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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 18

18 January 2020

OFAC ISSUES AMENDED VENEZUELAN SANCTIONS GENERAL LICENSES

On 18 January, OFAC issued amended Venezuela-related General License 5B “Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After April 22, 2020” and 8E “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela”.

https://content.govdelivery.com/accounts/USTREAS/bulletins/276e9d9

SUMMARY OF EU SANCTIONS REGIMES

On 17 January, Spanish law firm Lipicino published a briefing providing brief details of the various sanctions regimes in force in the EU in 2019.

https://www.lupicinio.com/en/international-sanctions-2019/

ISRAELI CRIME BOSS ARRESTED ON SUSPICION OF LAUNDERING HALF A BILLION SHEKELS

On 18 January, the Times of Israel reported that 35 associates of Benny Shlomo were also arrested across the country and in the West Bank as part of investigation allegedly involving fictitious receipts to launder approximately $150 million.  Shlomo was arrested earlier this month on suspicion of the attempted murder of a rival.

https://www.timesofisrael.com/crime-boss-arrested-on-suspicion-of-laundering-half-a-billion-shekels/

5 LATVIANS INDICTED IN US CHARGED WITH LAUNDERING MONEY FOR CYBERCRIMINALS

On 17 January, the Pittsburgh Post-Gazette reported that they were seemingly linked to organised crime group QQAAZZ.  It is alleged that the defendants opened accounts at various banks, including the PNC Bank in Pittsburgh.

https://www.post-gazette.com/news/crime-courts/2020/01/17/Latvians-indicted-in-Pittsburgh-in-international-money-laundering-scheme/stories/202001170144

ICELANDIC COMPANY AT THE CENTRE OF THE FISHROT BRIBERY SCANDAL PLANS TO WITHDRAW FROM NAMIBIA

On 18 January, All Africa reported that an Icelandic company at the centre of the “Fishrot” bribery scandal said it plans to withdraw its businesses from Namibia.  Samherji’s acting CEO Björgólfur Jóhannsson confirmed the exit in a statement.  The seafood company is accused of paying kickbacks to Namibian politicians.

https://allafrica.com/stories/202001180001.html

SWISS OPEN CONSULTATION FOR MORE EFFICIENT ACTION BY CUSTOMS AGAINST COUNTERFEITS

On 17 January, an article from Baker McKenzie said that a public consultation had been published on the introduction of a simplified procedure for the Federal Customs Administration (FCA) to destroy fake products in small consignments.  A new procedure aims to reduce the administrative effort by giving the authorities more leeway for their checks – and as the importation of small consignments from Asia into Switzerland increased 6-fold between 2014 and 2018.  It is said that over 90% of suspicious goods intercepted at the border concern minor cases of small consignments with th3ree items or less and that handling these customs procedures, however, requires a disproportionate amount of effort.  A streamlined and simplified procedure would mean that such minor cases could be settled with considerably less effort.

https://www.internationaltradecomplianceupdate.com/2020/01/17/swiss-open-consultation-for-more-efficient-action-by-customs-against-counterfeits/

FENTANYL: THE MOST DANGEROUS ILLEGAL DRUG IN AMERICA

On 13 January, a post from the RAND Corporation says that drug overdoses kill more Americans than car crashes, gunshots, or AIDS at its peak.  But it’s no longer just a crisis of prescription pills or heroin.  It’s a crisis of fentanyl.  Deaths involving it and other synthetic opioids have surged from around 3,000 in 2013 to more than 30,000 in 2018.  Researchers at RAND recently published the most comprehensive study to date on what’s driving the crisis, how it could play out in the future, and what may be done to save more lives.

https://www.rand.org/blog/rand-review/2020/01/fentanyl-the-most-dangerous-illegal-drug-in-america.html

ONLINE TOOL TO REMOVE TRADE BARRIERS IN AFRICA GOES LIVE

On 17 January, an article from the UN Conference on Trade & Development reported that an online platform developed by UNCTAD and the African Union to help remove non-tariff barriers to trade in Africa became operational on 13 January.  Traders and businesses moving goods across the continent can now instantly report the challenges they encounter, such as quotas, excessive import documents or unjustified packaging requirements – as it is said that non-tariff barriers are the main obstacles to trade between African countries.  AfCFTA (African Continental Free Trade Area), which entered into force in May 2019, is expected to boost intra-African trade, which at 16% is low compared to other regional blocs.  The agreement requires member countries to remove tariffs on 90% of goods – but negotiators realised that non-tariff barriers must also be addressed and called for a reporting, monitoring and elimination mechanism.

https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2273

NETHERLANDS: 6 PROSECUTED IN $8 MILLION COBALT THEFT

On 15 January, Insurance Marine News reported that the Public Prosecution Service in Rotterdam is pursuing charges against 6 men for the theft of 114 tonnes of cobalt from the Port of Rotterdam, stolen from 2019 from a secured warehouse.

https://insurancemarinenews.com/insurance-marine-news/six-prosecuted-in-8m-cobalt-theft/

FLORIDA EX-MAYOR GETS OVER 4 YEARS IN PRISON FOR CHARITY FRAUD

On 18 January, Associated Press reported that Guyland Thompson, the former mayor of a Florida city called Milton has been sentenced to more than 4 years in prison for defrauding a charity he ran.  Thompson embezzled over $650,000 between 2011 and 2018.  He was ordered to forfeit nearly $222,000 and pay an additional money judgment of over $430,000.

https://apnews.com/dfe3c86cd6e16d42d9379d06ec062991

URUGUAY: PRESIDENT-ELECT LUIS LACALLE’S PROPOSAL TO ATTRACT INVESTMENTS TO HIS COUNTRY IN EXCHANGE FOR TAX BENEFITS AND MAKE IT A TAX HAVEN

Telesur on 18 January reported that the President-elect, who takes up the office on 1 March, announced that he will facilitate the residence of some 100,000 high-income Argentines if they invest capital in his country.  A former president instead said “We have about $24 billion scattered throughout the world. Why don’t we try that money back to the country?”.

https://www.telesurenglish.net/news/Lacalle-Looks-to-Turn-Uruguay-Into-Tax-Haven-Again-20200118-0001.html

INDIA: CONSTRUCTION COMPANY DIVERTED MONEY OF HOME-BUYERS AND BANKS TO OFF-SHORE TAX HAVENS

On 18 January, the Economic Times reported that a forensic audit of Unitech Ltd, ordered by the Supreme Court, has revealed a massive diversion of funds by the company and its directors – some of which was diverted to offshore havens, including Jersey.  It is reported that nearly 40% of the money raised from financial institutions amounting had not been utilised for construction. The auditor filed the report after examining 51 projects, with 23 other projects not analysed due to lack of data.
https://economictimes.indiatimes.com/industry/services/property-/-cstruction/unitech-promoters-diverted-money-of-home-buyers-and-banks-to-off-shore-tax-havens-audit-report/articleshow/73351269.cms

KENYA: CHIEF PROSECUTOR SAYS COUNTRY RECOUPS ONLY 1% OF LOOTED FUNDS – $20 MILLION OUT OF $2 BILLION

The KMA News Agency carried a story on 18 January saying that Kenya, although described as an economic giant in East Africa, has over the years been dogged with issues of corruption and financial mismanagement, resulting in a series of high-profile corruption related arrests and ongoing prosecutions.  The Public Prosecutor told the BBC in a recent interview that the state has succeeded in recovering only 1% of stolen assets.  The country is ranked 144 out of 180 countries on Transparency International’s Corruption Perception Index.

https://kmaupdates.com/20m-out-of-2-bn-kenya-recoups-1-of-looted-funds-chief-prosecutor/

2 BUSINESSMEN JAILED FOR £1 MILLION PROPERTY FRAUD IN LONDON

Desiblitz on 18 January reported that the businessmen have been jailed for failing to pay the tax due on the profits they had made from successful house sales, having bought and sold over 50 properties across London between 2002 and 2009.

https://www.desiblitz.com/content/two-businessmen-jailed-for-1m-property-fraud

IED IN BAHRAIN: A COMPARATIVE ANALYSIS OF COMPONENTS

A report from the NGO Conflict Armaments Research in December shows that external supply chains have provided components for the construction of IED to Bahraini militants.  These are identical that captured from Houthi forces in Yemen and demonstrates Bahraini militants’ capability to manufacture explosives and IED domestically.  The report involved material seized by Bahraini national security forces from militant cells between 2013 and 2018.  Much of the materiel is identical to items recovered from militant factions after 2013 on mainland Bahrain and in other conflict-affected Gulf countries, such as Yemen.  The report also found a high frequency of removal of identifying information from components.

https://www.conflictarm.com/reports/the-ied-threat-in-bahrain/

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UK: POST OFFICE ‘ASSISTING’ REVIEW OF POSTMASTERS’ CONVICTIONS

On 18 January, the BBC reported on the latest developments in the long-running scandal.  The Post Office says it is ”assisting the Criminal Cases Review Commission (CCRC) to the fullest extent” with inquiries into cases of sub-postmasters who run or ran local sub Post Office and who were convicted of theft and fraud.  They were prosecuted after unexplained shortfalls were found in branch accounts, the ex-workers blamed flaws in the IT system, Horizon, provided by Fujitsu but the Post Office denied there was a problem.  However, in December it agreed to pay nearly £58 million to settle the legal dispute with the 550 sub-postmasters involved.  The CCRC is looking into the cases of those sub-postmasters who were convicted, to see if their convictions were safe and/or if they should be overturned.

https://www.bbc.com/news/av/uk-england-hampshire-51120545/post-office-assisting-review-of-postmasters-convictions

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 17

17th January 2020

 GLOBAL CIVIL UNREST EXPECTED TO INCREASE TO NEARLY 40% OF COUNTRIES IN 2020

On 16 January, CNBC carried an article saying that a new index of civil unrest has claimed that 47 of the world’s states witnessed a rise in civil unrest in 2019, and also predicted that in 2020, the number will increase to 75 countries.  Naming a number of countries as high-risk, and saying that a risk also exists in large and important states such as Russia, China, Saudi Arabia, Turkey and Brazil, the analysts behind the report say that companies and investors will have to adapt to increased unrest and may need high levels of protection.  However, they warned, companies would be in danger of complicity if they employ state or private security forces that perpetuate violations.

https://www.cnbc.com/2020/01/16/40percent-of-countries-will-witness-civil-unrest-in-2020-report-claims.html

UK: HOW TO TELL COMPANIES HOUSE IF THE INFORMATION YOU HOLD ABOUT A BENEFICIAL OWNER IS DIFFERENT FROM THE INFORMATION ON THE PSC REGISTER

On 10 January, Companies House published guidance, saying that a beneficial owner does not have the same definition as a PSC.  The requirement to report discrepancies is based on the Companies Act definition of a PSC.  The “obliged entities” covered by the guidance are credit institutions, financial institutions, auditors, insolvency practitioners, external accountants and tax advisors, notaries and other independent legal professionals, TCSP, estate agents, including when acting as intermediaries, other persons trading goods in cash amounting to €10,000 or more, gambling services, exchange services between virtual and fiat currencies, custodian wallet providers, art dealers in galleries and auction houses, and art dealers in free ports.

https://www.gov.uk/guidance/report-a-discrepancy-about-a-beneficial-owner-on-the-psc-register-by-an-obliged-entity

ITALIAN AUTHORITIES TO LOOK INTO REPORTS MAFIA USED MALTA BANKS IN EU FUNDS SCAM

On 17 January, KYC 360 reported claims that banks in Malta were used by the Italian mafia in a massive operation in Sicily that defrauded the EU of millions of euros in funds for farmers.  Since 2013, the so-called Tortorici Mafia is said to have defrauded about €10 million from the EU by falsely claiming they owned plots of land that in reality were owned by the region and local councils.

https://www.riskscreen.com/kyc360/news/authorities-to-look-into-reports-mafia-used-malta-banks-in-eu-funds-scam/

UK PROSECUTOR LOOKS AGAIN TO SEIZE IBORI PROCEEDS

On 17 January, KYC 360 reported that a British prosecutor launched a fresh attempt to confiscate tens of millions of pounds stolen from an oil-producing state in Nigeria by its former governor, James Ibori, who was governor of Delta State from 1999 to 2007, and pleaded guilty at London’s Southwark Crown Court in 2012 to 10 counts of fraud and money laundering.

https://www.riskscreen.com/kyc360/news/uk-seeks-to-confiscate-convicted-nigerian-politicians-loot/

PayPal OFFERS UP FINANCIAL DATA TO COMBAT HUMAN TRAFFICKING

Reuters on 16 January reported that PayPal Holdings Inc will share its financial data with a leading advocacy group in the US to try and stop human traffickers from moving funds on the digital money transfer platform.  Anti-trafficking group Polaris said it would work with Paypal to identify red flag transactions.

https://www.reuters.com/article/us-usa-trafficking-paypal-trfn/paypal-offers-up-financial-data-to-combat-human-trafficking-idUSKBN1ZF2X1

VANCOUVER PROPERTIES WORTH A COMBINED $7.5 MILLION SOUGHT IN CIVIL FORFEITURE

On 16 January, CBC in Canada reported that a civil suit from the province seeks to seize 6 homes allegedly involved in money laundering, drug trafficking.  The Civil Forfeiture Office alleges 6 homes were bought or maintained with money from trafficking fentanyl, heroin, cocaine and methamphetamine.  It also alleges an auto and appliance repair business registered at one of the properties was used as a front to conceal operations of the drug ring.

https://www.cbc.ca/news/canada/british-columbia/metro-vancouver-money-laundering-civil-suit-forfeiture-1.5430306

NEW LIMITED PARTNERSHIP REGIME FOR PRIVATE EQUITY FUNDS IN HONG KONG

On 16 January, Dechert published an article saying that the Hong Kong government was seeking to establish a limited partnership regime for funds (LPF), in order to facilitate industry development while maintaining market integrity and investor protection.  The Financial Services and the Treasury Bureau published a consultation paper setting out the key features of the proposed LPF regime in July 2019, with proposals for consideration by the Legislative Council in December 2019.

https://info.dechert.com/10/13399/landing-pages/new-limited-partnership-regime-for-private-equity-funds-in-hong-kong.asp?sid=e314a925-1440-4479-bd28-c88ee5d44dd9

DECAYING INTERNATIONAL TAX REGIME THREATENS THE GLOBAL ECONOMY

On 17 January, an article from Foreign Affairs cautioned that a threat to the global economy has received little attention: a looming tax war. Since the early 20th Century countries have largely agreed on how to tax income earned by multinational corporations that conduct business across borders. But this long-standing regime is coming apart, imperilling the broader international economic order.  The regime rests on the norms set in domestic tax laws as well as a patchwork of almost 4,000 bilateral treaties, but the digital age contains tensions and threats.  European governments, especially the French, have attempted to impose digital services taxes on giant technology firms. Their efforts have rankled the US, which views such new taxes as unfairly singling out US companies.  It also says that China, India, and other emerging markets are reshaping the economic order, and other measures that depart from historic international tax norms are popping up.  The article warns that if the OECD fails to reach a new agreement, the old order will continue to decay, only faster and, without a compromise, multinational corporations face punishment with levies equivalent to tariffs, except on both goods and services.  The consequences of inconsistent taxation of cross-border activity go far beyond the current dispute between the Trump administration and France.

https://www.foreignaffairs.com/articles/united-states/2020-01-17/looming-tax-war

UKRAINE: COURT SEIZES $10.2 MILLION FROM FORMER PRESIDENT YANUKOVYCH’S ENTOURAGE

112 UA reported on 17 January that a court had seized $10,2 million belonging to the All-Ukrainian Development Bank and held in the accounts of the International Investment Bank and transferred them to the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (ARMA).

https://112.international/society/sourt-seizes-102-million-of-yanukovychs-entourage-47593.html

UK: COMPANY DIRECTOR TRIED TO STEAL £405,000 FROM AVIVA INSURANCE COMPANY

On 17 January, the Insurance Times carried an article about a failed attempt to steal £405,000 from Aviva by Edward Camborne de Lucy, who has received a suspended sentence and a £33,000 confiscation order.  It is said that there was a genuine loss involved, which he attempted to inflate by £200,000.

https://www.insurancetimes.co.uk/news/1432343.article

FCA BEGINS REVIEW OF FUND AUTHORISED CORPORATE DIRECTORS IN WAKE OF WOODFORD AND OTHER CASES

On 17 January, an article from Out-Law says that the FCA has begun a review of the role played by third party authorised corporate directors (ACD) in the oversight of regulated investment funds, and the first such firm has already received a site visit and questionnaire from the regulator.  It is said that the review would focus on the commercial conflicts that may arise when an external ACD is contracted by a fund to provide governance functions.

https://www.pinsentmasons.com/out-law/news/fca-begins-review-of-fund-authorised-corporate-directors

COSTA RICA SEIZURES SHOW HEIGHTENED FOCUS ON PACIFIC DRUG ROUTE

On 17 January, Insight Crime reported that, since 2020 began, major operations along Costa Rica’s western coast have brought in nearly 1,000 kg of cocaine showing the country’s increasing efforts to tackle drug smuggling in the Pacific.  Costa Rica is an increasingly important transshipment point in the international drug trade.

https://www.insightcrime.org/news/brief/costa-rica-pacific-drug-route/

SPANISH BANKER GETS JAIL TERM FOR TRYING TO SMUGGLE PICASSO MASTERPIECE OUT OF SPAIN ON YACHT

The Local on 16 January reported that a Madrid court also fined ex-Bankinter head Jaime Botín, 83, €52.4 million.  It awarded ownership of the work, “Head of a Young Girl”, to the Spanish state.  French customs seized the work, which is estimated to be worth €26 million, in July 2015 on Corsica, halting what they said was an attempt by Botin to export it to Switzerland to sell it.  Botin, whose family are one of the founders of the Santander banking group, had been trying since 2012 to obtain authorisation to export the painting.

https://www.thelocal.es/20200116/spanish-banker-gets-jail-term-for-trying-to-smuggle-out-picasso-masterpiece

https://www.superyachtnews.com/business/picasso-painting-seized-on-board-yacht-in-corsica

BELGIUM: COUNTERFEIT CIGARETTES SEIZURES IN JANUARY ALONE NEARLY TOPPLE 2019 RECORD

On 17 January, the Brussels Times reported that over 100 million counterfeit cigarettes have been seized by customs authorities in Belgium in the first weeks of January, a number which nearly shatters the record set in all of 2019.  The cigarettes were discovered in separate shipments identified as coming into the country from SE Asia, according to the FPS Finance, and 8 people have been arrested as part of the investigation by customs officials, with all detainees claiming to be of Turkish nationality.

https://www.brusselstimes.com/belgium/90035/counterfeit-cigarettes-seized-in-january-near-2019-record/

CHINA CUSTOMS SEIZES 58 ENDANGERED CACTUS SEEDLINGS

On 17 January, China.org reported that Qingdao Customs in east China’s Shandong Province said that it had seized 58 cactus seedlings subject to CITES restrictions in several inbound parcels sent from Germany and Italy.

http://www.china.org.cn/china/2020-01/17/content_75622181.htm

UK: ‘URGENT REVIEW’ OF MEDICAL CANNABIS ACCESS NEEDED TO CURB USE OF STREET DRUGS, SAYS TRADE BODY

The Pharmaceutical Journal reports that the Centre for Medicinal Cannabis has called on the government to “urgently review” access to medical cannabis, to prevent patients from having to rely on illegal and unregulated “street” cannabis.

https://www.pharmaceutical-journal.com/20207568.article

THE JOURNEYS OF THE 2 SHIPMENTS OF LOW-ENRICHED URANIUM TO THE IAEA LEU BANK

On 16 January, the International Atomic Energy Agency published an slideshow article about the second and final delivery in December of a shipment of low-enriched uranium (LEU) at the Ulba Metallurgical Plant in Ust-Kamenogorsk, Kazakhstan. The IAEA LEU Bank aims to provide assurance to countries about the availability of nuclear fuel.

https://www.iaea.org/newscenter/multimedia/photoessays/the-journeys-of-the-two-shipments-of-low-enriched-uranium-to-the-iaea-leu-bank

UK: INFORMATION FOR PROSPECTIVE GROWERS OF LOW THC CANNABIS (INDUSTRIAL HEMP), FOR THE PRODUCTION OF SEED AND FIBRE ONLY

On 17 January, the Home Office published updated guidance directed at any company or organisation wanting to cultivate industrial hemp and which therefore needs to apply for a controlled drugs domestic licence.

https://www.gov.uk/guidance/controlled-drugs-industrial-hemp

MAN ARRESTED IN NORTHERN IRELAND SUSPECTED OF TRYING TO SELL 12 BILLION STOLEN PASSWORDS ONLINE

On 17 January, The Journal reported that police had arrested 2 men in the Netherlands and Northern Ireland suspected of trying to sell some 12 billion stolen usernames and passwords via an online website.  Officers believe the pair made total profits in excess of £200,000 from the site.

https://www.thejournal.ie/weleakinfo-stolen-passwords-4969801-Jan2020

https://www.nationalcrimeagency.gov.uk/news/weleakinfo-com-site-hosting-stolen-credentials-taken-down-after-international-operation

DELOITTE – WE DENY ANY ASSOCIATION OR INVOLVEMENT IN STATE CAPTURE AND CORRUPTION

A report on News 24 Wire on 17 January reported that auditing firm Deloitte has denied any involvement in state capture or corruption, particularly relating to its consultancy contracts with state power producer Eskom.  It says that Eskom is now litigating against Deloitte in a bid to get it pay back money for 2 tenders and other work the cash-strapped power producer says the auditing firm was “improperly” awarded in 2016.

https://allafrica.com/stories/202001170739.html

FUEL FRAUDSTERS BUSTED FOR TRAFFICKING OVER 300,000 LITRES OF ILLICIT FUEL IN EUROPE

A news release from Europol on 17 January reported that an operation began in 2019 with surveillance as part of an investigation targeting mineral oil fraud in the EU.  Thanks to coordinated action, 16,000 litres of illicit fuel were seized in November 2019 and the organised crime group behind the illegal activities was dismantled.  Also, 4 individuals were arrested, and also seized were vehicles (2 semi-trailers and 3 tractors), technical equipment, and documents proving that 348,000 litres of illicit oil had been shipped.

https://www.europol.europa.eu/newsroom/news/fuel-fraudsters-busted-for-trafficking-over-300-000-litres-of-illicit-fuel

CAN’T SELL YOUR PRESIDENTIAL PLANE? MEXICO MULLS A RAFFLE INSTEAD

On 17 January, Reuters reported that the Mexican President Andres Manuel Lopez Obrador has floated the idea of raffling off his predecessor’s $130 million jet after the government’s efforts to sell the plane over the past year came to nothing.  Mexico has yet to find a buyer for the Boeing 787 Dreamliner.

https://uk.reuters.com/article/uk-mexico-airplane/cant-sell-your-presidential-plane-mexico-mulls-raffle-instead-idUKKBN1ZG28K

CENTRAL BANK OF THE BAHAMAS LAUNCHES PROJECT SAND DOLLAR FOR DIGITAL CURRENCY

On 15 January, the CFTAF reported that the Central Bank of The Bahamas will introduce a digital version of the Bahamian dollar through an initiative titled ‘Project Sand Dollar’. The sand dollar is also the name given to the proposed central bank digital currency (CBDC), which is part of the Bahamian Payments System Modernization Initiative (PSMI). The main objective of the Project is improving financial inclusion and access to all citizens of The Bahamas.

For more details see –

https://www.centralbankbahamas.com/news.php?cmd=view&id=16660

UK NOTICE TO EXPORTERS 2020/02: OPEN GENERAL EXPORT LICENCES (OGEL) UPDATED – TURKEY LICENCE DELETED

On 17 November, the Department for International Trade released this latest Notice to Exporters saying that the Department has amended 14 OGEL, 1 open general transhipment licence (OGTL), and revoked the OGEL for Turkey, following the review of OGEL where Turkey was a permitted destination.

https://www.gov.uk/government/publications/notice-to-exporters-202002-open-general-licences-updated/notice-to-exporters-202002-open-general-licences-updated

The revoked OGEL for Turkey can be seen at –

https://www.gov.uk/government/publications/open-general-export-licence-turkey

SINGAPORE: FIRST PENALTY FOR FAILURE TO DISCLOSE SHAREHOLDING INTERESTS

A release on Mondo Visione on 17 January reported that the Monetary Authority of Singapore (MAS) has imposed a civil penalty of $200,000 on Mr Lim Soon Fang for not disclosing changes in, and providing false information regarding his shareholding in Asia-Pacific Strategic Investments Limited (ASIL).  This is the first civil penalty action by MAS for breaches of shareholding disclosure requirements under Part VII of the Securities and Futures Act (SFA) since the civil penalty regime was extended to these contraventions in November 2012.

https://mondovisione.com/media-and-resources/news/monetary-authority-of-singapore-first-civil-penalty-enforcement-action-for-fail/

FORMER PHILIPPINES POLICE CHIEF AND DRUG WAR ENFORCER TO BE CHARGED WITH CORRUPTION – 13 OTHER OFFICERS SAID TO BE IMPLICATED

On 17 January, The Guardian reported that Oscar Albayalde, who resigned in October was the former chief police enforcer of Philippine president Rodrigo Duterte’s deadly war on drugs.  He will be charged with corruption for allegedly protecting officers linked to the narcotics trade.  Prosecutors found “probable cause” to charge Albayalde for not punishing officers accused of failing to account for 163 kg of drugs and about $517,000 seized from a drug raid, and it is said that 13 other police officers would be charged with drug offences, corruption and taking bribes for their role in the operation.

https://www.theguardian.com/world/2020/jan/17/former-philippines-police-chief-to-be-charged-with-corruption

US TREASURY ISSUES FINAL REGULATIONS IMPLEMENTING FIRRMA RE THE COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES (CFIUS)

On 17 January, Baker McKenzie issued a Client Alert about 2 recently-issued Final Rules which implement the Foreign Investment Risk Review Modernization Act (FIRRMA) enacted in August 2018, which expanded the US foreign investment review regime.  FIRRMA mandated pre-closing notification of certain foreign investments and expanded the scope of transactions subject to CFIUS’ jurisdiction.  The Alert examines the Final Rules, including the mandatory notification of foreign government-affiliated investments, mandatory notification of investments in critical technology businesses, certain real estate transactions affected, the exempt countries and investors and a preserved exemption for investment funds.

https://bakerxchange.com/rv/ff00586abbf1f5eed49b6cce8241abe47bd0504f

 

 

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AML/CFT MUTUAL EVALUATION REPORT ON BERMUDA RELEASED

On 17 January, Business Wire reported that the mutual evaluation report (MER) of Bermuda’s systems and framework, published by FATF-style regional body CFATF, highlights the outstanding work that has been done to comply with the FATF 40 Recommendations.  It is said that, of the more than 75 MER published to date, Bermuda ranks first against the Technical Compliance requirements, with 39 of the 40 Recommendations rated as Compliant or Largely Compliant, and is in the top 6 for overall level of effectiveness and one of only two jurisdictions with a high level of effectiveness in relation to its risk assessment and domestic coordination mechanisms.

https://www.businesswire.com/news/home/20200117005478/en

The report can be found at –

https://www.cfatf-gafic.org/documents/4th-round-meval-reports/13596-bermuda-4th-round-mer/file

It was adopted at the CFATF Plenary in November

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45 POLICEMEN, 11 MAYORS OF MOLDOVA AMONGST THOSE DETAINED FOR CORRUPTION ACTS IN 2019

On 17 January, Moldpress reported that officers of the National Anticorruption Centre (CNA) detained 45 police inspectors, 18 directors and deputy directors of state enterprises and 11 mayors and deputy mayors for corruption acts in 2019.  The Interior Ministry (MAI), Health, Labour and Special Protection Ministry (MSMPS), mayors, as well as the Customs Service are among the institutions where most corruption acts were discovered in 2019.

https://www.moldpres.md/en/news/2020/01/17/20000380

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SAUDI ARABIA: FATF AML/CFT ASSESSMENT FOLLOW-UP REPORT

On 17 January, FATF published a follow-up report following the mutual evaluation of Saudi Arabia in 2018, after which the country (like many others) was put in the enhanced follow-up process.  FATF has upgraded the results in respect of 2 FATF Recommendations – 6 (Targeted financial sanctions related to terrorism and terrorist financing), from partially compliant to largely compliant; and 7 (Targeted financial sanctions related to proliferation), from partially compliant to largely compliant.  Such follow-up reports do not address the effectiveness ratings of a country.  The report also looks at whether Saudi Arabia’s measures meet the requirements of FATF Recommendations that have changed since the 2018 mutual evaluation, maintaining the rating of largely compliant for Recommendation 2 (National cooperation and coordination), but it downgraded the rating for Recommendation 18 (Internal controls and foreign branches and subsidiaries) and Recommendation 21 (Tipping-off and confidentiality) from compliant to largely compliant.  As a result, Saudi Arabia is now compliant on 17 of the 40 FATF Recommendations and largely compliant on 21, remaining partially compliant on 2 of the 40 Recommendations.  Saudi Arabia will continue to report back to FATF on its progress.

