On 2 September, Insight Crime reported that raids across Costa Rica have exposed a web of front companies filtering illegally mined gold to the US. In late August, Costa Rican authorities carried out 32 raids and arrested 27 people. Police also recovered gold bars, drugs, cash, and falsified export documents.
On 3 September, Defence Web reported that Russia has stepped up its logistic support for private military contractor Wagner Group in Libya with some 338 military cargo flights from Syria in the 9 months to the end of July to aid Wagner fighters backing eastern-based Libyan commander Khalifa Haftar, according to a UN report. The report also found that Turkey, the UAE, Jordan, Russia, and Qatar breached an arms embargo on Libya, and says that the arms embargo remains totally ineffective.
On 3 September, Sambad reported that banks need to take a wider and long-term view, apart from trying to meet the minimum regulatory requirements, to curb and avoid money laundering activities, according to a survey by Deloitte Touche Tohmatsu India LLP – South Asia Anti-Money Laundering Preparedness Survey Report 2020. The survey conducted with leading banks and financial institutions in India, Sri Lanka, and Bangladesh earlier this year, highlighted “siloed risk management” approaches across banking operations, CDD, sanctions screening, and trade-based transactions as the root cause for systemic inefficiencies leading to fraud.
The report itself can be accessed at –
On 3 September, the Council of Europe published a new report aimed at helping the global community to counter new criminal activities which are exploiting the COVID-19 pandemic, including the sale of counterfeit medicines and cybercrime. The aim is to assist policymakers, practitioners and the private sector in applying a more targeted and effective response to the money laundering and terrorist financing risks in Europe. The report found that the urgent need to acquire specialised medical equipment and supplies created vulnerabilities for fraud, corruption and subsequent money laundering. Authorities in charge of supervising money laundering and terrorist financing threats have had to find innovative ways to carry out their tasks by using secure electronic means. Nevertheless, international cooperation against money laundering and terrorist financing does not appear to have been negatively impacted by the emergency measures taken to combat COVID-19.
On 3 September, the Bank of International Settlement published a paper about measures taken to address the decline in correspondent banking relationships, including further examination of the dimensions of the decline and implications for financial inclusion and financial stability; clarifying regulatory expectations; supporting domestic capacity-building in jurisdictions that are home to affected respondent banks; and strengthening tools for due diligence by correspondent banks. It says that effective supervision is also crucial to successfully addressing some of the concerns which may lead to loss of relationships. The paper aims to contribute to the international dialogue by focusing on supervisory practices relating to correspondent banking activities. It is said that while it was found that legal and regulatory frameworks in place are consistent with international standards, their implementation is more variable and would benefit from greater alignment with the standards and convergence across jurisdictions.
On 3 September, Eurasia Review carried an article which says that, according to the UN, “small arms and light weapons” will mean any man-portable lethal weapon that expels or launches, is designed to expel or launch, or may be readily converted to expel or launch a shot, bullet or projectile by the action of an explosive, excluding antique small arms and light weapons or their replicas. The article focuses on the different dimensions of the small arms problem in South and South East Asia and aims to highlight the areas seriously affected by the proliferation, accumulation and the misuse of small arms and it aims to highlight the gravity of the situation in the region by describing ways in which the small arms problem manifests itself within the South Asian context. It also considers the role of the UN and regional initiatives.
On 3 September, OFAC announced that it had added 11 entities to its SDN List, plus 3 individuals connected to certain of those entities. 6 of the “front companies” in various jurisdictions are said to be entities based in Iran, UAE, and China and linked to Triliance Petrochemical Co. Ltd (which was itself designated in January). The other 5 entities are said to have been knowingly engaging in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran. The 3 individuals named, 2 Chinese and 1 Iranian national, are to be principal executive officers of these sanctioned entities.
Panama Covid-19 update – interesting video on news of all-woman protect against unequal distribution of benefits during the pandemic – socially distanced and all -women (being a woman’s day, the gender-based restrictions still being in place).
Meanwhile, another 532 new cases, as numbers continue to creep downwards, giving us 24,764 active cases, of which 165 are in ICU and 1,240 in other wards and 398 in hotel rooms. 12 new fatalities take the total to 2,030 to date.
2 September 2020
SWITZERLAND: CREDIT SUISSE FACES ENFORCEMENT PROCEEDINGS OVER SPYING SCANDAL
On 2 September, the Wall Street Journal reported that Switzerland’s financial regulator FINMA has said that it had started enforcement proceedings against Credit Suisse Group AG over the physical surveillance of 2 bank executives last year. The move is said to be a further setback to the bank’s new CEO who is trying to draw a line under the bank’s slate of embarrassing headlines. The enforcement proceedings will closely examine the breaches of supervisory laws that were linked to Credit Suisse’s observation and security activities and specifically “the question of how these activities were documented and controlled.”
US VISA RESTRICTIONS ON 14 IRANIAN INDIVIDUALS FOR THEIR INVOLVEMENT IN GROSS VIOLATIONS OF HUMAN RIGHTS ON BEHALF OF THE IRANIAN REGIME
On 25 August, a news release from the US State Department announced that it had imposed the restrictions making the 14 ineligible for entry into the US, as well as their immediate family members.
AVERAGE BEC FRAUD ATTEMPTS ARE NOW WORTH $80,000
On 1 September, ZD Net reported that despite the average amount for Business Email Compromise (BEC) scams, one Russian cyber-crime group named Cosmic Lynx has been focused on tricking companies into sending over huge wire transfers. The current $80,000 average is said to be up from $54,000, the average sum that BEC groups tried to obtain from victims in Q1 2020.
US INCREASINGLY USES ENTITY LIST TRADE BLACKLIST FOR FOREIGN POLICY GOALS
On 2 September, the Wall Street Journal reported that, in the past, the list was more closely tied to violations of US export control regulations. Being placed on the Commerce Department Entity List means that targeted companies cannot receive certain goods made or designed in the US. The Trump administration increasingly cites national security as a rationale for restricting exports, trade experts say, and since 2017, over 100 Chinese companies and their affiliates have been added to the Commerce Department blacklist.
MEXICAN AUTHORITIES ARREST SENIOR POLITICIAN OVER MONEY LAUNDERING AT UNIVERSITY
On 31 August, El Universal reported that the Attorney General’s Office had announced it had arrested Gerardo Sosa Castelán over money laundering charges. He is a politician from the Institutional Revolutionary Party (PRI) and the head of the board of trustees at Hidalgo’s Autonomous University (UAEH), with the board under investigation since May 2019.
BRAZIL: HEAD OF ‘CAR WASH’ TASK FORCE QUITS WITH TEAM’S FUTURE IN DOUBT
On 1 September, Reuters reported that Deltan Dallagnol, 40, the head of Brazil’s top corruption-busting team of federal prosecutors is to leave the task force that dismantled the country’s biggest graft network and jailed a former president for taking bribes. On social media he said that he was stepping down as coordinator of the task force for personal reasons, saying he would look after an ill daughter aged 22 months.
AML ENFORCEMENT ACTION AGAINST INTERACTIVE BROKERS (IB)
On 1 September, Bloomberg Law reported that 3 US regulators have announced an AML enforcement action against Interactive Brokers (IB), described as a first in several ways, including the first joint AML enforcement action by the SEC, CFTC, and FINRA; and the largest fine to date in an AML enforcement action involving the securities and futures industries, with monetary penalties totalling $38 million. The case involves failures to commit adequate resources to AML compliance, coupled with inadequate controls and a lack of strong management support. The article looks at lessons from the case, saying that it sends a clear message on common misunderstandings and AML compliance failures that firms should avoid.
UK NATIONAL PLEADS GUILTY TO ATTEMPTING TO UNLAWFULLY EXPORT POWER GENERATING EQUIPMENT TO IRAN
On 2 September, the EU Sanctions Blog reported that Colin Fisher had pleaded guilty to an attempt to export a Solar Mars 90 S turbine core engine and parts from the US to Iran. His co-conspirator, James Meharg, CEO of Florida-based Turbine Resources International, pleaded guilty to the same offence, and is currently serving a 40-month sentence of imprisonment.
THE DUTCH UBO-REGISTER FOR CORPORATE AND OTHER LEGAL ENTITIES
On 31 August, Loyens and Loeff published an article saying that, as of 27 September, corporate and other legal entities that are incorporated or established under Dutch law and that are registered in the Dutch Trade Register are required to obtain, hold and register certain personal information on their ultimate beneficial owners.
INDIAN DIAMOND TRADERS ARRESTED IN CHINA – ACCUSED OF SMUGGLING IN POLISHED DIAMONDS
On 2 September, The Economic Times reported that a “large number” of traders had been arrested, accused of avoiding a 6% import charge.
ALLEGED HAWALA DEALER ARRESTED IN INDIA
On 2 September, Outlook India reported that the Enforcement Directorate (ED) has arrested alleged “hawala” dealer Naresh Jain in a money laundering probe linked to “hawala” transactions. He has been arrested under sections of the Prevention of Money Laundering Act (PMLA). It says that a maze of multiple shell or dubious firms and at least 600 bank accounts are under the scanner of the agency in the case, touted to be one of the biggest hawala and trade-based money-laundering cases of the country.
US PROSECUTOR SEEKS TO FORFEIT $393 MILLION FROM ONECOIN LAWYER
On 2 September, Finance Magnates reported that the US DoJ is seeking a $392,940,000 forfeiture judgment against Mark Scott, the US lawyer convicted for laundering the proceeds from the multi-billion dollar OneCoin scam. Scott was convicted last year for laundering around $400 million using multiple accounts to funnel them through the Cayman Islands and the BVI to the UAE.
EU BAN ON NEW HARMFUL PSYCHOACTIVE SUBSTANCE ISOTONITAZENE
On 2 September, the EU announced that the Commission is initiating the process to ban isotonitazene, a new psychoactive substance, across the EU. This synthetic opioid can cause severe harm to health and can in some cases lead to death. Isotonitazene has been available in the EU since at least April 2019 and has been detected in 5 Member States. 2 deaths associated with isotonitazene have been reported in the EU, and 21 deaths in the US and in Canada. Isotonitazene appears to be sold online in small and wholesale amounts, mainly as a powder but also as ready-to-use nasal sprays. The decision to ban isotonitazene is based on a risk assessment conducted by the EU’s drug agency.
EUROPEAN COMMISSION OPENS IN-DEPTH INVESTIGATION TO ASSESS WHETHER THE RIGHT GRANTED BY BELGIUM TO LADBROKES TO OPERATE VIRTUAL BETTING IS IN LINE WITH STATE AID RULES
On 2 September, the EU reported that the inquiry followed 2 gaming operators lodging a complaint to the Commission alleging that Belgium granted incompatible State aid to Ladbrokes in the form of an exclusive right to operate virtual betting.
SOUTH KOREA: POLICE RAID CRYPTO EXCHANGE BITHUMB
On 2 September, Decrypt reported that South Korea’s largest crypto exchange has reportedly been accused of fraud for pre-selling its BXA tokens and never listing them.
DETAILED GUIDE FOR BRITISH BUSINESSES ON DEVELOPING THEIR OVERSEAS TRADE, EXPORTING TO AND DOING BUSINESS IN IRAN
On 2 September, the FCO (actually the Foreign and Commonwealth Office has closed and has been replaced by the Foreign, Commonwealth & Development Office – FCDO) and others published an updated version of this guide.
AUSTRALIAN GOVERNMENT ONLINE REGISTER THAT PUBLISHES COMPANIES’ STATEMENTS ON THEIR COMPLIANCE WITH THE COUNTRY’S FEDERAL MODERN SLAVERY ACT
On 1 September, Foley Hoag LLP published an article saying that the Australian Government has launched an online register that publishes companies’ statements on their compliance with the country’s Federal Modern Slavery Act 2018. Unlike comparable legislation in other jurisdictions, the Act makes reporting mandatory within 6 months of a company’s fiscal year-end. Although there are no financial penalties for failing to comply with the Act, the Government can “name and shame” companies that do not comply, which stands to generate considerable reputation risk for businesses that fail to act.
THE INDIAN PREMIER LEAGUE AND THE LEGAL BETTING SCENARIO IN INDIA
On 1 September, an article on Jurist opens by saying that the Indian Premier League (IPL) has been overburdened with scandals in recent years linked to shadowy illegal betting world.
MALTA: CUSTOMS SEIZED OVER 270,000 FAKE GOODS IN 8 MONTHS
On 1 September, Newsbook reported that Customs officials have seized over 270,000 fake and counterfeit products over the past 8 months, saying that a total of 49 containers each 40-feet in length were full of counterfeit products. An inventory of 23 containers was made after the officials unloaded the products, with the remaining 26 containers still to be unloaded.
DOMINICAN REPUBLIC: CUSTOMS AGENCY DGA SEIZED $2,174,340 IN THE PORT OF HAINA ORIENTAL
On 1 September, Dominican Today reported that the money was imported in 2 sound speakers from New York. DGA has seized a total of $4,349,090 in less than 10 days, which is attributed by the entity to the increase in surveillance and intelligence work.
PHONE SCAMS TARGETED IN INTERPOL-COORDINATED OPERATION
On 2 September, a news release from INTERPOL advised that 2 members of a criminal network engaged in telephone and email fraud have been extradited from China to South Korea, as part of an ongoing operation, Operation First Light. First held in 2014, this targets telecom fraud and other types of social engineering scams, as well as money laundering of the illicit proceeds. Launched in September 2019, some 37 countries and territories are participating in the latest edition to identify and locate illicit call centres engaged in the fraud scams.
UK: TAXIDERMIST JAILED FOR TRADING IN ENDANGERED SPECIES
Aaron Halstead, 29, bought and advertised for sale items including a Sperm Whale tooth, a Sawfish Rostrum, a Black Rhinoceros Skull and 2 Black Rhinoceros Horns. He has been jailed for 56 weeks for trading in endangered species. He was arrested in January 2018.
EXTORTION: THE SICILIANISATION OF MEXICAN DRUG CARTELS
On 1 September, Insight Crime carried an article saying that extortion has formed part of the daily Mexican life since the second half of the 20th Century; and that nowadays, extortion in Mexico is manifested in many forms, including derecho/cobro de piso (“user rights”), where the business owners are asked to pay criminals periodically in order to be able to work. A new report analyses derecho/cobro de piso and its effect on Mexico’s private sector, ranging from the humble street vendor in Mexico City to the transnational avocado industry in Michoacán.
SUCCESSFUL CONCLUSION OF THE WCO ASIA/PACIFIC SECURITY PROJECT
On 2 September, a news release from WCO said that the WCO had previously provided Customs administrations of the region with 65 Raman spectrometers and 19 backscatter x-ray machines. In addition, passenger targeting systems were implemented in 2 countries, and a wide range of training and operational activities were conducted in nine partner countries across the Asia/Pacific region. The second phase of the project focused primarily on sustaining the operational activities in the 9 SE Asian countries, but also on expanding and integrating Programme Global Shield (PGS) activities into South Asia.
BREAKAWAY MOLDOVAN REGION OF TRANSDNIESTER CELEBRATES 30 YEARS OF “INDEPENDENCE”
On 2 September, Rferl carried an article reminding one that the region separated from Moldova in 1990, due to fears that Moldova would seek reunification with Romania.
