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US SANCTIONS ON SYRIA – NEW EXECUTIVE ORDER AND 3 GENERAL LICENSES

On 14^th October, OFAC announced that a new Executive Order had been signed and 3 new General Licenses issued in relation to sanctions involving Syria. The Executive Order was that naming the Turkish ministries and ministers. The licences authorised certain activities necessary for the winding down of operations under existing contracts with the 3 ministries; authorising the conduct of official business of the US; and authorising official activities of international organisations involving the ministries.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20191014.aspx

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US SANCTIONS ON TURKEY IN RESPONSE TO SYRIA INVASION

On 14^th October, the US Treasury advised that OFAC had taken action against 2 ministries and 3 senior Turkish Government officials in response to Turkey’s military operations in Syria. The Ministry of National Defence and the Ministry of Energy and Natural Resources, as well as the Minister of National Defence, Minister of Energy and Natural Resources, and the Minister of the Interior – Hulisi AKAR, Fatih DONMEZ and Suleyman SOYLU – are designated. Persons that engage in certain transactions with those designated may themselves be exposed to designation; and any foreign financial institution that knowingly facilitates any significant financial transactions for or on behalf of the persons designated could be subject to US correspondent or payable through account sanctions. The Treasury stresses that the action is not intended to affect or disrupt the operation of international humanitarian NGO or the UN in Turkey in rendering humanitarian assistance to Syrian communities in need.

https://home.treasury.gov/news/press-releases/sm792

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20191014.aspx

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 14

14^th October 2019

IN BREAKAWAY ABKHAZIA, A LOOPHOLE FOR NORTH KOREAN WORKERS AMID BEACHES AND SOVIET RELICS

An article in the Washington Post on 13^th October looks at how North Korean workers continue to be used in the area, despite UN sanctions signed up to by Russia, which backs the statelet. It says that around 400 North Koreans — mostly men with wives and families back home to support — have been relocated from Russia to this subtropical strip of land, with many in the main city, Sukhumi, building apartment blocks and pharmacies and laying railway tracks in a region still pockmarked by the secessionist conflict of the early 1990s when Abkhazia, backed by Moscow, broke away from Georgia. It also points out that about 10,000 North Korean workers remain in Russia and that it has promised to send them home by a December 22^nd deadline. Russia recognised Abkhazia as independent in 2008 and cash from Russia flooded in, although the UN and Western nations still see Abkhazia as part of Georgia.

ABKH

https://www.washingtonpost.com/world/europe/in-breakaway-abkhazia-a-loophole-for-north-korean-workers-amid-beaches-and-soviet-relics/2019/10/12/7e203290-d7b8-11e9-a1a5-162b8a9c9ca2_story.html

CHINESE CLAMPDOWN ON SUGAR SMUGGLING CAUSES EXCESS SUPPLIES IN ASIA

The Hindu on 14^th October reported that a crackdown on sugar smuggling into China has left abundantly supplied markets elsewhere in Asia struggling to absorb excess supplies, causing a broader storage problem for global markets. It says that sugar is smuggled into China, produced mostly in India or Thailand and shipped to Myanmar, Laos or Vietnam before entering the Chinese mainland. However, the flow should more than halve this year to about 800,000 tonnes. In May 2017, China imposed hefty tariffs on sugar imports and started to levy extra tariffs on out-of-quota sugar imports from all origins in August 2018, and this is combined with the smuggling crackdown.

https://www.thehindubusinessline.com/markets/commodities/chinese-clampdown-on-sugar-smuggling-accentuates-excess-supplies-in-asia/article29678340.ece

MALAYSIA TO FORM NEW ANTI-FINANCIAL CRIME BODY

Regulation Asia on 13^th October reported that, expected to launch in January, the National Anti-Financial Crime Centre (NAFCC) will co-ordinate the efforts of 12 enforcement agencies – including BNM (Bank Negara Malaysia), the Malaysian Anti-Corruption Commission, Customs Department and the police – to tackle financial crime. It will establish, administer, maintain and manage a centralised data system which contains all the relevant information that it receives or gathers. Data will be and analysed and used to plan and co-ordinate integrated operations among government entities and enforcement agencies to prevent financial crimes. It will look into all financial crimes including money laundering cases, but it will not replace the existing 16-member National Coordination Committee (NCC) to counter money-laundering, where BNM is the secretariat.

https://www.regulationasia.com/malaysia-passes-bill-to-form-new-anti-financial-crime-body/

DEUTSCHE BANK REMOVING ITS CORRESPONDENT BANKING SERVICES TO MALTA FINANCIAL INSTITUTIONS

On 14^th October, KYC 360 reported that Deutsche Bank has confirmed that it is removing its correspondent banking services to local financial institutions, making it more difficult for them to offer dollar-denominated transactions. The decision follows Moneyval report about Malta’s failure to adequately combat financial crime. It is understood the bank will stop offering correspondent banking services in all currencies by the end of December.

https://www.riskscreen.com/kyc360/news/deutsche-bank-pulls-the-plug-on-malta/

NEW ZEALAND: $4 MILLION PENALTY FOR AUCKLAND MONEY SHOP UNDER AML LAWS

On 14^th October, KYC 360 reported that Jin Yuan Finance has to pay $4 million following a lawsuit from the Department of Internal Affairs, in the second case to involve consulting company Starfish Consulting. The DIA accused Jin Yuan of failing to CDD, monitor accounts and transactions, and comply with the requirement to report suspicious transactions.

https://www.riskscreen.com/kyc360/news/4m-penalty-for-auckland-money-shop-under-anti-money-laundering-laws/

MEXICO: EXTENSIVE BRIBERY AT PEMEX REVEALED IN SECRET RECORDINGS

KYC 360 reported on 14^th October that, in 2017, Israeli private investigation company Black Cube secretly recorded senior officials at Petróleos Mexicanos describing widespread bribery and corruption at the state-run oil company. These recordings form part of the evidence in a lawsuit filed last year against the Mexican government by a Mexican oil-field drilling company called Oro Negro. It is also said that the evidence from the lawsuit forms part of a broad-ranging US investigation into corruption at Pemex by the DoJ and SEC.

https://www.riskscreen.com/kyc360/news/secret-recordings-describe-extensive-bribery-at-mexicos-pemex/

SWITZERLAND REMOVED FROM THE EU TAX GREY LIST

On 10^th October, Charles Russell Speechlys LLP published an article saying that, in December 2017 the EU had placed Switzerland on the “grey list”, which includes co-operative jurisdictions who are subject to the successful delivery of their commitments in tax matters. Switzerland had been placed on this list due to the existence of special corporate tax regimes and was given 1 year to enforce a tax reform.

https://www.charlesrussellspeechlys.com/en/news-and-insights/insights/corporate/2019/switzerland-is-removed-from-the-eu-tax-grey-list/

BUSINESS AND HUMAN RIGHTS UPDATE

On 30^th September, Covington & Burling LLP published an article providing an update on developments in this area. These included the implementation of the Child Labour Due Diligence Act in the Netherlands. This requires companies to identify, prevent and assess the issue of child labour in their supply chains, and covers companies that sell or supply goods or services to Dutch customers, including companies registered outside of the Netherlands. The article also mentions the recommendations of an independent review of the Modern Slavery Act in the UK, and the draft Transparency in Supply Chains Act completed by a parliamentary committee in Canada. The article also reviews the position of the UN’s Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and Other Business Enterprises. A revised draft applies not only to business operations “of a transnational character” and would require states to legislate to mandate human rights due diligence for business by requiring businesses to “take appropriate steps to prevent human rights violations or abuses in the context of it business activities…”, and establish liability (including criminal liability) for failure to prevent another natural or legal person with whom a business has a contractual relationship with from causing harm to third parties.

https://www.cov.com/-/media/files/corporate/publications/2019/09/business_and_human_rights_update_september_2019.pdf

EXPLORING DRIVERS AND CHALLENGES TO DETECTING NUCLEAR AND RADIOLOGICAL MATERIALS AT MARITIME FACILITIES

In June 2019, a paper was published by the Nonproliferation Review and says that while detection systems are now deployed at strategic locations for the purported purpose of detecting and deterring the smuggling of nuclear and radioactive materials (such as major UK container ports), and despite considerable investment in this area, few studies have examined how these programmes are implemented or the operational challenges they face on a day-to-day basis. The paper seeks to address this with a focus on radiation-detection efforts at maritime facilities. It says that the results clearly demonstrate that the implementation of these systems varies significantly across different national and organisational contexts, resulting in a fragmented global nuclear-detection architecture, which arguably undermines efforts to detect trafficked nuclear-threat materials. Greater consideration should therefore be given to developing international standards and guidance, designing and adopting tools to support key parts of the alarm assessment process, and broader sharing of good practice. The theft and accidental loss of nuclear and radioactive materials, resulting in so-called material out of regulatory control (MORC), is a global issue of long-standing concern. In the UK, under Project Cyclamen, fixed radiation-detection systems were installed to scan incoming goods at three major UK ports and one international airport. This has since evolved into Programme Cyclamen, which now covers most major UK port facilities, major airports, and rail links with mainland Europe. The paper says that there are particular challenges to detecting smuggled nuclear and radiological material in the maritime environment – largely due to the volume and speed of trade flows, and recent estimates put the number of 20- or 40-foot containers in circulation at over 43 million. At a busy international port, such as Rotterdam, more than 10 million TEU pass through port facilities each year, processing tens of thousands of containers every day.

https://www.tandfonline.com/doi/pdf/10.1080/10736700.2019.1610256

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INTERNATIONAL BLOCKCHAIN SHIP REGISTRATION SYSTEM UNDER DEVELOPMENT

Maritime Executive on 14^th October reported that the Singapore Shipping Association (SSA), the International Chamber of Commerce (ICC) and Singapore tech start-up Perlin have teamed up to build an advanced digital blockchain ship registration preparation system for international adoption – the International E-Registry of Ships.

https://maritime-executive.com/article/blockchain-ship-registration-system-under-development

https://www.hellenicshippingnews.com/project-is-launched-to-transform-shipping-registries-globally/

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TRADE COSTS OF NON-TARIFF MEASURES NOW MORE THAN DOUBLE THAT OF TARIFFS IN ASIA-PACIFIC REGION

On 14^th October, the UN Conference on Trade and Development announced the Asia-Pacific Trade & Investment Report 2019, which says that non-tariff measures (NTM) are now affecting around 58% of trade in Asia and the Pacific. These NTM can include government procurement limitations, subsidies to export and import restrictions as well as import and export bans through unilateral or multilateral sanctions. Meeting these complex and often opaque rules can require significant resources, affecting in particular SME. Most of the NTM are technical regulations, such as sanitary and phytosanitary requirements on food. In summary, while applied tariffs in the Asia-Pacific region have halved over the past 2 decades, the number of NTM – policy regulations other than tariffs affecting international trade – has risen significantly.