http://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Follow-Up-Report-Saudi-Arabia-2020.pdf

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PRIVATE WAR IN LIBYA FUNDED VIA SCOTTISH LIMITED PARTNERSHIPS

On 17 January, The Times reported that a convicted arms dealer used a notorious form of company to finance a private air war in Libya.  Rami Ghanem supplied mercenaries to fly and maintain fighter-bombers for one of the local militias, and with crews paid through 2 Scottish limited partnerships.  Ghanem, an Arab-American, was jailed for 30 years in the US last year.

https://www.thetimes.co.uk/article/private-war-in-libya-funded-via-scots-firms-kh5gs9klc

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AB InBev LOOKS TO MACHINE LEARNING TO ROOT OUT CORRUPTION

On 17 January, the Wall Street Journal reported that Anheuser-Busch InBev, the world’s largest brewer, has spent 3 years developing machine-learning technology that can identify risky business partners and potentially illegal payments.  The analytics platform, BrewRight, draws on data from operations in more than 50 countries, allowing the company to monitor legal risks and prevent violations.  It is said that the platform is designed to get smarter and more effective over time, and that it has cut hundreds of thousands of dollars in costs associated with investigating suspect payments.

https://www.wsj.com/articles/ab-inbev-taps-machine-learning-to-root-out-corruption-11579257001

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 16

16th January 2020

 OFAC ISSUES NEW FAQ RE NEW SANCTIONS ON IRANIAN INDUSTRIES

On 16 January, OFAC announced issue of FAQ 816, which asks if there a wind-down period for the most recent Executive Order 13902, “Imposing Sanctions with Respect to Additional Sectors of Iran”.  Essentially, those affected have a 90-day period after the issuance of E.O. 13902 to wind down those transactions without exposure to sanctions.

https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#816

ALMOST ALL NORTH KOREAN WORKERS HAVE NOW LEFT RUSSIA, SENIOR DIPLOMAT SAYS

NK News on 16 January reported that a senior Russian diplomat has said that nearly all the over 11,000 North Koreans working in Russia have left, as UN sanctions banning the use of such workers takes effect.

https://www.nknews.org/2020/01/almost-all-north-korean-workers-have-now-left-russia-senior-diplomat-says/

RISE IN CHEQUE FRAUD IN US COULD MOTIVATE SWITCH TO OTHER PAYMENT TOOLS

The Wall Street Journal on 15 January reported that a recent rise in check fraud could motivate corporate treasurers to ditch paper cheques and replace them with faster, safer and cheaper electronic payments.  It says that attempted check fraud increased to $15.1 billion in 2018 — up from $8.5 billion in 2016 — and accounted for 60% of attempted fraud against deposit accounts at US banks.

https://www.wsj.com/articles/rise-in-check-fraud-could-motivate-treasurers-to-switch-to-other-payment-tools-11579131505

PODCAST: WAGNER AND RUSSIAN PRIVATE MILITARY CONTRACTORS

The latest Defense One podcast sets out to take a closer look at Russian private military contractors, saying that it is a phenomenon with a history; and something that does not seem to be going away anytime soon.

https://www.defenseone.com/ideas/2020/01/ep-62-wagner-and-russian-private-military-contractors/162447

US VIRGIN ISLANDS ATTORNEY GENERAL SAYS JEFFREY EPSTEIN TRAFFICKED GIRLS AND EXPLOITED SHELL COMPANIES IN 2018

On 16 January, KYC 360 reported that a lawsuit filed by the US Virgin Islands Attorney General alleges that deceased multimillionaire financier Jeffrey Epstein sexually trafficked hundreds of young women and girls on his private island, some as recently as 2018, aided by a web of shell companies to carry out and conceal his crimes.

https://www.riskscreen.com/kyc360/news/virgin-islands-allege-epstein-trafficked-girls-exploited-shell-companies-in-2018/

REPORT CITES A “ROGUE 100” GROUP OF CRIMINAL BROKERS WHO CONTROL BITCOIN ADDRESSES THROUGH WHICH HUNDREDS OF BILLIONS OF DOLLARS FLOWED IN 2019

On 16 January, KYC 360 reported that a report from Chainalysis cites a “Rogue 100” group of criminal over-the-counter brokers who control Bitcoin addresses, a form of digital wallet, through which hundreds of billions of dollars flowed in 2019.  The company says the Rogue 100, none of which are directly identified in the report, often transact with each other and also transfer Bitcoin through intermediary accounts to make it harder to trace.  Chainalysis says the Rogue 100 rely heavily on 2 major overseas exchanges, Huobi and Binance, with 70 of the Rogue 100 operating on Huobi.

https://www.riskscreen.com/kyc360/news/how-shadowy-brokers-allegedly-launder-billions-for-crypto-criminals/

GHANA CHARGES CEO OF 2 DEFUNCT LENDERS OVER BANKING CRISIS THAT COST $2.2 BILLION

On 16 January, Bloomberg reported that Ghanaian prosecutors charged the CEO of 2 defunct lenders for alleged crimes that contributed to a banking crisis that cost the nation $2.2 billion in bailouts.  They were Michael Nyinaku, the former CEO of Beige Bank Ltd and Prince Kofi Amoabeng, who founded UT Bank Ltd.

https://www.riskscreen.com/kyc360/news/ghana-charges-ceos-over-banking-crisis-that-cost-2-2-billion/

ANOTHER LAW FIRM DRAGGED INTO NAMIBIA’S FISHROT” SCANDAL

On 15 January, The Namibian reported that the Anti-Corruption Commission (ACC) has confirmed investigating another law firm, Ellis Shilengundwa Incorporated, in connection with funds deposited into their bank account by the National Fishing Corporation of Namibia (Fishcor).  The other law firms being investigated are those of Sisa Namandje and Sacky Kadhila Amoomo.

https://www.namibian.com.na/87025/read/Another-law-firm-dragged-into-Fishrot

US: OLD EXPORT REGULATIONS GET A NEW USE

In its 18 January edition, the Economist carried an article about the Bureau of Industry and Security (BIS) and its control of rules governing the flow of goods from and through the US, called the Export Administration Regulations (EAR).  Under President Trump, it argues, these rules are being transformed into a new weapon in the fight against Chinese technology. But changing them risks driving high-tech business out of America, the article says.

https://www.economist.com/united-states/2020/01/18/old-export-regulations-get-a-new-use

FORMER SENIOR EU DIPLOMAT INVESTIGATED OVER CHINA SPYING CLAIMS

The Washington Post on 16 January reported that a former senior European diplomat and 2 others are being investigated on suspicion of spying for China.  Apartments and offices in Germany and in Brussels were searched but no arrests made, with the investigation said to be centred on a former German career diplomat.  He is said to have held senior posts in a number of European institutions, including the Commission and the European External Action Service.  He served as an EU ambassador in Asia before he left diplomacy in 2017 to join a lobbying business.  The other 2 suspects work for a separate lobbying company.

https://www.washingtonpost.com/world/former-senior-eu-diplomat-investigated-over-china-spying-claims/2020/01/16/1a850cca-386a-11ea-a1ff-c48c1d59a4a1_story.html

ISRAELI COURT REJECTS NSO SPYWARE FIRM’S ATTEMPT TO DROP HACKING CASE

On 16 January, Middle East Eye reported that a judge in Israel has ordered the NSO Group, the country’s largest surveillance company, to fight a hacking case brought against it by prominent Saudi activist Omar Abdulaziz and pay for his legal fee.  Abdulaziz, a Saudi dissident living in Canada, has claimed that his mobile phone was infected with Pegasus spyware by an operator “linked to Saudi Arabia’s government and security services”.  Pegasus was the same software used to spy on Middle East Eye and Washington Post columnist Jamal Khashoggi, a friend of Abdulaziz’s.

https://www.middleeasteye.net/news/israeli-court-rejects-nsos-attempt-drop-hacking-case

https://www.theguardian.com/world/2020/jan/16/israeli-spyware-firm-nso-hacking-case

US LIFTS VISA RESTRICTIONS ON GHANA

On 16 January, Modern Ghana reported that the US had imposed visa restrictions on Ghana for refusing to accept the deportation of some 7,000 Ghanaians, and restrictions included suspension of issuance of all new visas for domestic employees of Ghanaian Diplomats hosted in the US.

https://www.modernghana.com/news/979431/us-lifts-visa-sanctions-on-ghana.html

DON’T ATTEND NORTH KOREAN CRYPTOCURRENCY CONFERENCE, UN SANCTIONS EXPERTS WARNS

On 16 January, News 18 reported that UN sanctions experts are warning people not to attend a cryptocurrency conference in North Korea in February, flagging it as a likely sanctions violation. It also reminds one that the US has formally charged American digital currency expert Virgil Griffith after he attended the North Korean cryptocurrency conference last year.

https://www.news18.com/news/tech/dont-attend-north-korean-cryptocurrency-conference-un-sanctions-experts-warn-people-2460235.html

DUTCH MAN JAILED IN THAILAND FOR MONEY LAUNDERING IN NETHERLANDS IS RELEASED

On 16 January, Dutch News reported that Johan van Laarhoven, a Dutch man who ran several cannabis cafes, or coffee shops, in the Netherlands and was jailed for 100 years in Thailand, is heading back home after years of campaigning for his release.  Once back he will have to sit out some 2 years in a Dutch jail to complete his sentence, it is believed, and he also faces a criminal investigation for money laundering of €20 million, tax fraud, and membership of a criminal organisation.

https://www.dutchnews.nl/news/2020/01/dutchman-jailed-in-thailand-for-money-laundering-in-nl-is-released/

POLICING IN THE UK: SERIOUS AND ORGANISED CRIME

On 16 January, the House of Lords Library published a briefing paper which explores the nature of serious and organised crime in the UK.  It includes statistics on the scale of the problem as well as information on the response by the Government and the NCA.  In the UK, no single official or body is in overall charge of the response to serious and organised crime.  Rather, there are over 100 government departments, law enforcement bodies, agencies and other organisations involved in tackling this type of crime.  Operationally, the NCA leads and coordinates the UK’s response.  It also publishes an annual national strategic assessment on the issue, highlighting key findings and trends.  There is no dedicated funding stream for tackling serious and organised crime.  The work is financed through several unconnected funding streams by sources that are subject to annual bidding and decision processes.  It is said that recent reports have concluded that “there remain some significant and avoidable shortcomings” and, in addition, the director general of the NCA has called for an increase to the amount of funding aimed at tackling serious and organised crime.

http://researchbriefings.files.parliament.uk/documents/LLN-2020-0016/LLN-2020-0016.pdf

UK: PERSONAL SERVICE COMPANIES AND “IR 35”

On 16 January, the House of Commons Library published an updated briefing paper reminding one that ‘IR35’ is the commonly-used term for legislation introduced in 2000 to tackle the misuse of personal service companies (PSC) for tax avoidance purposes.  The briefing looks at debates as to the effectiveness of these rules and wider concerns about the use of employment intermediaries to avoid tax, before discussing recent developments as to their application in the public and private sector.

http://researchbriefings.files.parliament.uk/documents/SN05976/SN05976.pdf

TAX AVOIDANCE IN THE UK: A GENERAL ANTI-AVOIDANCE RULE

On 16 January, the House of Commons Library released a pair of briefing papers.

The first gives some background to the earlier debates there have been on the case for a general statutory prohibition of aggressive tax avoidance, in relation to the Coalition Government’s introduction of a General Anti-Abuse Rule in 2013.

http://researchbriefings.files.parliament.uk/documents/SN02956/SN02956.pdf

The second briefing notes looks at the case that has been made recently for a general anti-avoidance rule, and the Coalition Government’s introduction of a ‘narrower’ General Anti-Abuse Rule in 2013.

http://researchbriefings.files.parliament.uk/documents/SN06265/SN06265.pdf

GUATEMALA: EX-ECONOMY MINISTER SOUGHT ON GRAFT CHARGES

KSL.com in the US on 16 January reported that a former economy minister, Acisclo Valladares Urruela, was declared a fugitive from justice after he appeared in court to face corruption allegations.  Valladares was economy minister in then-President Jimmy Morales’ administration until 15 January, when a new President was inaugurated and a new Congress sworn in. As a sitting Cabinet official, Valladares had enjoyed immunity from prosecution under Guatemalan law.

https://www.ksl.com/article/46705238/guatemala-ex-economy-minister-sought-on-graft-charges

ANGOLAN NATIONAL BANK ADMITS FAILURES THAT ENCOURAGED CORRUPTION

Prensa Latina on 16 January reported that the current administration of the National Bank of Angola (BNA) detected serious internal failures that led to the illegal sending abroad of considerable sums of money, now the subject of a lawsuit in the so-called ‘500 million’ case.

https://www.plenglish.com

BAHAMIAN COMPANY AT CENTRE OF LEKOIL FRAUD SCANDAL SEAWAVE INVEST MAY HAVE ALREADY BEEN STRUCK OFF

On 16 January, This is Money reported that a company that claimed to represent Qatar’s huge sovereign wealth fund may have been struck off at the time it allegedly duped a Nigerian oil company.  Seawave Invest, which calls itself an ‘independent consultancy firm’ specialising in Africa, received a consultancy fee from petroleum company Lekoil in return for a $184million loan agreement from the Qatari Investment Authority (QIA).

https://www.thisismoney.co.uk/money/markets/article-7894367/Bahamian-company-centre-Lekoil-scandal-struck-allegedly-duped-oil-company.html

INDIVIDUAL BEHIND SUSPECTED FX SCAM SIMPLE WEALTH REFUSES TO COMPLY WITH CFTC SUBPOENA

On 16 January, Retail FX reported that the US Commodity Futures Trading Commission still has no access to the documents it sought in a subpoena in November from Cody Wilson, the individual behind the allegedly fraudulent Forex and binary options scheme.  He is said to have solicited customers through a variety of ventures, including an entity called Simple Wealth LLC.

https://financefeeds.com/individual-behind-suspected-fx-scam-simple-wealth-refuses-comply-cftc-subpoena/

UN AMENDS 85 ENTRIES ON ITS ISIL/AL-QAIDA SANCTIONS LIST

A news release from the UN on 14 January advised that the entries relating to 85 separate persons on the sanctions list had been amended, to make reference to a review of said entries in December for the purposes of UN SCR 2368.

https://www.un.org/press/en/2020/sc14078.doc.htm

UN AMENDS 7 ENTRIES ON ITS MALI SANCTIONS LIST TO INCLUDE PHOTOS

On 14 January, a UN news release advised that the entries for 7 individuals had been amended to include links to photos of said individuals being available.

https://www.un.org/press/en/2020/sc14079.doc.htm

US STRATEGY TO COMBAT HUMAN TRAFFICKING, IMPORTATION OF GOODS PRODUCED WITH FORCED LABOUR AND CHILD SEXUAL EXPLOITATION

On 15 January, Homeland Security Today reported that the US Department of Homeland Security had issued its first strategy on the subjects.  It sets out the Department’s priorities over the next 5 years to combat the growing threat of human trafficking, the importation of goods produced with forced labour, and child sexual exploitation, which include investigating and prosecuting perpetrators and enabling DHS through organisational improvements to combat these illicit activities.  It is said that in 180 days, the Department will publish an implementation plan that includes specific deliverables, timelines, and metrics for key results.

https://www.hstoday.us/federal-pages/dhs/dhs-issues-strategy-to-combat-human-trafficking-the-importation-of-goods-produced-with-forced-labor-and-child-sexual-exploitation/

The Strategy itself can be found at –

https://www.dhs.gov/publication/strategy-combat-human-trafficking-importation-goods-produced-forced-labor-and-child

NEW GUATEMALA GOVERNMENT ARRESTS FORMER MAYOR IN CORRUPTION RAIDS

On 16 January, Reuters reported that Guatemala’s government said prosecutors carried out raids and arrested a former mayor – Ángel Ren Guarcas of Chiche – accused of corruption as the US embassy announced it had revoked visas for some ex-officials.

https://www.reuters.com/article/us-guatemala-corruption/new-guatemala-government-arrests-former-mayor-in-corruption-raids-idUSKBN1ZG04P

LAS VEGAS HIGH-ROLLER WHO CLAIMED HE HELPED CREATE “GRAND THEFT AUTO” PLEADS GUILTY TO SWINDLING INVESTORS OF HIS LATEST VENTURE

On 16 January, the New York Post reported that Robert Alexander has pleaded guilty to using his gaming company, Kizzang, as a personal piggy bank.  It is said that Alexander blew through more than $1.3 million he got from investors exaggerating his role in “Grand Theft Auto” and lying about his now-defunct company’s success.

https://nypost.com/2020/01/16/grand-theft-auto-kingpin-pleads-guilty-to-fraud-charges/

FORMER MEMBER OF BARBADOS PARLIAMENT AND MINISTER OF INDUSTRY FOUND GUILTY OF RECEIVING AND LAUNDERING BRIBES FROM BARBADIAN INSURANCE COMPANY

On 16 January, a news release from the US DoJ advised that Donville Inniss, 54, a US legal permanent resident who resided in Tampa, Florida, and Barbados, was found guilty by a federal jury for his role in a scheme to launder bribes paid to him by executives of the Insurance Corporation of Barbados Limited (ICBL).  It is said that in 2015 and 2016, he took part in a scheme to launder into the US approximately $36,000 in bribes that he received from high-level executives of ICBL.

https://www.justice.gov/opa/pr/former-member-barbados-parliament-and-minister-industry-found-guilty-receiving-and-laundering

MALAWI ANTI-BRIBERY PROTESTS DRAW THOUSANDS

On 16 January, VoA reported that tens of thousands of Malawians took part in protests at alleged attempts to bribe judges overseeing a legal challenge to the re-election last year of President Peter Mutharika – and after the country’s chief justice charged that the 5 judges presiding over the case had been offered kickbacks.

https://www.voanews.com/africa/malawi-anti-bribery-protests-draw-thousands

INDIA: ENFORCEMENT DIVISION TO QUIZ AIR ASIA CHIEF ON LAUNDERING SUSPICIONS

On 16 January, the Telegraph in India reported that the Enforcement Directorate (ED) has summoned the senior executives of AirAsia, including its CEO Tony Fernandes, for questioning in an alleged money laundering case.  The probe is related to allegations that the airline tried to manipulate government policies through corrupt means to get an international licence for its Indian venture, AirAsia India Limited.

https://www.telegraphindia.com/business/enforcement-directorate-ed-to-quiz-airasia-chief-tony-fernandes-on-money-laundering/cid/1736445

BRITISH PHARMACIST JAILED FOR SELLING OPIATE PAINKILLERS, TRANQUILLISERS AND CANCER DRUGS TO ORGANISED CRIMINALS

On 16 January, illicit Trade reported that Jaspar Ojela, 56, from West Bromwich, a pharmacist has received a 28-month jail sentence after being convicted of supplying controlled drugs with an estimated street value of almost £280,500 to members of an organised crime network.  He purchased controlled opiate painkillers, tranquillisers and medications intended for the treatment of cancer from drug wholesalers in 2016 before selling them on to his underworld contacts.

https://www.illicit-trade.com/2020/01/british-pharmacist-jailed-for-selling-opiate-painkillers-tranquillisers-and-cancer-drugs-to-organised-criminals

ITALIAN COURT CONFIRMS ING NEW CUSTOMER BAN IN MONEY LAUNDERING CASE

On 16 January, Reuters reported that an Italian court has backed a decision last year by supervisors at the Bank of Italy prohibiting Dutch lender ING from taking on new customers in Italy over a money laundering case.  The central bank also ordered the lender to remove its Italian CEO.  The Netherlands’ largest financial services provider admitted in 2018 that criminals had been able to launder money through its accounts and agreed to pay €775 million to settle the case in the Netherlands.

https://www.reuters.com/article/ing-groep-italy-moneylaundering/italian-court-confirms-ing-new-customer-ban-in-money-laundering-case-idUSL8N29L43Z?rpc=401&

 

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 15

15th January 2020

 PODCAST: THE FRENCH ANTI-CORRUPTION AGENCY

In the latest TRACE podcast, Emmanuel Farhat of the AFA discusses Sapin II and his organisation’s role in vetting the implementation of the corporate compliance programmes that the law mandates.

https://traceinternational.org/resources-podcast

PODCAST: INTERVIEW WITH BILL BROWDER OF HERMITAGE CAPITAL AND THE MAGNITSKY ACT

In the latest podcast from KYC 360 Bill Browder, an American-born British financier and political activist, has for the past several years led an international campaign to expose corruption and human rights abuses in Russia.  His efforts culminated with the 2012 passage of the Magnitsky Act, which forbids “gross abusers” of rights in Russia from banking in or visiting the US, and named after Browder’s lawyer Sergei Magnitsky, a whistleblower who died in a Moscow prison in 2009.  In a wide-ranging interview Martin Woods talks to him about the scourge of corruption and money laundering through financial institutions and what can be done to stop it.  In the interview, he said that officials in the UK and bankers throughout Scandinavia turned a blind eye to the influx of illicit Russian funds linked to Europe’s biggest money laundering scandals, according to a British financier and anti-corruption activist.

https://www.riskscreen.com/kyc360/podcast/episode-03-bill-browder-ceo-and-co-founder-of-hermitage-capital-management/

https://www.riskscreen.com/kyc360/news/in-europes-dirty-money-scandals-bill-browder-sees-willful-blindness/

US SUPREME COURT: ANOTHER POTENTIAL LOSS FOR PROSECUTORS FIGHTING PUBLIC CORRUPTION

On 14 January, NPR reported that “Bridgegate” was the political scandal in 2013 that marked the beginning of the end of New Jersey Governor’s Chris Christie’s presidential hopes.  The scandal’s legal consequences could prove more consequential if, as prosecutors fear, the criminal convictions in the case are thrown out by the Supreme Court.  It is said that lawyers will argue that the actions involved were driven by a political motive, and while that may not be attractive, it is not fraud.  The government argues that the use of public funds and property to carry out and cover-up the plot made it fraud.  It is feared that should the Court rule against it, the government will lose a tool in the fight against public corruption.

https://www.npr.org/2020/01/14/796024449/at-supreme-court-another-potential-loss-for-prosecutors-fighting-public-corrupti

UK FAILED TO ALERT EU OF 75,000 CRIMINAL CONVICTIONS AS IT WAS REQUIRED TO DO

  On 14 January, the New York Times reported that not only did the UK fail to report the crimes, it then concealed the omission to avoid “reputational impact”.  A computer system failed to send details of 75,000 convictions — 1 in 3 of those required— during a period of 5 years.  The arrangement allows local European police agencies to monitor people convicted of serious crimes abroad and to prevent offenders escaping convictions by moving to another EU country.  The newspaper says that the mistake may weaken European trust in British law enforcement agencies as the UK and EU begin negotiating their post-Brexit relationship.

https://www.nytimes.com/2020/01/14/world/europe/uk-eu-75000-criminal-convictions.html

WARNING OF ‘UNPRECEDENTED RISE’ IN PIRATE KIDNAPPINGS IN GULF OF GUINEA

On 14 January, Seatrade Maritime News reported that the Gulf of Guinea saw a more than 50% increase in kidnappings by pirates in 2019 with a sharp rise in the fourth quarter, according to the annual report of the International Maritime Bureau (IMB) – with 121 kidnappings of seafarers by pirates in the Gulf of Guinea in 2019 as a whole, compared to 78 in 2018.

https://www.seatrade-maritime.com/ship-operations/imb-warns-unprecedented-rise-pirate-kidnappings-gulf-guinea

LETTERS OF CREDIT IN AIRCRAFT LEASING: A REFRESHER

On 15 January, an article from Vedder Price said that letters of credit are often issued in aircraft leasing transactions as an alternative to the provision of a cash security deposit and, less frequently, the obligation to pay maintenance reserves in cash.  It says that it is important to understand the differences that exist between different forms of letter of credit and some of the challenges that may arise for an enforcing lessor or financier.

https://www.internationallawoffice.com/Newsletters/Aviation/International/Vedder-Price-LLP/Letters-of-credit-in-aircraft-leasing-a-refresher

US INDICTS 5 FOR ILLEGAL EXPORTS TO PAKISTAN’S NUCLEAR WEAPONS PROGRAMME

On 15 January, VoA reported that 5 Pakistani businessmen have been indicted in the US for operating an international network of front companies to export US-origin goods to Pakistan for use in that country’s nuclear weapons programme.  The defendants, all associates of a Pakistan-based front company called “Business World”, were charged in federal court in New Hampshire.  2 Pakistani entities named — AERO and PAEC — are on the Commerce Department’s list of companies required to hold export licences because their activities are deemed  contrary to US national security or foreign policy interests.

https://www.voanews.com/usa/us-indicts-5-illegal-exports-pakistans-nuclear-weapons-program

BORIS ROTENBERG LOSES SANCTIONS SUIT AGAINST NORDIC BANKS

On 15 January, ACFCS reported that Boris Rotenberg, a Russian businessman under US sanctions (but not EU ones) over the Ukraine conflict due to his close ties with President Vladimir Putin, has lost a discrimination lawsuit he filed in a Finnish court against 4 Nordic banks.  The court rejected a complaint over the right to banking services and damages for discrimination.  The court said he had failed to prove he was a person living in the EEA and therefore he was not entitled to basic banking services in Finland.  It also ruled the banks’ concerns of significant financial risks related to Rotenberg’s transactions were not unfounded. The court ordered him to pay the banks’ legal expenses, amounting to around €530,000.

https://www.acfcs.org/fincrime-briefing-aml-fines-in-2019-breach-8-billion-treasury-official-pleads-guilty-to-leaking-2020-crypto-compliance-outlook-and-more/

VENEZUELAN ATTORNEY AND BUSINESSMAN ADDED TO ICE MOST WANTED LIST FOR CONSPIRACY TO VIOLATE THE FOREIGN CORRUPT PRACTICES ACT AND MONEY LAUNDERING

On 15 January, a news release from US Immigration and Customs Enforcement announced that Raul Antonio De La Santisima Trinidad Gorrin Belisario, a Venezuelan attorney and businessman, a Venezuelan citizen with a residence in Miami, had been added to its “Most Wanted” list.  It is said that he paid millions of dollars in bribes to 2 high-level Venezuelan officials to secure the rights to conduct foreign currency exchange transactions at favourable rates for the Venezuelan government.

https://www.ice.gov/news/releases/venezuelan-attorney-and-businessman-added-ice-most-wanted-list-conspiracy-violate

EU NOTICE TO PANAMA OF THE POSSIBILITY OF BEING IDENTIFIED AS A NON-COOPERATING THIRD COUNTRY IN FIGHTING ILLEGAL, UNREPORTED AND UNREGULATED (IUU) FISHING

On 15 January, the EU published a Notice to Panama under EU Regulation 1005/2008/EC which provides that a third country may be identified as a non-cooperating third country if it fails to discharge the duties incumbent upon it under international law as flag, port, coastal or market State, to take action to prevent, deter and eliminate IUU fishing.  Information gathered by the EU Commission and shortcomings identified during 2019 visits to Panama prompted the Commission to consider the possibility of identifying Panama as a non-cooperating third country in the fight against IUU fishing.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2020.013.01.0008.01.ENG&toc=OJ:C:2020:013:TOC

PAPUA NEW GUINEA MP RESPONDS TO ALLEGATIONS OF EXPLOITATION AND ABUSE IN LOGGING INDUSTRY

On 15 January, ABC in Australia says that, in the wake of an explosive documentary alleging corruption and abuse in PNG’s logging industry, a local member of parliament says authorities will investigate the companies involved.  UK-based Sarawak Report claims communities are being recklessly exploited by foreign logging companies, and PNG authorities are ignoring their pleas.

https://www.abc.net.au/radio-australia/programs/pacificbeat/mp-responds-to-allegations-of-exploitation-abuse-in-png-logging/11872384

TEXAS DOCTOR GUILTY FOR ROLE IN $325 MILLION HEALTH CARE FRAUD SCHEME INVOLVING FALSE DIAGNOSES OF LIFE-LONG DISEASES

A news release from the DoJ on 15 January advised that the $325 million health care fraud scheme involved Jorge Zamora-Quezada, MD, 63,  falsely diagnosing patients with life-long diseases and treated them with toxic medications on the basis of that false diagnosis.

https://www.justice.gov/opa/pr/texas-doctor-found-guilty-role-325-million-health-care-fraud-scheme-involving-false-diagnoses