MARITIME PIRACY IN MEXICO… A TICKING TIME BOMB
On 2 September, Hellenic Shipping News reported that communication equipment, diving equipment, tools, wiring, metal caps, navigation instruments, watches, cell phones, and even wallets, stolen by groups of pirates from oil platforms and ships that sail in the probe of Campeche, Dos Bocas, and Veracruz, are offered through the Internet, as well as in local markets and flea markets in Mexico. A report says that organised crime groups operating at sea have increased their illegal activity in Mexican seas for several years. In 3 years, there have been at least 351 recorded assaults by pirates of the sea.
EGYPT AND CYPRUS OFFICIALS INTENSIFY TALKS OVER JOINT GAS PIPELINE PROJECT
On 2 September, Hellenic Shipping News reported on another angle of the current disputes in the Eastern Mediterranean and energy resources. It is said that the joint scheme would see natural gas from the offshore Aphrodite gas field in Cyprus piped to liquefaction plants (which convert gas into a liquid state) in Egypt for re-export to European countries and for use in local markets.
SWITZERLAND FROZE $900 MILLION FROM ANGOLAN BUSINESSMAN
On 2 September, Reuters reported that Switzerland has frozen $900 million held in accounts belonging to a top Angolan businessman as part of a money laundering investigation. Carlos Manuel de São Vicente was a key figure in Angola’s oil industry, heading a group of companies which sold insurance and reinsurance contracts to state oil company Sonangol.
EXPERTS WARN SOMALI PIRACY RISKS REMAIN AS HOSTAGES RELEASED
An article from Dryad Global on 2 September says that the release of 3 Iranian crew members, on 20 August, marks the end of the Somali piracy era, however, seafarers still should remain vigilant in these waters, warn security experts.
PODCAST: COMPLIANCE IN CANADA
In the latest TRACE podcast, Amee Sandhu, founder and CEO of Lex Integra in Toronto, discusses Canada’s history with anti-bribery efforts, some recent developments and where things stand today.
THE GEOPOLITICAL FORCES THAT WILL SHAPE THE SPREAD OF NUCLEAR WEAPONS
On 2 September, the Center for Strategic and International Studies produced a report saying that although many countries have explored or pursued nuclear weapons, only 9 states have them today. The report identifies 7 trends that will shape the future of nuclear proliferation. It uses 3 case studies of potential proliferators – Turkey, South Korea and Saudi Arabia.
US: MONEY TRANSFER COMPANIES SETTLE CHARGES FOR REMITTANCE TRANSFER VIOLATIONS
A news release from the US Consumer Financial Protection Bureau on 1 September advised that 2 money transfer companies – TRANS-FAST REMITTANCE LLC (also doing business as NEW YORK BAY REMITTANCE) and Sigue Corporation, SGS Corporation, and GroupEx Corporation – had settled CFPB charges for failing to comply with error resolution and disclosure requirements under the Electronic Fund Transfer Act.
PAKISTAN POLITICAL LEADER FINED OVER £2 MILLION FOR EVADING INCOME TAXES FOR 20 YEARS IN UK
On 2 September, The News reported in Pakistan that Muttahida Qaumi Movement (MQM) leader Altaf Hussain has been fined £2 million over income tax evasion and an investigation is already underway to determine the full extent of the MQM leader’s financial matters. Since 2015 he has been outside Pakistan after a crackdown on MQM.
GOLD BARS SEIZED FROM UK AIRLINE PASSENGER IN 2018 TO BE AUCTIONED
In its 3 September edition, Stuff in New Zealand reported that 8 gold bars said to be worth £750,000 are being auctioned off in the UK after they were seized from a passenger flying to Dubai in 2018.
DOMINICAN CITIZEN EXTRADITED TO US RE CHARGES RELATING TO DRUG TRAFFICKING THROUGH SHAM INTERNET PHARMACY
A news release from the DEA on 2 September advised that Jose Francisco Guzman-Cabrera, a citizen of the Dominican Republic, had been extradited from the Dominican Republic to the US. He is charged with conspiracy to distribute controlled substances, including oxycodone, hydrocodone, the fentanyl analogue p-fluoroisobutyryl fentanyl, and the synthetic opioid U-47700, distribution of controlled substances over the Internet, and conspiracy to commit money laundering, in connection with a large-scale drug distribution operation purporting to be an online pharmacy.
STEPSON OF EX-MALAYSIAN PM TO FORFEIT $60 MILLION IN 1MDB SCANDAL
On 2 September, the Courthouse News Service in the US reported that prosecutors say the stepson of former Prime Minister Najib Razak, Riza Aziz, received illicit funds from the 1MDB scam and funnelled them into his company Red Granite Pictures, which financed Hollywood films including the 2013 Martin Scorsese picture “The Wolf of Wall Street”. Aziz received the funds in 2011 and 2012 and laundered them through banks in the US, Switzerland, Singapore and Luxembourg, according to prosecutors.
OWNERS OF IRANIAN FUEL SEIZED BY US ASSERT RIGHTS TO CARGOES
On 2 September, Hellenic Shipping News reported that the owners of 4 Iranian fuel cargoes that were confiscated by US authorities last month have mounted a challenge to the seizure, asserting their rights to control the cargo, according to a court filing. It says that UAE-based Mobin International Limited said it was the owner of the cargo aboard 2 tankers tankers, UK-registered Oman Fuel said it owned the cargo aboard 2 other tankers, and Oman-registered Sohar Fuel said it part-owned the cargo aboard the one of the ships. The companies said they had sold the cargoes onwards to UAE-based Citi Energy FZC, but payment was due upon delivery, which was disrupted by the seizure.
UK: WOMAN ARRESTED IN CONNECTION WITH CONTINUED PROBE INTO BIRMINGHAM “CRIMINAL MASTERMIND” FENG XU
On 2 September, Birmingham Live reported that a woman has been arrested on suspicion of laundering money in connection with an ongoing investigation into a convicted Birmingham criminal mastermind, said to be Chinese national, Feng Xu. Birmingham-based Xu was jailed for more than 7 years in December 2019 and faces deportation at the end of his sentence. He had set himself up as an ‘enabler’ for ruthless crooks by using fake identities to rent out 446 properties across the UK. The gangs would then pay off the degree student before converting each property into either a brothel or a cannabis cultivation farm.
THE FUTURE OF US SANCTIONS POLICY
On 26 August, the Center for a New American Security released a set of reports containing ideas about how the US must recalibrate its sanctions policy. The proposals improving how the US uses sanctions, including by making US sanctions-removal assurances more credible, rethinking the role of sanctions in pressure targeting adversaries, and emphasising the importance of information-sharing and transparency around sanctions for effective foreign policy. Another report outlines a phased approach for engaging Iran in 2021 that takes into account economic, regional, and nuclear issues.
On 2 September, an article from the Council of Europe says that criminals have been exploiting the upheaval generated by the COVID-19 pandemic by adapting their modus operandi to gain additional profits from various kinds of crimes such as fraud through electronic means, the sale of counterfeit medicines and cybercrime. It says that MONEYVAL has prepared a report outlining preliminary conclusions on threats, vulnerabilities and best practices identified so far during the pandemic based on the information collected from its members. The report aims to assist policymakers, practitioners and the private sector in applying a more targeted and effective response to the emerging money laundering and terrorist financing risks in the European context. The findings indicate that the urgent need to acquire special medical equipment and supplies seems to have created some vulnerabilities for fraud, corruption and subsequent money laundering. It also says that some findings of the report are also relevant for the general public as a source of information against potential criminal schemes, such as phishing emails, text messages containing links to malicious websites, attachments to obtain personal payment information and social engineering.
The report is at –
An article from Orrick Herrington & Sutcliffe LLP on 2 September was concerned with civil forfeiture actions brought by the a US Attorney to seize stolen or laundered virtual currency from various terrorist organizations and North Korean actors. These combined actions represent the largest seizures of cryptocurrency by the US Government to date. It is said that these cases demonstrate that in its fight against money laundering and terrorist financing, US law enforcement can identify and prosecute terrorist networks that use virtual currency in their attempts to finance their activities through anonymous donations.
On 2 September, OFAC adds Fatou BENSOUDA (aka Fatou Bom BENSOUDA), a Gambian national, and Phakiso MOCHOCHOKO, a Lesotho national, to its SDN Lists. They are listed pursuant to the Executive Order blocking property of certain persons associated with the International Criminal Court, in response to the ICC assertions of jurisdiction over personnel of the US and certain of its allies, including the ICC Prosecutor’s investigation into actions allegedly committed by US military, intelligence, and other personnel in or relating to Afghanistan. Bensouda is a chief prosecutor at the ICC.
The Law Commission, which recommends changes and improvements to the law in the UK, has concluded this project. It says that the 4 Official Secrets Acts that help protect the UK from spying and leaks are outdated and no longer fit for purpose. The criminal law provisions that protect official information are primarily contained in the Official Secrets Acts 1911-1939 and 1989, and the Official Secrets Act 1911 still provides the principal legal protection in the UK against espionage, despite the fact it was enacted in the run up to the First World War. The final report makes 33 recommendations, which notably includes that a statutory public interest defence should be available for anyone – including civilians and journalists – charged with an unauthorised disclosure offence under the Official Secrets Act 1989. If it is found that the disclosure was in the public interest, the defendant would not be guilty of the offence. It also recommends that public servants and civilians should be able to report concerns of wrongdoing to an independent statutory commissioner who would be tasked with investigating those concerns effectively and efficiently. Commentator Joshua Rozenberg says that the report makes 33 recommendations in 3 distinct areas:
- Espionage: the criminalisation of individuals who try to obtain sensitive information;
- Leaks: disclosing official information without authorisation; and
- Public interest: when disclosing protected information may be justified.
On 1 September, the OECD reported that a new peer review resulted in an overall Partially Compliant rating, whereas the previous first-round report had concluded the jurisdiction’s EOIR practice to be Largely Compliant with the standard. The main concerns identified refer to the effectiveness of enforcement and supervision activities to ensure the availability of ownership, accounting and banking information, particularly considering the filing compliance rates. Malta also had large number of inactive companies registered during the review period, which caused delays or failures to provide information to its main EOI partners. The new report thus includes recommendations to enhance enforcement, supervision and monitoring activities in order to reduce and limit the number of inactive companies. The ratings show Malta marked down from Largely Compliant to Partially Compliant on access to ownership and identity information and availability of accounting information, and from Compliant to Partially Compliant for availability of banking information and quality and timeliness of information request responses.
On 2 September, Accountancy Daily reported that the Global Forum on Transparency and Exchange of Information for Tax Purposes has published 9 new peer review reports assessing compliance with the international standard on transparency and exchange of information on request (EOIR) – for Anguilla, Chile, China, Gibraltar, Greece, Korea, Malta, Papua New Guinea and Uruguay.
On 2 September, Zawya carried a release about a report from SWIFT and BAE Systems Applied Intelligence called ‘Follow the Money’, that describes the complex web of money mules, front companies and cryptocurrencies that criminals use to siphon funds from the financial system after a cyber-attack.
The report is at –
On 2 September, Fox 26 News in the US reported that US Customs & Border Protection had announced that it had seized $27 million in undeclared cash aboard a ship bound for the US Virgin Islands, the largest such seizure in the region. It is said to have been aboard a ship docked in Puerto Rico inside home moving boxes destined for St. Thomas.
On 1 September, Reuters reported that the Philippines will not halt infrastructure projects involving Chinese companies blacklisted by the US sanction for being involved in building and militarising artificial South China Sea islands, and will act in its own interests, not those of a foreign power, the president’s spokesman said.
Panama Covid-19 update – took a lovely close-up photo of a locust this morning as I went for a walk – that would be just great, I thought, on top of everything, a plague of locusts…meanwhile, the news on the coronavirus front remains cautiously optimistic; although 570 new cases take the grand total to date to 93,552 – but with the great majority now recovered. There were 16 additional fatalities, giving a total of 2,018 to date, but far less than in past weeks. Slightly worrying is that ICU occupancy has crept up, and currently stands at 168.
1 September 2020
IMPORTATION AND LOCAL USE OF ENCRYPTION-BASED PRODUCTS IN RUSSIA AND THE EURASIAN ECONOMIC UNION
Baker McKenzie has published a brief which features FAQ on importation and local use of encryption-based products in Russia and the Eurasian Economic Union. The importation and exportation of encryption-based products in Russia is subject to import/export encryption clearance requirements set at the supranational level of the Eurasian Economic Union (EAEU).
MINSK VOWS PROPORTIONAL RESPONSE TO BALTIC COUNTRIES’ SANCTIONS
On 1 September, ERR in Estonia reported that the Belarus foreign ministry said that the Belarusian government will take appropriate measures in response to the sanctions imposed on a number of high-ranking Belarusian officials by the Baltic countries.
US: 4 EMPLOYEES OF FAILED BANK CHARGED WITH $29 MILLION EMBEZZLEMENT CONSPIRACY
The Chicago Sun Times on 28 August reported that the bank president was found hanged in the home of a customer, and now 4 employees have been charged with helping Chicago attorney Robert M. Kowalski and “higher-ranking bank officials” embezzle at least $29 million before federal regulators closed the Washington Federal Bank for Savings.
CHINA MUST REFORM FINANCIAL MARKETS TO WARD OFF US FINANCIAL SANCTIONS
An article in the South China Morning Post on 1 September reported that a think tank, China Finance 40 Forum group of senior Chinese regulatory officials and financial experts, called for more cooperation with US to avoid escalation of bilateral conflict. China should make its own financial markets big enough and open enough to foil any attempt by the US to decouple financially, according to a semi-official Chinese research group.
COVID CORRUPTION IS RIFE IN SOUTH AFRICA – NEW £470 MILLION CORRUPTION SCANDAL
On 1 September, KYC 360 reported that a fresh corruption scandal linked to the allocation of at least half of the £470 million earmarked for emergency Covid relief has sparked a wave of anger among South Africans who are still punch-drunk after years of state-sponsored looting. Under suspicion are government departments, municipalities and figures connected to the senior ranks of the ruling ANC.
PODCAST: RUSSIA IN THE MIDDLE EAST: PART 1
On 1 September, the Center for Strategic and International Studies released a podcast, the first episode of a new narrative podcast miniseries, Russia in the Middle East. Jon Alterman gives an overview of Russian policy in the Middle East and how the Middle East fits into Russia’s worldview. He covers Russia’s return to the Middle East and looks at how Russian foreign policy has changed since the fall of the Soviet Union. He also sits down with Dmitri Trenin, director of Carnegie’s Moscow Center, and Celeste Wallander, president and CEO of the U.S.-Russia Foundation, for their insight into Russia’s foreign policy decisions.
UAE BECOMES THE FIRST ARAB COUNTRY TO OPERATE A NUCLEAR POWER PLANT
On 1 September, the Arms Control Association reported that, on 1 August, the UAE became the first Arab country to operate a nuclear power plant when officials announced that the first of 4 planned reactors at the Barakah nuclear power station achieved criticality by completing a sustained fission reaction. Once all 4 units at the Barakah plant are operational, nuclear power will account for a quarter of the country’s electricity and reduce the nation’s reliance on oil and gas.