https://www.unescap.org/publications/APTIR2019

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CLEANING UP: THE RISE OF THE LAUNDROMATS

In August, RDC published a White Paper about the so-called “Laundromats” in money laundering scandals in recent years. The firm says that financial services professionals should understand and be able to identify the money laundering schemes known as laundromats – the Russian, the Azerbaijani and the Troika Laundromats. The White Paper sets out to examine the major examples of the recently revealed laundromat schemes; the key characteristics of the schemes; and actions that they can take to protect a company and customers – what to look for and how they can ensure robust and appropriate protections are in place to thwart criminals. It identifies 3 factors required for the laundromats – the main actors are ‘paper’ corporate vehicles with no infrastructure, staff, products, etc, and they are often formed by formation agents or Corporate Services Providers (CSP); companies’ accounts are held in an alternative jurisdiction to where they are registered; and transactions between the companies’ accounts are often covered with some fake transaction (e.g. the repayment of a defaulted loan in the case of the Russian Laundromat).

https://rdc.com/whitepapers/rise-of-the-laundromats/

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FATF PUBLISHES EVALUATIONS REPORTS AND UPDATED CONSOLIDATED ASSESSMENT SCHEDULE

As the FATF Plenary continues in Paris, on 14^th October, FATF published the APG mutual evaluation reports for Taiwan, Pakistan and the Solomon Islands (previously published by the FATF-style regional body). It also published a suitably updated consolidated schedule of assessment ratings for countries assessed.

http://www.fatf-gafi.org/media/fatf/documents/4th-Round-Ratings.pdf

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NETHERLANDS TIGHTENING EXPORT CONTROL POLICY IN TURKEY AFTER THE INVASION OF THE TURKISH ARMY IN NORTHERN SYRIA

A statement from the Dutch Government on 14^th October announced that it had decided to tighten Dutch arms export policy with regard to Turkey. Until further notice, no new licence applications for the export of military goods to Turkey will be considered and no new licences will be issued. It also said that other EU states, such as France, Germany, Sweden, Finland, Norway and Belgium, have also tightened their national arms export policy.

https://www.rijksoverheid.nl/documenten/publicaties/2019/10/14/aanscherping-exportcontrolebeleid-turkije-na-de-inval-van-het-turkse-leger-in-noord-syrie

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UK: OFSI ANNUAL REVIEW

The UK Office of Financial Sanctions Implementation has published its annual review for the year to March 2019. This year included the FATF mutual evaluation report which was (perhaps surprisingly) a positive result.

ofsi1

ofsi2

ofsi3

Funds frozen as at September 2018.

ofsi4

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/838178/Annual_Review_2018-19_FINAL.pdf

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EU RESTRICTING NON-EU COMPANIES ACTING AS EXPORTERS

VAT Live on 14^th October reported that the Netherlands has become the latest EU member state to block non-EU Customs Union companies acting as the exporter of record following the EU changing the definition of an exporter for customs from July 2018. Germany, Belgium, Italy, Hungary, Lithuania and the Czech Republic have imposed the restriction to date, and it will apply to UK businesses in the case of a Brexit without a transition deal out of the Customs Union.

https://www.avalara.com/vatlive/en/vat-news/eu-blocks-off-non-eu-exporters.html

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SCOTTISH LIMITED PARTNERSHIPS: UK’S MONEY LAUNDERING MACHINE

On 1^st October, investigative site Bellingcat published an update on the situation regarding Scottish Limited Partnerships (SLP). It refers back to a Bellingcat and Transparency International UK joint report in 2017, saying that since then SLP have continued to be implicated in further scandals, including the huge Azerbaijani Laundromat – though in 2017 SLP became obliged to register their Person of Significant Control (PSC) at Companies House, and the boom in registrations ended and SLP registrations are at their lowest level since 2010. However, it points out that we still do not have the details of the business activities of the SLP involved in the pre-2017 period, who controlled them, or who their true beneficial owners were or are. Bellingcat now says that it has been involved in an examination of the filings for 14,658 SLP and the groups of presenters who have been responsible for bulk registering thousands of anonymously owned partnerships between January 2015 and July 2019 – finding large numbers of SLP with controlling partners in secrecy jurisdictions, PSC disproportionately situated outside of the UK (largely in Ukraine and Russia), and thousands of SLP registered at mailbox addresses and virtual offices. It also says it found SLP trading in high-risk money laundering areas, operating unregulated trading and gambling websites, in business as trade intermediaries (which is a high risk sector for trade misinvoicing), appearing in the Ukrainian criminal courts, involved with generic websites with no clear details of their trading activities (possibly set up to bypass money laundering checks), for sale online as shelf companies, involved in political lobbying, and others more directly involved in large-scale criminal activity.

https://www.bellingcat.com/wp-content/uploads/2019/09/Smash-and-Grab-The-UKs-Money-Laundering-Machine.pdf

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 13

13^th October 2019

US COMPANY SUPPLYING TEAR GAS TO HONG KONG POLICE FACES MOUNTING CRITICISM
Channel News Asia on 12^th October reported that Pennsylvania-based NonLethal Technologies is selling riot gear to Hong Kong that is being used against protesters.
https://www.channelnewsasia.com/news/world/hong-kong-police-tear-gas-us-company-supplying-nonlethal-11994148

ransomware

SOUTH AFRICA SPEEDS UP EXTRADITION TREATY AFTER US SANCTIONS ON GUPTA BROTHERS

IOL on 12^th October reported that the Department of Justice confirmed that Minister Ronald Lamola had requested the UAE to finalise the ratification of 2 treaties concerning mutual legal assistance and extradition. The Justice Department confirmed it had issued requests to finalise the ratification for mutual legal assistance from India, Canada, Switzerland, Mauritius, Hong Kong, China and the UAE.

https://www.iol.co.za/ios/news/now-sa-speeds-up-extradition-treaty-after-us-sanctions-on-gupta-brothers-34748009

INDIA: ASSETS OF BHUSHAN POWER AND STEEL SEIZED IN MONEY LAUNDERING CASE

On 13^th October, ZeeBiz reported that properties of BPSL had been “attached” by the Enforcement Directorate in connection with allegations that it had siphoned off funds obtained as loans from various banks and financial institutions.

https://www.zeebiz.com/companies/news-money-laundering-big-setback-rs-4025-cr-assets-of-bhushan-power-and-steel-attached-check-investigative-revelations-112378

UKRAINE: PROSECUTORS REVIVE CASE AGAINST YANUKOVYCH’S JUSTICE MINISTER

On 13^th October, the Kyiv Post reported that the Prosecutor General’s Office has revived a corruption case against ex-President Viktor Yanukovych’s Justice Minister Olena Lukash after it had been dormant for years. She was the Cabinet’s chief of staff in 2012-2013 and the justice minister in 2013-2014.

https://www.kyivpost.com/ukraine-politics/prosecutors-revive-case-against-yanukovychs-justice-minister.html

PRE- AND POST ON-SITE VISIT PROCESS FOR FATF-STYLE REGIONAL BODIES

This diagram shows the ongoing prior and follow-up process from the perspective of CFATF.

cfatf1

Cftaf2

https://www.cfatf-gafic.org/

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LONDON SOUVENIR SHOPS LAUNDERING ILLICIT MONEY FROM AFGHANISTAN?

Private Eye has continued its investigation into souvenir shops in London which it says has revealed a “hotbed” of tax and accounting fraud, and has now apparently uncovered indications of something more troubling still: that much of the business is a launderette for illicit money from Afghanistan. It says that this would explain why shops that cost a fortune to rent in prime West End locations exist for years despite a dearth of customers looking to buy what, since the Afghan networks took over the business a decade ago, has become increasingly poor-quality merchandise.

https://www.private-eye.co.uk/sections.php?section_link=in_the_back&issue=1504

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ALLEGATIONS OF EVIDENCE OF HIGH-LEVEL CORRUPTION CONNECTED TO ENI OIL COMPANY LICENCES IN CONGO

On 10^th October, Global Witness published a report saying that it has obtained strong evidence of high-level corruption relating to 4 of the Italian oil giant licences in the Republic of Congo. The revelations come, it says, as Eni faces corruption probes into its business in multiple countries and call into question the company’s business model and connections to power across the world.

https://www.globalwitness.org/en-gb/campaigns/oil-gas-and-mining/spotlight-sharpens/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 12

12^th October 2019

https://www.statista.com/chart/15628/un-budget-who-has-paid-their-dues/

US COAST GUARD SETS RECORD FOR ILLEGAL FISHING INTERDICTION IN GULF OF MEXICO

On 11^th October, Homeland Security Today reported that the USCG made a record-setting number of illegal fishing interdictions in the Gulf of Mexico this past fiscal year. 175 vessels were spotted and 138 were intercepted, with 74 interdictions. In fiscal year 2018, there were 61 “lancha” (small, fast craft used by the fishermen) interdictions.

https://www.hstoday.us/federal-pages/dhs/uscg/coast-guard-set-record-for-illegal-fishing-interdictions/

GULF OF GUINEA COUNTRIES URGED TO ESTABLISH SPECIAL MARITIME COURTS TO HANDLE PIRACY

On 11^th October, Homeland Security Today reported that countries in the Gulf of Guinea region have been advised to establish a specialised maritime courts to handle cases of sea robbery, piracy and other maritime offences at the ongoing Global Maritime Security Conference in Abuja.

https://www.hstoday.us/subject-matter-areas/maritime-security/countries-urged-to-establish-special-maritime-courts-to-handle-piracy/

GULF OF GUINEA STATES ADVISED TO IMPROVE MARITIME SURVEILLANCE CAPABILITIES

Also on 11^th October, countries in the Gulf of Guinea have been advised to improve surveillance capabilities and establish a common maritime security architecture. They were recommended that countries should improve domain awareness, improve in sharing of intelligence amongst stakeholders, training and capacity building for relevant stakeholders involved in maritime security, Review legal frameworks and signing of bilateral MoU to facilitate cross-border operations, explore alternative sources of funding their armed forces outside budgetary allocation of member states to enhance the effectiveness of their response to maritime incidences.

https://www.hstoday.us/subject-matter-areas/maritime-security/gulf-of-guinea-states-advised-to-improve-maritime-surveillance-capabilities/

ILLEGAL GOLD MINING OPERATIONS ENTER NEW PARTS OF PERU

On 11^th October, Insight Crime reported that dredgers have been found in several rivers across Peru’s northern department of Loreto, confirming that illegal gold mining has been rapidly expanding into previously untapped parts of the country, and authorities identified and destroyed 4 dredgers used for illegal gold mining.