2 PERUVIANS PLEAD GUILTY TO OVERSEEING CALL CENTRES THAT THREATENED AND DEFRAUDED SPANISH-SPEAKING US CONSUMERS

A news release from the US DoJ on 15 January advised that 2 Peruvian men had pleaded guilty to conspiracy to commit mail fraud and wire fraud for operating a large fraud and extortion scheme.  Johnny Enso Hidalgo Marchan, 40, and Rodolfo Hermoza, 44, oversaw call centres in Peru that used government impersonation, lies, and threats to steal money from thousands of US Spanish-speaking victims.   Both men were extradited from Peru in December 2019.

https://www.justice.gov/opa/pr/two-peruvians-plead-guilty-overseeing-call-centers-threatened-and-defrauded-spanish-speaking

THE THREATS FACING HONDURAS’S FIGHT AGAINST CORRUPTION

On 15 January, a Q&A from WOLA provides facts and context essential for understanding the MACCIH’s role and impact in combating corruption in Honduras, the troubling legislative agenda pushed by the Honduran Congress, and what potential there is for the US government to play a more productive role in advancing anti-corruption efforts in Honduras.

https://www.wola.org/analysis/threats-facing-honduras-fight-corruption-maccih

POLICE AND PROSECUTOR’S OFFICE DISRUPT PROPERTY FRAUD GROUP IN SOFIA

On 14 January, Bulgarian National Television reported that 6 people have been detained so far, including police officers, bailiffs, lawyers and employees from the Chief Directorate for Civil Registration and Administrative Services.  Sources of the investigation say the group had forged documents and thus acquired properties.

https://www.bnt.bg/en/a/police-prosecutors-office-disrupt-property-fraud-group-in-sofia

https://sofiaglobe.com/2020/01/15/eight-arrested-in-bust-of-real-estate-fraud-group-in-bulgarias-capital-sofia

ITALIAN APPEALS COURT ACQUITS SAIPEM, ENI IN ALGERIAN GRAFT CASE

On 15 January, Reuters reported that an Italian appeals court has acquitted oil services group Saipem and oil major Eni of corruption and lifted an asset seizure order in a long-running trial over bribery allegations in Algeria.  It also acquitted a series of other defendants, including former Eni Chief Executive Paolo Scaroni and former Saipem CEO Pietro Tali.  The case involves allegations that Saipem paid intermediaries about €198 million to secure contracts worth €8 billion with Algeria’s state-owned Sonatrach.

https://www.reuters.com/article/saipem-algeria-corruption/update-1-italian-appeals-court-acquits-saipem-eni-in-algerian-graft-case-idUSL8N29K4ZN

ZIMBABWE: ANGLICAN BISHOP ARRESTED FOR FRAUD

On 15 January, OCCRP reported the arrest of the head of the Manicaland Diocese, Bishop Eric Ruwona.  It is alleged that Ruwona used a piece of land belonging to the church as collateral to obtain the loan without official authorisation. The money was not used for its intended purpose.

https://news.pindula.co.zw/2020/01/15/anglican-bishop-eric-ruwona-nabbed-by-zacc-over-us700k-fraud

https://www.occrp.org/en/daily/11437-zimbabwe-anglican-bishop-arrested-for-fraud-pocketing-700k

ITALY SMASHES MAFIA RACKET DEFRAUDING EU AGRICULTURE FUNDS

On 15 January, Reuters reported that Italian police arrested 94 people in pre-dawn raids on Wednesday as part of an investigation into an alleged Mafia scam that defrauded EU agriculture funds of millions of euros.  It is suspected that the fraud was orchestrated by 2 Mafia clans in eastern Sicily who obtained at least €5.5 million in EU farm subsidies for land they did not own between 2010 and 2017.

https://uk.reuters.com/article/uk-italy-mafia-eu/italy-smashes-mafia-racket-defrauding-eu-agriculture-funds-idUKKBN1ZE1NK

MAN GIVEN CASH FORFEITURE ORDER FOR LAUNDERING CASH FOR VAT FRAUDSTERS

The Warrington Guardian on 15 January reported that Douglas Brown was jailed for over 4 years in 2018 after using his IT recycling company to wash cash for an organised crime gang who swindled more than £2.6 million in VAT repayments.  He stole £100,000 himself.  He has now been ordered to repay £76,439 within the next 3 months or face an extra year in jail.

https://www.warringtonguardian.co.uk/news/18162434.vat-fraudster-douglas-brown-told-pay-back-75-000/

US IRS UPDATES VIRTUAL CURRENCY FAQ

On 15 January, Tax News reported that the IRS has recently updated its list of frequently asked questions and answers on the tax treatment of transactions involving virtual currencies, as an additional set of FAQ to supplement guidance contained in Notice 2014-21.

https://www.tax-news.com/news/US_IRS_Updates_Virtual_Currency_FAQs____97491.html

UK: CLOCK IS TICKING FOR WASTE CRIMINALS AS NEW TASKFORCE LAUNCHED

On 15 January, DEFRA announced that a new unit – Joint Unit for Waste Crime (JUWC) – will bring together law enforcement agencies and UK environmental regulators to target waste criminals.  It is to be dedicated to tackling serious and organised waste crime, such as dumping hazardous materials on private land and falsely labelling waste so it can be exported abroad to unsuspecting countries.  Serious and organised waste crime is estimated to cost the UK economy at least £600 million a year.

https://www.gov.uk/government/news/clock-is-ticking-for-waste-criminals-as-new-taskforce-launched

AFRICA’S FREE-TRADE AREA NEEDS BUSINESS SUPPORT TO TAKE OFF

An article in Business Day in South Africa on 15 January starts by saying that the African Continental Free Trade Area (AfCFTA) involves all but one of the 55 countries making up the continent, and that it is designed to create a single African market for goods and services and to facilitate the free movement of people, capital, goods and services between all participating countries.  Then it says that many businesses across Africa are still wondering what, if anything, the successful implementation of AfCFTA will mean for them, and whether it is actually in their best interests to support the initiative.  It calls for their involvement, which it says would be of benefit to them.  It says that African businesses should also start positioning themselves to take full advantage of AfCFTA when it is officially implemented in the middle of 2020.

https://www.businesslive.co.za/bd/opinion/2020-01-08-africas-free-trade-area-needs-business-support-to-take-off/

INCOTERMS FOR COMMERCIAL CONTRACTS

On 15 January, Out-Law published an article reminding one that anew version of the Incoterms, published by the International Chamber of Commerce (ICC), came into force on 1 January.  It says that as Incoterms are regularly used in commercial contracts businesses should make themselves aware of the changes and consider the impact on their contracts and operations.  Incoterms are a set of 11 trade terms for use in business-to-business contracts for the sale and purchase of goods: such EXW for ex-works delivery and DDP for delivery duty-paid.

https://www.pinsentmasons.com/out-law/guides/incoterms-for-commercial-contracts

A PRIMER ON CANADIAN IMPORT/EXPORT REQUIREMENTS FOR CANNABIS

On 15 January, Dentons produced a briefing which provides an overview of international and domestic trade regulation of cannabis in Canada.  It says that since legalisation, cannabis imports and exports in and out of Canada have been very small, but are increasing rapidly.

https://www.dentons.com/en/insights/alerts/2020/january/15/global-cannabis-trade-a-primer-on-canadian-import-export-requirements-for-cannabis

UK: SECURITY CHIEF TELLS ESTATE AGENTS ‘MORE TO DO’ OVER MONEY LAUNDERING

Estate Agent Today on 15 January carried an article saying that a security expoert has said that estate agents and others in the property industry have much more to do to deter money laundering.  This is despite 74.5% of estate agents questioned in a survey think enough is being done by the UK regulator and regulated businesses collectively to tackle the issue.

https://www.estateagenttoday.co.uk/breaking-news/2020/1/security-expert-warns-agents-more-to-do-over-money-laundering

PIRACY SPIKE IN SINGAPORE STRAIT PROMPTS CALLS FOR TIGHTER SECURITY

In its 16 January edition, Hellenic Shipping News reported that the call came as ReCAAP Information Sharing Centre (ISC) released its Annual Report 2019.  It says that in 2019, a total of 31 incidents occurred in the Singapore Strait, of which 15 occurred in westbound lane of the Traffic Separation Scheme (TSS) mostly from January to August, and 16 in the eastbound lane of the TSS from the end of September to December.  The organisation calls upon the littoral states to step up surveillance and patrol as well as to enhance their cooperation. The shipping industry is advised to exercise utmost vigilance, adopt preventive measures and report all incidents immediately to the nearest coastal state.

https://www.hellenicshippingnews.com/piracy-spike-in-singapore-strait-prompts-calls-for-tighter-security/

US DoJ HAS EXTRADITED A 65-YEAR-OLD DUTCH WOMAN INDICTED IN 2010 FOR BEING PART OF A CONSPIRACY TO FIX PRICES IN THE GLOBAL AIR CARGO INDUSTRY

A post on the FCPA Blog on 15 January is concerned with the extradition of Maria Christina “Meta” Ullings, formerly a senior vice president for Netherlands-based Martinair Cargo.  Italian police arrested her in July 2019 while she was visiting Sicily, on an Interpol red notice from 2011 based on a US arrest warrant. It explains that she was responsible for setting prices and fuel surcharges for cargo handled for US and other customers, and the DoJ said she coordinated the prices and surcharges with other cargo carriers through a conspiracy that started in 2001 and continued for at least 5 years.  A large number of airlines entered into plea agreements and in March 2017 the European Commission re-imposed about $860 million in fines against 11 cargo airlines.

https://fcpablog.com/2020/01/15/ten-year-fugitive-extradited-for-airline-cargo-price-fixing-conspiracy/

 

Featured

US FEDERAL TRACED ACT AND STATE LAWS AIMED AT COMBATING ROBOCALLS

On 15 January, Eversheds Sutherland published an alert which says that 2019 saw an effort by both Congress and various state legislatures to reduce the volume of robocalling and “spoofed” calls. Robocalls are pre-recorded calls placed through automated dialing equipment while spoofed calls falsely appear to come from a particular area code or legitimate place of business to increase the recipient’s chances of answering.  The alert provides a general overview of the federal Act and also discusses several notable examples of state laws passed in 2019 aimed at reducing robocalling and spoofing.

https://www.jdsupra.com/legalnews/2019-legislative-roundup-federal-traced-68457/

Featured

INDIA: TAX FRAUD AND OVER 1,200 EXPORTERS “UNTRACEABLE”

The Economic Times reported on 15 January that the Revenue Department using its data analytics has discovered a fraud in GST refunds with as many as 1,200 exporters, who have claimed tax refunds but are now untraceable.
https://economictimes.indiatimes.com/news/economy/finance/over-1200-exporters-untraceable-government-saves-rs-350-crore-fake-igst-refund/articleshow/73274446.cms

Featured

THE UK BRIBERY ACT 2010 AFTER 10 YEARS

THE UK BRIBERY ACT 2010 AFTER 10 YEARS

 

  1. The new Act in 2010
  2. The bribery offence
  3. Penalties
  4. The defence
  5. Guidance provided
  6. Compliance staff
  7. Enforcement bodies in the UK
  8. Developments
  9. Other countries’ use of the Act and similar
  10. Verdict on the Act

The following is a summary of points and comments, largely for my own education, but which might be helpful to others.

THE NEW ACT IN 2010

The Bribery Act 2010 received Royal Assent in April 2010, and so has been on the statute book in the UK for some 10 years (although technically it only came into force on 1 July 2011).  After a decade of existence, 2020 presents a timely opportunity to review how effective it has been.

The Act reformed and consolidated the law of the UK in respect of bribery and corruption, replacing both common law provisions and several ageing Acts of Parliament known collectively as the Prevention of Corruption Acts 1889 to 1916[1].

The Act provided for offences under two broad categories – bribing another person and agreeing to accept a bribe.  It also provided for a distinct offence of bribery of a foreign public official, as well as a new offence where a commercial organisation[2] fails to prevent bribery.

Those found guilty of offences under the Act would be liable to a maximum of 10 years’ imprisonment, or an unlimited fine for a corporation.  There were other potential consequences, which I will mention shortly.

Notably, and still relatively uncommon for UK law, it provided for extra-territorial jurisdiction to prosecute bribery committed abroad by persons ordinarily resident in the UK as well as UK nationals and UK corporate bodies.  However, it did not itself extend to the Channel Islands, Isle of Man or the British Overseas Territories[3] so to create offences under their laws – although British citizens from those jurisdictions could still be liable to prosecution under the UK Act, and the OECD Working Group on Bribery in 2019 noted that, despite an ongoing dialogue between the UK and British Overseas Territories, the extension of the OECD Convention has not been finalised in all remaining Territories.

The extra-territorial element means that an offence can be committed where it took place partly, or even entirely, outside the UK, provided that the alleged perpetrator is a British citizen or deemed to have a “close connection” with the UK – and this includes citizens of the British Overseas Territories and companies incorporated in the UK.  This aspect of the law was largely in accordance with pre-existing bribery legislation, and the only significant change being that the Bribery Act applies to foreign nationals who are ordinarily resident in the UK.

The Act had its origins dating back to at least 1995[4], with several reports and a failed earlier Bill, before the final Bill was ready in 2009.

The UK is party to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions[5] and the associated 2009 Council Recommendation[6], as well as the UN Convention against Corruption, which the UK ratified in 2006[7].  The UN Convention covers 5 main areas – preventive measures, criminalisation and law enforcement, international cooperation, asset recovery, and technical assistance and information exchange.  It also covers many different forms of corruption, such as bribery, trading in influence, abuse of functions, and various acts of corruption in the private sector; and a is the inclusion of a specific chapter on asset recovery, aimed at returning assets to their rightful owners, including countries from which they had been taken illicitly.

It is claimed that the OECD Convention (with its 2009 Recommendation) is the first and only international anti-corruption instrument focused on the “supply side” of a bribery transaction.  In December 2018, in order to ensure the continued relevance of the Convention, the OECD launched a review of the 2009 Recommendation, with this undertaken by the Working Group on Bribery, and scheduled for completion by early 2020[8].

The 2009 Recommendation complementing the OECD Convention came about when parties to the Convention agreed to put in place new measures to prevent, detect and investigate foreign bribery, and the subsequent Recommendation contains provisions for combating small facilitation payments, protecting whistleblowers, improving communications between public officials and law enforcement, and included the OECD Good Practice Guide on Internal Controls, Ethics and Compliance[9].

Whilst the compliance framework that businesses need to be aware of does not just include the standard reputational due diligence driven by legislation such as the Foreign Corrupt Practices Act (FCPA) in the US and the Bribery Act.  Consumers and investors are also increasingly wanting or having to assess the environmental, social and governance (ESG) framework before spending their resources.  This requirement often dovetails with bribery and corruption, as the bribery or corruption may often be the result of abuse of ESG principles, or result in ESG abuses, and in the modern world of social media and rapid communications, increases the reputational risks for any business unfortunate enough to be affected.

 

THE BRIBERY OFFENCE

The Act uses a “reasonable person” test to decide if bribery has taken place and notably excludes taking into account local practice and custom outside the UK – unless such practice or custom is permitted or required by written law[10].

The distinct and strict liability offence of bribery of a foreign official closely follows the requirements of the 1997 OECD Convention, as supplemented by the 2009 Recommendation.  It only covers the offering, promising or giving of bribes, and not the acceptance of them by a foreign official abroad (that, presumably, is a matter for the local authorities in that country) – although bribery is clearly a two-way street.

Hence the Act criminalises the UK-connected person or organisation giving or offering the bribe – which does not have to be a monetary bribe and has no de minimis amount, but not the foreign official (unless that foreign official was in the UK at the time the offence was committed).

The offence of bribing a foreign public official does not require “impropriety” as part of the wrongful act, but only that advantage is given in order to “influence”.   Hence, corporate hospitality intended to influence the recipient to look favourably on the giver of the hospitality can be caught and it is said that the legislation relies on prosecutorial discretion with respect to corporate hospitality given to foreign public officials, i.e. when “normal” hospitality becomes bribery.

The foreign official involved can be either a government official or someone working for and international organisations

The offence has 2 elements – the (illegal) conduct involved and the fault element – what a person must intend in order to commit the offence, such as gaining or retaining an advantage, exercising influence etc.

The types of UK commercial organisations caught by the offence of failure to prevent bribery are –

  • a body incorporated under the law of any part of the UK and which carries on business, whether there or elsewhere;
  • a partnership that is formed under the law of any part of the UK and which carries on business there or elsewhere; and
  • any other body corporate or partnership wherever incorporated or formed which carries on business in any part of the UK (thus an overseas entity that carries on a business or part of a business in the UK is caught by the Act).

The Act does not criminalise bribery by a foreign subsidiary of a UK company committed abroad.

The Act does affect foreign nationals who are in the UK when the criminal act is carried out, and also has extraterritorial effect for foreign nationals who are “ordinarily resident” in the UK.

A 2019 Parliamentary report highlighted an interesting aspect of the law, reflecting a general principle of English corporate law.  This was that the so-called “identification principle”, a central feature of English corporate law, and which requires that any successful prosecution of a business needs to demonstrate that the controlling minds of the business (usually the board of directors) were aware of the criminal actions, and possessed the necessary mens rea (“guilty mind”).  It has been argued that this model is inherently disadvantageous to small- and medium-sized enterprises (SME), compared with large companies (especially transnational corporations), as it is much easier to identify the controlling minds of a small company and hold them responsible[11].  There have been calls for adoption of a form of vicarious liability, where a corporation is liable for the acts or omissions of an employee which take place in the course of that employee’s employment (unless he or she was off on a spree of their own).

The offence is committed where a person associated with the commercial organisation bribes another person (and not only a “foreign official”, as required by the OECD Convention) with the intention of obtaining or retaining business or an advantage in the conduct of business for that organisation.  It does not need to be an offence in the other country.

The offence of bribery is described in section 1 as occurring when a person offers, gives or promises to give a “financial or other advantage” to another individual in exchange for “improperly” performing a “relevant function or activity”.

Section 2 covers the offence of being bribed, which is defined as requesting, accepting or agreeing to accept such an advantage, in exchange for improperly performing such a function or activity. The “relevant function or activity” element is explained in section 3 — it covers “any function of a public nature; any activity connected with a business, trade or profession; any activity performed in the course of a person’s employment; or any activity performed by or on behalf of a body of persons whether corporate or unincorporated”.

Section 1, 2 and 6 offences carry the same maximum penalties of up to 10 years imprisonment and/or an unlimited fine for individuals, and an unlimited fine for a company[12].

The 2019 Parliamentary report (see below) reviewed prosecutions under the Act, highlighting the difficulties of properly assessing whether the Act was being adequately enforced.  These included the long duration of many bribery investigations, which meant that long after the Bribery Act came into force, a majority of bribery-related cases are still being prosecuted under earlier laws.  Indeed, the report said, between 2014 and the second quarter of 2018, the Crown Prosecution Service (CPS) launched 107 proceedings under the previous Prevention of Corruption Act 1906, compared with only around 42 for all offences under the Bribery Act.

Under UK law, bribery and corruption may be charged under various other laws.  For example, misconduct in public office, a common law offence which carries a maximum sentence of life imprisonment, is said to be preferred by prosecutors in the UK in cases where a public official is involved.  Other notable legislation was the Fraud Act 2006[13] and, in respect of money laundering, the Proceeds of Crime Act 2002.  Furthermore, the Financial Conduct Authority (FCA) is also able to impose fines on regulated companies for lax procedures in relation to bribery and corruption, under the Financial Services and Markets Act 2000.

 

PENALTIES

Individuals face up to 10 years in prison and unlimited fines.  Companies face unlimited fines, and would face forfeiture of any financial gain resulting from the illegal activity.  They can also be required to implement a formal anti-bribery programme (which might have saved them if they had had one, or one that worked).

One has also to bear in mind the reputational and business costs from the damage caused, loss of current and potential markets and customers, as well as the legal and other costs of defending an action, investigating matters and remedying shortcomings.

In addition, as already mentioned, the FCA is also able to impose fines on regulated companies for lax procedures in relation to bribery and corruption, under the Financial Services and Markets Act 2000.

The UK Government has also indicated that an individual or a corporation being found guilty under the Act could be expected to be debarred from access to public contracts, although this is purely a discretionary matter for a “failing to prevent” offence by corporations.

Despite the significant penalties available, early offences involved low-level offences and correspondingly modest penalties, none of which involved overseas bribery allegations.

 

THE DEFENCE

The relevant offence of “failing to prevent” bribery is in section 7 of the Act –

A company or partnership failing to prevent bribery (under sections 1 or 6) committed anywhere in the world by a person performing services on its behalf and intending to obtain or retain business or a business advantage for the company/partnership unless adequate procedures were in place designed to prevent the bribery.

There is a defence for the commercial organisation to show it had adequate procedures in place to prevent persons associated with it from committing bribery offences.  The standard of proof for such a defence is the balance of probabilities.  The 2019 Parliamentary report concluded that it should be made clear in guidance that “‘adequate’ does not mean, and is not intended to mean, anything more stringent than ‘reasonable in all the circumstances’”.  It had been argued that “adequate procedures” was a higher bar than “reasonable procedures”, the standard for prevention of tax evasion offences under the Criminal Finances Act 2017.

Employees of the organisation are presumed to be acting on behalf of the organisation (unless the contrary is shown)[14], but actions of agents, “service providers”[15] and subsidiaries (including a foreign subsidiary) can also be taken to be actions on behalf of the organisation.

There is another defence available, but this is unlikely to be relevant to the business community[16], involving acting on behalf of the intelligence services or armed forces of the UK.

Thus, unlike previous legislation, the Act places strict liability upon businesses for failure to prevent bribes being given (active bribery) and the only real defence is that the business had in place adequate procedures designed to prevent persons associated with it from undertaking bribery.

It should be borne in mind that the adequate procedures defence is a defence to the offence of failing to prevent bribery.  It is not a defence to other offences which may be involved, but may be relevant, and at least provide mitigation, in respect of other offences where prosecutorial discretion is involved.

 

GUIDANCE PROVIDED

One thing that one notes when looking at assistance with anti-bribery controls is that there is seemingly no shortage of advice, guidance, and indicative red flags available to assist a conscientious company.  There are also specialist businesses available to help.  As explained, a non-governmental organisation (NGO) with an interest in combating corruption also offers extensive, and free to access, information.

The Act requires the Secretary of State to publish guidance on procedures that relevant commercial organisations can put in place to prevent bribery by persons associated with them[17] – this guidance was published in 2011 by the Ministry of Justice (MoJ).

Pointedly, it has been made clear by the UK authorities that while companies’ anti-bribery programmes may be compliant with the FCPA of the US this does not mean that it therefore also constitutes adequate procedures required under the Bribery Act, as the Bribery Act differs in several respects from the FCPA.

The requirements outlined in the UK-based guidance closely resembles the requirement in French law under Sapin II (see below), particularly in respect of the 8 requirements companies must follow in establishing their compliance programmes.

The UK-issued guidance came in two forms – a “Quick Start Guide[18]” of 9 pages, and a fuller 45-page version[19].

The Quick Start Guide stresses that –

  • there is a full defence if you can show that you had adequate procedures in place to prevent bribery – but you do not need to have such prevention procedures in place if there is no risk of bribery (so you have to undertake a proper risk assessment, and be sure that there really is no risk);
  • hospitality is not prohibited by the Act; and
  • facilitation payments were and remain bribes.

The Guide also sets out 6 principles to help you decide on what you might need to do –

  1. proportionality;
  2. top-level commitment;
  3. risk assessment;
  4. due diligence;
  5. communication; and
  6. monitoring and review.

Expanding each of these 6 principles slightly, we see a need –

  • that action you take should be proportionate to the risks faced – you would need to do more if a large organisation with overseas markets;
  • for top-level commitment from the top of the organisation;
  • for a proper, thorough (and ongoing) risk assessment – especially when entering into new business arrangements and/or new markets;
  • for satisfactory due diligence on who one is dealing with;
  • to ensure your policies and procedures are known to all your staff, agents, representatives etc; and
  • for ongoing monitoring and review of your policies and procedures, your business arrangements, customers, markets –

you would also obviously need to be aware of developments in anti-bribery laws, requirements and trends, not only in the UK and the markets you are involved in, but also where other countries’ laws might affect you (here, of course, we are primarily thinking about the US), or action and reports from organisations such as the EU, UN and World Bank[20].

The MoJ guidance says that while policies, monitoring and necessary due diligence are essential, controls should be proportionate to the size and risk-exposure of the business.

For example, it says that a business only has to think about doing due diligence on persons who will actually perform services for the company, or on its behalf.  Someone who simply supplies goods to the company is unlikely to do that.  It is very unlikely, therefore, that one would need to consider doing due diligence on persons further down a supply chain.  The extent and depth of due diligence required will be decided by the outcome of a risk assessment.

It is said in the guidance that it was not the intention of the UK Government to prevent genuine business hospitality that is “reasonable and proportionate”, saying that, for example, providing clients tickets to sporting events, buying them dinner and offering (reasonable) gifts and travel expenses would be permissible, again if “reasonable and proportionate” for your business.

However, the guidance also makes very clear that hospitality and reasonable and proportionate gifts etc is not to be seen as cover for facilitation payments, which it defines as “payments to officials to perform routine functions which they are otherwise obligated to perform”.  These, it says, are simply bribes.

Legally-required (and genuine) administrative charges, or additional payments for “fast track” services, would not be regarded as facilitation payments.

As regards payments permitted by the written laws of the country in question, these are permissible in the case of foreign official, and in other cases are a factor to be taken into consideration in determining whether acting “improperly”.

The fuller UK guidance includes an Appendix containing a number of case studies designed to demonstrate how the 6 principles mentioned above might be involved in some real-life situations.

For example, one case study deals with how a company might seek having anti-bribery prevention procedures included in any joint venture with another company, with binding commitments on the part of both parties, to protect both.

Another case study is concerned with how one might assess and take onboard a foreign agent – with thorough research of the prospective agent and all those identified as having some control over the affairs of the agent, and verifying any information obtained from questioning of the would-be agent, and not just taking their word at face value.  One should also call for evidence of the prospective agent’s own anti-bribery policies.  As with other risk assessment and due diligence aspects, monitoring of any agent should be seen as an ongoing process, and not a one-off.

For all aspects of a defence arrangement, whether for the business itself, or for any agents, subsidiaries, joint ventures etc, it is self-evident that it is essential that you document your compliance activities, including risk assessments.  This will –

  • demonstrate commitment to combating corruption;
  • facilitate any potential cooperation with authorities;
  • help establish and prove possible legal defences, should these become necessary; and
  • demonstrate compliance to any actual or potential business partners.

Furthermore, whilst complacency has to be avoided, ensuring that you have done as much as you possibly could have reasonably done must provide some peace of mind – at least allowing you to concentrate more of your attention on the very many other problems you might have to face.

In another example of freely available guidance online, in 2018 Lockheed-Martin produced guidance on “red flags”[21], which it describes as a fact, event, or set of circumstances, or other information that may indicate a potential legal compliance concern for illegal or unethical business conduct, particularly with regard to corrupt practices and non-compliance with anti-corruption laws; and may be indicators of potential current or future anti-corruption non-compliance.

It divides its Red Flags into 5 categories –

  • poor reputation – of the country, party or type of transaction involved; including a willingness to violate local law or policy;
  • ties to government and/or public officials;
  • questionable or unusual circumstances – including reluctance to agree to, or cooperate in, anti-bribery or due diligence controls, inconsistencies or apparent misrepresentations;
  • unusual compensation and questionable accounting and invoicing;
  • insufficient capabilities – such as where the other party is not expected to perform substantial work for the compensation involved, or it lacks the staff, facilities, experience or expertise to perform substantial work; or is a shell company or there is vagueness over how it will carry out its role.

In 2016, law firm Ropes & Gray produced an article highlighting what it had identified as then the top 10 red flags in respect of Latin America[22].  These, it said, related to the FCPA and the enforcement actions undertaken by the US Securities and Exchanges Commission and Department of Justice for conduct occurring in the region.  The top 10 were as follows –

  • inadequate supporting documentation – highlighting the need for transactions to be supported by complete documentation;
  • misreporting and misclassifying of payments;
  • transactions lacking a business purpose – such as the provision of benefits to non-employees without a legitimate business purpose;
  • off-the-books records and transactions – which can involve inflated sales, fictitious accounts (or employees, agents or consultants) etc;
  • pricing discrepancies – such as where prices do not match previous written agreements, and where large discounts, premium charges, or commissions might be used for bribes (or equally could be evidence of trade-based money laundering, like some or all of the other red flags);
  • overriding of internal controls after all, an effective compliance programme is only as strong as the response of and adherence by company management;
  • inadequate screening of third parties;
  • failure internally assess compliance programmes – such as having a “tick box” or “that will do” attitude perhaps;
  • an inadequate internal control programme – which, even if enforced and maintained, does not adequately take into account and mitigate the risks faced; and
  • the use of shell companies.