US REINTERPRETS MTCR EXPORT RULES TO BOOST EXPORTS
On 1 September, the Arms Control Association reported on the 24 July announcement that the US would unilaterally reinterpret how it will implement the 35-nation Missile Technology Control Regime (MTCR) in order to expedite sales of unmanned aerial vehicles (UAV) to other countries. The move, which has been widely expected for some time, follows years of lobbying from major US weapons manufacturers to allow more rapid export of large drones to a wider array of potential buyers.
CHINA PUTS A SPANNER IN TIKTOK SALE NEGOTIATIONS BY IMPOSING AI EXPORT RESTRICTIONS
On 1 September, Computing and others reported that China government has introduced new rules on the export of AI technologies, making it mandatory for ByteDance to receive approval before selling the US operations of its TikTok app to a US company.
THE ISRAEL-AZERBAIJAN PARTNERSHIP
On 1 September, Eurasia Review carried an article which examined the relationship between Israel and Azerbaijan, as the latter is engaged in further conflict with neighbouring Armenia, while noting that Israel is not a direct participant, but it enjoys close relations with both combatants. Israel is a major arms supplier to Azerbaijan, including UAV. It mentions a hiccup when an export licence was cancelled after an Israeli “suicide” drone attacked an Armenian target. After recent fighting in July, Armenia showcased alleged Israeli-made drones that it presumably shot down during the fighting. It also notes that there are also weaknesses to the bilateral relations. As Azerbaijan experiences geopolitical pressure from Russia and Iran.
NORTH KOREAN SANCTIONS ENFORCEMENT IN SUB-SAHARAN AFRICA
On 1 September, Just Security carried an article which starts with recent reports of North Korean evading sanctions with bank accounts in DRC, remarking on North Korean agents seeming to have an ever-evolving ability to come up with sanctions-busting tactics. Despite multinational banks efforts, at the regional and local level in sub-Saharan Africa, active compliance in the banking sector is constrained by the lack of capacity and regulatory support, as well as by meddling from corrupt political leaders and their associates – even if local regulation, while poorly enforced, does require banks to ask for incorporation and identity documents from companies and individuals looking to create accounts. It calls on international organisations like the UN, FATF, IMF etc to play a stronger role in building capacity and assisting countries in sub-Saharan Africa in creating a more robust and independent regulatory and compliance environment. It suggests providing technical assistance to regulatory bodies, sharing intelligence and information where appropriate, and providing guidance on how to create adequate frameworks that close money laundering and sanctions-evasion loopholes and allow for empowered, independent regulatory bodies – while preventing the latter from being reduced to paper tigers, beset by meddling from corrupt actors, with little operational funding or support for existing technocrats.
HONG KONG POLICE ARREST 3 MORE IN LATEST SWOOP LINKED TO PET-SMUGGLING RACKET
On 1 September, the South China Morning Post reported that police have swooped on animal facilities in Kowloon and New Territories during operation targeting those illegally transporting animals, this coming after crates of dead cats and dogs found washed up on Hong Kong beaches. It is thought that pet owners had entrusted agents to ship their animals from overseas to the China mainland via the entrepot of Hong Kong after completing studies or postings abroad.
SRI LANKA: NAVY SEIZES MORE TURMERIC SMUGGLED FROM INDIA
On 1 September, The Island Online reported that naval operations 29 August had led to the recovery of about 1,428 kg of dried turmeric smuggled into the country by sea. It says that naval operations since 28 July have led to recovery of 12,270 kg of dried turmeric smuggled into the country, with 25 suspects involved in turmeric rackets have also been detained during these operations.
BERMUDA TO LAUNCH NEW STABLECOIN
On 1 September, Cryptonews reported that the government of Bermuda has teamed up with a stablecoin platform to launch a test pilot programme for a stablecoin, which the territory calls a “digital stimulus token”, allowing purchases of food and other essential products, as well as services from participating merchants and retailers. Local authorities hope the initiative could help remove some of the challenges and costs associated with local payment options.
CENTURY BANKING CORPORATION (CBC) ISLAMIC BANK IN MAURITIUS LOSES LICENCE OVER 1MDB LINK
On 1 September, Free Malaysia Today reported that Mauritius’ first Islamic bank was reported to have had its licence revoked by the country’s central bank after FBI investigations pointed to links to money laundering involving 1MDB funds.
MAURITIUS EAGER TO REMOVE THE COUNTRY FROM THE EUROPEAN COMMISSION BLACKLIST
On 1 September, CAJ News Africa reported that the government is eager to remove the country from the EU blacklist as well as create highly effective AML/CFT regime. It says that recently, the Financial Services Institute, the Global Finance Mauritius and the Human Resource Development Council recently organised a training initiative focused on a risk-based approach to AML/CFT. The EU placed Mauritius on its list of high-risk countries with strategic deficiencies in their AML/CFT frameworks in May.
EU TO LAUNCH RAW MATERIALS INDUSTRY ALLIANCE
On 1 September, EurActiv reported that the European Commission is to announce the launch of a new industry alliance, with a view to building a complete EU supply chain for raw materials like lithium, which are seen as critical for the bloc’s digital and green transitions. The industry alliance will focus on metals and rare earths which are used to build magnets for batteries and all kinds of electric and electronic devices.
UK: DISGUISED REMUNERATION: TAX AVOIDANCE BY OWNER MANAGED COMPANIES USING REMUNERATION TRUSTS
On 1 September, HMRC issued Spotlight 56 concerned with an opinion on a case involving disguised remuneration, where a company rewarded its director using loans made through a remuneration trust. The company claimed a tax deduction for its contributions to the trust and both the company and its director claimed that the loans were tax-free. The opinion said that HMRC’s view was correct in considering that entering into and carrying out such arrangements was not a reasonable course of action. HMRC views these arrangements as tax avoidance and will challenge anyone operating such arrangements and investigate the tax affairs of all users.
SAUDI ARABIA SACKS MILITARY LEADER AMID CORRUPTION PROBE
On 1 September, Deutsche Welle reported that a probe into corruption at the Defense Ministry has led to the sacking of a senior military commander and his son. The Saudi military commander leading the kingdom’s war in Yemen was removed from his position and placed under investigation along with his son and other ministry officers.
SEVERAL ARRESTS MADE IN ARMENIA RACKETEERING TRAVEL FRAUD INVOLVING 50 IRANIANS
Armenpress on 1 September reported that several members of an organised crime syndicate consisting of Armenians and Iranians are under arrest for racketeering and defrauding around 50 citizens of Iran in a travel fraud. It is said that 2 Iranian citizens recruited their 50 countrymen and transported them to Armenia under the pretext of organizing their further travel to European countries.
SEYCHELLES GOVERNMENT HAS LAUNCHED A 3-YEAR PROGRAMME TO TIGHTEN UP ITS AML LEGISLATION
STEP reported on 1 September that the National Anti-Money Laundering and Countering the Financing of Terrorism Strategy 2020-23 aims to ‘address deficiencies highlighted by international bodies and jurisdictions in recent times’. The first set of reforms, namely the new AML/CFT Act 2020 (the AML Act) and the Beneficial Ownership Act 2020 (BOA), were enacted in March this year and have now come into force.
US: 6 INDICTED IN MONEY LAUNDERING SCHEMES TIED TO NIGERIAN SCAMS
A news release from the US DoJ on 31 August advised the charging of 6 individuals with allegedly laundering millions of dollars gained through multi-faceted fraud schemes run out of Nigeria, primarily targeting elderly US citizens. It is alleged that dozens of victims were befriended by scammers feigning romantic intentions through online social media platforms and dating sites. Scammers used the relationships and trust they built to convince victims to provide them with money to assist with business ventures or debt. Other victims were allegedly convinced by Nigerian scammers that they had won a sweepstakes.
UK CONFORMITY ASSESSMENT BODIES: CHANGE OF STATUS FROM 1 JANUARY
Another news release from the Department of Business, Energy and Industrial Strategy on 1 September advised that from 1 January any mandatory third-party conformity assessment for the EU market will need to be carried out by an EU-recognised conformity assessment body. This includes both EU based bodies and bodies in countries with which the EU has concluded a mutual recognition agreement. UK conformity assessment bodies will no longer be able to carry out mandatory conformity assessment for products being placed on the EU market unless agreed in negotiations. In addition, there will be a domestic legal framework that will allow UK conformity assessment bodies to continue operating for most products being placed on the GB market. Note the use of “GB”, not “UK”, as goods placed on the market in Northern Ireland will not qualify for UK-only markings, such as the new “UKCA”.
NEXT STEPS OUTLINED FOR UK’S USE OF DIGITAL IDENTITY
A news release from the Department of Digital, Culture, Media and Sport on 1 September is concerned with ongoing plans to enable the use of digital identity across the UK, with plans to update existing laws and a new set of guiding principles for policy development. It says that, increasingly people are required to prove their identity to access services, whether it is to buy age-restricted items on and offline or make it easier to register at a new GP surgery, and the UK government plans to update existing laws on identity checking to enable digital identity to be used as widely as possible. A new government Digital Identity Strategy Board has also developed 6 principles to strengthen digital identity delivery and policy in the UK.
UK: HOW TO COMPLY WITH REACH CHEMICAL REGULATIONS FROM 1 JANUARY
A further news release concerned with changes brought about as a result of Brexit has been published by the Department for Environment, Food and Rural Affairs on 1 September. It says that UK REACH, the UK’s independent chemicals regulatory framework, starts on 1 January, and that anyone making, selling or distributing chemicals in the UK and the EU needs to follow UK REACH and/or EU REACH rules. Needless to say, this seems like another case of regulation duplication brought about by Brexit, with many (if not all) users likely to have to comply with EU rules regardless, even if (as seems possible, if unlikely) UK-only rules diverge.
INTERPOL BLUE NOTICES
On 1 September, Estlund Law published an article explaining the purpose of an Interpol Blue Notice, which are notices to locate people who have not been charged with a crime. Member countries might request a Blue Notice, for example, in hopes of locating a witness to a crime, or people related to an alleged offender.
DUE DILIGENCE FOR POTENTIAL INVESTORS IN US CANNABIS BUSINESSES
On 1 September, an article from Rivkin Radler, Attorneys at Law, is concerned with what a potential investor needs to know about conducting due diligence in respect of a cannabis business, including understanding how the bankruptcy law applies to cannabis companies. It says that the need for due diligence is no less important for investors seeking to get involved in a cannabis company and those seeking to create one – and may, in fact, be even more necessary – than when examining a more traditional entity for investment purposes.
MACAU’S VIP GAMBLING CRUNCH PROVIDES NEW OPPORTUNITIES FOR SCAMMERS
On 1 September, Calvin Ayre reported that the struggling VIP casino gambling market is still providing opportunities for criminal scammers. There were a total of 4,691 criminal investigations opened during the first half of 2020, nearly one-third fewer than the first half of 2019. However, it says that fraud remains an ever-present threat, such as in the arrest of 4 individuals suspected of purchasing US$1.37 million worth of casino chips from a local resident using ‘practice’ bank notes that are used to train bank tellers and cashiers but are worthless.
US CUSTOMS SEIZES 440 lb OF KHAT HEADED TO CANADA
A news release from US Customs & Border Protection on 1 September advised that officers seized more than 440 lb of Khat during evening operations at the Ambassador Bridge into Canada, in removal boxes in a commercial truck.
AN OVERVIEW OF THE COUNTERFEIT COSMETICS INDUSTRY
On 31 August, Sayari published an article which says that the rapid expansion of counterfeit cosmetics internationally and in the US poses a public health risk for consumers and threatens the bottom lines of countless make-up companies. The value of the cosmetics industry is expected to reach $805 billion by 2022. Looking at recent cases, it says that counterfeit make-up seizures in the US and abroad are becoming alarmingly common. It says that the counterfeit side continues to grow, and since 2013, the international counterfeit make-up trade has steadily increased and was estimated to be worth $5.4 billion in 2016, according to the OECD. As well as the economic effects, fraudulent cosmetics have been found to contain known carcinogens such as arsenic, beryllium, and cadmium; others have exhibited high levels of toxic heavy metals like lead and mercury. It says that he growth in counterfeit make-up products is further exacerbated by the proliferation of online third-party marketplaces.
UAE MAKES IT MANDATORY FOR HAWALA SERVICE PROVIDERS TO REGISTER
On 1 September, the Khaleej Times reported that the UAE has made it mandatory for Hawala service providers in the country to register, as the country strengthens its AML/CFT framework. It explains that Hawala, or hundi, is an unofficial and informal channel to transfer money mainly used among South Asians.
COVID-19 AND COCAINE
A paper from Dr Anna Sergi of the University of Essex says that early data suggests that the cocaine trade appears to have weathered the Covid-19 pandemic. She examined trends in cocaine trafficking under lockdown for Jane’s Intelligence Review, HIS. It seems that the pre-Covid trend for increased numbers of postal deliveries has increased further, and that the post-Covid economic situation could lead more farmers to produce coca plants.
CREW KIDNAPPED OFF BENIN IN JULY ARE RELEASED
On 1 September, Insurance Marine News reported that 13 crew members (7 Russian, 6 Ukrainian) kidnapped from a chemical/oil products tanker in the Gulf of Guinea in July, have been released. All are said to be safe and well.
NEW RULES AND TOOLS FOR “AGGRESSIVE” ENFORCEMENT OF ANTI-DUMPING AND COUNTERVEILING DUTY PROPOSED IN US
On 1 September, Venables published an article reporting that a revamped framework for anti-dumping duty (ADD) and countervailing duty (CVD) investigations is in the works at the Department of Commerce. Comments on the proposed Rule involved are due by 14 September.
AN INSIDE LOOK AT THE MODUS OPERANDI OF HEZBOLLAH’S ISLAMIC JIHAD ORGANIZATION
This paper from the Washington Institute on 1 September says that many details regarding the modus operandi of the group’s external terrorist operations wing are being made public for the first time, including communications techniques, travel patterns, training programs, pay scale, and more. It says that revelations from recent — along with those involving operatives in Thailand and Peru — illustrate Hezbollah’s external operations modus operandi, senior handlers, communications techniques, travel patterns, terrorist training, and even limited information about the pay scale for operatives.
UNDERSTANDING CUSTOMS BONDS
On 27 August, Global Trade Magazine published an article asking what does such a bond in the US actually entail? Why must you even have a customs bond? And which one should you get? The article sets out to answer these questions.
On 1 September, the Egmont Group reported that the Egmont Group is pleased to report that the Information Exchange Working Group (IEWG) “Combating child sexual abuse and exploitation through financial intelligence: Project report” and the corresponding public bulletin are now available. The project sought to develop and consolidate the strategic intelligence picture associated with payments relating to the online streaming of CSAE. The data from Egmont Group member FIU and other sources, including private sector entities, provided the project team with an understanding of financial transactions suspected to be linked to online CSAE. One of its main conclusions is that the use of some forms of non-financial/cyber-related data, not normally held by FIU, appears to result in high quality intelligence and indicates a potential value not achieved via other forms of data exchange. It also shows benefit in combining financial information with other forms of information in this way and undertaking data exchange between non-FIU entities.