https://www.insightcrime.org/news/brief/illegal-gold-mining-new-parts-peru/

SEC HALTS ALLEGED $1.7 BILLION UNREGISTERED DIGITAL TOKEN OFFERING

A release on Mondo Visione on 11^th October advised that the SEC had announced that it has filed an emergency action and obtained temporary restraining order against 2 offshore entities conducting an alleged unregistered, ongoing digital token offering in the US and overseas that has raised more than $1.7 billion of investor funds. It says that Telegram Group Inc and its wholly-owned subsidiary TON Issuer Inc. began raising capital in January 2018 and sold approximately 2.9 billion digital tokens called “Grams”.

http://www.mondovisione.com/media-and-resources/news/sec-halts-alleged-17-billion-unregistered-digital-token-offering/

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MONEY LAUNDERING THROUGH ONLINE GAMES

On 11^th October, RUSI published a comprehensive and in-depth analysis saying that in-game artefacts and currencies often have real-life value and can be used to move or invest criminal proceeds – but that there are no clear expectations of what game operators can or should do to identify criminal activity. It concedes that unofficial sale of in-game items can contravene the game’s rules and has given rise to several court disputes in the US, though it also says that the underground trade has historically been closely related to so-called “gold farming”, the practice of playing online games specifically to obtain valuable items and resell them to other gamers. It refers to recent reports on the use of stolen bank/credit cards to but in-game “currency”. The article argues that if a computer game allows players to transfer in-game items to each other, and these in-game items can be exchanged into fiat currency, the gaming company’s position is similar to that of a virtual currency exchange – but unlike the latter FATF and other rules would not appear to compel the application of AML regulation – and neither FATF nor FinCEN states whether in-game currencies are covered by AML/CFT regulations. So far, governments have confined their examination of in-game transactions to consumer protection and/or gambling issues arising from ‘loot boxes’, the article says; and while subjecting online games to AML/CFT regulation without further evidence would be a step too far, governments should engage with the industry to clarify expectations in relation to the identification of criminal conduct and its reporting. Furthermore, the companies themselves should consider instituting customer verification and voluntary reporting of suspicious activity to law enforcement if their in-game items trade for fiat currency, whether officially within the game or on extraneous platforms.

https://rusi.org/publication/rusi-newsbrief/gaming-system-money-laundering-through-online-games

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UN AMENDS 1 ENTRY ON ISIL/AL-QAIDA SANCTIONS LIST FOR UK NATIONAL

A news release from the UN on 11^th October advised that the entry for a UK national, ANJEM CHOUDARY had been amended following his release from prison in the UK in October 2018 (having been released on licence which expires in July 2021).

https://www.un.org/press/en/2019/sc13984.doc.htm

https://www.interpol.int/en/How-we-work/Notices/View-UN-Notices-Individuals#2018-84874

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US TREASURY DEVELOPING NEW AUTHORITIES TO TARGET TURKEY FOR ANY POTENTIAL HUMAN RIGHTS ABUSES OR DESTABILISING ACTIONS IN SYRIA

On 11^th October, a US Treasury news release advised that, given Turkey’s ongoing military offensive in north-eastern Syria, President Trump intends to sign an Executive Order providing for new sanctions. It will give authority to designate individuals and entities of the Government of Turkey involved in human rights abuses or actions leading to the further deterioration of peace, security, and stability in north-eastern Syria. It also will give the Treasury the authority to impose secondary sanctions on those engaging in knowing and significant transactions with designated individuals and entities of the Government of Turkey.

https://home.treasury.gov/news/press-releases/sm791

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GLOBAL MARITIME SECURITY CONFERENCE IN NIGERIA MOVES TO TREAT MARITIME CRIME PROCEEDS LIKE ‘BLOOD DIAMONDS’

On 11^th October, Homeland Security Today reported that the Abuja conference ended with a firm declaration to globally criminalise acts of insecurity and proceeds from illegal maritime activities from the zone as was with the case of the “blood diamonds”. A communiqué, the Abuja Declaration, on the Gulf of Guinea crisis said Gulf of Guinea States and the international community should put mechanisms in place to ensure that resources that are illegally harvested/explored in the GoG, including stolen oil and Illegal Unreported and Unregulated Fishery, are intentionally banned as was the case with the ‘blood diamonds’.

https://www.hstoday.us/subject-matter-areas/maritime-security/abuja-declaration-moves-to-treat-maritime-crime-proceeds-like-blood-diamonds/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 11

11^th October 2019

MONEY LAUNDERING, TRAFFICKING, IVORY: CRACKDOWN ON ART CRIME INTENSIFIES

On 10^th October, the Art Newspaper reported that pressure on the UK’s art trade is increasing as it faces a wave of legislative changes and increased attention from enforcement agencies. It refers to new sentencing guidelines for criminal damage to heritage assets, AML regulations that are coming into force in January and a judicial review of the Ivory Act 2018. Under the AML changes, anyone trading in works valued at €10,000 or more — regardless of whether the sum is paid in cash or otherwise — will be obliged to verify customers’ identity.

https://www.theartnewspaper.com/news/crackdown-on-crime-intensifies

INTERNATIONAL REPORT ON THE POTENTIAL APPLICATION OF BLOCKCHAIN AND THE CRITERIA FOR FRESH REGULATION

On 10^th October, Bird & Bird published a report which explores the potential application of blockchain technologies and highlights where new regulation may be needed. It sets out to outline the various issues that businesses are facing now and will face in the coming years. It explains the technology, its advantages and disadvantages and examines some of the legal considerations and how they apply across certain jurisdictions. It discusses how fresh regulation, when it comes – and if or where needed, should aim to provide confidence, stability, and certainty for blockchain users in financial services and other sectors.

https://sites-twobirds.vuture.net/5/52/newsletter-sign-ups/blockchain-report-country-selection.asp

NGO EXPOSE RIGHTS ABUSES IN EU SUPERMARKET SUPPLY CHAINS

On 10^th October, EU Observer reported that more than 80 NGO and trade organisations have called on the EU institutions to deliver new legislation that establishes a mandatory human rights and environmental framework for businesses and companies operating and offering products or services in the EU. This follows a new Oxfam report which revealed that many of the people producing the food on sale in European supermarkets are victims of poverty pay, harsh working conditions, gender discrimination, and human rights abuses.

https://euobserver.com/social/146226

The report is at –

https://oxfamilibrary.openrepository.com/bitstream/handle/10546/620877/bn-workers-rights-supermarket-supply-chains-101019-en.pdf

NEW ATA CARNET APP MAKES DIGITAL DECLARATIONS AND TRANSACTIONS POSSIBLE

The International Chamber of Commerce has reported that the ICC digital ATA Carnet lifecycle management system has begun a 6-month period of testing in 6 pilot countries, including the UK. The initiative is part of a plan to ensure that declarations and transactions are digitally recorded and tracked, making cross-border travel of goods easier, faster and safer for businesses and customs offices alike, and by simplifying these tedious trade processes, encourage more countries will join the ATA system. An ATA Carnet is a sort of “passport” for goods temporarily imported into a country. It comprises a front and back cover and includes two sheets for presentation at each foreign country you are visiting and 2 sheets for presentation to customs when leaving and returning to your home country. One sheet is to give to the foreign customs officials when entering the country and the other when you leave it. The same applies when exiting and entering your own country.

https://iccwbo.org/media-wall/news-speeches/icc-new-ata-carnet-app-makes-digital-declarations-and-transactions-possible/

BANK OF IRELAND EMPLOYEES CHANGE STANCE ABOUT TESTIMONY IN ONECOIN CRYPTOCURRENCY FRAUD CASE

On 11^th October, Finance Feeds reported that it has become clear that despite the witnesses’ previous representations that they were “willing” to provide testimony, that testimony would not be voluntary, and the witnesses would testify only in response to compulsory process, i.e. under the provisions of the United States-Ireland Mutual Legal Assistance Treaty (MLAT). On trial in the US is Mark Scott, who is said to have maintained corporate bank accounts through which he is alleged to have laundered several hundred million dollars in OneCoin fraud proceeds, accomplished through, among other means, misrepresentations made by the defendant to the witnesses. It is said that the US the Government has submitted an MLAT request to the Central Authority of Ireland to compel the witnesses’ live CCTV testimony from Ireland.

https://financefeeds.com/bank-ireland-employees-change-stance-testimony-onecoin-case/

SEC GOES AFTER BINARY OPTIONS FRAUDSTERS BEHIND LBINARY AND IVORY OPTION

Finance Feeds on 11^th October reported that Israelis Anton Senderov and Lior Babazara (aka Lior Bar), are accused of defrauding more than 2,800 US investors and causing them to lose over $5 million. They are said to have owned and controlled LianTech Finance Marketing, Ltd., which operated a call centre in Israel that functioned as a “boiler room”, as well as 2 online binary options brokers, LBinary and Ivory Option.

https://financefeeds.com/sec-goes-binary-options-fraudsters-behind-lbinary-ivory-option/

DEADLINE TO SUBMIT COMMENTS TO US CUSTOMS ON PROPOSAL TO REQUIRE CUSTOMS BROKERS TO COLLECT CERTAIN INFORMATION FROM IMPORTERS TO VERIFY IDENTITY

On 11^th October, Sandler Travis Rosenberg reported that 14^th October is the deadline to submit comments to CBP on a proposal to require customs brokers to collect certain information from importers (including non-resident importers) to enable the customs brokers to verify the identity of the importers. Customs brokers must currently hold a power of attorney to act for a client, and often the broker will collect additional information, but this is not mandatory and CBP considers the information contained in a power of attorney insufficient. CBP is proposing to amend its regulations to standardise the process by which customs brokers verify the identity of their importer and non-resident importer clients – the article lists the information to be sought.

https://www.strtrade.com/news-publications-customs-brokers-importer-identity-verification-CBP-101119.html

ECONOMIC SUBSTANCE RULES RELEASED FOR THE BVI

On 10^th October, Ogier published an article saying that the final version of the Economic Substance Code has now been published to implement the legislation setting out economic substance requirements which would apply to certain BVI entities in certain circumstances, and thus meet the requirements of the EU Code of Conduct Group. The Code has been renamed as the Rules on Economic Substance, but will not become effective until a further amendment to the Beneficial Ownership Secure System Act comes into effect. Ogier says that it provide a summary of the finalised Rules in due course.

https://www.ogier.com/news/economic-substance-rules-released-for-the-british-virgin-islands

GUERNSEY’S SUBSTANCE REQUIREMENTS – APPLICATION TO IP COMPANIES AND AUGUST AMENDMENTS

On 27^th September, Carey Olsen published an article saying that, in March, the EU Council confirmed that Guernsey had met its commitment to introduce economic substance requirements and, as a consequence, Guernsey is regarded as a co-operative jurisdiction and is not listed on the ‘blacklist’ of non-cooperative jurisdictions. The relevant regulations were most recently amended with effect from 1^st August and the article provides some details of the changes made. These include changes to the definitions of intellectual property assets and what is meant by a high-risk IP company; and clarification of what counts as core income generating activity (CIGA) for an IP company and of the type of information required to rebut the presumption that applies where a high-risk IP company fails to demonstrate applicable substance requirements. The article focuses on the application of the substance requirements to IP Companies.