In 2014, Transparency International produced guidance on “adequate procedures”, and a useful and helpful checklist for assessing if an organisation has the necessary and sufficient adequate procedures in place[23] – covering such things as senior management and boardroom buy-in, human resources, risk assessment, policies and procedures, facilitation payments, expenses, gifts and hospitality, political and charitable contributions and sponsorship.

It also covers vital areas such as training and communication channels within the organisation, as well when dealing with subsidiaries and outside persons and organisations, agents and the like.

Transparency International in the UK had also produced a series of online documents intended to help businesses cope with the requirements of the Bribery Act[24].  These dated from the 2010s.  As well as “adequate procedures” guidance and checklist in 2014, there was also, in 2013, guidance for carrying out an effective bribery risk assessment[25].  The latter included another checklist, as well as a sample completed version as an illustration of how it might be used.

As the Transparency International guidance explains, risk management models generally identify two key variables which play a role in the evaluation of risk –

  • the likelihood (or the probability) of the occurrence involved; and
  • the likely impact if it does occur.

The likelihood or probability is chiefly driven by the presence of “risk factors”, and the more significant and/or numerous the risk factors associated with a particular activity, the higher the probability that something adverse might occur.

The “risk factors” are characteristics or circumstances which will tend to increase the risk that bribery might occur.  They do not describe how bribery might occur, but rather why bribery might occur and how likely it is to do so.  Some risk factors may apply to more than one – and possibly all – areas of risk.  For example, a general culture of corruption in a particular location is likely to elevate the risk associated with many, if not all, business activities carried out in that location -thereby raising the risk levels for all the activities across the board.

Of course, one has to decide what weight to give to each of the various risk factors, so that one can properly assess which areas or activities carry the greatest risk.

Then again, the area with the highest risk rating might have the lowest impact, whereas an area with a lower risk rating could have much greater impact on the business.

Therefore, one has to assess and give weight to the impact of each risk factor.  The financial, legal, regulatory, commercial and reputational fallout from one or more bribery allegations will be difficult to predict.

When one has satisfactorily assessed risk factors and their impact, the next question is what can one do to mitigate the risk.  One would probably try to target to target the greatest risks and those with the greatest potential impact.

Transparency International argues that, in the context of bribery, there is an argument to giving greater weight to the potential impact than probability of the risk occurring.  However, if there is a high probability of the risk factor, then there must be an argument that one would be seen to be failing in due diligence if one did not do what one could to prevent or mitigate the risk.

After the risk assessment has been carried out, and one has moved on to putting in place a plan to prevent or mitigate the identified risks, the key next steps are likely to be planning and putting into action an appropriate response to the risk assessment.  This would involve –

  • mapping the risks on to existing controls the business should have in place (for example, to prevent fraud, identify exposure to money laundering, etc);
  • identifying gaps in the existing controls in terms of those risks not adequately addressed (or even that were previously not identified);
  • designing and implementing appropriate remedial actions;
  • putting in place follow-up, monitoring and enforcement processes; and
  • reporting by the compliance official(s) to senior management and/or the board on the operation of the controls.

It is essential – for the anti-bribery controls to be worth the time and effort involved, and for them to have some practical use as a “defence” in the event of any legal problems – that the controls be real, and not just box-ticking or window dressing.  It is a key management responsibility to monitor the effectiveness of the programme in mitigating the risk of bribery, and part of this responsibility is to ensure that there is effective implementation of the policies and procedures laid down.

Remedying identified gaps and shortcomings might involve increased training and awareness-raising for staff, agents, associates etc.  Transparency International recommends obtaining confirmation from time to time from employees (and/or third parties) of awareness of, and compliance with, policies and procedures and their requirements.

High-risk areas and transactions could or should be subject to appropriate monitoring, with review and audit of high-risk transactions.

It is essential (both to protect the business, and to ensure that procedures are seen as being “adequate”) that there are robust responses to any allegations of bribery or other non-compliant behaviour.

For a defence of adequate systems to be seen as realistic the culture within the company, and the attitude of the senior management and boardroom, must be taken into account in any assessment made of the business by a regulator or law enforcement.  In other words, the compliance programme must be more than just a box-ticking exercise, or simply paying lip service to the requirements.

While it is acknowledged that there are practical limits to the extent to which an organisation can control the conduct of third parties, setting the right framework through the imposition of appropriate contract clauses will greatly assist.  Again, in the event of any future legal complications, if one can show that the business has in place genuine and effective controls then the business is in a much better position to defend itself.

In 2017, the Wolfsberg Group[26] produced updated Anti-Bribery and Corruption (ABC) Compliance Programme Guidance for banks[27], replacing the previous 2011 publication.  The publication is designed to also provide guidance to the broader financial services industry on how to develop, implement and maintain an effective ABC Compliance Programme, and should be read in conjunction with applicable guidance issued by authorities in the jurisdictions in which a financial institution is conducting business.  The guidance called for a risk-based approach.

There also exists an international standard, ISO 37001[28], launched in 2016 and which specifies requirements and provides guidance for establishing, implementing, maintaining, reviewing and improving an anti-bribery management system.  The system can be stand-alone or can be integrated into an overall management system.  It covers both the giving and acceptance of bribes, and its provisions are designed to be generic and intended to be applicable to all organisations (or parts of an organisation), regardless of type, size and nature of activity, and whether in the public, private or not-for-profit sectors.  One obvious advantage of the use of ISO 37001 is that it can be certified by accredited outside bodies, thus providing a degree of comfort to both the regulators/law enforcement and the company itself.  It is said to be designed to be capable of being integrated into existing management processes and controls, including those for quality standards, environmental control etc[29].

A large number of situations and occurrences can be seen as “red flags” that might indicate the existence of bribery or corruption, these would include –

  • a request for payment in cash or in kind;
  • payments without a full or proper invoice or receipt, or with their nature misdescribed;
  • inaccurate or incomplete records;
  • an agent or intermediary with close connections (or a family relationship) to those in positions of power or influence in the destination, and/or including a politically-exposed person (PEP);
  • evidence of lavish or unreasonable gifts, entertainment, travel or expenses being provided;
  • a refusal of a third party to provide reasonable and necessary information to undertake due diligence;
  • the discovery of information inconsistent with information provided by a third party;
  • the transaction or a third party is in a country known for widespread corruption and listed as such in reputable indices such as published by Transparency International;
  • a third party has a history of improper payment practices, has a poor business reputation, or has been subject to criminal enforcement actions or civil actions for acts suggesting illegal, improper or unethical conduct;
  • a third party does not have in place an adequate compliance programme or code of conduct, refuses reasonable requests to examine or test it or refuses to adopt one;
  • information provided about the third party, its services or principals is not verifiable;
  • the third party previously worked in the government at a high level, or in an agency relevant to the area of business involved;
  • the third party is a company with an owner, major shareholder or executive manager who is also an official;
  • the third party has (or is believed to have) an undisclosed beneficial owner;
  • a government official requests, urges, insists, or demands that a particular party, company, or individual be selected or engaged;
  • the third party makes large or frequent political contributions, or provides lavish gifts or hospitality to government officials;
  • the third party insists on dealing with government officials without the participation of the company;
  • the third party lacks experience or a “track record” with the product, service, field, or industry;
  • the third party does not have offices or a staff, or lacks adequate facilities or staff, to perform the work;
  • an address is a mail drop location, virtual office, or small private office that could not hold a business the size that is claimed;
  • the third party has not been in business for very long or was only recently incorporated and/or has an unorthodox corporate structure;
  • a third -party provides references which, when taken up provide evasive answers or cannot be contacted at all;
  • the third party has poor financial statements or credit.
  • the third party’s plan for performing the work is vague and/or suggests a reliance on contacts or relationships;
  • requests for an unusual advance payment;
  • any fee, commission, or volume discount provided to the third party is unusually high compared to the market rate;
  • a compensation arrangement is based on a success fee or bonus;
  • an offer to submit or use of inflated, inaccurate, or suspicious invoices;
  • a third party requests an invoice to reflect a higher amount than the actual price of goods provided;
  • invoices which use vague descriptions of the services provided;
  • requests for cash, cash equivalent, or bearer instrument payments;
  • requests for payment in a jurisdiction outside the home country that has no relationship to the transaction or the entities involved in the transaction – especially if the country is an offshore financial centre;
  • requests that payment be made to another third party or intermediary;
  • the proposed the use of shell companies;
  • requests that payments be made to two or more accounts;
  • a third-party shares compensation with others whose identities are not disclosed;
  • requests for an after-award services contract that a third party does not have the capacity to perform;
  • requests that a donation be made to a charity;
  • a refusal to properly document expenses;
  • pressures on the company to make the payments urgently or ahead of schedule;
  • requests for a large up-front payment;
  • payment arrangements that raise local law issues, such as payment in another country’s currency;
  • a refusal to agree to comply with relevant anti-corruption legislation, anti-money laundering laws, or other similar laws and regulations;
  • a refusal to evidence past compliance with anti-corruption legislation, AML laws, or other similar laws and regulations;
  • a third-party refuses to execute a written contract, or requests to perform services without a written contract where one is sought;
  • a third party insists that its identity remain confidential or that the relationship remain secret;
  • a refusal to divulge the identity of its beneficial owners, directors, officers, or other principals;
  • a refusal to answer due diligence questions;
  • a refusal refuses to allow audit clauses in contracts;
  • any suggestion by a third party that anti-corruption compliance policies need not be followed;
  • any suggestion by the third party that otherwise illegal conduct is acceptable because it is the norm or customs in a particular country;
  • suspicious statements such as needing payments to “take care of things” or “finalize the deal”;
  • the type of representation proposed is illegal under local law;
  • the alleged performance of the third party is suspiciously higher than competitors or companies in related industries;
  • guarantees or promises of unusually high rates of return;
  • a third-party requests approval of a significantly excessive budget or unusual expenditures;
  • expense claims and reports or petty cash payments are made and contain insufficient documentation and evidence;

Also, one should ask yourself have you –

  • checked litigation records, bankruptcy and insolvency records?
  • conducted thorough media checks in the local language?
  • checked for regulatory breaches (e.g. major health and safety violations, environmental issues, poor labour practices)?

Media searches need to be much more just a cursory use of Google, more in-depth checks are required and data-mining has been recommended by some experts.

Furthermore, as with anti-money laundering (AML) controls, anti-bribery due diligence checks should not  be seen as just a one-off exercise, but an ongoing one, with a compliance programme providing for repeated or continued checks or monitoring, particularly should any parties or circumstances change.

It also seems to go without saying that, if one takes over a new business, or takes on an existing supply of goods or services, that one of the steps taken should be to extend one’s compliance programme to the new business – and to carry out necessary due diligence to the people, organisations, markets and products involved.  However, one has seen cases in the US, where corporations have faced penalties for failures of businesses (such as for sanctions violations) which they have acquired.

 

COMPLIANCE STAFF

As with AML, the appointment of suitably qualified and senior staff with responsibility for anti-bribery compliance would appear a sensible move.  It is recommended that those in charge of such oversight should be autonomous from management and should have sufficient resources and seniority or authority to ensure the policies and procedures are implemented correctly.

You may, of course, choose to outsource some or all of your compliance to a third party – and it goes without saying that your due diligence checks on such an associate must be as good as, or better, than for any other third party.

Even if making use of a third party to undertake some of the compliance process, it remains important for the business to maintain its own internal compliance programme, the functions of any such third party being incorporated into it.

Th choice of a suitable due diligence provider involves a number of considerations for the business[30], looking at what and how the third party may assist, including such things as –

  • timeliness – are the results notified in a timely manner?
  • completeness – are the checks undertaken sufficient to provide peace of mind and capable of being seen as “adequate”?
  • accuracy of the checks undertaken;
  • the technology used – data-mining, use of AI;
  • available languages – in the language of the customer, destination etc, as well as in English and/or businesses’ home language;
  • justification of price versus value to the business;
  • ongoing monitoring and reporting of new data; and
  • customer service and response times if issues are found.

 

ENFORCEMENT BODIES IN THE UK

Those bodies which might be involved in investigating acts of bribery include local UK police forces, the City of London Police (where more complex financial activities are involved), and the National Crime Agency (NCA) – which has a dedicated International Corruption Unit, when a case is national in scope or connected to organised crime.

The CPS is primarily responsible for prosecuting cases, while the Serious Fraud Office (SFO) undertakes both the investigation and prosecution of the largest and most complex cases.

In addition, the regulator the FCA has its own, separate responsibilities and powers, and, as already mentioned, is also able to impose fines on regulated companies for lax procedures in relation to bribery and corruption.

 

DEVELOPMENTS

In 2014, the Sentencing Council in the UK issued guidance[31] on sentencing for Bribery Act offences, saying that they were “triable either way”[32], and while the maximum custodial sentence was 10 years, the recommended range of sentences was from discharge[33] to 8 years’ custody.  The guidance set out the types of aggravating and mitigating factors a judge could take into account – factors that could lead to an increased or reduced sentence.

In 2017, the UK published its AML/CFT National Risk Assessment[34], required in advance of a mutual evaluation assessment by FATF.  This made repeated mention of money laundering threats affecting the UK and flowing from international corruption (though “bribery” as a specific term was mentioned only twice, in case studies).  Notably perhaps, “wealth management” and PEP were 2 areas linked to corruption risks, and the acquisition of UK (particularly using “overseas” companies[35]) property with funds that included the proceeds of international corruption.

In September 2019, the CPS and the Director of the SFO published joint guidance on prosecutions under the Bribery Act 2010[36].  This sets out the approach to prosecutorial decision-making in respect of offences under the Act.

Interestingly, the CPS/SFO guidance includes prominently a paragraph saying that “prosecutors dealing with bribery cases are reminded of the UK’s commitment to abide by Article 5 of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions”.  It goes on to quote said Article 5 –

Investigation and prosecution of the bribery of a foreign public official … shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved“.

How much notice is taken of this statement may be open to doubt in view of past events.  Indeed, the guidance goes on to say that a prosecution will usually take place unless the prosecutor is sure that there are public interest factors tending against prosecution which outweigh those tending in favour – though the factors cited do not include the country’s economic interests.

Good news is that the guidance also prominently says that a factor against a prosecution is that there has been a genuinely proactive approach involving self-reporting and remedial action.

In 2018, the House of Lords Liaison Committee decided to recommend the setting up of a Committee for post-legislative scrutiny of the Bribery Act, it being felt that enough time had passed for a decent assessment of its performance had elapsed.  The House of Lords accepted that recommendation, and the Bribery Act 2010 Committee was set up in May 2018.

The Liaison Committee recommended that the new Committee should in particular consider:

  • whether the Act has led to a stricter prosecution of corrupt conduct, a higher conviction rate, and a reduction in such conduct;
  • whether, as the Confederation of British Industry and others warned, UK business have been put at a competitive disadvantage in obtaining foreign contracts because conduct which was lawful under equivalent foreign legislation might be unlawful under the stricter provisions of the Bribery Act;
  • whether SME were sufficiently aware of the provisions of the Act; and
  • consider Deferred Prosecution Agreements (DPA)[37] as they affect bribery[38], and how DPA have affected the conduct of companies both to prevent corrupt conduct, and in the investigation of such conduct once it is discovered to have occurred.

The Bribery Act 2010 Committee report was published in March 2019[39].  It followed 9 months of scrutiny by the Committee, including consideration of written and oral evidence from government ministers, departments, law enforcement, and the private sector.

As already mentioned, the Committee commented on the extreme difficulty in prosecuting large corporates for the substantive offences of bribery because of the existence of the “identification principle” in English corporate law.

One of the matters considered by the Committee was what role the suspicious activities report (SAR) system in the UK played in the detection of bribery.  The Committee put this question to the NCA, asking how many cases had been detected in this way.  The NCA confirmed that SAR provided a “valuable source of intelligence for law enforcement agencies”, and that they contribute to tackling “a range of threats, including bribery”.  However, the NCA did not provide any figures or examples of situations in which an incident of bribery had been detected through the SAR regime.

The Committee also found that there was no centralised mechanism for reporting bribery, and the City of London Police[40] told the Committee that there is “no single law enforcement or intelligence body within England and Wales [which] leads on routinely receiving information relating to bribery and corruption activity”, and it is “not clear to the public who corruption and bribery should be reported to”.

However, the Committee noted that the Home Office had committed to launching a new reporting mechanism for allegations of bribery and corruption, in line with the Government’s Anti-Corruption Strategy, and was investigating the options.  The Government’s first annual update on its Anti-Corruption Strategy, published in December 2018, described this as an ongoing commitment, with scoping work having been undertaken during the course of the year.

On DPA, the report declined to deal with the clear inconsistency between DPA involved in the Rolls-Royce and Tesco cases and the SFO failure to successfully prosecute individuals in either case, merely concluding that DPA are largely effective in encouraging companies to self-report and that, when used appropriately, are not an “easy way out” (for either side), and not a substitute for successful prosecution.

In its comment on the report, law firm Wilmer Hale said[41] that the outcome of the case of SFO and Tesco Stores Lts suggests that the DPA regime was not drafted with sufficient sensitivity to the potential criminal liability of individuals affected by the company’s DPA.  You had the situation where the DPA, and its inherent statement of facts, stood even when the individuals in question had been acquitted at the direction of the trial judge on the ground that there was no case to answer – inevitably begging the question of the fairness of the situation for those implicated, and if no-one was guilty of wrongdoing who had in fact done wrong.

The OECD Convention (and 2009 Recommendation) involves an inspection process by the Working Group on Bribery.  The most recent evaluation report, revealed that in 2017, expressed continued concern over cooperation between enforcement agencies in respect of corruption, and a follow-up to that report in 2019[42] revealed that the UK had fully implemented 16 recommendations, partially implemented 18 recommendations, and not implemented 10 recommendations.  In the report, the Working Group noted that efforts were underway in a number of areas – notably to enhance detection of foreign bribery through certain key government agencies or whistleblower protection, to engage with the Crown Dependencies[43] and British Overseas Territories on foreign bribery-related issues, and it encouraged the UK to continue to pursue these efforts.

However, the Working Group also expressed regrets that no steps had been taken to address long-standing recommendations to ensure the independence of foreign bribery investigations and prosecutions, or to enhance detection through AML-reporting mechanisms.  It also noted that, despite an increased level of enforcement of foreign bribery laws, the total number of finalised and ongoing cases relative to the size of the UK economy remained relatively low, with only 3 cases concluded since 2017[44].

In 2019, the UK Government announced the launch of a comprehensive Economic Crime Plan, intended as a 3-year plan to tackle economic crime, including strengthening its AML controls and revisions to the SAR (STR) submitted to the FIU in the UK.  The Criminal Finances Act 2017 had provided the UKFIU with new powers, including the authority to direct reporting entities to disclose additional information.

The UK Government had launched its “Flag it Up” campaign[45] in 2017, working with the accountancy, legal and property sectors to promote best practice in AML compliance and the reporting of suspicious activity.  The OECD Working Group on Bribery had welcomed the campaign to raise awareness about some red flags that may relate to foreign bribery, but notes that it only targets a limited number of reporting entities (solicitors, accountants and real estate agents) and is not tailored to specifically detect foreign bribery.

The UK Government has also launch ed the Government Counter Fraud Profession (GCFP) programme[46], described as a structure for counter-fraud (including anti-bribery) specialists working in central government and which aims to bring the counter-fraud community together under a common set of standards and develop that community as they protect public services and fight economic crime.  It is intended to raise the profile of such activity and the complex, evolving skill sets required to do it, whilst setting consistent counter fraud standards across the government.

In December 2019, the UN Office on Drugs and Crime (UNODC) Civil Society Team, in partnership with the UK Prosperity Fund of the FCO, held a special event[47] to showcase the work and testimony of civil society anti-corruption champions through their participation in 4 UNODC regional platforms to fast-track the implementation of the UN Convention.  The platforms cover Latin America, Southern Africa, Eastern Africa and SE Asia.  This was said to emphasise the valuable contributions that civil society organisations (CSO) make in contributing to a meaningful review of the Convention through the recently-established regional platforms, through monitoring of a country’s performance and establishing (or re-establishing) collaborations with governments in the fight against corruption.  Over 100 CSO were involved in the platforms (including 23 in Latin America).

 

OTHER COUNTRIES’ USE OF THE ACT AND SIMILAR

As already mentioned, the Bribery Act 2010 itself did not apply directly in the Crown Dependencies.  However, in 2013, the Isle of Man enacted its own version[48], mirroring the UK model.  Like the UK Act, the Isle of Man version encompassed offences committed outside the Island by a “resident of the Island”[49].

Jersey has a law dating from 2006, i.e. preceding the UK’s Bribery Act, but which, like the UK Act, replaced a mix of previous common law provisions and statute law.  However, it should be remembered that the UK Act potentially has extraterritorial reach in Jersey and is said to have done much to shape practice and approach in Jersey.  In large part it seems that the Jersey law was intended to enable Jersey to play a full part in international efforts to combat the problem of bribery of foreign officials, and thus meet its commitments under the OECD Convention etc.

However, an important fact to note is that the Jersey law contains no specific statutory defences; and there is no equivalent in Jersey of the adequate-procedures defence in the UK Bribery Act.  Similarly, there are no provisions in the Jersey law for plea-bargaining, deferred prosecutions or the like.

Guernsey’s law on bribery dates from 2003[50], and like the Jersey law, was also introduced, in large part, to ensure compliance with the OECD Convention and other international commitments.  As with the other Crown Dependencies, the UK Act also has some effect in Guernsey, it applies to the activities of natural and legal persons with a close connection with the UK, which includes all British citizens (which the British people in the Crown Dependencies remain)

In Australia, a bribery offence[51], largely similar to that under the UK Bribery Act, can be committed where the conduct occurs in Australia, or on board an Australian aircraft or an Australian ship.  It also applies to conduct outside Australia where, at the time of the alleged offence, the person who is alleged to have committed it is an Australian citizen, a resident of Australia, or a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory. The offence applies regardless of the outcome or result of the bribe or the alleged necessity of the payment, and whether or not the alleged offender intended to bribe a particular foreign public official.  A factsheet on foreign bribery is available online[52].

In Canada, the Corruption of Foreign Public Officials Act (CFPOA) aims to discourage companies from engaging in corrupt acts abroad and implements the UN and OECD Conventions in Canadian law.  Recent amendments have increased the maximum penalties under the Act and established accounting provisions comparable to the FCPA, increasing the anti-corruption compliance demands for companies.

The Act applies to bribery of foreign public officials when the offence is committed in whole or in part within Canada and to offences committed outside Canada by a Canadian citizen, permanent resident, or an entity organised under Canadian law[53].

Canada has announced its intention to eliminate the facilitation payments exception under the Act – where payment is permissible for expediting the performance of routine government actions (obtaining permits, processing government documents, police protection, mail and utility services) – but no date for the implementation of this amendment has been announced.

The German Penal Code applies to individuals – not companies – and makes it illegal to offer, pay or accept a bribe.   However, companies can be held civilly liable and face fines of up to €10 million and unlimited confiscation of all “economic advantages” obtained through bribery.   The civil provisions include corruption offences committed by a company’s representatives, and thus implementing effective compliance systems makes good business sense as doing so helps ensure companies avoid breaching German law.

In France[54], the so-called Sapin II law requires companies to evaluate their corruption risks through risk mapping and adequate due diligence of third parties, as well as ensuring training and awareness of employees and third parties, and the establishment of internal controls (including for whistleblowers[55]) – with the law setting out 8 measures they must follow for their compliance programme –

  1. the company must develop and implement a code of conduct;
  2. establish an internal whistleblower system;
  3. develop a risk assessment of the company’s exposure to corruption risks;
  4. assess of third-party risks (from clients, intermediaries, providers, etc.) based on the risk assessment developed;
  5. establish accounting controls to ensure that the company’s books and accounts are not concealing violations such as bribery, gifts or other dubious expenses;
  6. have a compliance training programme that targets senior management, managers and employees most exposed to corruption risks;
  7. establish disciplinary sanctions to be applied in cases where the company’s own code of conduct has been breached; and
  8. set up an internal control programme to evaluate and monitor the effectiveness of company compliance.

 Sapin II also provided for the establishment of the French anti-corruption enforcement agency, the Agence Française Anti-Corruption (AFA), consisting of magistrates from various French institutions and operating under the French Minister of Justice and the Minister of Budget.

 

VERDICT ON THE ACT

In the UK, early convictions following the coming into force of the Bribery Act were either prosecutions under the legislation replaced, or for purely domestic and relatively small-scale cases.  Even in its 2016-17 annual report, the City of London Police were reporting the first bribery convictions for providing customer data from insurance companies and relating to so-called ‘crash for cash’, with guilty verdicts for 6 solicitors and accomplices who orchestrated the insurance frauds.  Although valuable on a domestic front, and important to those affected, such cases had little meaning in the perspective of countering international bribery and corruption.

During 2019, in the US, 14 companies paid a record $2.9 billion to resolve FCPA cases – an amount said to include settlements with the DoJ or SEC or both[56], and with several big name, household names, involved.  It cannot be said that the Bribery Act in the UK is being seen to have the same impact.

 

Ray Todd

14 January 2020

 

[1]  Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916 (known collectively as the Prevention of Corruption Acts 1889 to 1916).

[2]  Including bodies corporate, Scottish partnerships (which have legal personality) and other partnerships.

[3]  Anguilla, Bermuda, the British Antarctic Territory (BAT), the British Indian Ocean Territory, BVI, Cayman Islands, Falkland Islands.

[4]  The Nolan Committee’s Report on Standards in Public Life in 1995 (Cm 2850I), set up in response to concerns about unethical conduct by those in public office, and Law Commission proposals for reform of bribery in a 1998 report (Legislating the Criminal Code: Corruption, Report No. 248).  The Law Commission published its second report Reforming Bribery (Report No. 313) on 20 November 2008.

[5]  http://www.oecd.org/corruption/oecdantibriberyconvention.htm

[6]  The OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions – containing an agreement to put in place new measures to reinforce efforts to prevent, detect and investigate foreign bribery: http://www.oecd.org/daf/anti-bribery/oecdantibriberyrecommendation2009.htm

[7]  https://www.unodc.org/unodc/en/treaties/CAC/

[8]  http://www.oecd.org/corruption/2019-review-oecd-anti-bribery-recommendation.htm

[9]  http://www.oecd.org/daf/anti-bribery/oecdantibriberyrecommendation2009.htm

[10]  Which can be public international law or local law.

[11] Might this be said to have been illustrated in the Tesco case?

[12]  https://publications.parliament.uk/pa/ld201719/ldselect/ldbribact/303/30306.htm#_idTextAnchor018

[13]  Fraud by abuse of position.

[14]  That is to say, a rebuttable presumption.

[15]  An “associated person” under the Act.

[16]  The defence involves the proper exercise of any function of a British intelligence service, or the proper exercise of any function of the British armed forces when engaged on active service.

[17]  http://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

[18]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/832012/bribery-act-2010-quick-start-guide.pdf

[19]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/832011/bribery-act-2010-guidance.pdf

[20]  The World Bank regularly “de-bars” companies and individuals from participation in projects it funds, listing those which have been sanctioned under the Bank’s fraud and corruption policy.  The current list of those debarred is at: https://projects.worldbank.org/en/projects-operations/procurement/debarred-firms

[21]  https://www.lockheedmartin.com/content/dam/lockheed-martin/eo/documents/ethics/corruption-red-flags.pdf

[22]  https://www.ropesgray.com/en/newsroom/alerts/2016/September/Top-10-Anti-Corruption-Red-Flags-In-Latin-America

[23]  https://www.transparency.org.uk/wp-content/plugins/download-attachments/includes/download.php?id=986 The UK branch also runs training programmes and has designed a number of services to help organisations to improve their anti-corruption capabilities.

[24]  https://www.transparency.org.uk/our-work/business-integrity/bribery-act/adequate-procedures-guidance/

[25]  https://www.transparency.org.uk/wp-content/plugins/download-attachments/includes/download.php?id=1145

[26]  The Wolfsberg Group consists of the following financial institutions: Banco Santander, Bank of America, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Société Générale, Standard Chartered and UBS.

[27]  https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/wolfsberg-standards/3.%20Wolfsberg-Group-ABC-Guidance-June-2017.pdf

[28]  https://www.iso.org/obp/ui#iso:std:iso:37001:ed-1:v1:en

[29]  https://www.iso.org/files/live/sites/isoorg/files/store/en/PUB100396.pdf

[30]  In January 2020, The Red Flag Group produced a White Paper on “How to Buy Due Diligence”: https://insights.redflaggroup.com/whitepapers/whitepaper-how-to-buy-dd-guide

[31]  https://www.sentencingcouncil.org.uk/offences/magistrates-court/item/bribery/

[32]  Meaning they could be tried by summons, on in a jury trial on indictment.  In England and Wales, the defendant can opt for trial by jury for such offences.