On 31 August, Sayari published an article which says that the rapid expansion of counterfeit cosmetics internationally and in the US poses a public health risk for consumers and threatens the bottom lines of countless make-up companies. The value of the cosmetics industry is expected to reach $805 billion by 2022. Looking at recent cases, it says that counterfeit make-up seizures in the US and abroad are becoming alarmingly common. It says that the counterfeit side continues to grow, and since 2013, the international counterfeit make-up trade has steadily increased and was estimated to be worth $5.4 billion in 2016, according to the OECD. As well as the economic effects, fraudulent cosmetics have been found to contain known carcinogens such as arsenic, beryllium, and cadmium; others have exhibited high levels of toxic heavy metals like lead and mercury. It says that he growth in counterfeit make-up products is further exacerbated by the proliferation of online third-party marketplaces.
A news release from FinCEN on 1 September says that the agency is aware that various media outlets intend to publish a series of articles based on unlawfully disclosed SAR, as well as other sensitive government documents, from several years ago. It warns that the unauthorised disclosure of SAR is a crime that can impact the national security of the US, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports. FinCEN has referred the matter to the DoJ and the US Treasury’s Office of Inspector General.
On 1 September, an article from Out-Law says that businesses that pay ransoms to cyber attackers to regain access to systems and data they have been locked out from are unlikely to face prosecution in the UK for doing so – but that businesses that fall victim to so-called ransomware attacks should carry out due diligence before deciding whether to pay the ransom requested. It is noted that it is illegal to pay a ransom to a terrorist organisation and mentioned the possibility of the UK government taking legislative action to ban ransom payments to “other groups”. As is the case with kidnap ransom insurance, anti-terrorism and sanctions legislation makes it illegal to make payments to terrorists and terrorist organisations or for the purposes of terrorism, either directly or indirectly.
A series of articles from OCCRP on 1 September is concerned with a little-known crime group called “Group America”, saying that the decades-old criminal organization with roots in New York and the Balkans operates in dozens of countries, but its leaders have shown amazing ability to evade capture. Its 60-year-old leader lives quietly but openly in New York and more than one senior police source has attributed its success to its ties with security services and intelligence agencies — perhaps even the CIA. Operating on a global scale in dozens of countries, it has been identified as one of the biggest drug traffickers in Europe, believed to be bringing large amounts of cocaine to the continent from South America. The articles include one on its “investments” in the Balkans.
On 1 September, the Government of Gibraltar issued a news release advising that Gibraltar had again achieved the second-highest OECD rating of ‘largely compliant’ in the latest Peer Review of tax information exchange carried out by a team of OECD Global Forum assessors. However, glancing at the summary of ratings of each of the individual elements considered, whilst the overall marking does come out as “LC”, in 3 of the elements it actually received a lower rating – in effect was marked down. These were in respect of –
- Availability of ownership and identity information (from “Compliant” to “Partially Compliant”);
- Availability of banking information (ditto); and
- Access to information (from “Compliant” to “Largely Compliant”).
The report calls for improvements in respect of beneficial ownership information and reliable accounting information, and whilst it has a reasonably good record in fulfilling assistance requests, the staffing needs to be enhanced and timeliness needs to be improved.
The report is at –
On 1 September, the Department of Business, Energy and Industrial Strategy published 2 news releases.
One dealt with what you need to do to comply with regulations on manufactured goods you place on the GB market from 1 January – note that it is “GB”, i.e. excluding Northern Ireland! Seeming more complicated than one might have expected, this involves different rules for different products. There is also the question of when, or if, to use the “CE” product marking, which one can in the UK until 31 December 2021, and if/when to use the new “UKCA” marking. However, the UKCA marking won’t be recognised in the EU (or Northern Ireland).
The second news release is concerned with what you need to do to comply with regulations on manufactured goods you place on the EU market from 1 January.
If the products are to on the market in the EU they still need a CE marking, and you want, or have, to use both CE and UKCA markings, if the goods comply with the different regulations…
A third news release is concerned with if you will need to use the new UKCA marking and how to use it. The UKCA (UK Conformity Assessed) marking is a new UK product marking that will be used for goods being placed on the market in Great Britain (England, Wales and Scotland). It covers most goods which previously required the CE marking (n.b. only in GB).
On 29 August, Homeland Security Today commented on a new report from the Soufan Center which calls on the US Government to treat the ultra-right, white supremacist AWD as a terrorist organisation. It says that AWD has demonstrated an ability to commit terrorist attacks, which have been enabled or facilitated through its paramilitary training camps. It says that while its roots are in the US, the group has an expanding international footprint, with established links and affiliates in the UK, Germany, Russia, Ukraine, and the Baltic States.
The report itself is at –
The FCA has issued a consultation document about proposed changes to the annual financial crime reporting obligation for certain firms – the Annual Financial Crime Report, introduced in 2016, which provides the FCA with information on a range of indicators that reflect the potential money laundering risk of a firm, based on its regulated activities and the nature of its customers. For example, it says, a firm could be more exposed due to the risk profile of its clients and the jurisdictions in which it operates, calling this the ‘inherent ML risk’ of the firm. Currently, approximately 2,500 out of the approximate 23,000 firms the FCA supervises have to submit such reports, based on the current threshold obligations explained in the document. The FCA proposes to extend the scope of firms required to provide reports to include firms that carry on regulated activities that it considers potentially pose higher money laundering risk, irrespective of a firm’s revenue threshold. The FCA also proposes to removing certain activities (“home finance mediation” and “making arrangements with a view to transactions in investments”) from the requirement to file the reports, as these are considered by the FCA to be outside of the scope of the money laundering regulations. The consultation closes on 23 November.
On 1 September, the EU Sanctions Blog reported the measures for “violations of international electoral standards and human rights”, repression against civil society and opposition to democratic processes.
On 1 September, OFAC issued a new Advisory to alert industry worldwide to North Korea’s ballistic missile procurement activities. This advisory identifies key North Korean procurement entities and deceptive techniques employed by North Korean proliferators and procurement networks, provides an overview of US sanctions authorities related to DPRK proliferation, and lists North Korea-related sanctions enforcement resources. It includes –
- Key North Korean ballistic missile procurement entities;
- North Korean procurement tactics;
- How to minimise risk;
- Overview of US sanctions related to North Korea’s proliferation activities;
- Other relevant US authorities;
- Consequences of engaging in prohibited and/or sanctionable conduct; and
- North Korea sanctions resources –
- fibrous material production;
- heavy-duty truck chassis;
- heat resistant, specialty steels, aluminium, etc;
- precursor chemicals;
- electronics; and
- guidance, navigation, and control systems.
The Global Coalition to Fight Financial Crime has published a survey report from the Future of Financial Intelligence Sharing (FFIS) international research programme. It says that, in 5 years, from 2015 to 2020, the concept of intensive cooperation between public agencies and private financial institutions to detect crime has moved from an outlying innovation to become a mainstream component of how advanced liberal democracies tackle financial crime. This report charts the rise of this phenomenon and includes a comprehensive description of national and trans-national public–private financial information-sharing partnerships worldwide, as at June 2020. The report brings together a survey of 23 financial information-sharing partnerships.
On 27 August, Squire Patton Boggs produced an overview of considerations for directors when a company is in financial difficulty. It says that one feature is common to all – the obligation not to continue trading if a company is insolvent.
Panama Covid-19 update – as we head towards the gradual relaxation of the lockdown and curfew (the gender-based restrictions are due to end on 12 September), some good news with only 7 new fatalities reported today – but which just takes us over the 2,000 level (to 2,002). Mind you, there were 917 new cases repoted, giving a current number of active cases of 24,807 – with 168 (a rise of 11) in ICU, 1,320 (a drop of over 100) in other wards, and 419 in requisitioned hotel rooms.
31 August 2020
INDIA: CHINESE RAN ONLINE BETTING VIA HSBC ACCOUNTS AND ONLINE WALLETS
On 29 August, NDTV reported that the Enforcement Directorate has frozen 4 bank accounts after raiding 15 locations across Delhi, Gurgaon, Mumbai and Pune after some companies were allegedly found running illegal online betting apps linked to China. ED has identified multiple bank accounts mostly held with HSBC Bank. In a statement, it said that during investigation, it is revealed that with the help of some Indian chartered accountants, some Chinese nationals floated multiple Indian companies. Initially, dummy Indian directors were used to incorporate the companies and, after some time, Chinese nationals travelled to India and took directorship in these companies.
HOW PANGOLINS BECAME THE ULTIMATE LUXURY GOOD
On 30 August, The Independent carried an article telling the story of how the trade of pangolin scales became one of the most profitable illegal businesses in Africa is one that unfolds alongside the globalisation of crime and the increased Asian presence in Africa. Pangolin scales are trafficked more like drugs than ivory, it is claimed, at $450 per kg.
SEC TO CONSIDER LIMITING LARGE WHISTLEBLOWER AWARDS
On 28 August, Compliance Week reported that the SEC is to consider controversial changes to its whistleblower program that, if passed, could weaken the agency’s prohibition of retaliation against whistleblowers and limit large rewards. The SEC says the change to the definition of a whistleblower and the protections they are entitled to — which the SEC first proposed in 2018 as a response to a Supreme Court decision — will help it run the programme more efficiently – but critics are concerned by attempts to weaken the prohibition on retaliation.
FCA PROPOSED CHANGES TO AML REPORTING COULD CATCH OUT CRYPTO EXCHANGES
On 28 August, an article from Squire Patton Boggs reported that the FCA announced proposals to extend AML reporting requirements in its financial crime controls to include virtual currency exchanges, such as all cryptoasset exchange providers and custodian wallet providers. The FCA is seeking comments on the proposal by 23 November.
DAMAGES FOR BREACH OF SEPARATE BUT RELATED CONTRACTS
On 27 August, RPC published an article about a Privy Council case from the BVI which found that where parties have entered into separate but related contracts, breach of one contract does not necessarily preclude the recovery of damages under another.
CHAD’S ILLEGAL DRUG TRADE CONTRIBUTES TO REGIONAL INSECURITY
On 25 August, an article from ENACT Africa says that curbing tramadol and other trafficking networks requires transnational cooperation. It says that trafficking must be curbed to prevent entrepreneurs of violence and insecurity (armed gangs, highway robbers, highway criminals and violent extremist groups) in Chad from creating destabilising interdependencies.
Tramadol trafficking routes through Chad to Libya
THE TRADE IN COUNTERFEIT AND CONTRABAND GOODS REMAINS A MAJOR PROBLEM FOR KENYA
On 26 August, an article in ENACT Africa was concerned with the apparent facts that the country needs to do even more to control and prevent counterfeit and other forms of illicit trade. A survey on illicit trade show that production and trade in counterfeits currently cost the country over $900 million annually in tax revenue.
INDIA: CONCERN OVER THE FREEZING OF EXPORTERS’ BANK ACCOUNTS LINKED TO BRAZIL MONEY LAUNDERING CASE
On 31 August, The Wire carried an article saying that the Federation of Indian Export Organisations (FIEO) has expressed concerns over the freezing of bank accounts of some exporters by the Enforcement Directorate (ED) without giving any warning, hearing or reasons. It says that the Government of Brazil had sent a message to the Ministry of External Affairs saying that they are carrying out some investigation against a former Governor and they suspect that about 67 parties in India could be involved in supporting that Governor in money laundering.
EXPERT WARNS BORIS JOHNSON’S “BONKERS” FREE PORT PLAN COULD ‘HURT’ NORTH-EAST ENGLAND
On 31 August, the Press & Journal reported that plans to create a special tax-free zone in the north-east could have a “devastating” impact on the local economy, an accountancy expert has warned, saying that it would create “all sorts of potential risks” – from money laundering to a cut in local authority business rate revenue.
MALTA: PUBLICATION OF FIAU INTERPRETATIVE NOTE FOR LAWYERS
On 29 August, Mamo TCV Advocates published an article saying that the Malta Financial Intelligence Analysis Unit (FIAU) published its ‘Interpretative Note: Relevant Activity for Lawyers’ designed to guide legal professionals in determining the conditions under which a ‘relevant activity’ in terms of Malta’s AML/CFT legislative framework may arise.
The document can be accessed at –
UAE “MAKES SIGNIFICANT PROGRESS IN COMBATING MONEY LAUNDERING AND TERROR FINANCING”
On 31 August, the Emirates News Agency reported that the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations (NAMLCFTC) had met to take stock of the significant progress towards fulfilling its role of implementing the national strategic plan for AML/CFT.
UNDERSTANDING THE EU RESPONSE TO ORGANISED CRIME
On 31 August, the EU Parliament Research Service published a briefing paper saying that the EU has made substantial progress in terms of protecting its citizens since the early 1990s, often in response to dramatic incidents, such as mafia or other organised crime group murders, big money laundering scandals, a steep increase in migrant smuggling and trafficking in human beings following the 2015 migration crisis, or – more recently – a sharp rise in cybercrime, fraud and counterfeiting during the coronavirus pandemic. It looks at organised crime in the EU, EU action against it, and the challenges and way forward.
HONG KONG: LIMITED PARTNERSHIP FUND ORDINANCE COMES INTO OPERATION
On 31 August, an article from Eversheds Sutherland reported that close-ended investment funds, particularly private equity and venture capital funds, are expected to be the main beneficiaries of the limited partnership fund (LPF) structure.
EU: VAT HIGHLIGHTS OF THE EUROPEAN COMMISSION’S TAX ACTION PLAN
On 30 August, an article from Baker McKenzie is concerned with the new tax package from the EU in July. The Tax Action Plan is a set of legislative and non-legislative initiatives on taxation that the Commission plans to deliver between 2020 and 2023. The article sets out the VAT highlights that are included in the Tax Action Plan – single EU VAT registrations and extension of the One Stop Shop; Financial Services and Tour Operators Margin Scheme (TOMS); and modernising VAT reporting obligations and cooperation between Member States.
HONG KONG: REGULATORS OBTAINS ARREST WARRANTS ON CHARGE OF CONSPIRACY TO CARRY OUT FALSE TRADING IN THE SHARES
A release on Mondo Visione on 31 August reported that a court has issued arrest warrants for Mr Ho Ming Hin and Mr Simon Suen Man in an application brought by the Securities and Futures Commission (SFC) after they failed to appear in court to face the charge of conspiracy to carry out false trading in the shares of Ching Lee Holdings Limited in 2016.
INDIA: POTENTIAL MISUSE OF ART MARKETS FOR MONEY LAUNDERING
On 31 August, a post from Lex Blog says that as mechanisms for detection and mitigation of money laundering are being improved by the global financial system, criminals are now resorting to trade-based money laundering – i.e. trading commodities in deals that may look unremarkable on the surface, but are in fact undertaken to disguise and leverage illicit money. It says that art has increasingly become a popular commodity to launder money and looks at the implications for the art market in India, and the framework relating to money laundering and the art market in India. It considers lessons from other countries’ art markets. It ends by suggesting measures that may be taken by the intermediaries in the art market.
IRELAND: 2 APPEAR IN SPECIAL CRIMINAL COURT CHARGED WITH 50 MONEY LAUNDERING OFFENCES
On 31 August, Breaking News in Ireland reported that the alleged offences took place 2012-16 involving EBS, Bank of Ireland and AIB accounts.
AUSTRALIA: CROWN RESORTS “DID NOT MONITOR MONEY LAUNDERING ACCOUNTS”
On 31 August, WA Today reported that Crown Resorts’ top legal officer has told a public inquiry that the casino giant’s AML teams did not monitor 2 company bank accounts suspected to have been used to clean dirty cash.
