
  • Report any concerns, including actual or potential sanctions violations immediately
  • Never bypass sanctions screening or encourage, help or advise clients to so

How to Avoid Sanctions Penalties

PPE regulations amended after 30 years

On 6 April 2022, the Personal Protective Equipment at Work (Amendment) Regulations 2022 (PPER 2022) came into effect, amending the 1992 Regulations (PPER 1992). These amendments extend employers' and employees' duties when it comes to personal protective equipment (PPE) to limb (b) workers (casual workers or those who work under a contract for service).

PPER 1992 places a duty on every employer in the UK to make sure that suitable PPE is given to employees who could be exposed to health and safety risks while working.

Since PPER 2022 has come into force, employers need to carefully consider whether the changes apply to them and their workforce and make the necessary preparations to comply.

Health & Safety Compliance Roadmap

Home Office apologises for visa service data breach

The Home Office's visa service has apologised for a data breach in which more than 170 people's email addresses were accidentally copied into an email sent out recently.

On 7 April, over 170 email addresses were inadvertently copied into a message from the UK Visa and Citizenship Application Service requesting a change of location for a visa appointment. Some of the email addresses were personal Gmail accounts, while others belonged to solicitors from various companies.

A Home Office spokesperson said, "We take data protection extremely seriously, and there are robust processes in place to prevent breaches. On the rare occasion, they do occur, data incidents which meet the appropriate threshold are reported to the Information Commissioner's Office. Our data protection officer is reviewing this incident to determine whether this threshold has been met."

Key takeaways:

  • Take care to safeguard recipients' personal information when sending emails - always double-check the list of recipients before sending
  • Protect personal information to ensure appropriate security and safeguard it against unauthorised or unlawful processing, accidental loss, destruction or damage
  • Don't conceal or cover up data losses or breaches - report mistakes and violations promptly so that you can limit the damage

6 Tips for Personal Data Compliance

UK Chemical firm fined £480k after worker injured

Robert McBride Ltd of Hornscroft Park has been sentenced for safety breaches after one of its workers suffered 13% superficial burns to his arm and hand due to the ignition of flammable vapours at its site.

Beverley Magistrates' Court heard that the worker was adding powder to a large mixing vessel at the time of the incident. As this process was underway, flammable vapours leaving the vessel via the lid ignited, briefly engulfing his upper torso.

The HSE's investigation revealed that the vessel's extraction system was insufficient to prevent a build-up of a flammable atmosphere, and a more suitable one should have been installed. As a result, the firm was fined £480,000 and ordered to pay costs of £13,441.80.

Fire Safety in the Workplace

FCA sends warning to illegal crypto ATM operators

The FCA has warned operators of crypto ATMs in the UK to shut their machines down or be prepared to face enforcement action.

In order for ATMs in the UK to be able to provide crypto asset exchange services, they need to be registered with the FCA and comply fully with the UK Money Laundering Regulations (MLR).

However, there are currently no FCA-registered crypto asset companies that have been approved to offer crypto ATM services, meaning that any of them operating in the UK are illegal, and consumers should avoid making use of them.

Recently, the Upper Tribunal ruled against Gidiplus, a company offering crypto ATM services, which wanted to continue trading, pending the Upper Tribunal's determination of its appeal against the FCA refusing its application for registration under the MLRs. The judge concluded there was a "lack of evidence as to how Gidiplus would undertake its business in a broadly compliant fashion".

Cryptocurrency AML Risks

Robeco fined €2m for AML compliance failure

AFM, the financial regulator in the Netherlands, has issued a €2m fine to Robeco for failing to sufficiently check its clients for money laundering.

It is a requirement for Dutch financial institutions to report suspected transactions to the Financial Intelligence Unit (FIU). However, Robeco along with its subsidiaries reported only a few such transactions when compared with other firms.

Only two out of Robeco’s over 250,000 clients, only two clients had received the risk classification “provisionally unacceptable”. These clients had opened their accounts in 1986 and 1994.

This raised suspicion with regulator AFM. Upon investigation, they found that there were significant shortcomings in the company's client checks and their transactions.

6AMLD Training Presentation

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