https://www.careyolsen.com/briefings/guernseys-substance-requirements-application-ip-companies-and-august-amendments

ECHR RULES THAT ITALY VIOLATED RIGHTS IN “TOUGH” TREATMENT OF TERRORISTS AND MOBSTERS

On 10^th October, Jurist reported that the European Court of Human Rights had rejected Italy’s request for referral in the case and making the judgement in the case final. The Court had held that Italy violated Article 3 of the Convention by imposing an irreducible sentence of life imprisonment on a defendant for Mafia-type activities along with murder, abduction, and other crimes. The Court ruled that it would be incompatible with human dignity … to deprive persons of their freedom without striving towards their rehabilitation and providing them with the chance to regain that freedom at some future date – and the defendant had been refused prison leave because he had refused to co-operate with judicial authorities.

https://www.jurist.org/news/2019/10/european-court-of-human-rights-rules-italys-tough-treatment-of-mobsters-and-terrorists-violates-human-rights/

EUROPOL: RECORD SEIZURES HIT SYNTHETIC DRUGS DURING LARGE-SCALE JOINT ACTION DAYS

A news release from Europol on 11^th October advised that in September Europol co-ordinated large-scale Joint Action Days 2019 which targeted synthetic drugs and new psychoactive substances and, human trafficking, migrant smuggling, document fraud and environmental crime. Joint efforts of 16 Member States targeted drug traffickers across Europe, and resulted in seizure of drugs and precursors worth more than €85 million, including 11.3 tonnes of MAPA pre-precursor.

https://www.europol.europa.eu/newsroom/news/record-seizures-hit-synthetic-drugs-during-large-scale-joint-action-days-2019

DIGITAL CURRENCIES: THE RISE OF STABLECOINS

On 11^th October, Fintech Futures published an article about the increase in “stablecoins” – cryptocurrencies designed to minimise the volatility of the price by linking to some “stable” asset or basket of assets, such as a cryptocurrency, fiat money, or to exchange-traded commodities. It says that they are significantly different from the popular incumbents: cash or bank deposits.

TAXING THE DIGITAL ECONOMY – THE OECD PROPOSAL

On 11^th October, Eversheds Sutherland published a briefing saying that on 9^th October the OECD published its latest consultation paper on its proposals to address the challenges of taxing the digital economy. The consultation puts forth a suggested approach to addressing Pillar One of its previous proposals that focuses on issues of taxable nexus and profit allocation, which would apply to “large consumer-facing businesses,” not just businesses with highly digital models. The briefing examines the background to the proposals, which come against the backdrop of unilateral measures being imposed by individual jurisdiction, and the proposals themselves.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Tax_planning_and_consultancy/digital-tax-secretariat-proposal-111019

CAYMAN ISLANDS ANNOUNCES PUBLIC BENEFICIAL OWNERSHIP REGISTER AND CALL FOR OTHER OVERSEAS TERRITORIES TO FOLLOW SUIT

An article on Ekklesia on 11^th October reported that, following an announcement by the Cayman Islands that it will introduce a public register revealing the real owners of companies registered there by 2023, Global Witness is calling on all other British Overseas Territories to immediately follow suit.

https://cnslibrary.com/wp-content/uploads/Cayman-Islands-Statement-on-Public-Beneficial-Ownership-of-Companies-9-Oct-2019.pdf

http://www.ekklesia.co.uk/node/28960

FRANCE: HOW A COMPANY ESCAPED PUNISHMENT IN FIRST SAPIN II CORRUPTION CASE

On 10^th October, a post on FCPA Blog detailed how Sonepar, a French company, countered allegations that it had breached 5 of the 8 obligations imposed by Article 17 of the anti-corruption law, re failure of its risk mitigation and anti-corruption systems. The post explains the supervisory powers of the relevant agency, and then how the company countered with how it had met each of the 5 obligations involved.

https://www.fcpablog.com/blog/2019/10/10/how-sonepar-escaped-punishment-in-the-first-sapin-ii-case.html

US COURT: DESIGNATING SOMEONE A COMPLIANCE RISK DOESN’T CONSTITUTE DEFAMATION

On 10^th October, the Wall Street Journal reported that, according to a federal appeals court in Chicago, designating someone a compliance risk doesn’t constitute defamation. This was a victory for medical device manufacturer Zimmer Biomet Holdings Inc, which was sued by a former employee after it placed him on a list of entities that the company said posed a risk to its compliance with anti-bribery laws. The lawsuit was filed in 2016 by Alejandro Yeatts, a former employee of a subsidiary in Argentina, who came under scrutiny after the company entered into a series of foreign bribery settlements with US authorities in 2012.

https://www.wsj.com/articles/former-executive-wasnt-defamed-when-biomet-called-him-a-compliance-risk-court-rules-11570749339

INSURANCE GHOST BROKERS CAMPAIGN

On 11^th October, Professional Security Magazine reported that the Motor Insurers’ Bureau (MIB) Operation Drive Insured is a national campaign in October to catch uninsured drivers. Police are warning drivers to be wary of fraudsters who may have sold them fake car insurance. The “ghost brokers” are fraudsters who sell drivers apparently cheap motor insurance deals but issue policies that aren’t worth the paper they’re written on.

https://www.professionalsecurity.co.uk/news/transport/ghost-brokers-campaign/

FCA FINES BROKER FIRM £15.4 MILLION

On 11^th October, Financial Reporter reported that Tullet Prebon’s rates division had ineffective controls around broker conduct which allowed improper trading to take place, including ‘wash’ trades. It reported that Tullett Prebon is an electronic and voice inter-dealer broker, acting for institutional clients transacting in the wholesale financial markets, typically investment banks. It is said that senior management wrongly believed sufficient systems and controls were in place and obvious red flags of broker misconduct and opportunities to probe were missed.

https://www.financialreporter.co.uk/regulation/the-fca-fines-broker-firm-154-million.html

JACOB ZUMA: EX-SOUTH AFRICAN LEADER TO FACE CORRUPTION TRIAL RELATED TO $2.5 BILLION DEAL

On 11^th October, Sky News carried a report saying that he is accused of taking bribes from French arms manufacturer Thales in the 1990s when he was deputy president. Zuma, 77, was president from 2009 to 2018.

https://news.sky.com/story/jacob-zuma-ex-south-african-leader-to-face-corruption-trial-related-to-2-5bn-deal-11832855

MARYLAND MAN SENTENCED FOR $396 MILLION PONZI SCHEME

On 11^th October, the Seattle Times reported that a US federal judge has sentenced Kevin B. Merrill, 54, to 22 years in prison for fraud and conspiracy in a $396 million investment scheme that stole from people as far as Singapore. His wife Amanda Merrill had admitted to trying to hide her husband’s cash and will be sentenced in January.

https://www.seattletimes.com/business/maryland-man-sentenced-for-396-million-ponzi-scheme

SUDANESE BUSINESSMAN “FUELLING CORRUPTION IN SOUTH SUDAN”

On 11^th October, Radio Tamazuj said that a new investigative report claimed that Ashraf Seed Ahmed, a Sudanese businessman, remains a major enabler of corruption and violence for President Salva Kiir’s government.

https://radiotamazuj.org/en/news/article/sudanese-businessman-fuelling-corruption-in-south-sudan-report

https://cdn.thesentry.org/wp-content/uploads/2019/10/AlCardinal_TheSentry_October2019-final.pdf

SWISS AIRCRAFT COMPANY PILATUS ALLOWED TO RESUME ACTIVITY IN INDIA DESPITE CORRUPTION PROBE

On 11^th October, Swissinfo reported that the Indian government has partially lifted the ban on commercial dealings with the Swiss aircraft manufacturer Pilatus after a freeze in July due to a corruption investigation. It is accused of corruption and irregularities in connection with the supply of 75 training aircraft to the Indian air force.

http://www.swissinfo.ch/eng/latest-news/pilatus-allowed-to-resume-activity-in-india-despite-corruption-probe/45291004

OECD PROPOSES NEW PROFIT ALLOCATION RULE

On 11^th October, a briefing from Out-Law was concerned with a new proposal published for consultation from the OECD. The proposal is that countries where multinationals operate would have a new taxing right over a portion of the ‘residual profit’ of certain multinational enterprises. The residual profit would be the profit that remains after allocating what would be regarded as a deemed routine profit on activities to the countries where the activities are performed. This deemed routine profit could be a fixed percentage with industry variances.

https://www.pinsentmasons.com/out-law/news/oecd-proposes-new-profit-allocation-rule

NORTH KOREAN SHIP SAILS WITH KIRIBATI FLAG AND LOITERS NEAR SHANGHAI

On 10^th October, NK Pro cited another example of a North Korean ship sending unusual information to tracking systems. The So Baek Su is registered in North Korea, but signalled flying a Kiribati flag and broadcast its heading to China.

https://www.nknews.org/pro/north-korean-ship-sails-with-kiribati-flag-loiters-near-shanghai/

PEACE IS SLIPPING AWAY IN COLOMBIA

On 11^th October, Foreign Affairs reported that a 2016 deal promised to disarm and reintegrate the members of the Marxist-Leninist insurgency known as FARC into Colombian society, and it included a plan to develop Colombia’s long-abandoned countryside and a substitution program for illicit drug crops, which were fuelling the violence, and guaranteed justice for victims of the conflict as well as the right of the FARC to participate in elections as a lawful political party. However, the deal is in jeopardy with, the article says, Washington turning a blind eye to the Colombian president’s slipshod implementation of the accord. The article argues that the US could, and should, help put the deal back on track.

https://www.foreignaffairs.com/articles/united-states/2019-10-11/peace-slipping-away-colombia

USING OPEN DATA TO EXPOSE CORRUPTION IN MONGOLIA

On 11^th October, an article from NGO Transparency international showed how access to public information helped uncover nepotism in the government loans system and hold those involved accountable. It is said that, in November 2018, it was reported that 110 out of 132 companies that received a low-interest loan from a government fund for SME were owned by politicians or their relatives – with nearly two thirds of the 74 members of parliament and 3 out of 16 cabinet ministers, including the prime minister’s younger brother, using the fund to finance their companies. It appears that this wrongdoing was uncovered by a local broadcaster through an updated right to information law which requires government bodies, including funds, to make all information transparent, and requires all companies to publicly reveal their owners and financial stakeholders.

https://voices.transparency.org/using-open-data-to-expose-corruption-in-mongolia-db9a5fa65913