THE TOP 100 CONTAINER PORTS IN THE WORLD
Lloyds List has released its 2020 edition of Lloyd’s List One Hundred Ports, tallying up the annual container throughput figures of the world’s elite port facilities. It says that TEU totals grew by 2.5% in 2019 year on year, against the 4.8% growth figure recorded in 2018 — and the 6% growth posted in 2017. Containerised trade moved through China represented nearly 40% of the overall TEU total.
THE INSIDE STORY OF A $60 MILLION ART FORGERY HOAX
On 28 August, an article in the Guardian says that for 15 years, one of New York’s most prestigious art galleries sold forged paintings – a new film explores how the art world fell for it. At the heart of a scandal was a remarkably homespun, given the status and moneyed anonymity of the fine art world, scheme to pass forgeries off as lost works by masters of abstract expressionism.
ENGINEERED PATHOGENS AND UNNATURAL BIOLOGICAL WEAPONS: THE FUTURE THREAT OF SYNTHETIC BIOLOGY
The August edition of the CTC Sentinel carries this disturbing article says that recent developments in biochemistry, genetics, and molecular biology have made it possible to engineer living organisms. Although these developments offer effective and efficient means with which to cure disease, increase food production, and improve quality of life for many people, they can also be used by state and non-state actors to develop engineered biological weapons. The virtuous circle of bioinformatics, engineering principles, and fundamental biological science also serves as a vicious cycle by lowering the skill-level necessary to produce weapons. The threat of bioengineered agents is all the more clear as the COVID-19 pandemic has demonstrated the enormous impact that a single biological agent, even a naturally occurring one, can have on society. It is likely that terrorist organizations are monitoring these developments closely and that the probability of a biological attack with an engineered agent is steadily increasing.
WHO HAS WHAT MISSILES
The Center for Strategic and International Studies has published updated graphics which display the missile activity and capabilities of countries around the globe, including missile ranges, missile testing patterns, and more. All images are free use with citation to the CSIS Missile Defense Project. It includes Israel, Iran, India, Pakistan and North Korea.
LA FASHION DISTRICT IMPORTER AND COMPANY OWNER AGREE TO PLEAD GUILTY TO CUSTOMS VIOLATIONS AND TAX OFFENCES AND PAY NEARLY $118 MILLION
A news release from US Immigration and Customs Enforcement on 26 August advised that Ambiance Apparel and company owner Sang Bum “Ed” Noh had agreed to plead guilty to felony offences and pay a total of $117,897,708, which includes nearly $36 million in cash seized from Ambiance and Noh in 2014. Ambiance Apparel – the operating name for two corporations, Ambiance USA Inc and Apparel Line USA Inc – agreed to plead guilty to eight counts, including conspiracy, money laundering, and customs offences. It is said that Ambiance imported clothing from Asian countries and submitted fraudulent invoices to US Customs and Border Protection (CBP) that undervalued the shipments and allowed Ambiance to avoid paying the full amount of tariffs owed on the imports.
NUMBER OF TAX TIP OFFS TO HMRC INCREASED 10% LAST YEAR
On 31 August, the Mail reported that the number of whistleblowing reports about potential tax evasion have surged by 10%. Around 73,000 tips were sent online to HMRC in the year to 31 March – up from 66,000 in 2019.
WIRECARD INQUIRY: HOW DID GERMAN OFFICIALS MISS FRAUD OF CENTURY?
On 31 August, Al Jazeera carried an article saying that lawmakers in Germany are questioning an adviser to Chancellor Angela Merkel in Berlin before grilling financial industry watchdogs. A Bundestag committee will also address why German AML authorities didn’t follow up on notifications involving Wirecard. The country’s FIU told the government earlier this month that it’s re-examining more than 1,000 reports of suspicious activity involving Wirecard since June 2017.
BELARUS APPROVES DRAFT CIS MONEY LAUNDERING TREATY
Amidst the ongoing post-election turmoil in the country, on 31 August the Bleta news agency announced that President Aleksandr Lukashenko had signed Decree No. 325 to approve the draft CIS Treaty on Combating Money Laundering, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction as a basis for negotiations.
NORWAY: ØKOKRIM TO PRIORITISE CORONA-FRAUD
On 31 August, Norway Today carried a post saying that the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (Økokrim) will prioritise Corona-related fraud together with the Norwegian Tax Administration and NAV. The agencies responsible for the compensation packages, the Tax Administration and NAV have together with Økokrim attempted to prevent the abuse of the schemes, with some 17,000 applications blocked.
HEAD OF NEW YORK MEDICAL CLINICS SENTENCED FOR MULTIMILLION-DOLLAR MONEY LAUNDERING AND HEALTH CARE KICKBACKS SCHEME
A news release from US DoJ on 31 August advised that Aleksandr Pikus, 45, of New York, was sentenced to 156 months in prison and also ordered to pay $39.4 million in restitution and to forfeit $2,614,233, after he was convicted of conspiracy to commit money laundering, money laundering, and conspiracy to pay and receive health care kickbacks as well obstructing the IRS. It is said that Pikus was the kingpin running a massive money laundering and kickback health care fraud syndicate.
CHINA CUSTOMS DESTROYS 19 TONS OF SMUGGLED DURIANS FRUIT
On 30 August, Produce Report reported that the destroyed durians had not been subjected to the requisite quarantine and approval formalities, nor had the necessary phytosanitary certificates been obtained, thus posing unacceptable food safety and health risks.
UN SECURITY COUNCIL FAILURE TO ADOPT TEXT ON PROSECUTING, REHABILITATING FOREIGN TERRORIST FIGHTERS – US VETO
A news release from the UN on 31 August announced that the Security Council had failed to agree a draft resolution aimed at advancing measures to prosecute, rehabilitate and reintegrate foreign terrorist fighters did not pass owing to a negative vote by the US. The resolution would have repeated calls for continuous implementation of measures regarding prosecution, rehabilitation and reintegration of foreign terrorist fighters, as laid out in previous resolutions.
UN SECURITY COUNCIL RENEWS MALI SANCTIONS
A news release from the UN on 31 August advised that the Security Council had agreed to renew sanctions in Mali for 1 year to 31 August 2021, unanimously adopting a resolution that also extends the work of the expert panel established to focus on the matter. The sanctions include a travel ban and asset freeze on those who are hobbling progress on implementing the Agreement of Peace and Reconciliation in Mali.
UK MAN FACING CHARGES IN US OVER BEC FRAUD
On 31 August, Cyberscoop reported that Habeeb Audu, a dual Nigerian/UK citizen, has been extradited to the US from the UK over alleged money laundering and fraud charges relating to activities 2013-18.
NEW BOOK: THE EVOLUTION OF UN SANCTIONS
Available online, including as an e-book, and marking the 50th anniversary of UN sanctions, this work examines the evolution of sanctions from a primary instrument of economic warfare to a tool of prevention and protection against global conflicts and human rights abuses. It looks at the rise of sanctions as a versatile and frequently used tool to confront the challenges of armed conflicts, terrorism, the proliferation of WMD and violations of international humanitarian and human rights law. It begins with a historical overview of sanctions and the development of the UN system. It then analyses all 30 UN sanctions regimes adopted over the past 50 years. Finally, it sets out to identify possible areas for improvements to the current Security Council structure dominated by the 5 veto-wielding victors of World War 2.
A release on Mondo Visione on 31 August advised that the European Securities and Markets Authority (ESMA), the EU’s securities and markets regulator, has published a list of the thresholds above which shareholders can be identified in the various Member States of the EU. The document includes the national thresholds for shareholder identification in Member States that have established such a threshold and the relevant national legislation and rules.
A release on Mondo Visione on 31 August advised that the US SEC had announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-US investors, adding 23 soliciting entities, 8 impersonators of genuine firms, and 7 bogus regulators.
The so-called PAUSE List is at –
The new additions are listed at –
On 31 August, Radio New Zealand reported that 3 other former members of his government are also facing bribery charges which stem from complaints filed by the former leader of the opposition and the now Deputy Prime Minister, who claimed that in November 2016, the defendants bribed MPs to sign an ultimately failed motion of no confidence.
A news release from US DoJ on 31 August advised that the Yang Ban Corporation, a company established in BVI in 2014 and operated in SE Asia had pleaded guilty to conspiring to launder monetary instruments in connection with evading sanctions on North Korea and deceiving correspondent banks into processing US dollar transactions. The company will pay a financial penalty totalling $673,714.04. Pleading guilty, Yang Ban admitted and accepted responsibility for its criminal conduct.
On 31 August, BNN Bloomberg reported that Carmelo Urdaneta Aqui, a former legal counsel to Venezuela’s powerful oil ministry, had appeared in federal court in Miami in connection with a years-long bribery and laundering investigation. He pleaded not guilty to charges that he took part in a billion-dollar corruption scheme that helped torpedo the oil-rich nation’s economy. Urdaneta fled Venezuela and was picked up at the Colombian border by US federal agents, who took him to Florida. It is said that Urdaneta could provide US prosecutors with a view into the circle of President Nicolas Maduro and the business elite who rose to riches in Venezuela, several of whom are the focus of the US investigation of corruption.
On 11 August, Iran Watch from the Washington-based Wisconsin Project on Nuclear Arms Control looks at the situation following the re-imposition of US sanctions in November 2018. It tracks the gradual changes and the increasing efforts of the Trump Administration. It includes a “business tracker” showing how companies around the world have been abandoning trade and investment with Iran that they had resumed following the JCPOA, it comprises a table which relies on news media sources to track the decisions by these companies and, which is sortable by industry, country, and date, and updated on a rolling basis as new announcements are made.
On 31 August, an article from Baker McKenzie saying that Singapore updated its strategic goods control regime to ensure robust administration of controls and effective risk assessments, while ensuring the facilitation of legitimate trade. Key amendments include ensuring individual and bulk permit holders have access to English translations for strategic trade records kept in other languages. For bulk permit-holders, expanded document categories under recordkeeping requirements and monthly reporting will apply. A new offence has also been created for failing to amend permits in the event that information submitted under initial permit application processes subsequently change. It advises those affected to review current processes.
On 31 August, the United Nations Office on Drugs and Crime (UNODC) has launched a practical guide for public organisations on how to conduct corruption risk assessments to identify, mitigate and prevent corruption vulnerabilities in their operations. It sets out an uncomplicated approach to corruption risk mitigation for public institutions, bodies and authorities, using 7 resource efficient steps.
On 27 August, an article in ENACT Africa reported that investigators are probing the involvement of Kenyan medical professionals in blood-smuggling. This illicit trade in blood donated by Kenyans is leading to an acute shortage in the country’s hospitals.
An article from ENACT Africa on 10 August said that the largely unregulated industry is costing Uganda in terms of lost revenue, environmental damage and exploitation of vulnerable communities. Sand is a valuable non-renewable commodity used mainly for mega-infrastructure projects in the rapidly expanding African and global construction market – and the high-value and largely unregulated industry is estimated to account for 85% of all mineral exploration in the world. Unregulated extraction, especially around Uganda’s Lake Victoria, is destabilising the area’s sensitive ecology. There’s also evidence that it threatens local rural livelihoods, including both fishing and agriculture. The mining is labour-intensive, employing men and youth, most of whom are underaged children.
On 31 August, KYC 360 reported that Slobodan Tesic, 55, subject to sanctions by the US continues to export weapons with licences issued by the Serbian government in return for favours to President Vucic’s Serbian Progressive Party, raising questions about an EU candidate and US ally. It mentions a shipment of 32,000 land mines, manufactured by a Serbian state company and delivered to Armenia by Vectura Trans, a company owned by Mr Tesic, in 2 tranches in 2019 and 2020.
Panama Covid-19 update – so far, over 334,000 tests carried out – about 7 -8% of the total population. This while Moody’s estimates a 10% reduction in GDP due to the crisis.
Meanwhile the figures appear to continue on their too gradual decline. 728 new cases reported and 12 new fatalities (so now very close to the 2,000 mark, at 1,995). There are 24,323 active cases, of which 157 are in ICU and 1,464 in other wards.
30 August 2020
CHINESE UCLA RESEARCHER INVESTIGATED FOR STEALING SOFTWARE FOR CHINA NOW CHARGED WITH DAMAGING HARD DRIVE SOUGHT BY FBI
American Military News on 29 August reported that Guan Lei, 29, a Chinese national and researcher at the University of California, Los Angeles has been arrested on federal charges of destroying evidence to obstruct an FBI investigation after he was observed throwing a damaged hard drive into a dumpster outside his apartment. The FBI recovered the damaged hard drive after Guan was not allowed to board a flight to China and after Guan refused the FBI’s request to examine his computer. Guan is being investigated for possibly transferring sensitive US software or technical data to China’s National University of Defense Technology (NUDT) and falsely denying his association with the Chinese military in connection with his 2018 visa application and in interviews with federal law enforcement.
CHINA CURBS EXPORTS OF SOME ARTIFICIAL INTELLIGENCE TECHNOLOGIES
On 30 August, the Hindu Business Line and others reported that technologies related to drones and to some genetic engineering methods and procedures were also added to the list, as well as exports of some artificial intelligence technology to safeguard national economic security, and will require government permits for overseas transfers. It is also said that it will affect ByteDance, owner of its popular video-sharing TikTok app, and it is unclear if the new rules will affect any potential sale.
SRI LANKA: NAVY SEIZED ABOUT 1,428 KG OF SMUGGLED TURMERIC
On 30 August, the Daily News reported that naval operations have led to the recovery of about 1,428 kg of dried turmeric attempted to be smuggled into the country by sea. Further investigations led the seizure of a total of 12,270 kg of dried turmeric to be smuggled and 25 suspects involved in turmeric smuggling have also been detained during these operations.
INDIAN COAST GUARD THWARTS SMUGGLING OF A TON OF SEA CUCUMBER INTO SRI LANKA
On 29 August, Zee News in India reported that, the Indian Coast Guard apprehended a fishing boat that was attempting to smuggle sea cucumber, an endangered species, into Sri Lanka.
US TREASURY CLEARS ZIMBABWEAN BANK OF HAVING TO PAY $385 MILLION PENALTY
On 30 August, BNN Bloomberg reported that OFAC had previously reviewed more than 15,000 transactions carried out by CBZ Holdings Ltd for ZB Bank Ltd. between 2009 and 2014 and has now sent the bank a letter saying that CBZ won’t face a penalty or sanctions.
HOW THE GLOBAL CONFLICT BETWEEN THE ISLAMIC STATE AND AL-QAIDA FINALLY CAME TO WEST AFRICA
An article in the July edition of the CTC Sentinel says that after the emergence of the Islamic State in the Sahel (or the Islamic State in the Greater Sahara) in 2015, the group existed in an uneasy alliance with al-Qaida’s various franchises in the region. Proving to be an exception to the rule that al-Qaida and the Islamic State fight each other in whichever territory they co-inhabit, the Sahel was for several years spared from such jihadi-on-jihadi fighting, in part because of personal relationships between jihadis in the rival groups. However, in recent months, this trend has been bucked by fighting between the jihadi forces in Mali and Burkina Faso.