[33]  Where the court records a conviction but, on the basis of the evidence heard, decides to impose no sentence by way of fine or imprisonment, with the discharge capable of being absolute or conditional.

[34]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/655198/National_risk_assessment_of_money_laundering_and_terrorist_financing_2017_pdf_web.pdf

[35]  Which would include those in the Crown Dependencies and Overseas Territories.

[36]  https://www.cps.gov.uk/legal-guidance/bribery-act-2010-joint-prosecution-guidance-director-serious-fraud-office-and

[37]  The first DPA was announced in November 2015.

[38]  DPA were created by the Crime and Courts Act 2013, and apply to many crimes other than bribery, but to date their main application has been to bribery offences.

[39]  https://publications.parliament.uk/pa/ld201719/ldselect/ldbribact/303/30302.htm

[40]  The UK National Policing Lead for Economic Crime.

[41]  https://www.wilmerhale.com/en/insights/blogs/wilmerhale-w-i-r-e-uk/20190321-the-house-of-lords-report-on-the-bribery-act-2010-a-glimpse-into-the-future-of-economic-crime

[42]  http://www.oecd.org/corruption/United-Kingdom-phase-4-follow-up-report-ENG.pdf

[43]  Jersey, Guernsey and the Isle of Man.

[44]  Involving the conviction of 12 individuals, with 9 acquittals, 1 civil recovery order for an individual, and 1 conviction of a company.

[45]  https://flagitup.campaign.gov.uk

[46]  https://www.gov.uk/government/groups/counter-fraud-standards-and-profession

[47]  https://www.unodc.org/unodc/en/frontpage/2020/January/unodc-uk-event-showcases-civil-society-initiatives-for-implementing-un-convention-against-corruption.html?ref=fs2

[48]  http://www.legislation.gov.im/cms/images/phocadownload/Acts_of_Tynwald/Primary_2013/briberyact2013.pdf

[49]  A resident of the Island means – (i) an individual who is ordinarily resident in the Island; or (ii) a body corporate or partnership that is incorporated or formed under the laws of the Island (section 18(4)(b)).

[50]  https://www.gov.gg/article/156152/Bribery-and-corruption

[51]  The offence of bribing a foreign public official is contained in section 70.2 of the Criminal Code Act 1995.

[52]  https://www.ag.gov.au/Crime/Foreignbribery/Documents/Factsheet-Theforeignbriberyoffence.pdf

[53]  https://www.ganintegrity.com/portal/anti-corruption-legislation/cfpoa-corruption-foreign-public-officials-act/

[54]  https://www.ganintegrity.com/portal/compliance-quick-guides/sapin-ii-compliance-guide/

[55]  The whistleblower requirement is wider than just for bribery and corruption, as it covers all crimes, offences, and violations of international law. It applies to legal persons, both private and public, with more than 50 employees.

[56]  https://fcpablog.com/2020/01/02/2019-fcpa-enforcement-index/

Featured

OTHER THINGS YOU MAY HAVE MISSED – JANUARY 14

14th January 2020

US TREASURY UNVEILS NEW RULES FOR FOREIGN INVESTORS IN US BUSINESSES

On 13 January, the Wall Street Journal reported that the Treasury had unveiled rules designed to increase scrutiny of foreign investors whose potential stakes in US businesses could pose a national security threat.  The rules clarify the circumstances in which foreign investors will be required to seek permission from CFIUS before they can acquire a stake in a US business that handles personal data or technology used by the US military. Areas affected could include telecom, energy or transportation industries, or handle sensitive personal data, such as health, genetic testing or geolocation information.  Investors in Australia, Canada and the UK will avoid scrutiny, and other countries could be added to the list.

https://www.wsj.com/articles/treasury-department-unveils-new-rules-for-foreign-investors-in-u-s-businesses-11578950569

KRATOM: HELPFUL HERB OR DANGEROUS DRUG?

On 13 January, NPR carried an article about a supplement that acts in the brain a bit like an opiate and is available in many places to children.  Usually, the leaf, from a tropical SE Asian tree, is chewed, brewed or crushed into a bitter green powder and chemicals in the herb interact with different types of receptors in the brain.  Often sold in the US in a processed form as both a pick-you-up and, in larger amounts, a sedative.  The FDA and DEA Food worry that kratom carries the risk of physical and psychological dependency and, in some people, addiction.

https://www.npr.org/sections/health-shots/2020/01/13/789145948/the-kratom-debate-helpful-herb-or-dangerous-drug

ILLICIT TRADE IN SOUTH AFRICA CHALLENGES AND SOLUTIONS

Available online is this report, published in October, which says that the country still faces a number of challenges, including a significant threat from illicit trade.  Some of the problems, it says, can be attributed to the many, long and porous borders with multiple country entry points, which are difficult to police comprehensively, as well as regional integration through the Southern African Development Community (SADC), which allows illicit goods to enter into South Africa from foreign seaports that have less oversight and enforcement, while poor legislation on goods-in-transit across Africa aggravates the problem.  The scope and depth of illicit trade presents challenges for South Africa’s continued economic development, but the report says that there have been some positive developments in recent years suggesting progress in addressing some of the country’s underlying vulnerabilities to illicit trade.

https://www.tracit.org/uploads/1/0/2/2/102238034/tracit_south_africa_report_and_recommendations.pdf

UK: GAMBLING ON CREDIT CARDS TO BE BANNED FROM APRIL 2020

the Gambling Commission has announced a ban on gambling businesses allowing consumers in Great Britain to use credit cards to gamble, from 14 April.  It is said that UK Finance estimate that 800,000 consumers use credit cards to gamble, and research undertaken by the Commission shows that 22% of online gamblers using credit cards to gamble are classed as problem gamblers.

https://www.gamblingcommission.gov.uk/news-action-and-statistics/News/gambling-on-credit-cards-to-be-banned-from-april-2020

PANAMA: 5 MARTINELLI EX-MINISTERS AMONG 24 TO TRIAL IN $33 MILLION HELICOPTER SCAM

On 13 January, Newsroom Panama reported that 5 former ministers and several former directors of entities of the administration of former President Ricardo Martinelli are among the 24, and the involves $33.1 million helicopter rental services processed by different state entities.

https://www.newsroompanama.com/business/5-martinelli-ex-ministers-among-24-to-trial-in-33-million-helicopter-scam-1

JERSEY, GUERNSEY AND ISLE OF MAN TO SHARE DATA WITH RUSSIAN AUTHORITIES

On 14 January, KYC 360 reported that Jersey, Guernsey and the Isle of Man are set to share details on bank accounts, properties, investments and other assets owned by Russian citizens to the Russian Federal Tax Service this year, despite the UK and Russia having cancelled an international agreement which facilitates the sharing of such financial information.  Russia lifted all previous restrictions on Russian citizens holding overseas bank accounts from the beginning of January — as long in a jurisdiction which participates in automatic information sharing with the Russian tax authorities.

https://www.riskscreen.com/kyc360/news/british-tax-havens-to-share-data-with-russian-authorities/

INDIA: SUPREME COURT ALLOWS FEDERAL AML AGENCY CAN SEIZE ASSETS OF JP MORGAN INDIA UNIT

On 14 January, KYC 360 reported that the permission was for allegedly violating foreign investment rules.  The court had in July asked the Enforcement Directorate to probe JPMorgan’s role in allegedly helping a property developer in a case being investigated by the ED.

https://www.riskscreen.com/kyc360/news/india-court-allows-seizing-jpmorgans-assets-in-real-estate-case/

UNJUST ENRICHMENT AND JERSEY’S LEGAL ‘HOT POTATOES’

On 12 January, an article from Ogier concerned a long-running fraud case – still dealing with attempts to limit discovery – which it said illustrates the difficult task that the Channel Island courts sometimes have in comparing and distinguishing between developed principles of English law and foundational elements of the customary law of the islands, which borrows from French and other civilian law jurisdictions.  The “hot potatoes” referred to are the question of the rights between wrongdoers to claim an indemnity or contribution outside the scope of the limited statutory scheme between joint tortfeasors, and (and more fundamental) the extent and nature of the doctrine of unjust enrichment under Jersey law.

https://www.ogier.com/publications/slowly-getting-to-grips-with-unjust-enrichment-and-jerseys-legal-hot-potatoes-cmc-v-forster

CANADIAN MINING EXECUTIVE WON MILLIONS IN A LEGAL FIGHT WITH KAZAKHSTAN. WAS IT WORTH IT?

On 14 January, the MacLeans website in Canada reported that a Canadian mining executive’s decades-long tussle with Kazakhstan is finally over — he hopes.  But even though he won, Paul Carroll doesn’t see much to celebrate.  He went to Kazakhstan prospecting for gold and 25 years later, the 78-year-old Toronto-based mining executive finally reached the end of a seemingly endless legal battle with that country’s government.  The fight took him to courtrooms in Washington and tribunals in Stockholm and London. The Kazakhs always seemed to gain the upper hand — that is, until Carroll’s legal team convinced international arbitrators that an obscure bilateral treaty proved they were right all along and he was awarded nearly $53 million for his trouble.

https://www.macleans.ca/news/canada/this-canadian-won-millions-in-a-legal-fight-with-kazakhstan-was-it-worth-it/

LAOS REVIEW OF ITS AML/CFT POLICIES AND SYSTEMS

On 14 January, the Star Online reported that Laos is planning to proceed to the second evaluation of implementation measures for AML/CFT by regional FATF-style body, the Asia/Pacific Group on Money Laundering, in March this year.  Laos had its first evaluation in 2010 and was placed in the grey list by FATF, causing difficulties for domestic commercial banks when transacting with banking partners overseas who had to close accounts with commercial banks in Laos.  The country was removed from the list in 2017.

https://www.thestar.com.my/news/regional/2020/01/14/laos-to-re-evaluate-anti-money-laundering-efforts

RECENT SOUTH AFRICAN PUBLICATION ON NON-PROFIT ORGANISATIONS AND FINANCIAL CRIMES

The National Law Review on 13 January reported that the Financial Intelligence Centre recently issued a public compliance communication on AML/CFT relating to non-profit organisations.  The publication aimed to create “awareness within the NPO sector around the vulnerabilities that NPO face,” and sets out FATF principles relating to NPO.  While FIC does not view all NPO as inherently high-risk entities, it does provide information on why certain NPO can pose a higher risk from a terrorist financing and money laundering perspective.  The publication provides multiple recommendations for NPO, and also provides helpful guidance to third parties that have relationships with NPO.  Many of the materials in the publication echo FATF recommendations and best practices, as well as material published by the US Treasury.

https://www.natlawreview.com/article/recent-south-african-publication-non-profit-organizations-and-financial-crimes

INSTEX FAILS TO SUPPORT EU-IRAN TRADE AS NUCLEAR ACCORD FALTERS

On 14 January, an article on EurActiv reported on the apparent failure of INSTEX, which was created by 3 EU States party to the JCPOA in January 2019 as a special purpose vehicle to help EU companies do business with Iran and facilitate non-US Dollar transactions to bypass and avoid breaking US sanctions.  6 European countries – Finland, Belgium, Denmark, Netherlands, Norway, and Sweden – joined the INSTEX.  The article says that INSTEX has become a point of contention between Europe and the Trump administration, with Washington effectively threatening to sanction anyone using the mechanism.  Though trade between Iran and the EU is still amounting to €6.3 billion, exports to Iran fell by 53% to €3.7 billion in the first 10 months of 2019, compared with the same period in 2018, and Iranian exports to the EU slumped by 94% to €586 million.

https://www.euractiv.com/section/global-europe/news/instex-fails-to-support-eu-iran-trade-as-nuclear-accord-falters/

see also the latest EU news release on Iran –

https://www.europarl.europa.eu/news/en/headlines/world/20200109STO69926/iran-can-the-eu-help-to-defuse-the-situation

EU ISSUED UPDATED TERRORISM SANCTIONS LIST

On 14 January, the EU published EU Regulation 2020/19/EU, the Annex to which provided an updated list of those persons, groups and entities subject to sanctions measures under EU Regulation 2580/2001/EC.  This sanctions regime is separate from the EU regime implementing UN Security Council resolutions targeting Al-Qaida and ISIL/Da’esh. The EU also has its own sanction regime which allows the EU to apply sanctions autonomously to ISIL/Da’esh and Al-Qaida and persons and entities associated or supporting them.

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R0019&from=EN

https://www.consilium.europa.eu/en/press/press-releases/2020/01/13/eu-renews-its-terrorist-list-of-persons-and-organisations-subject-to-sanctions/

See also EU Council Decision 2020/20/CFSP.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.LI.2020.008.01.0005.01.ENG&toc=OJ:L:2020:008I:TOC

EUROJUST SUPPORTS MAJOR CRACKDOWN ON CAR SALES VAT FRAUD

A news release from the EU on 14 January was concerned with a day of simultaneous and coordinated actions in 9 EU countries, judicial and police authorities dealt a blow to a criminal organisation involved in large-scale VAT fraud with the sale of luxury cars.  26 persons were interviewed and 33 premises searched in Bulgaria, the Czech Republic, France, Germany, Spain, Latvia, Lithuania and Romania, with over €100 000, as well as luxury cars and products, seized.  The suspects allegedly set up a VAT carousel for the purchase of luxury cars, buying vehicles on behalf of shadow companies controlled by French citizens.

http://www.eurojust.europa.eu/press/PressReleases/Pages/2020/2020-01-14.aspx

INDIA: COMPLAINT AGAINST CUSTOMS OFFICIALS OVER DIAMOND EXPORT SCAM

On 14 January, NDTV reported a case which was referred to the CBI after a Directorate of Revenue Intelligence probe found alleged involvement of Customs officials in the conspiracy.  The law enforcement agency has charged 17 individuals and companies, including 3 Mumbai-based senior Customs officials, for allegedly being part of a money laundering racket using over-invoiced import of diamonds.  Rough diamonds were imported at “highly exaggerated value” to siphon off excess foreign exchange overseas to cover the differential cost of other imports and park money abroad for unlawful activities.

https://www.ndtv.com/india-news/cbi-files-complaint-against-customs-officials-over-diamond-export-scam-report-2164170

GERMANY HITS PESTICIDES WHOLESALERS WITH LARGE FINES FOR OPERATING A CARTEL

On 14 January, Compliance Week reported that Germany’s competition regulator has fined seven pesticide wholesalers a total of €155 million for operating a cartel for 17 years between 1998 and 2015 – several individuals, reported to be managers, have also been fined.

https://www.complianceweek.com/regulatory-enforcement/germany-hits-pesticides-wholesalers-with-large-fines/28306.article

HOW DID ALLEGED UKRAINIAN MONEY LAUNDERERS BUY UP DOWNTOWN CLEVELAND?

An opinion piece in the Belt Magazine on 14 January posed this question.  This followed the filing in May 2019 of a lawsuit filed by the Ukrainian financial institution PrivatBank “alleging massive money laundering via American real estate”. Those accused allegedly funnelled illegally-obtained funds into American real estate deals and, during the course of this alleged money laundering, they became the largest property owners in Cleveland.

https://beltmag.com/ukrainian-money-laundering-cleveland/

US FEDERAL TAX EVASION: WHY IT MATTERS AND WHO DOES IT

On 14 January, Journalist Resources at the Shorenstein Center at the Havard Kennedy School published a briefing providing what it terms “a few ins and outs of federal tax evasion” — why it matters, why people do it and how they do it.

https://journalistsresource.org/studies/economics/taxes/tax-evasion-primer

UK OIL PRODUCER SEES SHARES TUMBLE 70% ON LOAN FRAUD

On 14 January, Oil Price.com reported that London-listed oil producer Lekoil has suspended trade in its shares amid a budding scandal involving a loan from a company claiming to act on behalf of the Qatar sovereign investment fund.  The Financial Times reported that this is not the first time a Nigerian-focused oil company has had trouble. In 2018, Lekoil’s partner in the Ogo field was found guilty of money laundering and fraud, for example. Lekoil bought off Afren and currently has 40% in the field.

https://oilprice.com/Latest-Energy-News/World-News/UK-Oil-Producer-Sees-Shares-Tumble-70-On-Loan-Fraud.html

MEDITERRANEAN OLIVE OIL PRODUCER USES IBM BLOCKCHAIN TO FIGHT FOOD FRAUD

On 14 January, the Coin Telegraph reported that one of the largest olive oil producers in the southern Mediterranean has announced that it is using IBM’s blockchain technology to provide traceability for its Terra Delyssa extra virgin olive oil.  Utilizing blockchain allows it to track Terra Delyssa across 8 quality assurance checkpoints, including the orchard where the olives were grown, the mill where olives were crushed, and the facilities where the oil was filtered, bottled and distributed.

https://cointelegraph.com/news/mediterranean-olive-oil-producer-uses-ibm-blockchain-to-fight-food-fraud

US SUPREME COURT REJECTS ATTEMPT BY SUDAN TO REVIEW EMBASSY BOMBING CASE THAT AWARDED BILLIONS TO VICTIMS’ FAMILIES

On 14 January, Jurist reported that the Court had denied a review filed by the Republic of Sudan concerning the 1998 embassy bombings in Kenya and Tanzania.  In 2017, a Court of Appeals awarded several billion dollars to family members of victims of the embassy bombings.  A 2001 lawsuit filed by US citizens held Sudan liable for damages and injuries caused by the attacks on the grounds that it had provided sanctuary to the Al Qaeda members who committed the bombings; and family members of foreign nationals working at the embassies at the time of the attacks filed a lawsuit against Sudan in 2017.

https://www.jurist.org/news/2020/01/supreme-court-denies-sudans-petition-for-review-in-1998-embassy-bombing-case/

LAOTIAN HELD IN JAPAN FOR TRYING TO EXPORT IVORY TAKEN FROM ZOO

Nippon.com on 14 January reported that police have arrested a Laotian on suspicion of trying to export ivory and other items he took from a Japanese zoo where he worked.  In July 2019, the suspect allegedly tried to export to Laos via Vietnam some 220 items, including African elephant ivory, Asian elephant bones and hair, white rhinoceros bones, cheetah teeth and deer horn, packed in a suitcase and other containers.

https://www.nippon.com/en/news/yjj2020011401042/laotian-held-in-japan-for-trying-to-export-ivory-taken-from-zoo.html

UK: CONTEMPT PROCEEDINGS FOR PRE-ACTION CONDUCT

On 13 January, an article in the Law Society Gazette reported that a landmark decision has held that the High Court has jurisdiction to commit for contempt of court in respect of false witness statements made under a pre-action protocol (PAP) even though proceedings were never issued.

https://www.lawgazette.co.uk/legal-updates/contempt-and-pre-action-conduct/5102640.article

FENTANYL: THE MOST DANGEROUS ILLEGAL DRUG IN AMERICA

An essay from the RAND Corporation on 13 January reported that researchers at RAND recently published the most comprehensive study to date on what’s driving the crisis, how it could play out in the future, and what may be done to save more lives.  Findings include that the crisis is only likely to get worse.  The lead author for the report is quoted as saying, “We haven’t seen anything like this since heroin first hit the streets more than 100 years ago”.

https://www.rand.org/blog/rand-review/2020/01/fentanyl-the-most-dangerous-illegal-drug-in-america.html

UK FINAL REGULATIONS FOR DISCLOSURE OF CROSS BORDER TAX ARRANGEMENTS UNDER EU DIRECTIVE

On 14 January, an article from Out-Law says that UK’s final regulations to implement EU Directive DAC6, which is designed to enable EU tax authorities to share information about cross-border tax schemes include some helpful changes.  The rules will now only apply where there is an EU tax advantage, and the penalty regime has been changed so as not to unduly penalise genuine mistakes. HMRC intends to issue guidance before the rules come into force on 1 July.

https://www.pinsentmasons.com/out-law/news/dac-6-uk-final-regulations-for-disclosure-of-cross-border-tax-arrangements

AMAZON TO RAMP UP COUNTERFEIT REPORTING TO LAW ENFORCEMENT

On 13 January, Reuters reported that Amazon.com Inc is planning to give more data on counterfeit goods to law enforcement in a further crackdown on fakes listed on its e-commerce sites, and comes as Amazon faces public scrutiny over how it polices counterfeits and allegedly unsafe products on its platform.

https://www.reuters.com/article/us-amazon-com-counterfeit/amazon-to-ramp-up-counterfeit-reporting-to-law-enforcement-idUSKBN1ZC25U

INTERNATIONAL ASSET RECOVERY EFFORTS IN CORRUPTION CASES, 2010–2019

The World Bank/UNODC Stolen Asset Recovery Institute is conducting a new study on international asset recovery efforts in corruption cases, based on a questionnaire for country authorities.  The study aims to collect data on global progress in international efforts to recover and return proceeds of corruption in a systematic and internationally comparable way.  The most recent study on this subject, the 2014 StAR/OECD report analysed asset recoveries by OECD countries between 2010 and June 2012.  No comparative data on international returns of proceeds of corruption since June 2012 or for non-OECD countries is available, a gap that this study seeks to fill.

https://star.worldbank.org/content/star-data-collection-international-asset-recovery-efforts-corruption-cases-2010–2019

GUATEMALANS DEMAND ARREST OF OUTGOING PRESIDENT FOR CORRUPTION

On 13 January, Al Jazeera reported that Guatemalan civil society groups are pressuring authorities to arrest President Jimmy Morales for corruption as soon as his successor takes office.  As president, Morales has immunity from prosecution, but this will lapse when the president-elect is inaugurated, but Morales will likely regain immunity just hours later when he is expected to be sworn into the Central American Parliament (Parlacen), a multilateral body for regional cooperation grew out of a 1980s peace process.

https://www.aljazeera.com/news/2020/01/guatemalans-demand-arrest-outgoing-president-corruption-200114001457754.html

US BANS FUGITIVE MOLDOVAN TYCOON FROM ENTRY FOR ‘SIGNIFICANT CORRUPTION’

Rferl reported on 13 January that Moldovan oligarch and former head of the Moldova’s Democratic Party (PDM) Vlad Plahotniuc has been banned from entering the US by the US State Department.  Moldovan anti-corruption prosecutors have charged Plahotniuc, who fled the country in June.

https://www.rferl.org/a/fugitive-moldovan-tycoon-plahotniuc-u-s-entry-ban-corruption/30375065.html

AFRICAN OLIGARCHS TURN TO ASIAN OFFSHORE DESTINATIONS

A Financial Times article on 13 January reported on the diversification of African capital flight to Asian centres such as Dubai, Singapore and Hong Kong, with the daughter of the former Angolan president being said to have moved her residence and companies to Dubai, as had the Guptas, relocating from South Africa; and looking at why it is happening.

https://www.ft.com/content/806e7d95-7921-43fb-8bbf-8100ae295fd1

 

 

Featured

CHINESE BANKER STASHED CASH BRIBES AT BEIJING PAD HE CALLED ‘SUPERMARKET’

The New York Post on 14 January carried a report claiming that a disgraced banker involved in one of China’s biggest financial-corruption cases drove around with a trunk full of cash bribes that he later stashed in an apartment he called “the supermarket”.  He was Lai Xiaomin, the former chairman of distressed-debt investor China Huarong Asset Management.  More than $29 million was eventually discovered by authorities.  Lai was arrested in November 2018 and has been accused of taking more than nearly $232 million, in bribes, according to news reports, through his positions as an ex-Communist Party chief and head of Huarong.

https://nypost.com/2020/01/14/chinese-banker-stashed-cash-bribes-at-pad-he-called-supermarket/

Featured

OFAC ADDS CHINESE AND NORTH KOREAN ENTITIES TO NORTH KOREA SANCTIONS LIST FOR EXPORT OF WORKERS FROM NORTH KOREA

On 14 January, OFAC announced that a Chinese entity, BEIJING SUKBAKSO of Beijing, and KOREA NAMGANG TRADING CORPORATION (aka. DPRK NAMGANG TRADING COMPANY) had been added to its sanctions lists.  The designations are said to relate to North Korea’s continued supply of illicit labour to overseas markets, something which is now banned under UN sanctions.  The Chinese entity is described as a “China-based North Korean lodging facility” that handles at least a portion of the travel and logistics for the North Korean company’s personnel working overseas.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200114.aspx

https://home.treasury.gov/news/press-releases/sm874

Featured

OTHER THINGS YOU MAY HAVE MISSED – JANUARY 13

13th January 2020

 UK: DIRECTOR BANNED FOR INVOLVEMENT IN NUISANCE MARKETING CALLS

On 6 January, the Insolvency Service reported that Gregory Francis Rudd (53), the sole director of Keurboom Communications Limited of Cambridge, has been banned for 6 years after his company permitted its lines to be used to make millions of nuisance marketing calls.  B

Between October 2014 and March 2016, up to 99.5 million automated marketing calls were made, through Keurboom’s lines, to people who had not provided their consent.

https://www.gov.uk/government/news/facilitating-nuisance-calls-lands-cambridge-director-with-ban

UK: BANKRUPT WHO CONTINUED TO RUN PAYROLL COMPANY DESPITE BEING BANNED DISQUALIFIED FOR 9 YEARS

On 8 January, the Insolvency Service reported that Addrees Ahmed (46) will be joined on the disqualified directors register by his wife, Robina Shaheen (42), also of Birmingham, after she allowed her husband to control the payroll company, Academy Management Services Limited.

https://www.gov.uk/government/news/bankrupt-disqualified-after-abusing-restrictions

LIBERIAN REGISTRY INTRODUCES A SIMPLIFIED VESSEL REGISTRATION PROCESS

On 13 January, Seatrade Maritime News reported that the Expedited Registration Process, or ERP, introduced on 1 January, reduces the number of requirements and allows for technology and digital files to replace administrative work, creating a more simplified process overall.  There is a claimed 50% reduction in time required.

https://www.seatrade-maritime.com/regulation/liberian-registry-introduces-simplified-vessel-registration-process

UK: WITNESS EVIDENCE WORKING GROUP (WEWG) REPORT ON IMPROVEMENTS TO THE CURRENT PRACTICE RE FACTUAL WITNESS EVIDENCE IN THE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

On 8 January, DLA Piper published an article saying that the WEWG, which included judges, barristers, solicitors and a nominee representing client users, issued its report in December which followed consideration by focus groups and the WEWG of the results of an online survey among stakeholders.  It is said that the report did not make any finite conclusions other than that there was “little enthusiasm for radical reform”, and instead it made various recommendations to assist in the creation of best practice guidelines which would hopefully streamline the approach of the different courts.  The survey is said to have found that only 6% of the respondents thought that the current approach to factual witness statements “fully achieved” the aim of producing the best evidence possible, and concerns demonstrated that there is significant room for improvement.

https://www.dlapiper.com/en/global/insights/publications/2020/01/wewg-report/

UN APPROVES SANCTIONS EXEMPTIONS FOR MSF, SWISS HUMANITARIAN AID IN NORTH KOREA

On 10 January, NK News reported that 2 European humanitarian organisations have been granted sanctions exemptions from the United Nations for projects in North Korea.

https://www.nknews.org/pro/un-approves-sanctions-exemptions-for-msf-swiss-humanitarian-aid-in-north-korea/

ICE AND US MARSHALS ARREST SALVADORAN TERRORIST FOR DEPORTATION

On 13 January, a news release from US Immigration and Customs Enforcement advised the arrest of Rene Antonio “Scrapy” Hernandez-Mejia, a Salvadoran national wanted in El Salvador,  He is wanted for being part of the 18 Revolutionary Pandilla, a terrorist organisation which is a faction of an El Salvadorian gang called Shadow Park Locos.  It is alleged that this gang is involved with crimes such as homicide, extortion, and terrorism.

https://www.ice.gov/news/releases/ice-us-marshals-arrest-salvadoran-terrorist-carson-city

HMRC LIST OF DELIBERATE TAX DEFAULTERS

On 13 January, HMRC published the latest, updated list of deliberate tax defaulters.

https://www.gov.uk/government/publications/publishing-details-of-deliberate-tax-defaulters-pddd

UK: CROWN SEEKS £5 MILLION FROM MAN JAILED IN SCOTLAND’S LONGEST TRIAL

On 13 January, STV reported that Edwin McLaren, 54, faces having to hand over more than £5.3 million, in a further revised assessment, to the Crown under proceeds of crime legislation.  He was jailed for 11 years in 2017 for his involvement in a £1.6 million property fraud scheme.

https://news.stv.tv/west-central/crown-seeks-5m-from-man-jailed-in-scotlands-longest-trial/

A WEALTHY CROATIAN BUSINESSMAN WITH TIES TO PRESIDENT PUTIN RECEIVED MILLIONS OF DOLLARS FROM RUSSIA UNDER THE GUISE OF FICTITIOUS REAL ESTATE PURCHASES