FATF WEEK IN PARIS NEXT WEEK

FATF has advised that representatives from 205 countries and jurisdictions around the world, the IMF, UN, World Bank and other organisations, will meet in Paris from 13^th October for 6 days of meetings which will focus on disrupting financial flows linked to crime and terrorism and discuss ways to contribute to global safety and security. Also up for discussion are virtual currencies and stablecoins, best practices on beneficial ownership and digital identities, progress made by Pakistan on AML/CFT and assessments of Turkey and Russia.

http://www.fatf-gafi.org/publications/fatfgeneral/documents/plenary-october-2019.html

NO-DEAL BREXIT: A GUIDE TO HOUSE OF COMMONS LIBRARY RESEARCH

On 11^th October, the House of Commons Library publish an index as an annotated bibliography of sources published by the House of Commons Library on a potential no-deal Brexit. It will be updated regularly and links to the papers included in the resource are made available online, while the downloadable version includes additional comment on some of the selected papers.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8682

UK: VAT ON CONSTRUCTION

On 11^th October, the House of Commons Library published a briefing paper that sets out the VAT treatment of construction work and the UK’s discretion in setting VAT rates under EU law, before looking at the debate on harmonising VAT rates on all types of construction work.

http://researchbriefings.files.parliament.uk/documents/SN00587/SN00587.pdf

MOLDOVA: ARREST WARRANT ISSUED FOR THE FORMER DEMOCRATIC PARTY LEADER VLAD PLAHOTNIUC OVER ALLEGED MONEY LAUNDERING
On 11^th October, the IPN Press Agency in Moldova reported that a court had issued an arrest warrant for Plahotnic, after he failed to appear before prosecutors.

https://www.ipn.md/en/arrest-warrant-issued-for-vlad-plahotniuc-7965_1068782.html

CYPRUS AND MALTA LEAD EU RANKING OF $1.6 TRILLION ASSETS HELD OFFSHORE

On 11^th October, the Cyprus Mail reported that, according to the EU Commission, EU taxpayers held assets worth at least $1.6 trillion offshore in 2016, equal to nearly 10% of EU output. It says that taxpayers in Cyprus and Malta held about 50% of their wealth abroad, the highest in the EU, compared to 12% in France, 10% in Germany and nearly 9% in the UK. The report also said wealth held offshore was likely higher than its estimates showed, as this did not include insurance contracts, real estate and cash.

https://cyprus-mail.com/2019/10/11/cyprus-malta-lead-eu-ranking-of-1-6-trillion-assets-held-offshore/

SINGAPORE REGULATOR BANS 2 ADVISERS FOR MISCONDUCT AND FRAUD

On 11^th October, International Adviser reported that the Monetary Authority of Singapore (MAS) has issued prohibition orders against 4 individuals banning them from providing financial advice after they were convicted for fraud and misconduct at the state courts of Singapore.

https://international-adviser.com/singapore-regulator-bans-four-advisers-over-misconduct/

http://www.mondovisione.com/media-and-resources/news/monetary-authority-of-singapore-bans-four-individuals-for-engaging-in-fraudulent/

GIBRALTAR GOVERNMENT LAUNCHES BREXIT ADVICE BOOKLET

On 11^th October, the Gibraltar Government advised that it had published a leaflet on preparations for a no-deal Brexit.

https://www.gibraltar.gov.gi/uploads/documents/brexit/Final%20-%20Preparing%20for%20No%20Deal%20Brexit.pdf

EUROPEAN COUNCIL ADOPTS EU-WIDE WHISTLEBLOWER PROTECTION RULES

On 11^th October, a briefing from Out-Law was concerned with new EU-wide protections for whistleblowers who report breaches of EU law which have been adopted by the European Council. The new EU Directive requires EU companies with more than 50 employees or with an annual turnover of €10 million or more to set up internal whistleblowing reporting procedures. It will also apply to regional administrations and municipalities with 10,000 inhabitants or more and to breaches of the relevant laws listed in an Annex to the Directive.

https://www.pinsentmasons.com/out-law/news/european-council-adopts-eu-wide-whistleblower-protection-rules

COST OF ARMED GUARDS CRIPPLING SHIPPING BUSINESS OPERATORS IN NIGERIA SAY

On 11^th October, Hellenic Shipping News reported that a cross section of the shipowners and brokers revealed that about 90% of vessels that call at the Port Harcourt port or Onne port come with armed guards. It is claimed that many indigenous shipping companies have closed down due to inability to afford the huge cost of private armed guards, which fluctuates between $30,000 and $50,000, and which follow a spate of insecurity plaguing the area.

https://www.hellenicshippingnews.com/maritime-insecurity-cost-of-armed-guards-crippling-shipping-business-operators/

Impacts_Environmental

https://www.freightwaves.com/news/shipping-impact-series-environmental

FOCUS1

FOCUS2

http://securityassistance.org/fact_sheet/security-assistance-focus-syria

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REFOCUSING THE AML MODEL ON EVIDENCE AND OUTCOMES

On 11^th October, an Occasional paper from RUSI examines the effectiveness of the current AML model, with particular reference to the financial services sector, and makes 8 relevant recommendations to enhance the model’s future effectiveness. One of the comments made is about the growing attempt to transform reactive financial crime ‘compliance’ cultures into proactive ‘risk management’. It says that there are early indications that such efforts, combined with initiatives to increase organisational agility, deploy new technology and improve partnerships with other financial institutions and the public sector, are improving the efficiency of the current AML model. This helps, it argues, counter the “fragmentation” – between countries, private and public sectors, and individual institutions – that leads to financial institutions having a narrow view of who their clients are, and what their behaviour might signify – making potential criminality harder to detect.

https://www.rusi.org/sites/default/files/20191011_deep_impact_web.pdf

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BERMUDA: SEGREGATED ACCOUNTS COMPANIES (SAC) AND ISAC

An article from Appleby on 11^th October is concerned with the Incorporated Segregated Accounts Companies Act 2019, described as a companion to the Segregated Accounts Companies Act 2000. It says that the use of SAC has been expanded to include areas such as the funds industry. The article sets out to provide some leading examples of the application of the ISAC Act to the financial services and other sectors. The SAC and ISAC appear akin to the PCC (protected cell companies) and ICC (integrated cell companies) available elsewhere and, like them, were originally seen as chiefly (or solely?) for the insurance sector. The article says that a key feature of both an SAC and an ISAC is that the assets of each individual segregated account, or cell, will not be available to the creditors of any other cell.

https://www.applebyglobal.com/publications/purpose-built-isac-a-boon-for-bermuda/

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OFAC IMPOSES MAGNITSKY SANCTIONS ON INDIVIDUALS AND ENTITIES LINKED TO SOUTH SUDAN – FOR CORRUPT DEALINGS WITH GOVERNMENT OFFICIALS AND SANCTIONS EVASION

On 11^th October, OFAC advised that sanctions had been imposed on Kur AJING ATER, a citizen of Equatorial Guinea, and Ashraf Seed Ahmed AL-CARDINAL, a Sudanese national, together with 4 entities sharing the Al Cardinal name and 2 other entities. Those designated included a UK company, ALCARDINAL GENERAL TRADING LIMITED, a Dubai and a Kenyan company.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20191011.aspx

https://home.treasury.gov/news/press-releases/sm790

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CYBER ATTACKERS HIDE BEHIND TRUSTED DOMAINS, HTTPS

On 10^th October, Dark Reading published an article on a report from security firm Webroot which found that 1 in 4 malicious URL employed a legitimate domain, making it more difficult for potential victims to spot possible dangers, and that attackers attempting to dodge more advanced security defences increasingly are adopting more sophisticated techniques to fool victims with their malicious e-mail messages and websites. It is said that, in the vast majority of cases — 94% — the attacker used an URL shortener to mask a malicious domain in order for it to appear legitimate.

https://www.darkreading.com/threat-intelligence/attackers-hide-behind-trusted-domains-https/d/d-id/1336054

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REVISED METHODOLOGY AGREED BUT NO NEW EU BLACKLIST BEFORE 2020

On 11^th October, an article from Eversheds Sutherland reported on a proposed revised methodology to be used in the creation of a new EU blacklist of ‘high-risk third countries’ with strategic AML/CFT deficiencies. It examines the proposed revisions to the methodology for a future EU blacklist, and considers whether these are likely to address the EU Council’s earlier criticisms of a previous draft list.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Fraud_and_financial_crime/Back_to_Black_but_not_quite_yet-Revised_methodology_agreed_but_no_new_EU_blacklist_before_2020

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EU: 2 COUNTRIES REMOVED FROM LIST OF NON-COOPERATIVE JURISDICTIONS AS 5 OTHERS MEET COMMITMENTS

A news release from the EU Council on 10^th October advised that the EU Council had agreed to remove the UAE and the Marshall Islands from the EU’s list of non-cooperative jurisdictions for tax purposes.

The list now comprises –

American Samoa
Belize
Fiji
Guam
Oman
Samoa
Trinidad and Tobago
US Virgin Islands
Vanuatu

It also found Albania, Costa Rica, Mauritius, Serbia and Switzerland to be compliant with all commitments on tax co-operation. The UAE and the Marshall Islands have both passed the necessary reforms to implement the commitments they had made to improve by the end of 2018 their tax policy framework by introducing economic substance requirements. Albania, Costa Rica, Mauritius, Serbia and Switzerland have implemented ahead of their deadline all necessary reforms to comply with EU tax good governance principles, and will be removed from the “grey” list.

https://www.consilium.europa.eu/en/press/press-releases/2019/10/10/taxation-2-countries-removed-from-list-of-non-cooperative-jurisdictions-5-meet-commitments

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IRELAND: AML TOOLKIT

On 10^th October, Irish law firm Matheson published an updated version of the Matheson AML Toolkit, a guide to AML in Ireland. It includes a consolidated version of the 2010 Act, a document which details some of the key changes brought about by the 2018 Act, an overview of the Joint Committee Guidelines on Money Laundering and Risk Factors, an analysis of the finalised Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector, consideration of the 2019 Bill intended to transpose the 5^th EU Money Laundering Directive, and a timeline which highlights the key developments in the recent past as well as anticipated developments on the horizon in the AML space.

https://www.matheson.com/news-and-insights/article/the-matheson-aml-toolkit-october-2019

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OFAC REDEFINES THE TERM “SIGNIFICANT TRANSNATIONAL CRIMINAL ORGANIZATION,” BROADENING ITS REACH

On 9^th October, Holland & Hart LLP published an article saying that OFAC has implemented President Trump’s prior revision of the definition of “significant transnational criminal organization” by eliminating a key clause that restricted the definition’s scope to largescale criminal syndicate organisations such as The Brothers’ Circle, Camorra, Yakuza, and Los Zetas, and which may eventually prove to be a significant development. The article says that OFAC appears to have vastly expanded the universe of entities that may fall within the definition’s reach to include legitimate companies and organisations accused of criminal wrongdoing involving multiple countries. The article also notes that OFAC has expressed its intent to provide “additional interpretative and definitional guidance” on this subject. The revised definition is –