CREDIT SUISSE UNCOVERS CLIENT FRAUD AT WEALTH MANAGEMENT BUSINESS
On 28 August, Bloomberg reported that Swiss-based Credit Suisse Group AG has discovered fraud at its international wealth management business, 2 years after it was criticised by a regulator in a similar case that rattled the bank and raised questions about controls. The case is said to involve a Zurich-based banker who forged documentation on an over-the-counter contract for an African wealth management client.
IRAN SAYS TO FIGHT U.S. SUIT TO SEIZE $1.7 BILLION HELD BY DEUTSCHE BOERSE UNIT
On 29 August, Reuters reported that Iran’s central bank has said it was taking legal steps to counter a lawsuit filed in a US court by creditors seeking to seize $1.7 billion of its assets held by the German stock exchange operator’s Clearstream unit.
PAYROLL HANDLER PLEADS GUILTY IN $100 MILLION NEW YORK FRAUD CASE
On 29 August, Bloomberg reported that a man will be ordered to repay $100 million embezzled from client payroll accounts after he pleaded guilty to a massive money laundering scheme.
CAPITAL ONE FINED $80 MILLION FOR INADEQUATE DATA CONTROLS
On 29 August, SCCE reported that the Office of the Comptroller of the Currency has fined Capital one $80 million for inadequate data controls leading to a 2019 data breach and for failing to fix the problems in a timely manner. The breach was one of the largest in history for a big bank, affecting credit card applications and accounts for more than 100 million customers.
In an article dated 31 August, Hellenic Shipping News reported that the US DoJ has announced the seizure of 3 websites used by 3 front companies: Mobin International, Sohar Fuel, and Oman Fuel, who arranged a multimillion dollar fuel shipment by the Islamic Revolutionary Guard Corps (IRGC) that was bound for Venezuela.
As part of revisiting and revising my own notes on various Panama-related matters, I have revised the following note which may be of interest or use to others. Any comments, or indeed corrections, would be welcomed.
FATF EVALUATION ASSESSMENT
Panama is a member of GAFILAT, the regional FATF-style regional body (FSRB), which has assessed Panama against the 40 Recommendations issued by FATF. These “set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction” and thereby establish an international standard against which countries can be measured.
FATF Technical Compliance and Immediate Outcomes
The country’s “technical compliance” with the Recommendations, e.g. by the enactment of the necessary legislation and the introduction of rules, regulations and structures, is assessed separately from the effectiveness of the legislation and systems themselves. The standard of compliance Or, indeed, non-compliance) is illustrated in chart form in the organisations’ reports (see below for December 2017 ratings for Panama). These technical compliance ratings may be adjusted if and when improvement is shown, such as when reassessed during follow-up reports (see below for comments on such follow-up reports).
Since 2013, FATF has also evaluated jurisdictions against 11 “Immediate Outcomes” to assess the effective implementation of the Recommendations and the overall robustness and effectiveness of the control regime in that jurisdiction. These so-called “IO” ratings were introduced as it was found that it was too easy for even a poorly compliant jurisdiction to have all the theoretically available structures in place, without the means or desire to use them.
The 11 Immediate Outcomes are included in the methodology laid down for carrying out of assessments (see Annex C for details of what the FATF Recommendations and Immediate Outcomes are).
Assessments are undertaken by means of mutual evaluation, a type of peer review using experts selected from other member countries of FATF or the FSRB concerned, and the results published in mutual evaluation reports (MER), both by the regional body and (after acceptance by a Plenary) by FATF itself. The experts carry out pre-visit examination of available information, carry out an on-site visit and also call for documents and information from the country being assessed, and subsequently enter into an ongoing dialogue with the country up to the time of the report being finalised.
The results of the assessments undertaken by the regional bodies are moderated and approved by FATF, and the markings published by FATF in a schedule of results for all jurisdictions that have been assessed.
The FATF rating systems
For technical compliance, FATF has 5 levels of grading –
- Compliant – There are no shortcomings;
- Largely Compliant – There are only minor shortcomings;
- Partially Compliant – There are moderate shortcomings;
- Non-Compliant – There are major shortcomings; and
- Not applicable – The requirement does not apply, due to the structural, legal or institutional features of a country.
For effectiveness, FATF has 4 levels of grading –
- High level of effectiveness – The Immediate Outcome is achieved to a very large extent, with only minor improvements needed;
- Substantial level of effectiveness – The Immediate Outcome is achieved to a large extent, with only moderate improvements need;
- Moderate level of effectiveness – The Immediate Outcome is achieved to som extent, but major improvements are needed; and
- Low level of effectiveness – The Immediate Outcome is not achieved or achieved to a negligible extent, and fundamental improvements are needed.
The Immediate Outcomes effectiveness ratings
The FATF 40 Recommendations are listed in Annex C attached to this paper. However, it might be helpful to explain the IO used to determine effectiveness before looing at the ratings obtained by Panama in the 2018 MER.
Policy, coordination and cooperation mitigate the money laundering and financing of terrorism risks.
IO.1 Money laundering and terrorist financing risks are understood and, where appropriate, actions coordinated domestically to combat money laundering and the financing of terrorism and proliferation.
IO.2 International cooperation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets
Proceeds of crime and funds in support of terrorism are prevented from entering the financial and other sectors or are detected and reported by these sectors.
IO.3 Supervisors appropriately supervise, monitor and regulate financial institutions, designated non-financial businesses and professions (DNFBP) and virtual asset service provider (VASP) for compliance with AML/CFT requirements commensurate with their risks.
IO.4 Financial institutions, DNFBP and VASP adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions.
IO.5 Legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information on their beneficial ownership is available to competent authorities without impediments.
Money laundering threats are detected and disrupted, and criminals are sanctioned and deprived of illicit proceeds. Terrorist financing threats are detected and disrupted, terrorists are deprived of resources, and those who finance terrorism are sanctioned, thereby contributing to the prevention of terrorist acts.
IO.6 Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations
IO.7 Money laundering offences and activities are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions.
IO.8 Proceeds and instrumentalities of crime are confiscated.
IO.9 Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.
IO.10 Terrorists, terrorist organisations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the non-profit organisation (NPO) sector.
IO.11 Persons and entities involved in the proliferation of weapons of mass destruction (WMD) are prevented from raising, moving and using funds, consistent with the relevant UN Security Council Resolution.
The 2014 MER
After the previous MER in 2014, the International Cooperation Review Group (ICRG) of FATF placed Panama in its enhanced follow-up process, and GAFILAT also placed the country under an enhanced follow-up process (which had ended by the time of the next on-site visit in 2017). The role of the ICRG is to monitor and report on “high risk” jurisdictions. Referral to the ICRG is normally based primarily on the results of the jurisdiction’s MER, and jurisdictions whose MER reveals a significant number of key deficiencies are referred to the ICRG. Jurisdictions considered to be falling short may be given a short window (usually 12 months) to demonstrate improvements, and may be required to prepare and submit an action plan and to engage in meetings with FATF representatives, as well providing high-level political commitment to remedying any identified shortcomings.
The 2018 MER
The latest MER for Panama was published in 2018, this having followed an on-site visit by a team of evaluators from GAFILAT in May 2017. According to that MER, Panama was deemed “Compliant” for 10 and “Largely Compliant” for 22 of the FATF 40 Recommendations.
However, Panama only scored “Substantially Effective” for 2 of the 11 Immediate Outcomes, and failed to score “Highly Effective” for any.
One of the main risks facing Panama in terms of income from criminal activities was said to be the receipt of funds or other financial assets resulting from tax crimes committed abroad. This risk had not been considered in the NRA and in the MER GAFILAT said it was important to point out that tax crimes are not criminalised as a predicate offence for the purposes of money laundering in Panama, which (naturally enough) significantly affects the possibilities for prevention and investigation. The National Strategy Plan of 2017 (see Section 6 below) included criminalising tax crimes as one of its most important action points, and the MER identified this step as a priority action.
Illicit drug trafficking was seen as the illicit activity committed in the Panamanian territory which was most related to money laundering in the country, with the country being seen as primarily a transit point – not a production base – for drugs heading chiefly to North America.
The MER said a priority was for Panama to pay special attention to the free zones sector to prevent measures of improper invoicing of goods or other illegal foreign trade operations. It also said that measures must be taken to control the use of cash in free zones, as well as in the real estate and construction sectors.
The MER called for greater attention to be paid to the risks of terrorism financing and proliferation/proliferation financing, and for more effort on raising the awareness of the risks.
However, as was the case with the NRA, the MER noted that tax crime not being a predicate offence for money laundering enhanced the risks in some vulnerable sectors, such as the financial sector, the corporate sector and the free zones. In addition, the MER said that the current control mechanisms of operation of the corporate service sector were not considered enough to mitigate the risks associated to the operation of Panamanian corporations and private interest foundations, especially in the offshore sector (something that I think was underlined by the revelations of the Panama Papers).
January 2019 – first follow-up report
In January 2019, GAFILAT published the First Enhanced Follow-up Report on Panama. This
reviewed Panamá’s progress in addressing the deficiencies of technical compliance identified in the MER. This report also analyses Panama’s progress in implementing new requirements relating to FATF Recommendations which have changed since the onsite visit made to Panama in 2017.
New technical compliance ratings are granted when enough progress is observed, and, in general, countries are expected to have addressed most of the technical compliance deficiencies, if not all, before the end of the third year as from the adoption of their MER.
In summary, the new report concluded that Panama was making progress in addressing the technical compliance deficiencies identified in its MER.
As already pointed out, such a follow-up report does not deal with progress aimed at improving effectiveness. A subsequent follow-up assessment (evaluation) will analyse the progress on the improvement of effectiveness which may eventually result in the new rating of the Immediate Outcomes.
Improvements noted meant that Panamá received a new, improved rating in the following Recommendations –
- 14 (Money or value transfer services);
- 19 (Higher-risk countries);
- 32 (Cash couriers);
- 33 (Statistics).
Acknowledging progress, GAFILAT considered it did not justify rerating of the following Recommendations –
- 1 (Assessing risks and applying a risk-based approach);
- 3 (Criminalising of money laundering offences);
- 16 (Wire transfers information);
- 17 (Reliance of financial institutions on third parties);
- 20 (Reporting of suspicious transaction);
- 27 (Powers of supervisors); and
- 35 (Civil and criminal sanctions for non-compliance).
Since the adoption of Panama`s MER in 2018, FATF had amended Recommendations –
- 7 (Targeted financial sanctions related to proliferation) – changes in the requirements of Recommendation 7 were covered, so the rating remains unchanged as Largely Compliant;
- 18 (Internal controls and foreign branches and subsidiaries) – the rating remained as Compliant); and
- 21 (Tipping-off and confidentiality) – changes were said to be covered sufficiently to justify maintaining a rating of Compliant.
As a result, the revised set of Recommendation results were as follows –
August 2019 – second follow-up report
On 22 August 2019, GAFILAT published a second follow-up report. As with the first follow-up report, this examined only the progress, if any, on technical compliance, and not effectiveness (which, as said, has to await a further evaluation).
The new report said that Panama had made progress in addressing its technical compliance deficiencies identified in the MER in relation to the following Recommendations:
- Recommendation 24 (Transparency and beneficial ownership of legal persons), originally rated Non-Compliant;
- Recommendations 3 (Money laundering offences), 20 (Reporting of suspicious transactions), 25 (Transparency and beneficial ownership of legal arrangements) and 30 (Responsibilities of law enforcement and investigative authorities), all of which had originally been rated Partially Compliant.
As a result, GAFILAT had re-rated for all these Recommendations, except Recommendation 25 (Transparency and beneficial ownership of legal arrangements), where it was felt that progress did not justify a new rating.
For Recommendation 3 (Money laundering offences), GAFILAT noted that tax crimes had been criminalised and made predicate crimes for money laundering, though some doubts over the proportionality and effectiveness, and other minor deficiencies, meant that the Recommendation was re-rated to Largely Compliant from Partially Compliant (and not to a full C for Compliant).
On Recommendation 20 (Reporting of suspicious transactions), progress was sufficient to mark Panama as now being Compliant.
For Recommendation 24 (Transparency and beneficial ownership of legal persons), this was re-rated from Non-Compliant to Partially Compliant, with some “moderate” deficiencies that still need to be addressed, such as those relating to the information in corporations, and that some mechanisms mentioned in FATF guidance are not specified to ensure that information referred to in the guidance is accurate and kept updated in a timely manner.
For Recommendation 30 (Responsibilities of law enforcement and investigative authorities), Panama was re-rated to Compliant, it now being possible to initiate parallel financial investigations alongside investigation of a predicate offence.
One other Recommendation remained with its original rating. Recommendation 2 (National co-operation and coordination) remains rated Largely Compliant.
With these various adjustments taken into account, the revised Technical Compliance ratings were now as follows –
FATF places on “grey list” June 2019
Notwithstanding the foregoing, in June 2019, FATF placed Panama on the list of countries with strategic deficiencies on its AML framework.
In a note on a Staff Visit to Panama, on 23 July 2019, the IMF said that despite recent progress on financial integrity, including the recognition of tax evasion as a predicate offense to money laundering, the legal framework needed to be further strengthened and its effectiveness to be demonstrated. It further said that the authorities were fully committed to implementing the recommendations of the action plan agreed with the FATF and aim to be removed from the list as soon as it is possible. It commented that sustained efforts to enhance the AML framework and tax transparency will be crucial to strengthen Panama’s position as a regional financial centre.
Panama had made a high-level political commitment in June 2019 to work with the FATF and GAFILAT to strengthen the effectiveness of its AML/CFT regime – with some of the issues raised by FATF being addressed in the second follow-up report above.
Following a Plenary in October 2019, FATF announced that Panama remained on its “grey list”, saying that whilst the country had taken steps since June 2019 to improve its co-operation in the fight against money laundering, it had to “continue working on the implementation of its action plan to address its strategic deficiencies”.
Following the Plenary, FATF issued short statement on developments in Panama. It said that since June 2019, when Panama made its high-level political commitment to work with the FATF and GAFILAT to strengthen the effectiveness of its AML/CFT regime, it had taken initial steps towards improving its AML/CFT regime. This included drafting sectoral risk assessments for the corporate and DNFBP sectors and free trade zones.
However, FATF said that Panama should continue to work on implementing its action plan to address its strategic deficiencies, including by strengthening its understanding of the national and sectoral money laundering and terrorism financing risk and using the findings to bolster its national policies to mitigate identified risks. It was also said that it should proactively take action to identify unlicensed money remitters, applying a risk-based approach to supervision of the DNFBP sector and ensuring effective, proportionate, and dissuasive sanctions again AML/CFT violations.
Another thing mentioned by FATF was the need to ensure adequate verification and update of beneficial ownership information by obliged entities, establishing an effective mechanisms to monitor the activities of offshore entities, assessing the existing risks of misuse of legal persons and arrangements to define and implement specific measures to prevent the misuse of nominee shareholders and directors, and ensuring timely access to adequate and accurate beneficial ownership information.
Panama was also told to ensure effective use of FIU products for money laundering investigations, to demonstrate its ability to investigate and prosecute money laundering involving foreign tax crimes and to provide constructive and timely international co-operation with such offence, and continuing to focus on investigations in relation to high-risk areas identified in the NRA and MER.
In June 2020, FATF confirmed that Panama remained on its “grey list” of Jurisdictions under Increased Monitoring, adopted in February 2020.