On 13 January, an OCCRP reported claimed that the exact source of the money is unknown – but the offshore company that made the payments is connected to a network that was used to launder funds stolen from the Russian state budget.  The report points the finger at family members and close associates of Mihajlo Perenčević.

https://www.occrp.org/en/troikalaundromat/unreal-estate

FRANCE: RUSSIAN ATHLETICS DOPING TRIAL POSTPONED UNTIL JUNE

On 13 January, OCCRP reported that the trial of former President of the International Association of Athletics Federations (IAAF), Lamine Diack, 86, who is accused of corruption, money laundering and breach of trust., has been delayed until June.  In the trial, 6 individuals are accused of having tried to cover up the doping of 23 Russian athletes.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/11416-france-russian-doping-trial-postponed-until-june

SPAIN: HEFTY SENTENCES SOUGHT FOR BRIBERY IN SAUDI ARMS DEALS

On 13 January, OCCRP reported that Spanish prosecutors are seeking long sentences for 8 individuals suspected of having bribed Saudi officials to get contracts to export weapons, as part of an investigation into corruption that had been going on for 25 years.  It is claimed that over $100 million in bribes were paid by the now dissolved state-owned weapons manufacturer Defex to various Saudi dignitaries.   Authorities investigated 11 contracts between Defex and Saudi Arabia, many of which were for ammunition and spare parts, and noticed that the bribes were paid to accounts in Switzerland, Liechtenstein, BVI, Panama, Bahamas, Isle of Man, Cayman Islands, Delaware, and Saudi Arabia.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/11415-spain-hefty-sentences-sought-for-graft-in-saudi-arms-deals

US SUPREME COURT REJECTS LOWER COURT RULING THAT IRANIAN ASSETS HELD OUTSIDE OF THE US COULD BE SEIZED TO SATISFY A JUDGMENT ISSUED IN THE US AGAINST IRAN

On 13 January, Jurist reported that the suit involves family members of US troops killed in the 1983 bombing of the US Marine Corp barracks in Lebanon.  The family members won the lawsuit against Iran, then sought to recover the money owed to them by Iran as stipulated by the judgment.  The case involves Bank Markazi’s assets held outside of the US.  The Supreme Court has rejected the Second Circuit’s ruling and sent the case back to the lower court so that it could issue a new decision based on the new National Defense Authorization Act, a new law signed by President Trump in December, which could help US troops’ families recover damages owed to them by Iran.

https://www.jurist.org/news/2020/01/supreme-court-rejects-lower-courts-decision-reviving-lawsuit-against-irans-central-bank/

SRI LANKA: CHINESE MAN HELD WITH OVER 200 SCORPIONS

On 13 January, Adaderana reported that a Chinese national has been arrested at the Bandaranaike International Airport (BIA) in Katunayake when he attempted to smuggle over 200 live scorpions out of the country.

http://www.adaderana.lk/news_intensedebate.php?nid=60196

LEEDS BUSINESSMAN SUBJECT TO FIRST “MCMAFIA” ORDER OVER ALLEGED LINKS TO ORGANISED CRIME HAS £1.13M FROZEN

On 13 January, the Yorkshire Post reported that Leeds entrepreneur Mansoor Mahmood Hussain, 39, is being asked to either explain the source of his wealth or hand it over to the NCA under an Unexplained Wealth Order which involves funds in a bank account linked to the company 500 M Ltd.

https://www.yorkshirepost.co.uk/news/crime/leeds-businessman-subject-to-first-mcmafia-order-over-alleged-links-to-organised-crime-has-1-13m-frozen-1-10199034

LITHUANIA FEARS NEW BELARUSIAN NUCLEAR PLANT HASN’T ‘LEARNED LESSONS OF CHERNOBYL’

An article on Rferl on 13 January reports on a controversial project funded by a subsidiary of Russian state nuclear energy monopoly Rosatom.  The Lithuania capital, Vilnius, lies a mere 40 km from the Astravets plant.  The same Russian-made VVER-type reactors that will be used near Astravets are slated for installation in a range of other countries by Rosatom — which has emerged as the world’s leading nuclear reactor supplier.

https://www.rferl.org/a/lithuania-fears-belarusian-nuclear-plant-hasnt-learned-lessons-of-chernobyl-/30374511.html

 

 

 

 

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UK: HMRC RUSHES OUT GUIDANCE ON NEW AML REGULATIONS

On 13 January, Accountancy Daily reported that HMRC has published outline guidance on the changes to AML/CFT regulations, which have been extended to cover lettings agents and art dealers from mid-January, with more detailed information set to follow.  The Money Laundering and Terrorist Financing (amendment) Regulations 2019 came into force on 10 January, updating existing regulations, and implementing elements of the 5th EU AML Directive.  HMRC says it will take into account the short lead-in time businesses have had to implement all the new requirements in assessing the response to any non-compliance.

https://www.accountancydaily.co/hmrc-rushes-out-guidance-new-aml-regulations

The HMRC guidance is at –

https://www.gov.uk/government/publications/money-laundering-and-terrorist-financing-amendment-regulations-2019/money-laundering-and-terrorist-financing-amendment-regulations-2019

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UK: AML GUIDE ISSUED FOR GAMBLING OPERATORS

An article from Out-Law on 13 January was concerned with new guidance issued by the Gambling Commission and says that operators have been urged to review and update their AML/CFT policies, procedures and controls.  Although aimed at casinos, it is said that the guidance holds lessons for all gambling operators.

https://www.pinsentmasons.com/out-law/news/aml-guide-issued-for-gambling-operators

The guidance is at –

http://www.gamblingcommission.gov.uk/PDF/AML/Prevention-of-Money-Laundering-and-Combating-the-Financing-of-Terrorism-5th-Edition.pdf

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ISLE OF MAN PUBLISHES NEW NATIONAL RISK ASSESSMENT OF MONEY LAUNDERING AND TERRORIST FINANCING

On 13 January, the Isle of Man advised of the publication of an updated NRA, which is a requirement of FATF.  As with the original NRA, it was carried out with cross-government participation and input from the private sector, but also builds upon the 2015 assessment and the findings and recommendations of the MONEYVAL Mutual Evaluation Report of 2016.  The NRA confirms the overall level of risk for the Island are that the money laundering risk remains “Medium-High” and the terrorism financing risk as “Medium-Low”.  Amongst the points mentioned is that –

  • the Customs and Excise Division of Treasury is engaging with OFSI in the UK new ‘Virtual Sanctions Network’ which has the aim of promoting dialogue and cooperation between the UK, the Crown Dependencies and the Overseas Territories;
  • reforms introduced by government, including increased investment, are taking effect. The reforms have been underpinned by strategy, policy and procedural development enabling the authorities to work together in a more collaborative and effective manner;
  • effective use needs to be made of new powers, procedures and resources that have been allocated to the authorities;
  • accuracy of the Beneficial Ownership database is tested by the FSA using a risk-based approach; however, the accuracy and completeness of identity and verification details on registration need to be reviewed;
  • the impact of the UK exit from the EU is currently unknown;
  • there has been a significant increase in casework for the Economic Crime Unit (ECU) from 34 cases in 2016/17 to 90 in 2018/19; the main predicate crimes for money laundering continue to be fraud, false accounting and deception. Two-thirds of the cases being investigated by the Economic Crime Unit arise from predicate offending outside the Island.

https://www.gov.im/news/2020/jan/13/isle-of-man-publishes-new-national-risk-assessment-of-money-laundering-and-terrorist-financing/

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OFAC: ADDITIONAL VENEZUELA SANCTIONS LISTINGS AND AMENDMENT FOR CHINESE COMPANY PAMCHEL TRADING BEIJING CO LTD

On 13 January, OFAC announced the addition of 7 corrupt National Assembly officials to its Venezuelan sanctions list.  Those designated are said to have led a failed attempt to illegitimately seize control of the National Assembly and block interim President Juan Guaidó and other deputies.

It also announced the amendment of the entry for the recently-designated Chinese company said to be linked to Iranian activities.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200113.aspx

https://home.treasury.gov/news/press-releases/sm871

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RUSSIAN OLIGARCHS LAUNDER DIRTY CASH IN UK COURTS USING “FAKE” TRIALS

On 13 January, KYC 360 reported on a report from the Henry Jackson Society which claimed that corrupt Russian oligarchs are bringing lawsuits in English courts to launder hundreds of millions of pounds in dirty money, with the “damages” paid over effectively becoming laundered funds.  It is said that oligarchs agree to sue each other in the English courts with the payment of damages being used to launder their funds, and they can also arrange to bring cases against themselves using sham companies.  In a foreword to the report, a prominent English QC says that the scale of Russian interference in the English judiciary is such that it now constitutes a “critical national security threat”.

https://www.riskscreen.com/kyc360/news/oligarchs-launder-dirty-cash-in-uk-courts/

https://henryjacksonsociety.org/publications/russian-kleptocracy-and-the-rule-of-law-how-the-kremlin-undermines-european-judicial-systems/

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 12

12th January 2020

 UK: WORKERS HIT BY CONSTRUCTION FRAUD PROBE

On 11 January, Click Liverpool reported that construction workers in Liverpool are facing a difficult time finding work after 2 high-profile projects were halted following a fraud probe after Elliott Lawless, the founder of the Elliot Group, was arrested along with a senior official at Liverpool council as part of a fraud investigation.

https://www.clickliverpool.com/business/36797-workers-hit-by-liverpool-construction-fraud-probe/

“LIFE-LONG CRIMINAL” CONVICTED OF HIS ROLE IN A PLOT TO IMPORT 96 LETHAL FIREARMS INTO THE UK

On 6 January, UK Haulier carried an article saying that Steven Spires, 37, from Slough has been convicted of his role in a plot to import 96 lethal firearms into the UK following an investigation by the joint NCA and Metropolitan Police Organised Crime Partnership (OCP).  This followed a retrial, after his original conviction in 2018.  He and 2 others were prosecuted following a discovery in 2017 of 79 handguns and thousands of rounds of ammunition by UK Border Force officers based at Coqeulles, France,

https://www.ukhaulier.co.uk/news/road-transport/crime/life-long-criminal-imported-lethal-handguns-into-uk/

PROTECTING LAW FIRM AND CLIENT FUNDS FROM CYBERCRIMINALS

In its 13 January edition, the Law Society Gazette published an article asking how can you avoid falling foul to a phishing scam and how can you mitigate the threat of cybercrime? It provides tips on improved security, including over passwords.

https://www.lawgazette.co.uk/features/protecting-your-funds-from-cybercriminals/5102637.article

INDIAN MAN ADMITS US CALL CENTRE FRAUD STEALING MILLIONS

On 12 January, the Desiblitz website reported that an Indian man has pleaded guilty in the US for his role in a multi-million dollar call centre fraud that targeted Americans.

Hitesh Madhubhai Patel, 43, is said to have played a prominent role in operating and funding the India-based call centres 2013-16.  Singapore authorities apprehended the Indian man, pursuant to a provisional arrest warrant in September 2018, after he flew there from India, and in 2019 extradited him to the US.

https://www.desiblitz.com/content/indian-man-admits-us-call-centre-fraud-stealing-millions

CROSS-BORDER OPERATION TARGETS PEOPLE-TRAFFICKING NETWORK USING GIBRALTAR AS GATEWAY TO EUROPE

The Gibraltar Chronicle on 12 January reported that police in Gibraltar and Spain have arrested 47 people suspected of involvement in a people-trafficking network that allegedly used Gibraltar as a gateway into mainland Europe from Morocco.

The operation began in late 2018 and involved months of surveillance and investigation in Spain and Gibraltar.  Arrests have taken place over the last 9 months.  The gang is said to have used UK short-stay tourist visas in Morocco with which migrants then travelled to Gibraltar by plane or ferry, later to be driven into Spain overland.

https://www.chronicle.gi/cross-border-operation-targets-people-trafficking-network-using-gibraltar-as-gateway-to-europe/

TRIAL OF FORMER IAAF PRESIDENT LAMINE DIACK SET TO OPEN IN PARIS

Inside the Games website on 12 January reported that disgraced former International Association of Athletics Federations (IAAF) President Lamine Diack, 86, faces prison if convicted at a trial beginning in Paris, where he stands accused of corruption, influence-trafficking and money laundering.  Allegations relate to payments made to companies connected to Diack and his son Papa Massata – who will not appear at the trial because he refuses to be extradited from Senegal but could be convicted in absentia.  It says that former Russian Athletics Federation President Valentin Balakhnichev and Alexei Melnikov, the former head Russian athletics distance coach, are also due to stand trial but have refused to cooperate with the long-running French investigation.

https://www.insidethegames.biz/articles/1089052/diack-trial-to-start-in-paris

 

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EMAIL PAYMENT FRAUDS – STAYING ONE STEP AHEAD

On 9 January, a briefing from HFW says that email payment frauds (aka business email compromise, or BEC, fraud) are becoming more elaborate and can have a heavy financial cost for those that fall victim to them.  In this briefing, the law firm examines what businesses can do to prevent themselves becoming a victim to these frauds and to recover money paid out if they do fall victim to such a fraud.  It says that the best protection against fraudulent emails is to identify them prior to making payment.  They will often appear genuine at first glance but there are measures, which are outlined in the briefing, which, if actioned, can increase your chances of identifying a fraudulent email.  However, if money is paid out into a fraudulent account, recovery is still possible in various jurisdictions, provided that you act promptly, the briefing says – and it looks at recovery in the UK and in Switzerland.

https://www.hfw.com/Email-payment-frauds-staying-one-step-ahead-Jan-20

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https://www.interpol.int/en/Crimes/Financial-crime/Business-Email-Compromise-Fraud

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THINGS YOU MAY HAVE MISSED – JANUARY 11

11th January 2020

TRAVELEX CYBER RANSOMWARE CASE SHOWS IMPORTANCE OF SERVICE CONTRACTS

On 10 January, an article on Out-Law was concerned with the ransomware attack on foreign exchange company Travelex, and says that businesses that rely on others for providing services to their customers should review their contracts with their service providers in light of the case.  It also says that the terms of such contracts will dictate whether the businesses have any recourse against their service provider in circumstances where services are disrupted due to a cyber event.

https://www.pinsentmasons.com/out-law/news/travelex-cyber-ransomware-case-shows-importance-of-service-contracts

ISLE OF MAN: AML/CFT CODE AMENDMENT

On 10 January, the FSA released a news release saying that there has been an amendment to the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019 that came into operation on 25 November.  The amendments address some minor typographical errors and make some updates that were required.

https://www.iomfsa.im/fsa-news/2020/jan/anti-money-laundering-and-countering-the-financing-of-terrorism-code-2019-amendment/

ISLE OF MAN: PROCEEDS OF CRIME CHANGES CONCERNED WITH “TIPPING OFF”

Also included in the FSA news release on 10 January was mention of a further package of measures was approved by the Island’s parliament in December which resulted in amendments being made to the Proceeds of Crime Act 2008 and Anti-Terrorism and Crime Act 2003.  These changes were made to enhance the Island’s AML/CFT legislation in connection with FATF and MONEYVAL recommendations around disclosures and what is colloquially referred to as “tipping off”, the confidentiality of the information disclosed to the FIU on a STR, and the legitimate disclosure of information within group companies.

https://www.iomfsa.im/fsa-news/2020/jan/anti-money-laundering-and-countering-the-financing-of-terrorism-code-2019-amendment/

https://www.gov.im/media/1367967/december-2019-tynwald.pdf

US BANS CHARTER FLIGHTS TO CUBA IN TIGHTENED SANCTIONS

On 11 January, the Daily Mail reported that the US is curbing public charter flights to Cuba in a further effort to squeeze the Cuban government’s income.  The U.S. Department of Transportation (DOT) has suspended until further notice all public charter flights between the US and Cuban destinations other than Havana’s José Martí International Airport.  9 Cuban airports currently receiving US public charter flights will be affected.  Operators will have a 60-day wind-down period to discontinue all affected flights.

https://www.dailymail.co.uk/news/article-7874579/U-S-seeks-squeeze-Cuba-curbing-flights-island.html

https://www.travelpulse.com/news/impacting-travel/dot-puts-further-restrictions-on-travel-to-cuba.html

2019 UPDATES TO CHINA’S DRAFT EXPORT CONTROL LAW – WHAT YOU NEED TO KNOW

On 11 January, Global Compliance News carried an article explaining the main features of the changes.  It notes that consultation on the draft ends on 26 January, but there is no set schedule for implementation of the changes.

https://globalcompliancenews.com/2019-updates-to-chinas-draft-export-control-law-what-you-need-to-know/

GERMANY JAILS RUSSIAN FOR EXPORTING EMBARGOED MILITARY TECH

On 11 January, the Moscow Times reported that authorities detained the man, identified as Vladimir D and who had lived in Germany for some 25 years, in December 2018 and his trial began in November 2019.  He was accused of selling more than $2 million worth of illegal dual-use goods to “military recipients in Russia” between 2014 and 2018.  It is said that he exported heat-and-pressure technology known as hot isostatic presses used in the production of aircraft and rocket engines, and 4.5 kg of a chemical used to make rocket propellants and explosives.

https://www.themoscowtimes.com/2020/01/10/germany-jails-russian-for-exporting-embargoed-military-tech-a68857

US COMMERCE DEPARTMENT WILL MOVE FORWARD WITH MORE STRINGENT EXPORT CONTROLS FOR CERTAIN EMERGING TECHNOLOGIES

On 11 January, an article from Skadden said that in November, the Bureau of Industry and Security published an advance notice of proposed rulemaking (ANPRM) soliciting comments on the criteria to be used to identify “emerging technologies” that are essential to US national security, and with a representative list of broadly scoped technologies, including, for example, artificial intelligence (AI) and machine learning technology.  After commenting on this, Skadden also says that BIS is poised to issue an ANPRM regarding the identification and control of so-called foundational technologies, described as items that currently are subject to control only for anti-terrorism reasons.  The article warns that the coming year promises to be momentous for technology export controls, and that companies operating in any of the industries identified by BIS in November should carefully monitor regulatory developments.

https://www.skadden.com/-/media/files/publications/2020/01/emerging-technologies-export-controls/commerce_department_will_move_forward.pdf

SUDAN CHARGES AL BASHIR’S BROTHERS,] AND PROMINENT ISLAMIST CLERIC UNDER MONEY LAUNDERING AND TERRORISM LAWS

On 11 January, Dabanga reported that the prosecutor of Sudan’s Anti-Money Laundering and Terrorism-Financing Department issued arrest warrants against 2 brothers of ousted dictator Omar Al Bashir and prominent Islamist cleric Abdelhay Yousef.  The department also seized the El Nour Islamic Complex in Khartoum North which was built by the ousted president.

https://www.dabangasudan.org/en/all-news/article/sudan-charges-al-bashir-s-brothers-islamist-cleric-for-ill-gotten-gains

 

 

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 10

10th January 2020

IRAN’S MILLIONAIRE MULLAHS, THE MILITARY, AND THE FIGHT FOR FOREIGN CURRENCY

On 6 January, Deutsche Welle carried an article about the Revolutionary Guard is a powerful economic force in Iran and, with the country’s economy flailing as a potential war with the US looms, its influence is likely to grow.

https://www.dw.com/en/irans-millionaire-mullahs-the-military-and-the-fight-for-foreign-currency/a-51934397

FIGHT AGAINST CORRUPTION: FRANCE MUST DO BETTER

On 9 January, the Council of Europe published a report from its anti-corruption body in which it calls on France to improve the effectiveness and practical application of measures to prevent corruption within the executive (President of the Republic, ministers, private office members and senior civil servants) as well as in the National Police and the National Gendarmerie, while noting some positive legislative developments to strengthen transparency in public life and integrity within the executive.

https://www.coe.int/en/web/portal/-/fight-against-corruption-france-must-do-better-in-terms-of-the-executive-and-law-enforcement-agencies

 

UK: DISCLOSURE OF EVIDENCE IN CRIMINAL PROCEEDINGS

On 10 January, the House of Lords Library published a briefing paper which provides a chronology of recent discussions on the disclosure of evidence in criminal proceedings.  It includes an overview of disclosure procedures, notable high-profile cases, and recent developments in disclosure practices across the criminal justice system.  It says that disclosure has been the subject of scrutiny for over a decade.  The House of Commons Justice Committee launched an inquiry into the disclosure of evidence in criminal cases in January 2018, and the final report was published in July 2018.  It provided recommendations for several partners across the criminal justice system.

http://researchbriefings.files.parliament.uk/documents/LLN-2020-0010/LLN-2020-0010.pdf

HOW MUCH RADIOACTIVE WASTE IS THERE IN THE UK?

On 10 January, a post on the GOV.UK blog site advised that the UK Radioactive Waste Inventory provides detailed information on radioactive wastes and material in the country.  It is essentially a huge dataset with information about all the radioactive waste and materials that we have in the UK, and that it is estimated will arise in future.  The amount of radioactive waste produced in the UK is very small compared to all other forms of waste.

https://nda.blog.gov.uk/2020/01/10/how-much-radioactive-waste-is-there-in-the-uk/

MAN JAILED FOR DUPING ROYAL NAVY INTO BUYING KIT UNFIT FOR USE IN £1.4 MILLION FRAUD

On 10 January, LBC reported that Carl Tiltman, 56, will spend more than 3 years behind bars after admitting fraud by false representation and fraud by abuse of position.  He duped the Royal Navy into investing in underwater scanning technology after using fake test results to lie about its capabilities in his sales pitch.

https://www.lbcnews.co.uk/uk-news/14bbde706add42dfa7c258fa02b3c503/

UK: HALF OF NHS TRUSTS OUTSOURCE OUTPATIENT PHARMACY SERVICES TO AVOID VAT

On 7 January, the Pharmaceutical Journal reported that data show 53 NHS trusts have a subsidiary outpatient pharmacy and that half of NHS trusts now outsource their outpatient pharmacies in an effort to save tax, according to NHS figures, despite union leaders saying this practice is detrimental to staff pay.

https://www.pharmaceutical-journal.com/20207538.article

US JUDGE DISMISSES 2 HELMS-BURTON CASES INVOLVING CUBAN PROPERTY CLAIMS BY US BUSINESSES

The EU Sanctions Blog on 10 January reported that a US federal Judge in Florida has dismissed 2 Helms-Burton cases filed against Norwegian Cruise Line and MSC cruises, because the conduct had taken place after the plaintiff’s interest in the property had expired.  However, the judge said that if the cruise lines’ alleged activities had taken place between 1960 and 2004, they would have been found to have “trafficked” in the plaintiff’s confiscated property under Title III of the Helms-Burton Act.  The blog also mentioned that, in August, Carnival Corporation’s motion to dismiss similar Helms-Burton proceedings was denied.  Title III allows for claims for use/misuse of formerly-held property seized and made use of for or by the Cuban regime.

https://www.europeansanctions.com/2020/01/us-judge-dismisses-2-helms-burton-cases/

US DEPORTS SALVADORAN NATIONAL WANTED FOR BRIBERY ETC AFTER 12 YEAR LEGAL BATTLE

On 9 January, a news release from US Immigration and Customs Enforcement announced that it had repatriated Roberto Carlos Silva-Pereira, 45, a citizen of El Salvador who is wanted for bribery and money laundering in his native country in addition to murder in Guatemala.  An arrest warrant against Silva-Pereira for bribery and money laundering was issued in Guatemala in 2007, and he was arrested in 2008 in the US but then years of litigation followed – until he was finally removed on 8 January.

https://www.ice.gov/news/releases/ice-phoenix-removes-salvadoran-national-wanted-bribery-illicit-financial-activity

EU SAID TO BE PREPARING FURTHER TARGETED SANCTIONS AGAINST VENEZUELA

On 9 January, a news release from the EU announced that the EU was “ready to start work towards applying targeted measures against individuals” involved in recent acts undermining democracy, rule of law and human rights in Venezuela.  25 Venezuelan officials are already currently designated under EU sanctions.

https://www.consilium.europa.eu/en/press/press-releases/2020/01/09/statement-by-the-high-representative-josep-borrell-on-behalf-of-the-european-union-on-the-latest-developments-on-the-national-assembly-of-venezuela/

US FORMALLY INDICTS RESEARCHER FOR BLOCKCHAIN LECTURE IN NORTH KOREA

On 9 January, NK News reported that a grand jury had formally indicted US blockchain researcher Virgil Griffiths, and reported that one of his associates was also expected to be arrested.

https://www.nknews.org/2020/01/u-s-jury-formally-indicts-researcher-for-blockchain-lecture-in-north-korea/

HUMAN TRAFFICKING: CLOSER TO HOME THAN YOU THINK,SAYS UK BANKERS GROUP

On 6 January, the American Bankers’ Association Banking Journal published an article saying that the UN International Labor Organization has estimated that there are currently 25 million victims of human trafficking around the world.  It goes on to say that, within the US, human trafficking is widely unreported for a variety of reasons, including fear or immigration status, but the ILO estimated that approximately 403,000 persons are trafficked in the US at any one time.  It points out that January is Human Trafficking Awareness Month, and says that the good news is that the financial industry and especially anti-money laundering professionals, can help stop these criminals with enhanced awareness and training, knowledge of typologies and red flags, and strong relationships with law enforcement.  It then provides some guidance and information on sex and labour trafficking in the US, red flags etc.

https://bankingjournal.aba.com/2020/01/human-trafficking-closer-to-home-than-you-think/

ARMED DRONES IN THE MIDDLE EAST: PROLIFERATION AND NORMS IN THE REGION

On 17 December, RUSI published an Occasional Paper which aims to provide an in-depth inventory of armed drones possessed by Middle Eastern states, assessing quantity, types and timeframes; and to explore where and how armed drones have been used so far, to assess whether and how countries’ practices and ethical considerations around airpower and airstrikes are affected.  It is said that the main conclusions drawn by this paper are that over the past few years more and more countries across the Middle East have acquired armed drones, either by importing them (Jordan, Iraq, Saudi Arabia and the UAE) or by building them domestically (Israel, Iran and Turkey). China, a no-questions-asked exporter of drones, has played and is likely to continue playing a key role as a supplier of armed UAV to the Middle East.

https://rusi.org/sites/default/files/20181207_armed_drones_middle_east_web.pdf

FATF SUPERVISORS’ FORUM ON SUPERVISING VIRTUAL ASSETS

On 10 January, FATF issued a news release on this meeting in Paris on 9 January.  It is said that supervisors from around the world met to discuss how to supervise and regulate virtual assets and virtual asset service providers (VASP).  This meeting was the first opportunity for supervisors to discuss how to implement these new measures since the FATF finalised them in June 2019. Participants in this Forum shared their knowledge and experience in virtual assets and VASP supervision and discussed 3 main areas –  lessons learnt so far from countries that have already established VASP supervisory regimes and are already supervising VASP; common issues when drafting VASP laws and regulations; and the tools, skills, procedures and technology that supervisors need to effectively supervise VASP.

http://www.fatf-gafi.org/publications/fatfgeneral/documents/supervisor-forum-2020.html

PAKISTAN: AUTHORITIES TRACE 10,000 PEOPLE INVOLVED IN MONEY LAUNDERING

The International News on 10 January reported that the Federal Board of Revenue (FBR) says it has traced out less than 10,000 people who are involved in cash transactions running into trillions of rupees allegedly for the purpose of tax evasion and with possibility of involvement in money laundering.  It is also said to be looking into affairs of non-profit organisations (NPO) and international non-profit organisations (INPO) with regard to alleged involvement in money laundering and terror financing.

https://www.thenews.com.pk/print/596819-fbr-traces-10-000-people-involved-in-money-laundering

CANADIAN PROSECUTORS SAY CASE AGAINST HUAWEI CFO IS ABOUT FRAUD, NOT SANCTIONS

On 10 January, Reuters reported that Huawei executive Meng Wanzhou’s conduct amounts to fraud under Canadian law and the court need not consider US sanctions law, Canadian federal prosecutors have argued.  Meng, 47, was arrested at the Vancouver International Airport in December 2018, at the request of the US, where she is charged with bank fraud.

https://uk.reuters.com/article/us-usa-huawei-tech-canada/canadian-prosecutors-say-case-against-huawei-cfo-is-about-fraud-not-sanctions-idUKKBN1Z92D2

IS ANGOLA’S ANTI-CORRUPTION DRIVE REAL OR COSMETIC?