“a group of persons that includes one or more foreign persons; that engages in or facilitates an ongoing pattern of serious criminal activity involving the jurisdictions of at least two foreign states, or one foreign state and the United States; and that threatens the national security, foreign policy, or economy of the United States”.

https://www.internationalcomplianceblog.com/ofac-redefines-the-term-significant-transnational-criminal-organization-broadening-its-reach/#page=1

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 10

10^th October 2019

US UNILATERAL SANCTIONS DISRUPT TANKER MARKET

On 23^rd September, Clyde & Co published an article about the fallout from OFAC listing COSCO Shipping Tanker (Dalian) Co. and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co (the Subsidiaries) as SDN subject to sanctions in connection with involvement with Iran. COSCO is one of the world’s largest tanker owners, operating more than 50 supertankers and transporting a large part of China’s oil needs, and it is said that oil traders began cancelling bookings and trying to find alternative vessels, pushing the spot rates for very large crude carriers up as much as 28%.

https://www.clydeco.com/insight/article/us-unilateral-sanctions-disrupt-tanker-market

HOW AIR TRANSPORT USED FOR WILDLIFE SMUGGLING

On 10^th October, Arabian Aerospace reported that the illegal trade in wild animals and animal products amounts to around $23 billion a year, much of it operating around the air transport sector. However, it says, the USAID ROUTES Partnership, an organisation that specialises in disrupting wildlife trafficking, and the Center for Advanced Defense Studies (C4ADS), a non-profit research organisation, have come together to launch the first-ever data dashboard on wildlife trafficking in the air transport sector. The analysis relies on the C4ADS air seizure database, which features the most comprehensive collection of illegal wildlife trade seizures and includes instances in more than 130 countries. It is said that before companies and agencies can take action to combat wildlife trafficking they have to understand how it affects their regions, businesses, and supply chains. Also available is the Route Risk Tool allows users to check for wildlife trafficking instances along specific flight routes or to and from specific cities. Future iterations of the Tool will provide a risk estimate for each route based on past wildlife trafficking activity along that route.

https://routespartnership.org/

https://www.arabianaerospace.aero/routes-to-beat-the-wildlife-smugglers.html

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NAVIGATING THE GLOBAL SANCTIONS LANDSCAPE IN 2020

Control Risks has made available a downloadable report saying that businesses face an increasingly unpredictable global sanctions landscape heading into 2020, and for the foreseeable future. In the report, Control Risks experts look at developments and trends facing businesses and their counsel. It sets out to provide an overview of the sanctions landscape; associated risks with doing business around these regimes – focusing on Russia, Iran, North Korea, Venezuela and Syria – as well as practical advice for avoiding pitfalls and operating intelligently.

https://www.controlrisks.com/campaigns/navigating-sanctions-regimes-responding-to-growing-unpredictability?utm_campaign=sanctions_report_2019

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OFAC AMENDS 2 ENTRIES ON IRAN SANCTIONS LISTS

On 10^th October, OFAC announced additions to the entries for the BAHMAN GROUP, based in Iran and said to be linked to the IRGC; and Kambiz ROSTAMIAN, an Iranian who also holds a St Kitts & Nevis passport.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20191010.aspx

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OFAC SANCTIONS ON SIGNIFICANT CORRUPTION NETWORK IN SOUTH AFRICA – GUPTA FAMILY

On 10^th October, a news release from the US Treasury advised that OFAC sanctioned members of a significant corruption network in South Africa that it said had leveraged overpayments on government contracts, bribery, and other corrupt acts to fund political contributions and influence government actions. OFAC designated Ajay Gupta, Atul Gupta, Rajesh Gupta, and Salim Essa. The news release says that Ajay, Atul, and Rajesh Gupta immigrated to South Africa in the 1990s, and due in large part to their generous donations to a political party and their reportedly close relationship with former South African President Jacob Zuma, their business interests expanded. The family has been implicated in several corrupt schemes in South Africa, allegedly stealing hundreds of millions of dollars through illegal deals with the South African government, obfuscated by a shadowy network of shell companies and associates linked to the family.

https://home.treasury.gov/news/press-releases/sm789

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20191010.aspx

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UK JUDGE: GREEK OWNER FAKED PIRATE ATTACK, SET OWN SHIP ABLAZE

On 9^th October, American Shipper reported a court case involving the loss of the 1992-built, 150,000-deadweight-ton Brilliante Virtuoso. Bought for $46 million, by 2011, the ship was worth only $13.5 million and after a series of refinancings, the owners were receiving notices of default. The Brilliship was insured for $77 million though, almost 6 times its value. The tanker loaded a cargo of fuel oil in Kerch, Ukraine, in 2011 for transport to China. However, it was subsequently lost in a fire started by the detonation of an improvised explosive incendiary device, seemingly placed by armed men who boarded the ship. The ship was badly damaged and was scrapped. The insurance claims was rejected on the grounds that the fire was deliberately set, and a High Court agreed with this interpretation. The most recent, and long trial, was the result of a case brought by a bank, which argued that it should be paid by the insurers even if “wilful misconduct of the owner” was proven. This claim was also rejected.

https://www.freightwaves.com/news/uk-judge-greek-owner-faked-pirate-attack-set-own-ship-ablaze

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INTERNATIONAL WARRANT BEING DRAFTED FOR UKRAINE BILLIONAIRE ZHEVAHO

On 10^th October, Rferl reported that an international arrest warrant is being prepared for Ukrainian billionaire Kostyantyn Zhevaho, who the newly created State Bureau of Investigations (DBR) suspects of large-scale money laundering and embezzlement of funds from a bank he formerly owned – the Finance and Credit bank, which was closed by the central bank in 2014. He is also the majority owner of Ferrexpo, a London-traded iron ore pellet producer based in Poltava, a centrally-located region in Ukraine. The company boasts Europe’s largest iron-ore deposit, with approximately 20 billion tons of resources.

https://www.rferl.org/a/international-warrant-being-drafted-for-ukraine-billionaire-zhevaho/30209246.html

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LIBYA: RICH IN OIL BUT LEAKING…

A report from Chatham House on 10^th October looks at Libya’s oil industry, saying that amid continuing violence and instability, up to one-third of oil goes missing from official supply chains each year, fuelling a black market that ultimately steals from state coffers at the expense of the population. Locals face shortage of fuel for heating and their motors. Libya’s oil refineries are supposed to be guarded by Petroleum Facilities Guards (PFG) units. But according to the chair of the National Oil Corporation, Mustafa Sanalla, PFG have ‘descended into local fiefs’. It is said that Libya’s Audit Bureau noted that the value of crude oil supplied to the refineries was approximately $2 billion in 2017, yet the value of the fuel actually received by fuel distribution depots, the next link in the supply chain, was only around $1 billion. The situation is also said to have underpinned the growth of sea-borne smuggling, allowing refined products enter the international fuel markets.

https://chathamhouse.shorthandstories.com/libya-rich-in-oil-leaking-fuel/index.html

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HOW TO ENSURE YOUR SUPPLY CHAIN IS BREXIT-READY

On 9^th October, Gowling WLG produced a fairly comprehensive, and certainly useful and interesting, briefing intended to help businesses identify where their key risks are and what they should do. While it focuses on UK businesses which trade with the risk of the EU, it also comments on trading with the rest of the world. It comprises 5 sections –

What you should do? This is the key part. It explains how to map your supply chain and the key issues you need to address;
This explains the difference between a hard Brexit and a soft Brexit. It is important to understand the difference as a hard Brexit will introduce more change;
Brexit opportunities. Brexit may bring new opportunities; this part explains those opportunities;
Key risks of Brexit for the supply chain. This sets out the key Brexit risks; and
A Brexit supply chain checklist.

https://gowlingwlg.com/en/insights-resources/articles/2018/how-to-ensure-your-supply-chain-is-brexit-ready/

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BETFRED TO PAY £322,000 OVER AML FAILURES

On 10^th October, Intergame reported that the Gibraltar-based, UK-facing gambling company is to pay a total penalty of £322,000 after an investigation by the Gambling Commission uncovered money laundering failings. It is said to have failed to carry out adequate source of funds checks on a customer who deposited £210,000, and lost £140,000, of stolen money in a 12-day period in November 2017.

https://www.intergameonline.com/igaming/news/betfred-to-pay-322k-over-aml-failures

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US ANTI-BOYCOTT VIOLATIONS CAN YIELD SUBSTANTIAL PENALTIES

On 10^th October, an article from Sandler Travis Rosenberg says that US companies and their foreign affiliates are prohibited from participating in foreign boycotts that the US does not sanction. Such actions can result in substantial criminal and civil penalties. The Arab League boycott of Israel is the principal foreign economic boycott that US companies must be concerned with today. The US Treasury has published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott, and the list currently comprises Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, UAE, and Yemen.

https://www.strtrade.com/news-publications-anti-boycott-penalties-countries-list-101019.html

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COSTA RICA LATEST LATIN AMERICAN COUNTRY TO INTRODUCE A CORPORATE CRIMINAL LIABILITY LAW

An article from Dentons on 9^th October reported that Costa Rica became the latest country in Latin America to introduce a corporate criminal liability law, following the example of countries such as Argentina, Brazil, Chile and most recently Peru. An OECD requirement, it came into force on June 11^th and law enforces criminal liability against legal entities (public or private) that are registered and domiciled in Costa Rica, as well as foreign companies that have agencies, subsidiaries or branches or that carry out business in Costa Rica. It covers criminal offences committed by its employees or representatives that are related to corruption issues, domestic and transnational bribery.

https://www.jdsupra.com/legalnews/costa-rica-introduces-corporate-34261/

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SYNTHETIC IDENTITY FRAUD IS THE FASTEST GROWING FINANCIAL CRIME

On 8^th October, an article in Forbes reported a claim from Lexis Nexis Risk Solutions that the fraud represents 61% of fraud losses for large banks stem from identity fraud [and] 20% of the identity fraud incurred by these larger banks. It is explained that it creates a new identity using a real social security number with a fictitious name, driver’s licence and address; and that there are some cracks in the system that have allowed synthetic identities to proliferate – for example, in the US relies on social security numbers as identifiers. There is no way to validate a number with the US Social Security Administration, which now uses random numbers, eliminating the geographical distinctions that would help identify fraudulent numbers or users.

https://www.forbes.com/sites/forbestechcouncil/2019/10/08/synthetic-identity-fraud-is-the-fastest-growing-financial-crime-what-can-banks-do-to-fight-it/#5e677f917ecb

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MUTUAL EVALUATION OF HONG KONG’S AML/CFT REGIME: KEY TAKEAWAYS FOR THE FINANCIAL SERVICES SECTOR