30 August 2020
 Under the FATF framework, jurisdictions having deficiencies are placed in a follow-up process, with regular reporting back to FATF or its FSRB and reassessments from time to time. In cases of serious deficiencies, an “enhanced” follow-up process is instigated, with shortened timescales and increased pressure on the jurisdiction concerned. This happened to Panama following the 2014 MER.
 http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/MER-GAFILAT-Panama-Jan-2018.pdf For details of previous FATF assessments and reports, see http://www.fatf-gafi.org/countries/#Panama
 This was nevertheless an improvement over the previous MER of 2014, in which it was reported that Panama fully complied with only 1 Recommendation; mostly complied with 3 Recommendations; partially complied with 26 Recommendations; and did not comply with 19 Recommendations. It did not receive a compliant or largely compliant rating in any of the 16 Principal and Fundamental Recommendations: https://www.imf.org/external/pubs/ft/scr/2014/cr1454.pdf
 This conclusion being underlined by the Odebrecht affair (see above)
 However, in 2016, of 6.2 million TEU containers entering/leaving the country, only 56 were seized for containing counterfeit goods (and this was down from 233 the previous year), with 61% of the goods said to be in transit (i.e. not destined for the Panamanian domestic market). INTA, the International Trademark Association, identified the CFZ as “a sensitive hub of counterfeit goods”: https://www.inta.org/INTABulletin/Pages/Anticounterfeiting_Update_7214.aspx
 Involved in trade-based money laundering and other trade-based financial crime: https://www.gov.im/media/1348726/notice-1000-man-trade-based-money-laundering-july-18.pdf
 Which might include proliferation, sanctions-busting etc. In 2018, Panama adopted new export controls for dual-use goods, and also adopted the EU list of dual-use items (see below).
 See MER paragraph TC31.
 See Annex C for details of what FATF Recommendations and Immediate Outcomes cover.
 There should be designated law enforcement authorities that have responsibility for ensuring that money laundering, predicate offences and terrorist financing are properly investigated through the conduct of a financial investigation. Countries should also designate one or more competent authorities to identify, trace and initiate freezing and seizing of property that is, or may become, subject to confiscation.
 Such as trusts, foundations etc.
 This was, of course, prior to the introduction of the new beneficial ownership legislation in 2020 (see Section 8A below).
 This was that it was not expressly stated that the information should be available in the country, nor is the information that resident agents must keep on all shareholders or members of a company clearly established.
 Once again, it might be noted that this was prior to the introduction of the new beneficial ownership provisions in 2020 (see Section 8A below).
Panama Covid-19 update – after enjoying the first Saturday without lockdown (at least for men) for weeks, a monsoon arrived in the afternoon…but new cases continue to seem to reduce, at 713, but 17 new fatalities (so edging closer to 2,000 at 1,983 to date). Of the 24,235 active cases, 155 are in ICU, 1,314 in other wards and 414 confined to requisitioned hotel rooms.
29 August 2020
ALBANIA: 1.6 BILLION ILLICIT FINANCIAL FLOWS
On 28 August, the Tirana times reported that a significant portion of Illicit Financial Flows in Albania run on the illicit proceeds of corruption and drug trafficking, according to Global Initiative’s latest report. The report claims that up to 30% of the bid value of procurement contracts is paid in bribes. A second source of IFF in Albania is drug trafficking. According to the report, the cannabis industry in the country has generated illicit profits for a large part of society, ranging from villagers who cultivate the crops to organized criminal groups who smuggle it abroad and sell it across the EU.
ALLEGATIONS THAT CARTEL BOSS USED DALLAS WESTERN WEAR STORE TO LAUNDER $10 MILLION
On 29 August, Borderland Beats reported that Jose Valdovinos Jimenez (aka “La Roca”), along with 27 other co-defendants, are charged with smuggling meth and heroin in from Mexico and laundering the money through the strip mall western wear store, and sending the money back to the Jalisco New Generation Cartel.
THE BRAZILIAN GENERAL DATA PROTECTION LAW
An article from Dentons on 28 August says that the Law (aka LGPD) will come into operation shortly, but administrative sanctions for non-compliance will only come into force in August 2021 which, will allow for a timely adaptation to those who are bound by the LGPD and the effective creation of the Brazilian Data Protection Authority (ANPD), whom will be responsible for overseeing, enforcing the LGPD and applying its sanctions.
US CUSTOMS OPENS MASS SEARCHES OF DATA ON CONFISCATED TRAVELLER SMARTPHONES AND COMPUTERS
An article from Womble Bond Dickinson on 28 August expressed concerns about reports that the US CBP is now building a searchable database of all of the data taken off of device seized from travellers over the years.
EU PLANS FOR A DAC7 DIRECTIVE ON ADMINISTRATIVE COOPERATION, THE EXCHANGE OF INFORMATION ON ONLINE PLATFORMS’ SALES, AND NEW COMMUNICATION ON TAX GOOD GOVERNANCE
On 24 July, Lowtax reported that the Commission has announced plans for a new Directive on Administrative Cooperation, on the exchange of information on online platforms’ sales, and a new Communication on Tax Good Governance. DAC7 will set out a framework for Member States to automatically exchange the information they receive on the taxable activities of business users of online platforms.
Meanwhile, a reminder from Deloitte on the DAC6: EU Mandatory Disclosure Regime
BRINGING CLAIMS AGAINST CAYMAN ISLANDS ENTITIES SUBJECT TO INSOLVENCY PROCESSES
On 27 August, Ogier published an article on this topic and the provision in Cayman islands law which imposes a moratorium on commencing or proceeding with any suit, action or other proceedings against the company once Liquidators are appointed by the Court (including on a provisional basis).
US CUSTOMS SEIZE 3,000 COUNTERFEIT DRILLS
On 27 August, US Customs & Border Protection reported that officers had seized 3,000 single-speed electric drills from a rail container in Minnesota.
FRANCE: COMPLETION OF REINFORCED “ANTI- GIFT” RESTRICTIONS
An article from Clifford Chance reported that a new Decree reinforced the French “anti-gift” restrictions which should be implemented from 1 October onwards, with several significant subjects have been clarified. It concentrates on the healthcare & life sciences sector and operators must soon be ready to comply with them.
THE TRANSFER OF OWNERSHIP OF GOODS – UPDATING THE UK RULES
On 27 August, the Faculty of Law at the University of Oxford published a post saying that the Law Commission recently launched a consultation on a draft Bill to reform the rules that apply to the transfer of ownership of goods. In the post it explains the proposed reforms and the issues raised in the consultation. The current transfer of ownership rules are contained in the Sale of Goods Act 1979, and have remained largely unamended since 1893 and distinguish between “specific goods” and “unascertained goods”. Specific goods are goods which are identified and agreed upon at the time the contract of sale is made. Unascertained goods are goods which are not identified and agreed upon when the contract is made.
US SUPPORT TO SECURITY SECTOR REFORM IN FRAGILE STATES
On 26 August, a brief from CSIS says that the Global Fragility Act calls upon the US government to develop a strategy for addressing fragility and stabilising violent countries. A state of fragility, or a cycle of violence, often points to deficits of legitimacy or capacity among formal security and justice institutions. It says that policymakers should understand the correspondence between security actors and the nature of fragility and should be thoughtful and deliberate in deciding how best to support reform. Moreover, they should closely examine the compatibility of their reform agenda with other security objectives, such as counterterrorism and military interoperability. It says that the report card on US policy toward security sector reform in other states is mixed, in large part because US policy and practice have been uneven. Examples of successful interventions led or supported by the US that led to meaningful reforms do exist, such as the oft-cited case of defence sector reform in Liberia.
HONG KONG: MONETARY AUTHORITY RELEASES CONSULTATION PAPER ON ENHANCING THE REGULATION AND SUPERVISION OF TRUST BUSINESS
On 29 August, Baker McKenzie reported on 29 August that the Hong Kong Monetary Authority has released a Consultation Paper on Enhancing the Regulation and Supervision of Trust Business. It plans to introduce a Code of Practice for Trust Business to be incorporated into a new Supervisory Policy Manual applicable to all authorized institutions and local subsidiaries of locally incorporated AIs conducting trust business in Hong Kong.
UK: THE LEGAL TEST FOR DISHONESTY
On 25 August, PNLD published a briefing saying that an important requirement to be proved in many criminal offences is whether a person has acted ‘dishonestly’ or not; this applies to fraud offences under the Fraud Act, offences under the Theft Act, and many other offences which involve ‘dishonesty’. It provides an overview of the case law in relation to dishonesty, in particular the recent case of R v Barton and another 2020, which confirmed the overruling of the dishonesty test in R v Ghosh of 1982.
IS SEOUL PREPARED TO JOIN A FIVE EYES PLUS INTELLIGENCE FRAMEWORK?
On 24 August, 38 North reported that recently, there have been increased talks about expanding the Five Eyes (FVEY) intelligence-sharing alliance between the US, UK, Australia, Canada and New Zealand, to include Japan, Germany, France and South Korea. However, that may require South Korea to end its bilateral intelligence-sharing arrangement with Japan, which is set to expire on 24 August.
HOW EUROPE CAN DEFEND ITSELF AGAINST US ECONOMIC SANCTIONS
On 25 August, an article from the European Council on Foreign Relations in the light oif threats relating to Nordstream 2 says that Germany and Europe must defend themselves against US sanctions – saying that they can strengthen their armoury in 2 ways.
2 SOUTH KOREANS KIDNAPPED FROM FISHING VESSEL OFF GHANA
On 29 August, Yonhap News reported that 2 South Korean nationals have been kidnapped by unidentified gunmen in waters off Ghana after a Ghanaian-flagged fishing vessel was attacked in waters 200 km south-east of the coastal city of Tema. A total of 50 crewmen, including 2 South Koreans, were aboard the vessel.
IRANIAN VESSEL LOADS WITH VENEZUELAN ALUMINA AMID CLOSER TIES
On 29 August, an article on Hellenic Shipping News reported that an Iranian-flagged vessel loaded a cargo of alumina in Venezuela this month after delivering supplies for an Iranian supermarket, sources familiar with the shipment said, in the latest sign of closer ties between the countries.
EUROPEAN BANKING FEDERATION RESPONSE TO EU AML/CFT CONSULTATION
On 26 August, EBF published its response to the European Commission consultation on an action plan for a comprehensive EU policy on preventing money laundering and terrorist financing. It says that the EBF has conducted a gap analysis to identify in the light of its Blueprint those topics where the EBF has further input to provide. The EBF’s detailed answers to the questions of the consultation paper on the 6-pillar Action Plan.
The EBF Blueprint is at –
ANGOLA TO JOIN OIL AND EXTRACTIVES TRANSPARENCY GROUP
On 29 August, Reuters reported that Angola plans to join the Extractive Industries Transparency Initiative (EITI), an international effort to fight corruption in revenues from oil, gas and mineral extraction. Formed in 2003, it has more than 50 implementing countries.
SENTENCING AND CONFISCATION IN PROSECUTIONS FOR BREACHES OF PLANNING ENFORCEMENT NOTICES
A BRIEF FROM 5 St Andrews hill on 24 August was concerned with a case involving an appeal against a fine and a confiscation order following criminal proceedings for breach of an enforcement notice served under the Town and Country Planning Act 1990. The Court of Appeal dismissed the appeal against the conviction and confiscation order. It also rejected the argument that the benefit figure ought to have been calculated by reference to the net profit as opposed to the gross rental income.
WHISTLEBLOWER KIDNAPPED IN UKRAINE AFTER ACCUSING CRYPTO FIRM OF EXIT SCAM
On 27 August, Coindesk reported that ex-Bitsonar employee Yaroslav Shtadchenko. Shtadchenko’s had gone missing as he was coming home from work. It says that the harrowing incident highlights the proliferation of risky investment schemes and dubious operators in the crypto industry, but also blockchain technology’s potential to help track missing funds. It says that, before going missing, he called Bistonar’s CEO, Marius Ziubka, and told him he was going to file complaints about Bitsonar to law enforcement in different countries, including the FBI.
On 29 August, VRT News in Belgium reported that Patrick De Koster, manager of footballer Kevin De Bruyne was questioned for several following what is believed to be a complaint by the Manchester City star and Belgian international.
On 28 August, ICIJ reported that Carlos Manuel de São Vicente, the former CEO of a company with a lucrative government monopoly to insure Angola’s oil sector, has had his bank accounts frozen on suspicions of money laundering. It says that Swiss criminal proceedings are highly secretive and details of the investigation and order have only now been made public.
On 29 August, the Sydney Morning Herald reported that Australian racing officials are investigating Phoenix Thoroughbreds, a leading thoroughbred operation, after its owner was accused in a US court of being involved in an international money laundering scheme linked to a fake cryptocurrency. The outfit was banned from racing in France earlier this month after a prosecution witness alleged in a New York court that its Dubai-based owner Amer Abdulaziz Salman had stolen $161 million in the OneCoin cryptocurrency scheme.
Panama Covid-19 update – 138 arrested at an illegal cockfighting event (which presumably broke both the anti-cockfighting and covid-19 laws…).
Meanwhile, numbers still a bit on the high side(?), despite relaxation of lockdown, with 741 new cases and 23,557 active cases, of which 156 in ICU and 725 in other wards. Another 16 fatalities (2,229 to date), although 79,093 said to have recovered – though news reports today highlighted apparent re-infections…
18 September 2020
ESTONIA: FOREIGN STUDENTS FALLING VICTIM TO FICTITIOUS REAL ESTATE ADVERTS
On 18 September, ERR reported that a TV documentary has revealed that fraudsters are offering foreign students imaginary apartments for rent and police are all but powerless and urge people to stay vigilant as the scheme crosses more than one national border.
JAMAICA: BANKS EASING ACCOUNT OPENING RESTRICTIONS
On 18 September, the Jamaica Observer reported that , following amendments to the Proceeds of Crime Act regulations in late 2019, several commercial banks have started to ease the account opening requirements for newly-designated low-risk bank accounts which previously excluded thousands of people from joining the formal banking system due to the inability to satisfy the KYC requirements.
LEAKED EU DRAFT PROPOSES ALL-ENCOMPASSING LAWS FOR CRYPTO ASSETS
Coindesk on 16 September reported that a leaked EU draft legislation proposes all-encompassing laws for crypto assets across all Member States. It says that the EU intends to treat crypto the same as any other regulated financial instrument, which will doubtless provide legal clarity. It says that there is a particular focus on stablecoins in Europe, which are defined as either asset-referenced tokens or e-money tokens. The 168-page draft EU Regulation would not likely be transitioned into EU law until 2022 at the earliest.
DATA PROTECTION CONTRACTS
An article from Gowling WLG on 18 September sets out to explain what needs to be included in the various types of data protection contracts, based on the positions of the European Data Protection Board and the UK ICO with regards to joint controllers, controller to processor transfers of data and international transfers of personal data. This is particularly important in the light of the Schrems II CJEU decision.
HONG KONG: FREEZING OF CUSTOMER BANK ACCOUNTS FOR MONEY LAUNDERING REASONS
On 17 September, an article from Deaons was concerned with the freezing of bank accounts in Hong Kong exploring why Hong Kong banks may be required to do so for money laundering reasons.
WHAT DOES US DoJ RECENT GUIDANCE ON COMPLIANCE PROGRAMMES MEAN FOR COMPANIES OPERATING IN AFRICA?