On 10 January, Voice of America carried this article, saying that increasingly, President Lourenco’s anti-corruption efforts appear to target former president Dos Santos’ family members, and that, along with the government’s reluctance to prosecute the former vice-president, a top Lourenco ally, is leading critics to ask whether Lourenco is actually trying to destroy corruption.  In 2018, Angola’s government strenuously protected former Vice-President Manuel Vicente against corruption charges in a Portuguese court

https://www.voanews.com/africa/angolas-anti-corruption-drive-real-or-cosmetic

CANADA: FORMER SNC-LAVALIN EXECUTIVE GETS 8½ YEARS FOR FRAUD AND CORRUPTION

On 10 January, The Star reported that former SNC-Lavalin executive Sami Bebawi, 73, was sentenced to 8½ years in prison, in the last of the criminal cases brought against the engineering giant and its former employees involved in fraud and corruption in Libya.

https://www.thestar.com/news/canada/2020/01/10/former-snc-lavalin-exec-sami-bebawi-gets-85-years-for-fraud-corruption.html

SEYCHELLES AIMS TO GET TOUGH ON MONEY LAUNDERING AND TERRORISM FINANCING

In its 11 January edition, CGTN in China carried an article saying that a new, stronger Bill on AML/CFT will be tabled before the National Assembly for approval in February, as part of a phased approach to strengthen the domestic framework.

https://newsaf.cgtn.com/news/2020-01-11/Seychelles-aims-to-get-tough-on-money-laundering-terrorism-financing-N9rt7T5l04/index.html

UK: RETROSPECTIVE TAXATION

On 10 January, the House of Commons Library published a briefing paper saying that retrospective tax legislation imposes or increases a tax charge prior to the legislation being introduced.  It says that although this is a controversial practice, retrospective provisions are often introduced to mitigate the risks to the Exchequer from tax avoidance.  This paper discusses the origin of the “Rees Rules” (an approach to retrospective taxation codified in 1978), and subsequent debates as to the use of retrospective changes in tax law.

http://researchbriefings.files.parliament.uk/documents/SN04369/SN04369.pdf

DUTCH BANKS ARE FREEZING ACCOUNTS UNDER FATCA

Investment Europe on 10 January reported that Dutch banks have started freezing the accounts of dozens of ‘accidental’ Americans in the Netherlands because they have failed to provide them with their US tax information numbers (TIN), a requirement under FATCA.

https://www.investmenteurope.net/news/4008930/dutch-banks-freezing-accounts-fatca

INCREASINGLY COMPANIES’ OPERATIONS AND DISCLOSURES ARE PUBLICLY EVALUATED BY “BENCHMARKS” THAT COMPARE PERFORMANCE ON HUMAN RIGHTS AND RECOGNISED ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) ISSUES

On 10 January, an article from law firm White & Case is concerned with human rights and ESG benchmarks public rankings or analyses — typically based on publicly available information and produced by civil society or NGO, foundations, investor groups and others – notably civil society organisations with funding from governments and investors.  The article examines the implications of such benchmarking, explaining what might be measured.  It provides a business case for understanding human rights and environmental benchmarks, and how a business can improve its scoring.

https://www.whitecase.com/sites/default/files/2020-01/human-rights-benchmarks-2020-01-10.pdf

KYRGYZSTAN TO STRENGTHEN EFFORTS TO CURB SHADOW ECONOMY

On 10 January, Xinhua reported that the Kyrgyz government will step up efforts to curb the shadow economy in 2020, the Kyrgyz Prime Minister has said, and that automatic monitoring systems have already been deployed at the border checkpoints with Kazakhstan to check for smuggled goods.  It is said that data from different sources show that the shadow economy accounts for 24% to 37% of the GDP.

http://www.xinhuanet.com/english/2020-01/10/c_138694647.htm

RECORD NUMBER OF DRUGS SEIZURES IN BELGIUM IN 2019

The Brussels Times on 8 January reported a growth of 660% in 5 years in the case of cocaine.  Cocaine is the most seized drug in Belgium. In the port of Antwerp, 119 discoveries were recorded last year, a figure representing 61.8 tonnes.  The main sources for hard drugs remain the same: Brazil, Ecuador and Colombia.

https://www.brusselstimes.com/all-news/belgium-all-news/88756/new-plant-to-manufacture-surface-and-underwater-drones-in-ostend/

ISRAEL SUPREME COURT ORDERS CUSTOMS AUTHORITY TO END PREFERENTIAL TREATMENT OF ISRAEL POST

On 8 January, Israel National News reported that the Court has ordered the Customs Authority to inspect packages sent via Israel Post, the same way they are inspected when sent through other postal companies – a change will take effect on 15 February and will affect all packages over $75.  A case brought by trade bodies and the chamber of commerce had said that the situation had exempted Israel Post from all the demands placed on importers, including from import tax and demands concerning the objects’ safety.

http://www.israelnationalnews.com/News/News.aspx/274267

LOS POCHOS, GUATEMALA’S NEW GENERATION OF DRUG RUNNERS FOR SINALOA CARTEL

On 10 January, Insight Crime reported that the arrest of a mayor in Guatemala’s northern department of San Marcos has unveiled a new criminal structure.  It is said that Erick Salvador Súñiga Rodríguez (aka “El Pocho”) and the mayor of the municipality of Ayutla in the department of San Marcos, surrendered to the DEA in mid-December and agreed to reveal details of his role in trafficking cocaine from Guatemala to the US.

https://www.insightcrime.org/news/brief/los-pochos-guatemala-sinaloa-cartel/

UK: THE FCA CRYPTOCURRENCY AML REGULATION REGIME

On 10 January, Eversheds Sutherland published a briefing saying that the FCA began supervising AML/CFT compliance within the cryptoasset sector from 10 January.  The article looks at regime scope and regulatory deadlines, and the risk-based approach.  The article reminds one that the FCA Gateway opens for businesses to submit registration applications on 10 January with a hard deadline of 10 January 2021.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Financial-services-and-dispute-investigation/Cryptocurrency_AML_Regulation_10_January_2020_Regime

 

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US: BEST PRACTICES FOR COMPLYING WITH BENEFICIAL OWNERSHIP REQUIREMENT OF CDD RULE

On 31 December, the American Bankers’ Association Banking Journal published an article which recommends some best practices for financial institutions in the US when collecting beneficial ownership information when onboarding new entities.  These include determining the legal status of the new entity, then deciding who its beneficial owners are – highlighting best practices and red flags.  It points out the relevant rules specifically require the financial institution to establish a “reasonable belief” that it knows the “true identity” of both the legal entity customer and its beneficial owners; and hence every financial institution should establish a clear and specific definition of “reasonable belief” and incorporate this into written policies.

https://bankingjournal.aba.com/2019/12/best-practices-for-complying-with-beneficial-ownership-requirement-of-cdd-rule/

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NEW US IRAN SANCTIONS LISTING AND EXECUTIVE ORDER EXTENDING SCOPE

NEW US EXECUTIVE ORDER IMPOSES ADDITIONAL SANCTIONS ON IRAN

On 10 January, the US Treasury announced that a new Executive Order expanding authorities to target additional sources of revenue used by the Iranian regime.  It is said that they are used by the Iranian regime to fund and support its nuclear program, missile development, terrorism and terrorist proxy networks, and malign regional influence.  It authorises the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions against persons operating in or transacting with additional sectors of the Iranian economy, including construction, mining, manufacturing, and textiles.

https://www.treasury.gov/resource-center/sanctions/Programs/Documents/20200110_iran_eo.pdf

OFAC NEW SANCTIONS TARGETS IRAN’S BILLION DOLLAR METALS INDUSTRY AND SENIOR REGIME OFFICIALS

On 10 January, OFAC announced that it had designated 8 senior Iranian regime officials who have, it says, advanced the regime’s destabilising objectives, as well as the largest steel, aluminium, copper, and iron manufacturers in Iran, who collectively generate billions of dollars annually.  Those designated include Ali Shamkhani, the Secretary of Iran’s Supreme National Security Council; Mohammad Reza Ashtiani, the Deputy Chief of Staff of Iranian armed forces; and Gholamreza Soleimani, the head of the Basij militia of the Islamic Revolutionary Guards Corps (IRGC) – and just killed in a drone strike.  Entities designated include a Chinese trading company and a Seychelles-based and Chinese-based company involved with the trading company.  The new designations target the 13 largest steel and iron manufacturers in Iran, who collectively generate billions in sales annually, and the top companies operating in the Iranian aluminium and copper sectors.

https://home.treasury.gov/news/press-releases/sm870

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200110.aspx

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TUNISIA: FATF AML/CFT ASSESSMENT FOLLOW-UP REPORT

On 7 January, FATF published the 4th follow-up report on Tunisia, following its mutual evaluation in 2016.  The ratings for 9 FATF Recommendations have been upgraded to “compliant” or “largely compliant”.   However, Tunisia will remain in enhanced follow-up and should submit its next enhanced follow-up report to FATF in November 2020.

http://www.fatf-gafi.org/media/fatf/documents/reports/fur/MENAFATF-FUR-Tunisia-2020.pdf

tunisia

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UK BENEFICIAL OWNERSHIP REPORTING REQUIREMENT CHANGES

A news releases from Companies House on 10 January advised that organisations supervised under AML legislation will need to report certain persons of significant control (PSC) discrepancies to Companies House under EU 5th AML Directive requirements implemented from 10 January.  The requirement extends to any obliged entity required to carry out CDD under AML regulations. These entities include –

  • credit institutions
  • financial institutions
  • auditors, external accountants and tax advisors
  • notaries and other independent legal professionals
  • trust or company service providers
  • estate agents, including when acting as intermediaries
  • other persons trading goods in cash amounting to 10,000 euros or more
  • gambling services
  • exchange services between virtual and fiat currencies
  • custodian wallet providers
  • art dealers in galleries and auction houses
  • art dealers in free ports

It is said that discrepancies must be reported if there’s a material difference between the institution’s and Companies House sets of information. Companies House will investigate these discrepancies and, if necessary, contact the company.

https://www.gov.uk/government/news/new-reporting-requirement-for-obliged-entities-comes-into-force

It also released guidance on how to tell Companies House if the information held as an obliged entity, about a beneficial owner is different from the information on the people with significant control (PSC) register.  It says that it will investigate the discrepancy and, if it is valid, it will contact the company to ask for their comments and request that they resolve the discrepancy to make sure the PSC register is up to date.  The company will not be informed that a discrepancy report has been made about their PSC register information, but Companies House will tell the obliged entity the outcome of the investigation.

https://www.gov.uk/guidance/report-a-discrepancy-about-a-beneficial-owner-on-the-psc-register-by-an-obliged-entity

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 9

9th January 2020

NORTH KOREA SEEKS SCRAP TYRES, $500,000 IN FOREIGN INVESTMENT FOR RUBBER PLANT

On 8 January, NK News reported that a North Korean trading company wants foreign investors to help with a rubber factory, with a public call for outside funding – $500,000 and an “in-kind investment of scrap & second-hand tires”.  This comes despite UN ban on joint ventures with DPRK companies.

https://www.nknews.org/2020/01/north-korea-seeks-scrap-tires-500000-in-foreign-investment-for-rubber-plant/

NEW TAX LAWS COULD ENHANCE IRELAND AS TAX HAVEN AND DOUBLE-TAX SOME COMPANIES

An article in Fortune magazine on 8 January says that, for years, Google and other companies employed a legal tax avoidance strategy called the Double Irish, Dutch sandwich and involving transferred ownership of intellectual property.  It says that one of the Irish laws that made the tactic possible expired on 1 January due to international pressure from many countries.  However, it says that the 2017 US tax rules could have some unexpected — and undesired — consequences, and some provisions could unwittingly do the opposite of what legislators originally intended.

https://fortune.com/2020/01/08/corporate-tax-haven-laws-loopholes/

BANKS TAKING A CLOSER LOOK AT ENVIRONMENTAL AND SOCIAL RISKS IN CREDIT UNDERWRITING

On 8 January, the Wall Street Journal reported that a survey has revealed that 67% of 182 banks worldwide screen their loan portfolios for environmental, social and governance risks when considering loans to corporate borrowers.  Some banks are making commitments to stop lending to companies in industries viewed as high-risk.

https://www.wsj.com/articles/banks-taking-a-closer-look-at-esg-risks-in-credit-underwriting-11578438224

2 BUSINESSMEN SETTLE BRIBERY CHARGES LINKED TO VENEZUELA PROBE IN US

In its 10 January blog, the Wall Street Journal reported that 2 businessmen – Juan Jose Hernandez Comerma of Florida and Charles Quintard Beech III of Texas – have pleaded guilty to foreign bribery charges for their roles in a scheme to secure contracts from Venezuela’s state oil giant PDVSA, the latest admissions in a broad investigation.

https://blogs.wsj.com/riskandcompliance/2017/01/10/two-businessmen-settle-bribery-charges-linked-to-venezuela-probe

PROSECUTOR GETS 5 MONTHS TO CLOSE PANAMA’S BIGGEST CORRUPTION PROBE

Newsroom Panama on 8 January reported that Prosecutor Zuleyka Moore has been granted 5 more months to complete investigations into the Odebrecht bribery scandal.  It says that Panama remains the only country where no one has been punished, although at least $90 million was paid in bribes.

https://www.newsroompanama.com/news/prosecutor-gets-5-months-to-close-panamas-biggest-corruption-probe

ANTIQUITIES AND ANCIENT ART – LEGAL ISSUES IN A CHANGING TRADE

On 8 January, an article from Boodle Hatfield refers to concerted efforts by source nations to encourage regulation of the trade in antiquities, resulting in a proliferation of national laws, international treaties and conventions that deal with the protection, movement and marketing of ancient objects.  It says that small dealers and auction houses are reportedly facing a rising number of challenges when dealing in objects coming to the market that have been removed from their country of origin, even if they were removed legitimately or are not subject to restrictions.  It also says that larger auction houses have also faced difficulties in recent years involving multi-million pounds lots that were sold amidst protests from national governments.  The article goes on to examine the current state of play.  It then provides practical points for the trade – on due diligence and how to respond to claims.  Anyone involved in the antiquities market must look carefully at who is selling an object, their reputation, the physical object and its provenance and the nature of the transaction.

https://www.boodlehatfield.com/the-firm/articles/antiquities-and-ancient-art-legal-issues-in-a-changing-trade/

LEBANESE HEZBOLLAH’S CRIMINAL NETWORK BREACHES US, HELPS IRAN

On 9 January, Homeland Security Today carried an article saying that Lebanese Hezbollah is using money laundering and the drug trade — and used cars — to raise revenue for their own operations and benefit their Iran regime benefactors, a leading DEA official has said.  It also says that of 68 groups designated as foreign terrorist organizations by the US, the DEA has linked 25 of those to drug trafficking or some role in the drug trade. The type of criminal activity conducted by Hezbollah’s networks varies from continent to continent, but in North America the main operations are money laundering, the used car trade, and drug trafficking.  In South America, Hezbollah is said to have benefited from a “long history of Islamic extremism in the Tri-Border Area” and its ties to Colombian cartels and a corrupt Venezuela government.

https://www.hstoday.us/subject-matter-areas/border-security/drugs-laundering-and-used-cars-hezbollahs-criminal-network-breaches-u-s-helps-iran/

US COAST GUARD COULD FACE A NARCO SUBMARINE EPIDEMIC IN 2020

On 8 January, Homeland Security Today reported a Forbes article which says that the number of narco submarine incidents has risen sharply in recent years.  2018 saw 35 reported, and 2019 saw 36.  For every sub stopped, it says, many more get though.  The majority are actually low-profile vessels (LPV) which do not fully submerge, and in recent years the trend has been to reduce the cargo capacity, instead sending more subs.

https://www.forbes.com/sites/hisutton/2020/01/07/why-america-could-continue-to-face-a-narco-submarine-epidemic-in-2020/#b9621fe73694

US CUSTOMS TO ASSESS COLLECTION OF DNA SAMPLES

On 8 January, Homeland Security Today reported that US Customs and Border Protection has initiated a limited, small-scale 90-day pilot programme to assess the operational impact of proposed regulatory changes that would require the collection of DNA samples from certain individuals in CBP custody.  The pilot will assess the operational impact of a DoJ proposed amendment to the regulation that requires the collection of DNA samples from certain individuals (listed in the article).

https://www.hstoday.us/subject-matter-areas/border-security/cbp-to-assess-collection-of-dna-samples/

FIRM CLEARED OF IMPROPERLY TRANSFERRED $2.4 MILLION FROM ITS ATTORNEY TRUST ACCOUNT TO PONZI SCHEMER

On 9 January, Law.com reported that the New Jersey Supreme Court has cleared law firm Fox Rothschild of claims that it improperly transferred $2.4 million from its attorney trust account to a now-convicted Ponzi schemer, finding that law firms are under no obligation to break with clients’ directions unless they are aware of a competing claim on funds.

https://www.law.com/njlawjournal/2020/01/09/nj-justices-clear-fox-rothschild-in-case-over-ponzi-scammers-transfers/

REFORMING UK SAR — REFLECTIONS ON THE REFORM PROGRAMME

On 8 January, a briefing from MacFarlanes says that the UK government has pledged to reform suspicious activity reports (SAR) to ensure UK enforcement agencies and IT systems are prepared to effectively prevent and tackle money laundering and terrorist financing.  The article considers the strength of the UK’s existing SAR regime and suggest what changes practitioners can expect from the reform programme as we enter 2020, and as announced in the Economic Crime Plan 2019.  It is said that the reform programme is both a response to a long-standing and widely acknowledged need for reform, as well as to a specific call for action by FATF at the end of 2018 in the mutual evaluation report.

https://www.macfarlanes.com/what-we-think/in-depth/2020/reforming-sars-reflections-on-the-reform-programme/

PHILIPPINES: MONEY LAUNDERING CHARGES FOR REMITTANCE BUSINESS IN $81 MILLION BANGLADESH BANK CASE
On 9 January, Inquirer.net reported that the DoJ had filed charges money laundering against the owners of local remittance firm Philrem Service Corporation in connection with the $81 million Bangladesh Bank cyber theft in 2016.
https://business.inquirer.net/286811/doj-file-money-laundering-charges-vs-philrem-for-81-m-bangladesh-bank-caper

MILLIONS IN EU ERITREA AID REPORTEDLY USED FOR FORCED LABOUR

On 9 January, EU Observer reported that after the EU gave Eritrea €20 million to build a road and stop the flux of migration, this road appears to be constructed by forced conscripts, according to the New York Times in a a system the UN calls “tantamount to enslavement”.

https://euobserver.com/tickers/147074

MEDICAL CANNABIS: UK REPORT ON RECENT DEVELOPMENTS

On 9 January, the House of Lords Library published a briefing paper which provides information on recent developments surrounding cannabis use for medicinal purposes.

http://researchbriefings.files.parliament.uk/documents/LLN-2020-0008/LLN-2020-0008.pdf

SEC TRACES $3.5 MILLION BACK TO ALLEGED FRAUDSTER BEHIND FAKE CRYPTO MINE

The Coin Telegraph on 9 January reported that the SEC has pressed charges of fraud against Donald Blakstad, crypto mining company Energy Sources International Corporation (ESI) and vehicle part company Xact Holdings Corporation, and described ESI as “a purported cryptocurrency mining operation”.  Blakstad allegedly gathered $3.54 million from at least 14 different investors via fraudulent offerings.  The SEC also charged Blakstad with accounts of insider trading in 2019.

https://cointelegraph.com/news/us-sec-traces-35m-back-to-alleged-fraudster-behind-fake-crypto-mine

FORMER HEAD OF POLAND’S FINANCIAL REGULATOR INDICTED FOR CORRUPTION

On 9 January, TVN24 reported that the state prosecutor had indicted Marek Chrzanowski, who was appointed in 2018, and who has denied the allegations.

https://tvn24.pl/tvn24-news-in-english,157,m/polish-prosecutor-indicts-former-head-of-financial-regulator,999131.html

FOUNDER AND PRESIDENT OF ONLINE GAMING COMPANY PLEADS GUILTY TO SECURITIES AND WIRE FRAUD

A DoJ news release on 8 January reported that Robert Alexander, president of an online gaming company, had induced investors through false statements about the health of his company and his own background.

https://www.justice.gov/usao-sdny/pr/founder-and-president-online-gaming-company-pleads-guilty-securities-and-wire-fraud

UK: FORMER FRESHFIELDS LAW FIRM TAX HEAD CHARGED IN GERMANY OVER ALLEGED FRAUD SCHEME

On 9 January, City AM reported that the former head of tax at law firm Freshfields Bruckhaus Deringer – Ulf Johannemann, who resigned last year has been charged by German prosecutors for his part in a suspected fraudulent trading scheme, the so-called “Cum-Ex” fraud.

https://www.cityam.com/former-freshfields-tax-head-charged-over-alleged-fraud-scheme/

MALTA RECORD €2.34 MILLION FINE FOR UNAUTHORISED GAMBLING

On 9 January, Calvin Ayre reported that Malta’s gambling regulator has issued a record financial penalty against Blackrock Media Ltd for offering gambling services without permission.  Blackrock Media is said to be owned by Dutch firm Blackrock Entertainment N.V., which operates the Curacao-licensed Wild Sultan online casino brand.

https://calvinayre.com/2020/01/09/business/malta-regulator-record-penalty-unauthorized-gambling/

ISLE OF MAN LEGISLATION ALLOWING FOR EU TURKEY SANCTIONS

The Order Paper for the 21 January sitting of the Island’s parliament includes the European Union (Turkey Sanctions) Order 2019 and Turkey Sanctions Regulations 2019, which give effect to EU Regulation 2019/1890/EU in the Island with certain modifications.  To date, of course, no person or entity has been designated under the EU sanctions regime.

http://www.tynwald.org.im/business/opqp/sittings/20182021/2019-SD-0476-0477-MEMO.pdf

THE UN 1540 COMMITTEE AND THE WMD TERRORISM REGIME COMPLEX

First published on 25 August, and available online, is this paper which looks at United Nations Security Council Resolution 1540 of 2004, the central international tool to prevent terrorism with WMD, saying that its implementation body, the 1540 Committee, has remained weak in terms of enforcement powers, budget allocation and human resources.  It examines specifically how the 1540 Committee has tried to overcome its structural constraints to achieve its objectives.  It argues that the lack of resources of the Committee has led it to seek to have matters dealt with by other organisations and actors and, while a large number of intermediary actors have integrated the provisions of UN SCR 1540 in their own agendas (e.g. FATF in its standards), the coordination of these actors by the 1540 Committee has remained largely ad hoc and lacked the systematic exchange of relevant information.

https://onlinelibrary.wiley.com/doi/abs/10.1111/1758-5899.12719#.XhYJmsFDP14.twitter

DETECTING, INVESTIGATING AND PROSECUTING EXPORT CONTROL VIOLATIONS: EUROPEAN PERSPECTIVES ON KEY CHALLENGES AND GOOD PRACTICES

In December, the Stockholm International Peace Research Institute published a paper saying that the effective implementation of arms and dual-use export controls is reliant on the ability of states to detect, investigate and—when appropriate—prosecute any violations that take place.  However, this aspect of export controls is also among the most challenging for states, including EU Member States.  This report highlights the broad and growing set of difficulties that EU Member States need to overcome when seeking to detect, investigate and prosecute export control violations.  In doing so, it details the range of approaches taken by states, outlines areas of good practice at the national level, and presents 7 cases (and accompanying lessons learned) where export control violations have been detected, investigated and prosecuted.  The report also includes a set of recommendations for steps that the EU could take to help to build national capacity and improve information sharing.  However, given that many of the challenges and good practices identified are shared by all states, the report has wider relevance beyond the EU.  The case studies examined involve –

  • Export of machine tools from Spain to Iran
  • Export of gas turbines from the Netherlands to Iran
  • Export of firearms from Germany to Colombia
  • Export of chemicals from Belgium to Syria
  • Export of valves from Germany to Iran
  • Export of aircraft spare parts from the UK to Iran
  • Exports of arms from Italy to Iran and Libya

https://www.sipri.org/sites/default/files/2019-12/1912_sipri_report_prosecuting_export_control_violations_0.pdf

 

 

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GUIDANCE ON NEW UK AML REGIME COULD TAKE MONTHS TO ARRIVE

On 9 January, the Law Society Gazette reported that official guidance on how to comply with the new AML regime coming in to force from 10 January may not be available for months, the Solicitors Regulation Authority admitted.  It also said that that its enforcement activity will take into account the ‘limited time that firms have had to prepare’ for the 5th Anti-Money Laundering Directive.

https://www.lawgazette.co.uk/practice/guidance-on-new-aml-regime-could-take-months/5102676.article

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BELGIUM TIGHTENS ACCESS TO DIAMOND TRADE

Diamond.net reported on 8 January that Belgium has introduced legislation requiring managers of diamond companies to prove their good conduct and knowledge of money laundering laws.  Firms wishing to trade diamonds or continue as an accredited diamond business must submit criminal records or proof of good conduct for the company and each senior officer.  New entrants to the sector must provide the documentation to the Federal Public Service Economy before being accepted, while existing traders have one year to submit their paperwork.

https://www.diamonds.net/news/NewsItem.aspx?ArticleID=64584

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NETHERLANDS GUIDANCE FOR COMPANIES COMPILING AN INTERNAL COMPLIANCE PROGRAMME (ICP) FOR “STRATEGIC GOODS, TORTURE GOODS, TECHNOLOGY AND SANCTIONS”

The Netherlands has issued (including in English) these guidelines, which are similar to those issued by the EU.

https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/richtlijnen/2019/02/22/guidelines-for-compiling-an-internal-compliance-programme/Guidelines+for+compiling+an+Internal+Compliance+Programme.pdf

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 7/8

8th January 2020

 PODCAST: “MONEY TREE: TEAK AND CONFLICT IN SOUTH SUDAN”

In the first TRACE podcast of 2020, C4ADS Senior Analysts Stella Cooper and Cecile Neumeister discuss their report on the little-known problem of illegal logging in South Sudan and the environmental, social, financial and security implications.

https://traceinternational.org/resources-podcast

MILLIONS OF DOLLARS-WORTH OF ILLEGAL TEAK IS COMING FROM A VERY UNLIKELY SOURCE – SOUTH SUDAN

The C4ADS report referred to in the TRACE podcast starts by saying that illegal logging is the most lucrative natural resource crime, currently valued between $52 and $157 billion per year.  Deforestation of teak has escalated as global demand grows, a direct consequence of teak’s high value and scarcity.  Originally planted in the 1940’s by British colonists, South Sudan’s teak reserves are among the largest in Africa.  It is said that the report serves as the first comprehensive review of the regulatory and security environment surrounding this little-researched topic, and it examines how conditions within South Sudan have made its teak sector more vulnerable to exploitation from illicit actors and contributed to the country’s instability; including how international demand for teak has exacerbated underlying issues plaguing South Sudan’s teak sector.

https://c4ads.org/s/Money-Tree.pdf

UK NOTICE TO EXPORTERS – EU DUAL-USE EXPORTS LIST UPDATED

On 8 January, the Department for International Trade published Notice to Exporters 2020/01, which advised of updates to the control list (Annex 1 of the relevant EU Regulation) to reflect the changes previously agreed in the international export control regimes.  It also said that open general export licences (OGEL) affected will be updated and republished shortly.

https://www.gov.uk/government/publications/notice-to-exporters-202001-list-of-dual-use-controlled-items-updated/notice-to-exporters-202001-list-of-dual-use-controlled-items-updated

TRAVELEX ‘BEING HELD TO RANSOM’ BY HACKERS SAID TO BE DEMANDING $3 MILLION

The Guardian reported on 7 January that the currency exchange business had been forced to take down its websites as a consequence of the attack.  The attack took place on 31 December and involved 5GB of customers’ personal data — including social security numbers, dates of birth and payment card information.  Travelex, which is based in London, has a presence in more than 70 countries with more than 1,200 branches and 1,000 ATM worldwide. It processes more than 5,000 currency transactions every hour.

https://www.theguardian.com/technology/2020/jan/07/travelex-being-held-ransom-hackers-said-demanding-3m

PANAMA: COUPLE FOUND WITH $257,000 CASH JAILED

Newsroom Panama reported on 7 January that 2 people found with $257,672.36 stuffed into 2 suitcases and a piggy bank on 3 January have been jailed following a court appearance and a plea deal.  The couple could not justify the amount of money and took taking advantage of the penalty agreement and took responsibility for the money seized.

https://www.newsroompanama.com/news/257000-cash-haul-buys-5-years-jail-time

PANAMA: FORMER LEGISLATOR CHARGED WITH EMBEZZLEMENT AND MONEY LAUNDERING

On 7 January, Newsroom Panama reported that former Panamenista legislator Adolfo Beby Valderrama was formally charged with money laundering and embezzlement.  As well as Valderama, there are already 10 people charged in this case, including former PRD deputy Jaime Pedrol and former Pandeportes directors, Roberto Arango and Mario Pérez, among others.

https://www.newsroompanama.com/news/ex-legislator-charged-with-embezzlement-laundering