On 9^th October, Mayer Brown published an article reflecting on the recent mutual evaluation report from FATF-style regional body APG on Hong Kong, summarising the key findings and recommended actions identified in the report that are relevant to the financial services sector.

https://www.mayerbrown.com/en/perspectives-events/publications/2019/10/fatf-apgs-mutual-evaluation-of-hong-kongs-aml-cft-regime-key-takeaways-for-the-financial-services-sector

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NEW NON-PROFIT ORGANISATION TARGETS HUMAN TRAFFICKING BY BOLSTERING PUBLIC-PRIVATE PARTNERSHIPS AND DATA SHARING

ACFCS reported in a detailed post on its blog on 9^th October on the establishment in September of the Anti-Human Trafficking Intelligence Initiative (ATII). It says that ATII intends to build on the analyses from FinCEN, FATF etc and combine their conclusions with insight from banks, law enforcement and other counter-trafficking groups in a bid to filter down to financial institutions the latest schemes used by human trafficker operations to launder their ill-gotten proceeds.

https://www.acfcs.org/new-non-profit-aims-at-better-arming-banks-protecting-victims-against-human-trafficking-by-bolstering-public-private-partnerships-data-sharing/

The ATII website is at –

http://followmoneyfightslavery.org/

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 9

9^th October 2019

CHAIR OF JAPAN NUCLEAR OPERATOR TO RESIGN OVER $3 MILLION GIFT SCANDAL

On 9^th October, Nikkei Asian Review reported that the chairman of Kansai Electric Power, Japan’s second-largest listed utility by revenue, intends to resign over $3 million in undisclosed cash and gifts received by company executives over the years.

https://asia.nikkei.com/Business/Companies/Chair-of-Japan-nuclear-operator-to-resign-over-3m-gift-scandal

FBI WARNS US UNIVERSITIES ABOUT CHINESE THEFT OF INTELLECTUAL PROPERTY

The Campus Safety website on 8^th October reported that the FBI has been working to stop the theft of technology and trade secrets by Chinese researchers who are working at US institutions of higher education, with outreach efforts to universities include lecturing at seminars, briefing campus administrators and providing information on intellectual property theft. Earlier this year, 2 bodies published a sample of some of the best practices being implemented by universities to combat emerging security threats and encouraged all universities to review the examples and consider implementing them on their campuses.

https://www.campussafetymagazine.com/news/fbi-warns-u-s-universities-about-chinese-theft-of-intellectual-property/

US TREASURY PROPOSES 2 CFIUS RULES IMPLEMENTING FIRRMA

On 8^th October, Davis Wright Tremaine LLP published an article about 2 proposed rules published in September concerned with the process whereby the US authorities review foreign investments in the US from the aspect of national security –

expanding the Committee on Foreign Investment in the United States (CFIUS) rules to include certain non-controlling investments by foreign persons in US businesses involving critical technology, critical infrastructure, or sensitive personal data;
including certain transactions with foreign persons involving real estate in close proximity to US military and other sensitive national security facilities; and
modernising the CFIUS review process.

The article examines each of the proposals in more detail.

https://www.jdsupra.com/legalnews/treasury-department-proposes-two-cfius-53358/

CHINA MASKS OIL IMPORTS VIA SHIP TRANSFERS AS US SANCTIONS BITE

Yahoo Finance on 9^th October published an article which claims that Chinese oil imports from ship-to-ship transfers surged last month, with some 910,000 tons of crude, 3 times as much as in August, said to have been offloaded at Chinese ports after being transferred in the South China Sea. Imports from Malaysia rose to make it the seventh-biggest supplier to China, up from 16^th in August and much of that oil has also been transferred at sea. Some of the oil coming from Malaysia may be from Venezuela, one analytics company is reported to have said.

https://finance.yahoo.com/news/china-oil-imports-ship-ship-093940671.html

NAVIGATING THE RECENT U.S. SANCTIONS ON COSCO AND OTHER CHINESE COMPANIES

On 8^th October, Holland & Knight published an article saying that unlike past designations, OFAC neither identified specific vessels nor provided guidance or wind-down general licences that would have eased the disruption caused by such a major action, and that resolution of these designations is likely a bargaining chip in the larger trade negotiations between the US and China. The article looks at who/what are the targets of the sanctions and the implications. It goes on to examine what companies can do to mitigate the risks. It says that in-depth research is necessary to determine who owns particular counterparties, taking steps to wind-down or terminate contracts, or other actions. For many companies, it contends, the commercial risks from breach of contract and the inability to enter into new agreements are likely to be the greatest problems.

https://www.hklaw.com/en/insights/publications/2019/10/navigating-the-recent-us-sanctions-on-cosco-dalian-and-other

ISRAEL SEIZES 69 ANCIENT GREEK COINS BEING SMUGGLED FROM GAZA

On 8^th October, the Jerusalem Post reported that 69 ancient and rare coins from the period of Alexander the Great were found being smuggled from the Gaza Strip through the Keren Shalom crossing a truck that was transporting textile products from Gaza into Israel.

https://www.jpost.com/Israel-News/Ancient-Greek-coin-haul-caught-being-smuggled-from-Gaza-to-Israel-604052

CANADIAN PROBE OF BOMBARDIER BUSINESS ACTIVITIES IN AZERBAIJAN TO INCLUDE ALLEGATIONS OF MONEY LAUNDERING

On 8^th October, the Globe & Mail in Canada reported that the investigation into the aircraft and train producer had been expanded to encompass allegations of money laundering.

https://www.theglobeandmail.com/business/article-swedish-probe-of-bombardier-alleges-money-laundering/

EU AML/CFT PRIORITIES TO BE DEBATED

On 7^th October, a briefing from Hogan Lovells said that the Presidency of the Council of the EU had issued a note which sets the agenda for the ECOFIN EU Council meeting observing that Member States need to consider the scope of possible future actions on AML/CFT. The relevant legal framework has been substantially enhanced in the last few years. The note observed that Member States need to consider the scope of possible future actions on AML/CFT, and has therefore noted several issues should be discussed at the EU Council meeting on 10^th October. These issues included the most appropriate scope of further reforms, the need for further harmonisation and co-operation, and if a new EU body was required.

https://www.hlengage.com/eu-issues-priorities-on-review-of-anti-money-laundering-and-countering-the-financing-of-terrorism

WHEN IS A SIGNATURE NOT A SIGNATURE? THE LAW COMMISSION REPORT ON THE ELECTRONIC EXECUTION OF DOCUMENTS

On 30^th September, Wilberforce Chambers published an article following the 4^th September UK Law Commission report on the use of electronic signatures. The article says that the report reflects the lack of certainty which permeates this topic. This lack of certainty includes when dealing with vulnerable individuals, for example in connection with Lasting Powers of Attorney, and the risk of fraud, particularly when dealing with property held in trust. It is said that the Law Commission has not fully resolved these issues.

https://www.wilberforce.co.uk/wp-content/uploads/2019/09/Wilberforce-Michael-Ashdown-When-is-a-signature-not-a-signature.pdf

PROFESSIONAL E-SPORTS IN LATIN AMERICA

On 31^st August, CMS Law published a briefing saying that esports are taking off in Latin America, with the recent creation of national leagues in Chile, Peru, Argentina, Mexico and Colombia, and a Mexican TV company looking to acquire a sports production company with the aim of launching a 24-hour esports channel. It asks how are tax regimes dealing with the new business models and income streams generated by the boom in esports – looking at the tax rules for esports players and industry participants in Colombia, Chile, Mexico and Peru.

https://cms.law/en/INT/Publication/Professional-esports-is-taxing

UK: MOVEMENT OF CITES SPECIMENS AFTER BREXIT

On 8^th October, BIFA said that more than 35,000 CITES-protected species, as well as their products, will require action in order to move between the UK and EU, and permits will be required to move protected plants and animals between the UK and the EU. BIFA has prepared a “get ready” leaflet –

https://www.bifa.org/media/4387607/cites-get-ready-leaflet.pdf

EX-COLOMBIA PRESIDENT URIBE TESTIFIES OVER WITNESS TAMPERING AND BRIBERY

Al Jazeera on 9^th October reported that Alvaro Uribe is accused of trying to bribe members of a paramilitary group who had damaging information against him. A magistrate queried Uribe, president 2002-2010, behind closed doors for over 7 hours. After the questioning, the court released a brief statement announcing that officials had concluded there were sufficient grounds to continue investigating Uribe, though no charges have been filed.

https://www.aljazeera.com/news/2019/10/colombia-president-testifies-witness-tampering-bribery-191009062209424.html

US OFFICIAL: SEYCHELLES MUST IMPROVE OFFSHORE BANKING TO DETER TERRORIST AND DRUG MONEY

On 9^th October, the Seychelles News Agency reported that the Assistant Secretary for Terrorist Financing at the US Treasury said that the Seychelles need to raise awareness on the risks associated with off-shore banking and set up legislation to fix loopholes within financial regulatory systems. Following meetings on the islands, he also said that that awareness needs to be raised in particular on “establishment of off-shore shell companies without an effective beneficial ownership registry”, and that it needs to introduce new legislation to fix the “enormous” loophole in the current laws.

http://www.seychellesnewsagency.com/articles/category/1/articles/11769/US+official+Seychelles+must+improve+off-shore+banking+to+deter+terrorist%2C+drug+money

AUSTRALIA: CLAIM THAT FORMER NSW LABOR BOSS RECEIVED $35,000 IN WINE BOX FROM CHINESE BILLIONAIRE

ABC News on 9^th October reported that the Independent Commission Against Corruption (ICAC) is examining allegations Huang Xiangmo, a property developer. Former NSW Labor boss, Jamie Clements, has the inquiry that Huang Xiangmo gave him $35,000 hidden in a wine box to pay his legal fees. He says he did not think it was unusual because Mr Huang had paid the legal fees of former Labor senator, Sam Dastyari.

https://www.abc.net.au/news/2019-10-09/icac-told-nsw-labor-boss-got-35-000-hidden-in-wine-box/11585342

IRELAND ADOPTS LLP – AND A NEW COMPLAINTS REGIME FOR BARRISTERS AND SOLICITORS

On 8^th October, the Law Society Gazette reported that Limited liability partnerships will become available for lawyers in Ireland following the implementation of regulatory reforms under the 2015 Legal Services Regulatory Authority Act, which also transfers responsibility for complaints handling from representative bodies to the new Legal Services Regulatory Authority.

https://www.lawgazette.co.uk/practice/ireland-adopts-llps-and-a-new-complaints-regime/5101720.article

RUSSIAN REGULATOR NAMES 12 FRAUDULENT ONLINE TRADING COMPANIES THAT MOST OFTEN TARGET INVESTORS

On 9^th October, Finance Feeds reported that the Russia’s Federal Financial Monitoring Service has warned that a raft of foreign entities are offering investment services in Russia without having the right to do so.

https://financefeeds.com/regulator-names-12-fraudulent-online-trading-companies-often-target-russian-investors/

GAMBLER FROM SUNDERLAND ADMITS TO STEALING £890,000 FROM SPORTS GIANT NIKE

The Sunderland Echo on 9^th October reported that Christopher Edward Rawding, 34, pleaded guilty 2 charges of fraud by false representation during a 3½ year period, while he was working for the global sports company 2015-18. He was a cash collector and his job was to obtain funds from customers who were placing large orders.

https://www.sunderlandecho.com/news/crime/gambler-sunderland-admits-stealing-ps890000-sports-giant-nike-649138

GREECE’S CRUISING TAX FOR YACHTS: WHAT WAS THE IMPACT?