On 16 September, an article from Covington & Burling LLP asks the question, why does guidance issued by US law enforcement authorities matter to companies operating in Africa? It says that for companies operating in Africa that have the most significant exposure to US law (e.g., affiliates or partners of US-headquartered or US-listed companies), the reasons for heeding the DoJ Guidance are obvious – the Guidance will provide the “rules of the game” in the event that the company finds itself defending its compliance programme before DoJ.
NEW ZEALAND: CHANGES TO EXPORT CONTROLS FOR GOODS AND TECHNOLOGY DESTINED FOR A MILITARY END-USE
On 18 September, Voxy reported that changes to New Zealand’s “catch-all” export controls for goods and technology destined for a military end-use, and which could be put to military or police uses or used to support military or police operations, will enter into force on 9 October. It is said that limiting the scope of our catch-all controls to those few countries under a UN arms embargo is no longer sufficient to manage the risks from exports to military and police users in a wider set of countries of concern.
FRENCH AUTHORITIES DISMANTLE RING OF CHINESE HUMAN SMUGGLERS WHO BROUGHT COMPATRIOTS IN ON TOURIST VISAS ONLY TO HAVE THEM WORK FOR A PITTANCE IN PARISIAN RESTAURANTS
On 18 September, Macau Business carried an AFP report saying that the network worked with a travel agency in China for the issuing of tourist visas and some 200 illegal immigrants are believed to have arrived in France from China using the network over the past 3 to 4 years.
NEW ZEALAND CUSTOMS CONCERNED ABOUT CIGARETTE SMUGGLING FROM MALAYSIA
On 18 September, Free Malaysia Today reported that New Zealand Customs Service is increasingly concerned about the record volume of illegal cigarettes entering the country through Malaysian criminal syndicates. It is said that said the emergence of Malaysian cigarette smugglers was hardly surprising as Malaysian syndicates are already involved in trafficking drugs and smuggling illegal immigrants; and that Australia had seen large-scale illegal cigarette importation over many years, and it is believed that the same criminal groups targeting Australia are now targeting New Zealand.
AIDE TO TANZANIA PRESIDENTIAL CANDIDATE ARRESTED FOR MONEY LAUNDERING
On 18 September, The East African reported that Jerome Luanda, an aide to Tanzanian presidential candidate for Alliance for Change and Transparency (ACT-Wazalendo) Bernard Membe, is being held by the police for questioning on money laundering allegations. He was arrested after arrival from Dubai where he had gone with his boss.
RARE BOOKS RECOVERED IN ROMANIA IN €2 MILLION LONDON WAREHOUSE HEIST INVESTIGATION
A news release from Eurojust on 18 September advised that, following the execution of a European investigation order, a house search led by the Romanian authorities uncovered rare books buried underground. Reported stolen from a warehouse in the UK in 2017, the priceless historical antiques included first editions of Galileo Galilei and Isaac Newton from the 16th and 17th Centuries. The books will now be sent to Italy for examination in order to confirm their authenticity.
UK REVIEW OF ILLEGAL DRUGS: PHASE ONE REPORT
A news release from the Home Office on 17 September is concerned with an independent review of drugs commissioned in 2019 to inform the UK government’s thinking on what more can be done to tackle the harm that drugs cause. The Phase 1 report provides a detailed analysis of the challenges posed by drug supply and demand, including the ways in which drugs fuel serious violence. It finds that the illicit drugs market is big business, worth an estimated £9.4 billion a year. Drug deaths have reached an all-time high and the market has become much more violent. Most drugs consumed in the UK are produced abroad but interventions to restrict supply have had limited success. The use of new psychoactive substances among the general population has fallen but has increased in vulnerable populations such as those sleeping rough and those in prison.
UK: INFORMATION FOR PROSPECTIVE GROWERS OF INDUSTRIAL HEMP FOR THE PRODUCTION OF SEED AND FIBRE ONLY
A news release from the Home Office on 18 September contained updated information for prospective growers of low-THC cannabis (industrial hemp), for the production of seed and fibre only.
IRAQ: ALLEGED $49 MILLION IN KIRKUK
Iraq Business News reported that the country’s Commission on Integrity has issued warrants for the arrest of the governor of Kirkuk, the director of school buildings in the governorate, along with 23 employees, with accusations relating to $49 million in for a school-building programme.
MONEY LAUNDERING: 13 RICH NIGERIANS UNDER PROBE
The Sun Online in Nigeria reported on 18 September that, after it froze accounts of 38 companies over forex infractions, the Central Bank of Nigeria(CBN) has ordered banks to provide details of the domiciliary account statements of some high profile customers and other accounts linked to them.
MALTA: DUE DILIGENCE REPORT WEIGHS IN ON GRECH AND DELIA ALLEGATIONS
Lovin Malta on 17 September reported that allegations concerning Adrian Delia’s ties to suspected Caruana Galizia assassination mastermind Yorgen Fenech are dealt with in a due diligence report for the PN political party ahead of the party’s leadership election. It is said that the numerous allegations against Delia take up 10 pages.
The report is available at –
FCA POLICY ON LISTINGS OF CANNABIS-RELATED BUSINESSES IN UK
A news release from the FCA on 18 September says that, n response to queries from cannabis-related companies interested in listing in the UK, it has set out its approach to assessing these applications. This is pending a guidance consultation which will follow in due course. It explains that, while medicinal cannabis was legalised in the UK in 2018, investment in overseas-licensed medicinal cannabis businesses remains a legally complex area. We consider that there remains a risk that the proceeds from overseas medicinal cannabis business may constitute ‘criminal property’ for the purpose of PoCA 2002. This includes where the company possesses a licence issued by an overseas medicines or pharmaceuticals licensing authority. However, UK-based medicinal cannabis companies can be admitted to the Official List if the company has the appropriate Home Office licences for their activities where they are required.
MILAN JUDGE SEIZES €2.3 MILLION FROM NOVARTIS IN FRAUD PROBE
On 18 September, Reuters reported that the money has been sequestered from the company’s Italian unit Novartis Farma SpA, suspected of selling medicines to hospitals at inflated prices as part of a scheme to fraudulently obtain reimbursement funds from the regional government.
A POTENTIAL RESOLUTION TO CURB THE RISING TENSIONS BETWEEN GREECE AND TURKEY OVER INTERNATIONAL MARITIME CLAIMS
On 17 September, an article on Jurist discusses the seemingly never-ending disputes between the countries and, in the light of the most recent disagreement over Turkish drilling, discusses a potential resolution to curb the rising tensions between Greece and Turkey over international maritime claims.
VAT ON SETTLEMENT OF DISPUTES AND TERMINATION OF CONTRACTS
On 18 September, an article from Out-Law was concerned with VAT issues that commonly arise on out of court settlements of commercial disputes and terminations of contracts. It does not discuss court settlements.
NEW FRENCH FOREIGN INVESTMENTS SCREENING SCHEME
On 18 September, Dentons provided a guide to the FDI screening regime under which any foreign investor (either from EU/EEA or outside of EU/EEA) who wants to invest in sensitive business sectors in France must obtain the FDI prior approval of the French Ministry of Economy and Finance.
JAMAICA: OVER HALF MILLION DOLLARS FORFEITED BY MAN SUSPECTED OF TERRORISM OFFENCES
On 17 September, a release on the CFATF website was concerned with money seized by the Jamaican Constabulary Force (JCF) in 2017 from Abdullah el-Faisal, who was the subject of an extradition warrant from the US, and which alleged his involvement in terrorism offences. The money was found at his home following his arrest. The courts have now ordered the money – $524,000 and £1,850 – to be forfeit.
US: IRANIAN HACKERS INDICTED FOR STEALING DATA FROM AEROSPACE AND SATELLITE TRACKING COMPANIES
A news release from US DoJ on 17 September claimed that 3 computer hackers, all of whom were residents and nationals of Iran, had been indicted for engaging in a coordinated campaign of identity theft and hacking on behalf of Iran’s Islamic Revolutionary Guard Corps (IRGC) in order to steal critical information related to US aerospace and satellite technology and resources. They are all residents in Iran. The defendants’ hacking campaign, which targeted numerous companies and organizations in the US and abroad, is said to have begun in approximately July 2015 and continued until at least February 2019.
NETHERLANDS: A COLOMBIAN WOMAN AND 2 ALBANIANS SENTENCED TO PRISON TERMS OF 3½ TO 5 YEARS FOR LAUNDERING ALMOST €13 MILLION
A NEWS RELEASE FROM THE Dutch FIU on 17 September advised that a Colombian accomplice was also given a 2-year prison sentence for his involvement.
US AND CYPRUS TO CONSTRUCT BORDER SECURITY TRAINING HUB
On 15 September, Homeland Security Today reported that the US and Cyprus have agreed to construct a regional border security training hub in Cyprus. Construction will begin later this year and it will be known as the Cyprus Center for Land, Open-seas, and Port Security (CYCLOPS). The US will provide equipment, trainers, and other capacity-building support, while Cyprus will contribute land, facilitate travel, and provide additional trainers. It will enable regional partners to learn best practices for securing critical infrastructure and to engage in cross border, counterproliferation cyber investigations.
THE FRENCH LAWYER AND INTERNAL INVESTIGATIONS
The National Council of Bars and Law Societies/Research and Study Centre (CNB les Avocats) has published a Guide said to be necessary in the increasing use of internal investigations, and which says that internal investigations have their own methodology and techniques, which this guide aims to summarise through the joint work of experienced lawyers who have compared their concerns and their practices in order to formulate recommendations.
EU COMMISSION REPORT ASSESSING WHETHER MEMBER STATES HAVE IDENTIFIED AND MADE SUBJECT TO THE OBLIGATIONS OF THE 4MLD ALL TRUSTS AND SIMILAR LEGAL ARRANGEMENTS
On 16 September, the European Commission published a report assessing whether Member States have duly identified and made subject to the obligations of the Fourth Anti-Money Laundering Directive (4MLD) all trusts and similar arrangements governed under their laws. This report is said to provide a first attempt at EU level to analyse legal arrangements that could be considered similar to the common law trust under Member States’ law and custom. It concludes that a preliminary analysis of the obligations imposed on such legal arrangements by Member States shows that the aim of establishing a consistent monitoring and registration framework might not have been achieved yet.
DEVELOPMENTS IN THE DISCLOSURE AND PROVISION OF LEGAL ENTITY INFORMATION IN JERSEY
Walkers have published an Advisory in the light of recently closed consultation by the Jersey Government on its Registry Law. The Registry Law applies to all types of legal entities which have legal personality, namely companies, LLC, foundations, incorporated and separate limited partnerships, and LLP. It does not apply to limited partnerships. It was adopted in July, and is expected to be brought into force on 1 December, unless there are any further delays resulting from the Covid-19 pandemic. Although the Regulations stipulate that the publication of significant persons information on the Companies Register may not take place before 1 June 2021. It says that further clarity on the developments will be provided when guidance is published by the FSC but, for now, it would seem that the biggest adjustment will be a new register of directors.
The FIAU on 18 September released an updated edition of its guidance. It includes red flags and case studies.
On 18 September, UK P+I issued a Circular is to raise awareness of an expansion in United States sanctions, targeting the construction of the NS2 and TurkStream pipeline projects and those who provide vessels and services in connection with either project, including related insurance. It explains that there 2 US Acts and that both Acts have the potential to reach the activities of non-US ship owners and others in the marine industry (including insurers) – a summary of each Act is provided. The Circular points out that Members are reminded that there shall be no cover for any vessels involved in activities that are either unlawful and/or put the Club at risk of breaching sanctions. In view of the direct sanctions threat posed to insurers by CAATSA and PEESA, there will be no Club cover for any activity involving or related to the Nord Stream 2 or Turk Steam construction projects.
A release on Mondo Visione on 18 September advised that the proposed amendments would facilitate the adoption of a risk-based approach by the securities industry, and they address some areas for enhancement identified in the latest FATF Mutual Evaluation Report. The amendments also include additional measures which would help mitigate risks associated with business arrangements such as cross-border correspondent relationships. The consultation runs to 18 December.
On 18 September, Homeland Security Today carried an article saying that the USCG has released a new strategy to combat IUU fishing that will focus on targeted intelligence, countering irresponsible state behaviour, and expanding multilateral fisheries enforcement cooperation. USCG will advance its whole-of-government effort with partners like the National Oceanic Atmospheric Administration, the Department of State, and the Department of Defense. The article says that 1 in 5 fish caught around the world is believed to have originated from IUU fishing, and it results in tens of billions of dollars of lost revenue to legal fishers every year as 3.3 billion people around the world rely on fish for at least 20% of their animal protein. 93% of the world’s major marine fish stocks are classified as fully exploited, overexploited, or significantly depleted, with between 11 and 26 million tonnes of fish are caught illegally each year.
The IUU Strategic Outlook is available at –
On 18 September, the FSA in the Isle of Man published guidance which it says is aimed at assisting readers to determine whether the particular use, or nature, of a cryptoasset or token may require a business to be regulated for financial services or registered as a designated business. Also provided is a set of FAQ
On 17 September, the Law Commission, which reviews and advises on changes to the law in the UK, issued a consultation paper concerned with more accurately and efficiently determining a defendant’s criminal proceeds and more effectively enforcing confiscation orders. It says that the UK the regime has been ineffective at recovering the benefits of crime from defendants. The making of confiscation orders has been complex and time consuming, and once an order has been made, defendants have been able to frustrate attempts at enforcement. This has resulted in the UK’s confiscation debt growing to more than £2 billion (as of March 2019). The Commission’s This project aims to improve enforcement of fairer, more realistic confiscation orders.
A summary of the consultation is at –
On 18 September, OCCRP published an article saying that the relationship between the Trump Administration and the Erdogan administration in Turkey involves Russia-linked oligarchs, alleged crooks, and key players in Trump’s Ukraine impeachment scandal. It is said that the warm relationship between the countries’ leadership would see Trump administration officials, and the president himself, make decisions that baffled advisers who believed they put Erdoğan’s interests over America’s. One titbit, revealed by Carl Bernstein, is that by far the greatest number of Trump’s telephone discussions with an individual head of state were with Erdogan, who sometimes phoned the White House at least twice a week and was put through directly to the President on standing orders from Trump.
On 17 September, a news release from the AG Office about the now-closed consultation to seek views on the revised Disclosure Guidelines and CPIA Code of Practice advised that a revised CPIA Code of Practice was laid before Parliament on 10 September.
The draft Code is available at –
It is scheduled to come into force on 31 December, and its purposes is to set out the manner in which investigators are to record, retain and reveal to the prosecutor material obtained in a criminal investigation. It replaces the previous 2015 version. The most important change is said to be is the introduction of a rebuttable presumption that certain types or categories of unused material meet the disclosure test, saving time and resources that are currently wasted in establishing its status.
On 18 September, Total Croatia News reported that the MPs in question are Drazen Barisic (HDZ), the mayor of Velika Gorica, Darko Puljasic (HDZ), the mayor of Pozega, and Vinko Grgic (SDP), the mayor of Nova Gradiska. Barisic and Grgic are among 13 persons suspected in a corruption case – Barisic is suspected of influence peddling and misuse of position and authority, while Grgic is suspected of bribe taking. Puljasic is connected with another case involving the extension of a primary school in Pozega.