PANAMA STAYS ON FRENCH TAX HAVEN LIST

On 7 January, Newsroom Panama reported that France has updated its list of tax havens having removed Guatemala, but Panama remains on the list which includes 13 countries or territories – Anguilla, Bahamas, Fiji, Guam, US Virgin Islands, BVI, Oman, American Samoa and Samoa, the Seychelles, Trinidad and Tobago, and Vanuatu.

https://www.newsroompanama.com/business/panama-stays-on-french-tax-haven-list

FEDERAL DISTRICT COURT OVERTURNS OFAC’S $2 MILLION FINE AGAINST EXXON MOBIL

On 7 January, an alert from Crowell Moring was concerned with the overturning of a $2 million fine levied by OFAC against Exxon Mobil Corporation for alleged violations of the Ukraine-Related Sanctions Regulations.  The 2017 penalty had related to 8 contracts with the the President and Chairman of the Board of Russian state-owned oil company Rosneft in 2014, which was not itself designated as an SDN.  The alert says that, going forward, OFAC and other Executive branch agencies may be less willing to provide commentary on the meaning of OFAC sanctions regulations outside of carefully-vetted guidance such as OFAC’s FAQ, or formally requested interpretive guidance.

https://www.cmtradelaw.com/2020/01/district-court-overturns-ofacs-2-million-fine-against-exxon-mobil

AML RISKS ARISING FROM INVESTMENT IN THE CANNABIS INDUSTRY

On 6 January, an article from Baker McKenzie said that the prospective relaxation of cannabis regulations in jurisdictions around the world offers UK businesses investment opportunities.  However, investors should be wary of potential exposure under UK AML legislation and consider taking appropriate safeguarding actions prior to any transaction.  It says that a discrepancy between cannabis laws in the UK and those in other jurisdictions creates a potential problem under UK AML legislation for UK businesses looking to invest in the legal cannabis industry abroad, or otherwise enter into arrangements with companies in the industry (for example, through the provision of debt finance or insurance).  It says that there is currently no court of government guidance to date, and then goes on to consider the “Spanish bullfighter” defence.  This defence is available under POCA in respect of criminal conduct, which is legal in the country in which it occurs, if the criminal conduct would attract a maximum custodial sentence of 12 months in the UK.  It also mentions a recent Lloyds of London circular about the provision of insurance, but says that businesses may feel uncomfortable acting as if POCA will not apply in the absence of clear guidance from the courts or the government.

https://bakerxchange.com/rv/ff00572ff3249a46394b9667a0419afd51a8074f/p=6070730

SFO SECURES A SIXTH DPA

On 6 January, a blog post from Herbert Smith Freehills reported on a deferred prosecution agreement agreed between the SFO and Guralp Systems Ltd and approved in October 2019.  GSL agreed to disgorge relevant profit of £2,069,861 in relation to charges of conspiracy to make corrupt payments and failure to prevent bribery by its employees, both in respect of South Korean business; although 3 GSL personnel, who were also charged with conspiracy to make corrupt payments, were subsequently acquitted.

https://hsfnotes.com/fsrandcorpcrime/2020/01/06/sfo-secures-sixth-dpa/#page=1

LONDON POLICE CONSIDER ASSET FREEZES IN CRACKDOWN ON VIOLENCE AND MID-LEVEL DRUG DEALERS

On 8 January, KYC 360 reported that unexplained wealth orders, seen as a tool for seizing high-end London real estate from overseas kleptocrats, may soon be put to use against mid-level drug dealers and other criminals fuelling violence in the U.K. capital.

https://www.riskscreen.com/kyc360/news/london-police-consider-asset-freezes-in-crackdown-on-violence/

EXCESSIVE FISHING BECOMING ‘INSTRUMENT OF NATIONAL POWER’ IN OCEANIA, PACIFIC

USNI News on 7 January reported that the nations in SE Asia facing an existential threat from illegal fishing are the ones least able to protect themselves from it, the senior US Coast Guard officer in charge of operations has said, and that 20% of fishing hauls is illegally caught,  China is by far the nation with the largest long-distance fishing fleet, and Taiwan ranks second.

https://news.usni.org/2020/01/07/coast-guard-excessive-fishing-becoming-instrument-of-national-power-in-oceania-pacific

MISDECLARED LITHIUM BATTERIES CAUSED FIRE ON CONTAINER SHIP ON 5 JANUARY

On 8 January, Loadstar reported that Chinese authorities say that the cause of the blaze which broke out on the Cosco Pacific on 5 January was a shipment of misdeclared lithium batteries.  Cosco is reported as saying that the 3 containers in which this cargo was loaded were due to be unloaded in India, declared as “spare parts and accessories”.

https://theloadstar.com/misdeclared-lithium-battery-cargo-caused-cosco-pacific-fire

CAMBODIA DEPORTS NORTH KOREAN WORKERS, SHUTS DOWN BUSINESSES TO COMPLY WITH SANCTIONS

On 8 January, Radio Free Asia reported that the authorities in Cambodia have arrested 16 North Koreans, shortly after announcing that they would shut down North Korean-owned businesses in an attempt to comply with UN sanctions, which require all North Koreans working abroad had to be repatriated by the end of 2019.  The 16 suspects were using passports with tourist visas that were expired, and were working as computer technicians, installing illegal software.

https://www.rfa.org/english/news/cambodia/cambodia-north-korean-worker-deport-01082020140356.html

NIGERIA TO REOPEN PETER ODILI’S MONEY LAUNDERING CASE, 13 YEARS LATER

Information Nigeria on 8 January reported that the Economic and Financial Crimes Commission has announced its decision to reopen the money laundering case against Peter Odili, former governor of Rivers state.  He had obtained a court injunction preventing the EFCC from investigating or arresting him in 2007, and the EFCC was also restrained from probing the finances of the Rivers state government.

https://www.informationng.com/2020/01/efcc-to-reopen-peter-odilis-money-laundering-case-13-years-after.html

NEW ZEALAND PORN SITE OPERATOR CHARGED IN THE US WITH SEX TRAFFICKING – WILL BE EXTRADITED IF FOUND

On 8 January, Radio New Zealand reported that a California prosecutor says the US Government will seek to extradite a New Zealand man charged with child sex trafficking and sex trafficking by force, fraud and coercion, if he is found to be in the country.  Michael James Pratt, 36, is accused of the crimes which are linked to the operation of a porn website.  He is believed to have left the US, where he had lived since 2007.

https://www.rnz.co.nz/news/national/406957/nz-porn-site-operator-charged-in-the-us-with-sex-trafficking-will-be-extradited-if-he-s-in-the-country

BILLIONAIRE’S LETTERS TO CONGO’S KABILA WERE SOUGHT BY SFO IN UK

BNN Bloomberg on 8 January reported that UK fraud prosecutors sought an Israeli billionaire’s correspondence with the former President of DRC Joseph Kabila as part of one of their largest bribery investigations, a lawyer for the SFO said at a London trial of Anna Machkevitch, 37, who is accused of failing to produce the documents concerning her mining magnate father, Alexander.  It is said that the case is an off-shoot from the SFO’s 7-year investigation into Eurasian Natural Resources Corporation (ENRC), a mining company owned by Machkevitch senior and 2 billionaire partners.  It is said that the SFO is investigating how ENRC acquired valuable mineral assets in Congo.

https://www.bnnbloomberg.ca/billionaire-s-letters-to-congo-s-kabila-were-sought-by-u-k-fraud-watchdog-1.1370914

10 CONFLICTS TO WATCH IN 2020

A blog post from ETH Zurich listed the 10 conflicts which it says one should keep an eye on in 2020 – Afghanistan, Yemen, Ethiopia, Burkina Faso, Libya, US-Israel-Iran and the Persian Gulf, US-North Korea, Kashmir, Venezuela and Ukraine.

https://isnblog.ethz.ch/conflict/10-conflicts-to-watch-in-2020

NEPAL DEPORTS 122 CHINESE NATIONALS AFTER CYBER RAID

On 8 January, the Daily Mail reported that Nepal on Wednesday deported 122 Chinese nationals who were arrested on suspicion of operating a large-scale cyber fraud operation in Kathmandu last month.

https://www.dailymail.co.uk/wires/afp/article-7865313/Nepal-deports-122-Chinese-nationals-cyber-raid.html

UK CONSOLIDATED LIST OF STRATEGIC MILITARY AND DUAL-USE ITEMS THAT REQUIRE EXPORT AUTHORISATION

On 8 January, the Department of International Trade published updated information on controlled goods requiring an export licence.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/856510/UK_strategic_export_control_lists_20191231.pdf

REPORT ON HOW REGULATIONS TO IMPLEMENT COUNCIL DIRECTIVE (EU) 2018/822 ON INTERNATIONAL TAX ENFORCEMENT WILL BE USED IN DIFFERENT EU EXIT SCENARIOS

On 8 January, a news release from HM Treasury advised the release of a report on how the power in Finance Act 2019, which enables regulations to implement Council Directive (EU) 2018/822, will be used in different EU Exit scenarios.  The powers allow for regulations to be made to implement the Directive concerned with administrative cooperation in the field of taxation as regards to mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements that may have involved evasion of tax.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/856709/International_Tax_Enforcement_-_Parliamentary_Report_PDF.pdf

US: DWINDLING CONFIDENCE IN CORPORATE COMPLIANCE PROGRAMMES

On 8 January, an article from FTI Consulting said that findings from the 19th annual edition of the Law in the Boardroom study show eroding confidence in internal ethics and compliance programs among respondents.  Only 35% reported feeling “very confident” compared to 46% a year ago.  It speculates that the increasingly complex regulations and legislation faced by today’s organisations, which target an array of new risks that need to be addressed by corporate compliance and oversight, may be the reason for the fall.

https://www.jdsupra.com/legalnews/dwindling-confidence-in-corporate-81206/

SWITZERLAND TO PRIORITISE FIGHT AGAINST ‘NDRANGHETA IN 2020

On 8 January, OCCRP reported on recent commitments made by public officials to prioritise the fight against organised crime in 2020, an issue whose urgency has been underscored by the significant inroads made by the Calabrian ‘Ndrangheta — one of the world’s most powerful organised crime groups.  It was said that the fight against the Italian mafia is a recurring topic that Switzerland will continue to deal with in 2020.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/11391-switzerland-to-prioritize-fight-against-ndrangheta-in-2020

 

 

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EU, UK AND ISLE OF MAN ADD 5 INDIVIDUALS TO MALI SANCTIONS LIST AMENDED

On 8 January, a Notice from HM Treasury advised that 5 individuals had been added to the Consolidated List under Mali sanctions.  This followed EU Regulation 2020/8/EU and the UN announcement.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/856458/Notice_Mali_2020_8.pdf

The Isle of Man followed suit –

https://www.gov.im/news/2020/jan/08/financial-sanctions-mali/

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.LI.2020.004.01.0001.01.ENG&toc=OJ:L:2020:004I:TOC

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OFAC ADDS THE FIRST VICE PRESIDENT OF SOUTH SUDAN TO MAGNITSKY HUMAN RIGHTS SANCTIONS LIST

On 8 January, OFAC announced that Taban Deng GAI, a Sudanese national, had been added to its sanctions lists.  OFAC says he is listed for his involvement in serious human rights abuse, including the disappearance and deaths of civilians.

https://home.treasury.gov/news/press-releases/sm869

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200108.aspx

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MILLIONS OF DOLLARS-WORTH OF ILLEGAL TEAK IS COMING FROM A VERY UNLIKELY SOURCE – SOUTH SUDAN

PODCAST: “MONEY TREE: TEAK AND CONFLICT IN SOUTH SUDAN”

In the first TRACE podcast of 2020, C4ADS Senior Analysts Stella Cooper and Cecile Neumeister discuss their report on the little-known problem of illegal logging in South Sudan and the environmental, social, financial and security implications.

https://traceinternational.org/resources-podcast

 

MILLIONS OF DOLLARS-WORTH OF ILLEGAL TEAK IS COMING FROM A VERY UNLIKELY SOURCE – SOUTH SUDAN

The C4ADS report referred to in the TRACE podcast starts by saying that illegal logging is the most lucrative natural resource crime, currently valued between $52 and $157 billion per year.  Deforestation of teak has escalated as global demand grows, a direct consequence of teak’s high value and scarcity.  Originally planted in the 1940’s by British colonists, South Sudan’s teak reserves are among the largest in Africa.  It is said that the report serves as the first comprehensive review of the regulatory and security environment surrounding this little-researched topic, and it examines how conditions within South Sudan have made its teak sector more vulnerable to exploitation from illicit actors and contributed to the country’s instability; including how international demand for teak has exacerbated underlying issues plaguing South Sudan’s teak sector.

https://c4ads.org/s/Money-Tree.pdf

 

 

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CAMPIONE D’ITALIA, A TINY ITALIAN ENCLAVE LOCATED IN SWITZERLAND, RETURNED TO ITALY AND THE EU CUSTOMS UNION

On 6 January, the Il Globo reported that the move was raising concerns among residents accustomed to the enclave’s special status.  It is situated on the banks of Lake Lugano in the Swiss canton of Ticino around 23 km from Italy, has bounced between the countries since at least the 7th Century.  Its special status meant that while the 2000 or so residents paid their taxes in Italy, most of the public services provided by Swiss companies.  Residents were also exempt from VAT and, because the cost of living is higher in Switzerland, they enjoyed tax breaks.   A deal was reached on 20 December.  Residents will have to pay VAT, although it is aligned with the Swiss consumption tax of 7.7% – much lower than Italy’s 22% rate.

https://ilglobo.com.au/news/46435/switzerland-returns-tiny-italian-enclave-to-rome/#

https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-77668.html

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GUERNSEY, JERSEY AND ISLE OF MAN TO STAY ON NETHERLANDS TAX BLACKLIST

On 6 January, the Guernsey Press and others reported that Guernsey is to remain on Netherlands’ list of low-tax jurisdictions for the purposes of enforcing certain anti-tax avoidance rules, the Dutch Ministry of Finance has announced.  The blacklist contains 8 jurisdictions that are currently banned by the EU, as well as a further 15 low-tax jurisdictions, including Guernsey, Jersey and the Isle of Man.  They have corporate tax rates of less than 9%, and fall within the scope of new controlled foreign companies (CFC) rules, which became effective from 1 January 2019.  Guernsey and the Isle of Man employ zero rates of corporation tax.

https://www.internationalinvestment.net/news/4008738/guernsey-stay-netherlands-tax-blacklist

https://guernseypress.com/news/2020/01/07/guernsey-to-remain-on-netherlands-tax-blacklist/

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OCEAN CARRIERS SEE SEIZURES OF LARGE SHIPMENTS OF DRUGS IN THE US AND EUROPE IN 2019 WITH THE GROWING USE OF COMMERCIAL SHIPS FOR INCREASINGLY LARGE LOADS OF COCAINE, HEROIN AND OTHER DRUGS

On 6 January, the Wall Street Journal reported that officials say the growing scale of shipping operations, with the biggest container ships doubling in size over the past decade, have made them an attractive target for drug traffickers.  It is reported that the rule of thumb around the world is that only 1 in 10 containers gets checked.  Seizures of cocaine aboard commercial ships and private vessels world-wide more than tripled over the past 3 years.  It is said that the moves by drug smugglers to piggyback on their operations raises new concerns for international supply chains, and cocaine is increasingly being moved by ships doing regional South America sailings.

https://www.wsj.com/articles/global-shipping-faces-troubling-new-smuggling-questions-11578330634

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OTHER THINGS YOU MAY HAVE MISSED – JANUARY 6

6th January 2020

FATE OF FORMER PANAMA PRESIDENT MARTINELLI RESTS WITH 3 WOMEN JUDGES

On 6 January, Newsroom Panama reported on the appeal lodged against the 2018 acquittal of former President Martinelli on charges of wiretapping political opponent. Journalists, businessmen and lawyers.

https://www.newsroompanama.com/news/fate-of-former-panama-president-rests-with-three-women-judges

3 SEAFARERS KIDNAPPED, 4 SECURITY PERSONNEL KILLED, IN NIGERIAN PIRATE ATTACK

Seatrade Maritime News on 6 January reported that pirates have kidnapped 3 seafarers (2 Russian, 1 Indian) and killed 4 Nigerian security personnel onboard a dredger off the Forcados terminal in Nigeria, the latest in a spate of violent pirate attacks in the Gulf of Guinea.  A fire fight had taken place between the pirates and security personnel on board.

https://www.seatrade-maritime.com/ship-operations/three-seafarers-kidnapped-four-security-personnel-killed-nigerian-pirate-attack

CHINESE REGULATOR TIGHTENS SCRUTINY OF AML/CFT PROGRAMMES AT BANKS AND INSURERS

On 6 January, KYC 360 reported that the CBIRC (China Banking and Insurance Regulatory Commission) has issued a new circular on improving the effectiveness of AML/CFT programmes in the banking and insurance sectors.  It applies to all banks (including foreign banks), financial asset management companies, insurance companies and insurance asset management companies.

https://www.riskscreen.com/kyc360/news/chinese-regulator-tightens-scrutiny-of-aml-ctf-programmes-at-banks-insurers/

DANSKE BANK FACES $2 BILLION IN FINES FOR LAUNDERING CASE

On 6 January, KYC 360 reported claims that the bank probably will be fined around $2 billion this year by authorities in Denmark, the US and the UK as investigations into Europe’s biggest money laundering scandal draw to a close.

https://www.riskscreen.com/kyc360/news/danske-faces-2-billion-in-fines-for-laundering-case-jyske-says/

CENTRAL BANK OF IRELAND RESISTS BID TO INCREASE WORKLOAD IN EU MONEY LAUNDERING FIGHT

KYC 360 on 6 January reported that the CBI is resisting government plans to add to its responsibilities in the fight against money laundering, claiming that the extra work “might more appropriately be assigned elsewhere”.  Whilst the company registry has dealt with companies’ beneficial ownership requirements, the CBI has been given responsibility for non-corporate entities (including thousands of Irish collective asset-management vehicles, or ICAV) registered in the country largely for tax purposes.

https://www.riskscreen.com/kyc360/news/central-bank-of-ireland-resists-bid-to-up-workload-in-eu-money-laundering-fight/

CHINESE COMPANIES $11 BILLION INVESTMENT IN OVERSEAS PORTS DURING THE PAST DECADE AS STRATEGIC MARITIME HUBS AS PART OF ITS BELT AND ROAD INITIATIVE

On Nikkei Asian Review on 5 January carried an article saying that the aggressive investment campaign that has raised concerns about China’s growing clout across the world – with 25 port projects in 18 countries from 2010 to December 2019.

https___s3-ap-northeast-1.amazonaws.com_psh-ex-ftnikkei-3937bb4_images__aliases_articleimage_1_4_6_0_24180641-3-eng-GB_20191226-Silk-road

https://asia.nikkei.com/Spotlight/Belt-and-Road/China-drops-11bn-anchors-to-expand-Maritime-Silk-Road

LEGAL PROCEEDINGS: THE IMPORTANCE OF COMPANY AUTHORISATION AND REPRESENTATION

An article from Irish law firm McCann Fitzgerald says that a company incorporated under the Companies Act (of Ireland and UK) has its own legal personality and can institute legal proceedings in its own name.  However, the firm says, difficulties can arise where proceedings are commenced on behalf of a company where this has not been properly authorised by the company.  In addition, where a company is a party to proceedings, in the absence of certain limited exceptions, it must retain legal representation to act on its behalf.

https://www.mccannfitzgerald.com/knowledge/disputes/legal-proceedings-the-importance-of-company-authorisation-and-representation

US COMMERCE DEPARTMENT TO PLACE EXPORT CONTROLS ON GEOSPATIAL IMAGERY SOFTWARE

On 6 January, Export Compliance Daily reported that the Department is to amend the Export Administration Regulations to control exports of software designed to automate analysis of geospatial imagery.  Comments on the proposed rule imposing the control are required by 6 March.

https://exportcompliancedaily.com/news/2020/01/06/commerce-to-place-export-controls-on-geospatial-imagery-software-2001030024

https://www.govconwire.com/2020/01/commerce-dept-releases-final-rule-on-imagery-software-export-controls/

https://www.internationaltradecomplianceupdate.com/2020/01/06/us-bis-amends-ear-to-add-certain-software-for-geospatial-analysis/

US ‘PRESSURED’ NETHERLANDS TO BLOCK CHINA COMPUTER CHIP EQUIPMENT SALE

On 6 January, Silicon reported claims that US officials mounted an ‘extensive campaign’ to pressure the Netherlands to block ASML from selling chip lithography equipment to China, before the Netherlands’ decision to effectively block the sale of high-end chip manufacturing equipment to a Chinese company, although it had earlier granted a dual-use export licence.

https://www.silicon.co.uk/workspace/netherlands-china-asml-326587

UKRAINE GAZETTES LAW AMENDING AML REGIME UNDER EU DIRECTIVES

On 6 January, Bloomberg reported that Ukraine has published a law amending the AML/CFT regime to comply with EU Directives.  It generally has effect from 28 April, and affects such things as beneficial ownership disclosures.

https://news.bloombergtax.com/daily-tax-report-international/ukraine-gazettes-law-amending-anti-money-laundering-regime-under-eu-directive

CLAIMS THAT BANKRUPT TYCOON SCOT YOUNG ‘LAUNDERED DIRTY MONEY FOR RUSSIAN GANGSTERS’- BEFORE HIS DEATH ON RAILINGS OUTSIDE HIS LONDON HOME

On 6 January, the Daily Mail carried a story reporting claims that Scot Young was the ‘go-to fixer’ for Boris Berezovsky and laundered the Russian oligarch’s cash before they both died in mysterious circumstances within a year of each other.  He had once been worth up to £800 million before his bankruptcy, and died after falling onto railings below his £3 million London penthouse in December 2014.

https://www.dailymail.co.uk/news/article-7856257/Scot-Young-laundered-dirty-money-Russian-gangsters-including-Putin-critic-Boris-Berezovsky.html

ISLE OF MAN TAX RESIDENCE PRACTICE NOTE

On 2 January, the Isle of Man Treasury’s Income Tax Division issued a new Practice Note, PN 208/20.  It covers such subjects as dual residence, registration of foreign companies (and cessation of their registration), and application for non-residence.

https://www.gov.im/media/1367940/pn208-20.pdf

HOME SECRETARY ASKS ADVISORY COUNCIL ON THE MISUSE OF DRUGS TO REVIEW OF THE CLASSIFICATION OF GHB AND GBL

On 6 January, the Home Office announced that the Home Secretary had written to the advisory body to review the classification of gamma-hydroxybutyric acid (GHB) and gamma-butyrolactone (GBL) and closely related compounds under the Misuse of Drugs Act 1971 and Misuse of Drugs Regulations 2001 – GBL being a so-called “date rape” drugs.

https://www.gov.uk/government/publications/letter-to-the-acmd-to-review-ghb-and-gbl/letter-from-the-home-secretary-to-the-chair-of-the-advisory-council-on-the-misuse-of-drugs

https://homeofficemedia.blog.gov.uk/2020/01/06/home-secretary-calls-for-review-into-date-rape-drugs/

UK: TRAINING AND AWARENESS-RAISING RESOURCES AVAILABLE TO PUBLIC SECTOR ORGANISATIONS ON MODERN SLAVERY

On 6 January, a news release from the Home Office advised of training and awareness-raising resources available to public sector organisations to help their staff understand modern slavery and learn to spot the signs.

https://www.gov.uk/government/publications/modern-slavery-training-resource-page/modern-slavery-training-resource-page

UK: LAW FIRM WAS “VEHICLE” FOR £5.7 MILLION CONVEYANCING FRAUD

On 6 January, Legal Futures reported that a solicitor who “consciously closed his eyes” to the activities of people he knew were fraudsters, agreeing to buy a law firm which was “purchased from the outset as a vehicle for fraud”, has been struck off.

https://www.legalfutures.co.uk/latest-news/law-firm-was-vehicle-for-5-7m-conveyancing-fraud

REHAB OWNER PLEADS GUILTY IN CONNECTION WITH $175 MILLION INSURANCE FRAUD SCHEME

NBC in Los Angeles reported on 6 January that the co-owner of a company that operated drug and alcohol treatment centres in Southern California and Colorado pleaded no contest to 14 felony counts in connection with a $175 million insurance fraud scheme, in which he and his partner fraudulently billed an estimated $175 million in healthcare claims between June 2012 and December 2015, with about $44 million being paid out by 5 insurance companies.

https://www.nbclosangeles.com/news/local/rehab-owner-pleads-guilty-in-connection-with-175-million-insurance-fraud-scheme/2286371

RUSSIA’S VTB BANK SUES MOZAMBIQUE STATE FIRM AT CENTRE OF $2 BILLION DEBT SCANDAL

On 6 January, Reuters reported that VTB has filed a lawsuit in the High Court in London against a Mozambican government company it lent large sums to as part of a project now at the centre of a $2 billion debt scandal.  Defendants the Mozambique state and Mozambique Asset Management took a $535 million loan from VTB.

https://uk.reuters.com/article/us-mozambique-credit-suisse-vtb/russias-vtb-sues-mozambique-state-firm-at-center-of-2-billion-debt-scandal-idUKKBN1Z527M

3 DEFENDANTS PLEAD GUILTY TO CONSPIRING TO FRAUDULENTLY SELL IMPORTED JEWELLERY FROM THE PHILIPPINES AS NATIVE AMERICAN-MADE

A news release from the US DoJ on 6 January advised that the defendants had pleaded guilty to conspiracy to commit misrepresentation of Indian-produced goods, wire fraud, mail fraud, and entry of goods by means of false statements and smuggling goods, for her role in the manufacture, importation, and sale of jewellery as Native American-made.

https://www.justice.gov/opa/pr/three-defendants-plead-guilty-conspiring-fraudulently-sell-imported-jewelry-philippines

FRENCH AUTHORITIES GIVEN GREEN LIGHT TO SEARCH SOCIAL MEDIA FOR EVIDENCE OF TAX EVASION

On 6 January, the STEP organisation reported that the France’s Constitutional Court has granted the country’s tax authorities permission to search social media postings for evidence of French residents’ undeclared income; and in December 2019, the government enacted laws to allow the tax authority to conduct a 3-year project to collect online information as part of a tax-enforcement drive.

https://www.step.org/news/french-authorities-given-green-light-search-social-media-evidence-tax-evasion

TEVA PHARMACEUTICALS TO PAY $54 MILLION TO SETTLE FRAUD CASE

On 6 January, the Globes website reported that the company is to pay the settlement in respect of allegations that the Israeli pharmaceutical company bribed doctors to write prescriptions for multiple sclerosis treatment Copaxone and Parkinson’s disease treatment Azilect, in a case filed in the US by 2 of the Israeli company’s former sales representatives.

https://en.globes.co.il/en/article-teva-to-pay-54m-to-settle-copaxone-bribery-case-in-us-1001313846#utm_source=RSS

BRAZIL FIGHTING PESTICIDE SMUGGLING WAR ON 2 FRONTS

An article in Insight Crime on 6 January on the growing black market for pesticides which has left Brazil in a bind, fighting large robberies at home while also cracking down on smuggled agricultural products from Paraguay.  In December, 22 tons of stolen pesticides were seized in 2 separate operations.  It has been estimated that 20% of pesticides sold in Brazil were illegally sourced, at an annual cost of $2.1 billion.  It is also said that smuggling of pesticides is growing in the country at the rate that Brazilian agriculture grows.  It says that Brazil now faces a war on 2 fronts, cracking down on pesticide thefts at home and on smuggling from abroad.

https://www.insightcrime.org/news/brief/brazil-pesticide-war-two-fronts/

UK: BETTER TESTING NEEDED AS NUMBER OF FENTANYL-RELATED DEATHS INCREASE

On 6 January, Police Professional reported that the UK could mirror the US and Canada where fentanyl and its analogues are being added to heroin and has resulted in tens of thousands of deaths, according to the Advisory Council on Misuse of Drugs (ACMD).  It says that the number of fentanyl-related deaths in the UK is on the rise but the true nature of the problem could be hidden as forensic analysis is limited.  It is explained that fentanyl – a licensed medicine first used as an anaesthetic and painkiller in 1963 – is 50 to 100 times more potent than morphine.  One of its analogues, carfentanil, is 100 times as therapeutically potent as fentanyl and is only legally used in veterinary application, such as sedating large animals.

https://www.policeprofessional.com/news/better-testing-needed-as-number-of-fentanyl-related-deaths-increase/

 

 

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FIFTH MONEY LAUNDERING DIRECTIVE IMPLEMENTED IN THE UK

On 10 January, according to Eversheds Sutherland, the 5th EU Money Laundering Directive comes into force in the UK.  An article details key changes implemented by the Money Laundering Regulations 2019.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Financial-services-and-dispute-investigation/Fifth_Money_Laundering_Directive_implemented_in_the_UK