On 8^th October, an article on Superyacht News examined the impact of the new cruising tax, TEPAI, introduced in May 2019 by the Greek government. It says that it was first proposed in 2014, and that its introduction was beset with issues from the outset, including a lack of any method of registering or paying the tax. The tax applies to vessels over 7 metres and is payable prior to or upon entry into Greek waters at a monthly rate of €8 per metre (for yachts over 12 metres). The article says that while the implementation of the cruising tax may have had little impact on the 2019 summer season, charter regulations introduced in 2018 continued to inconvenience charter yachts with cruising itineraries in Greece – such as requiring commercial yachts not in possession of a Greek charter licence to both embark and disembark charter guests outside of the country.

https://www.superyachtnews.com/business/greek-cruising-tax-what-was-the-impact

FOREIGN FORESTRY COMPANIES NEW ZEALAND’S BIGGEST LANDOWNERS

On 8^th October, Customs Today reported that, despite a clampdown on some overseas investment, including a ban on residential sales to offshore buyers, the Labour-led government has actively encouraged further foreign purchases of land for forestry through a stream-lined ‘special forestry test’. Since the government was formed, the Overseas Investment Office (OIO) has approved more than $2.3 billion of forestry-related land sales – about 31,000 hectares of it previously in New Zealand hands. Of that, about half has been sold via a streamlined ‘special forestry test’ introduced by the government in October 2018.

http://www.customstoday.com.pk/green-rush-foreign-forestry-companies-nzs-biggest-landowners/

INDONESIA: TEXTILE INDUSTRY UNDER SCRUTINY FOR POTENTIAL ‘IMPORT LEAKS’

Customs Today on 8^th October reported that the Trade Ministry is working with a special task force to audit producers’ importer identification numbers (API-P) to verify the textile industry’s import quantity and identify possible “import leaks”. The Ministry’s move follows urgings from the textile industry for the government to protect them from rapidly growing imports, as the sector cannot compete in the domestic and international markets.

http://www.customstoday.com.pk/textile-industry-under-scrutiny-for-potential-import-leaks/

UNODC-WCO CONTAINER CONTROL PROGRAMME CELEBRATES 15 YEARS OF MAKING GLOBAL TRADE SAFER FROM CRIME

On 8^th October, the UN Office on Drugs and Crime published a news release celebrating the 15^th anniversary of the Container Control Programme (CCP), which counters the cross-border movement of illicit goods and is jointly implemented by UNODC and WCO. The CCP assists governments in building the capacities of national agencies at the border to detect illicit goods in sea, land and air cargo consignments and thereby helps to strengthen international supply chain security and contributes to facilitate legitimate trade. It began as a modest project, established in 4 seaports and primarily focused on drug trafficking, and has become a far-reaching programme on a global scale – now it is established more than 100 operational inter-agency Units in over 50 countries and has expanded its focus to include airports, dry ports, land border crossings and rail terminals.

https://www.unodc.org/unodc/en/frontpage/2019/October/unodc-wco-container-control-programme-celebrates-15-years-of-making-global-trade-safer-from-crime.html?ref=fs1

KILLINGS REVEAL LONGTIME COCAINE PRODUCTION IN GUATEMALA

On 8^th October, Insight Crime reported that the killing of 3 naval officers in an eastern coastal region dominated by organised crime, and the implementation of martial law, has drawn attention to the country becoming a cocaine producer. The Interior Minister has said that Guatemala had gone from being a drug transit country to a cocaine-producing country, authorities then locating and destroying 4 cocaine-producing laboratories with the production capacity of between 300 and 500 kg daily.

https://www.insightcrime.org/news/analysis/killings-cocaine-production-guatemala/

ANTI-DOPING PROBE EXPOSES BAD BLOOD IN RUSSIAN SPORTS

A feature on Rferl on 8^th October was concerned with ongoing problems with cleaning up Russian athletics, and officials tasked with cleaning up Russian athletics slinging mud and preparing for the worst – including a potential ban from the 2020 Tokyo Olympics and future Games. This centres on a controversy which erupted following international sport’s World Anti-Doping Agency (WADA) announcement in September that it was giving Russia 3 weeks to explain “inconsistencies” in data received from the Moscow Anti-Doping Laboratory.

https://www.rferl.org/a/wada-investigation-russian-sports-bad-blood/30206345.html

THE EFFECTIVENESS OF EXPORT PROMOTION MEASURES

An article from the VOX website, the CEPR Policy Portal on 9^th October says that public export promotion agencies, which provide direct support to exporting firms, are used in many countries around the world. It surveys the literature that examines the effects of export promotion policies using firm-level observational data. While empirical studies generally find a positive effect of such measures, many show differences in the pattern of effects depending on firm characteristics. The survey also suggests that bundled services combining multiple types of support – and the more direct measures, such as helping firms find distributors – are more effective.

https://voxeu.org/article/effectiveness-export-promotion-measures

CYPRUS: REVENUE FROM SHIP MANAGEMENT OVER €1 BILLION

On 9^th October, Hellenic Shipping News reported that revenue from ship management companies in 2018 reached €1.034 billion, with the President of the country noting at the same time that the discovery of significant quantities of hydrocarbons in Eastern Mediterranean region generates new opportunities for Cyprus’ shipping industry.

https://www.hellenicshippingnews.com/cyprus-revenue-from-ship-management-reached-e1-034-billion-president-says/

DoJ GUIDANCE ON WHEN A DEFENDANT IS UNABLE TO PAY PENALTY

On 8^th October, the Wall Street Journal reported that the US DoJ had issued guidance for federal prosecutors to use in cases where companies claim they can’t pay a criminal fine and provide more transparency in cases where financially troubled companies are faced with criminal penalties.

https://www.wsj.com/articles/justice-department-issues-guidance-on-inability-to-repay-claims-11570550445

NO MORE SECRET PURCHASES OF CONDOS IN MANHATTAN

On 8^th October, the Wall Street Journal reported that a state law in New York makes every condo buyer’s name publicly available under the state’s Freedom of Information Law. This followed a dispute over home conversions in suburban Rockland County, because of which lawmakers in the county drew up state legislation to prevent the anonymous purchase of homes through the creation of LLC – because some residents suspected their new neighbours of making illegal home conversions or subdivisions, and getting local authorities to enforce the rules is more difficult if a property is owned through an LLC. In one tower, more than 85% of all purchases were made through LLC. It is reported that 12% of all condos and 5% of houses in New York City are owned via LLC, and federal officials say some buyers use LLC to launder money or conceal ill-gotten wealth.

https://www.wsj.com/articles/secret-manhattan-condo-purchases-are-dead-thanks-to-a-suburban-squabble-11570557635

PODCAST: RANSOMWARE

In the latest TRACE podcast, Renee Dudley of ProPublica discusses her fascinating research into the unsettling world of ransomware: how it works, the role that “recovery services” play, and where the ransom money ends up.

https://traceinternational.org/bribe_swindle_or_steal

MEMBER STATES PUBLISH A REPORT ON EU CO-ORDINATED RISK ASSESSMENT OF 5G NETWORKS SECURITY

On 9^th October, a news release from the EU says that the report is based on the results of the national cybersecurity risk assessments by all EU Member States. It identifies the main threats and threats actors, the most sensitive assets, the main vulnerabilities (including technical ones and other types of vulnerabilities) and a number of strategic risks. This assessment provides the basis to identify mitigation measures that can be applied at national and European level.

https://europa.eu/rapid/press-release_IP-19-6049_en.htm

LIBYA’S WAR BECOMES A TECH BATTLEGROUND

On 9^th October, Defence Web reported that fleets of long-range drones carry out strikes, cyber-attacks proclaim the end of governments, and social media propaganda has become all-consuming. It says that foreign actors have largely been driving this war. Turkey and Qatar support the GNA, while the UAE, Egypt, Russia and France are behind the LAAF. These foreign backers have contributed diplomatic support, military equipment, mercenaries and military personnel, and direct military action to the 2 sides. In 6 months, drones have become a mainstay of Libya’s conflict. A UN spokesman said that the current conflict has seen some 900 missions flown by drones fielded by the 2 sides, and this has increased steeply in recent weeks. Both sides use them for surveillance, long-range strategic strikes on arms depots and airports, and close-air support to units enmeshed in urban combat; and some 900 missions flown by drones. Alongside drones, hacking and cyber-attacks have been weaponised in Libya’s conflict and like drones, cyber-attacks offer a low-cost means of achieving conflict goals.

https://www.defenceweb.co.za/joint/science-a-defence-technology/iss-libyas-war-becomes-a-tech-battleground/

NIGERIA MARITIME OFFICIALS DISCUSS ANTI-GRAFT METHODS

On 9^th October, OCCRP reported a meeting of Nigerian anti-corruption officials on how to effectively combat graft in the country’s ports, which annually lose up to $6.89 billion to “negative operational elements”. It is said that the ports lack the necessary infrastructure to properly monitor all transactions.

https://www.occrp.org/en/daily/10856-nigeria-maritime-officials-discuss-anti-graft-methods

24 TAIWANESE ARRESTED IN BUST OF INTERNATIONAL TELECOM FRAUD RING

Focus Taiwan on 9^th October reported that 24 Taiwanese were arrested last month in Vietnam on suspicion of telecoms fraud, allegedly were targeting Chinese-Americans in the US and posing as officers from the FBI and the Chinese Ministry of Public Security.

http://focustaiwan.tw/news/asoc/201910090019.aspx

IRISH BOOKMAKERS GRANTED BETTING TAX RELIEF IN 2020 BUDGET

On 9^th October, i-Gaming Business reported that it has been confirmed that in its 2020 Budget bookmakers in Ireland will receive a relief of up to €50,000 from the 2% turnover tax levied on betting in the country.

https://www.igamingbusiness.com/news/irish-bookies-granted-tax-relief-2020-budget

ADDRESSING THE ABUSE OF TRADE FOR MONEY LAUNDERING PURPOSES

A Commentary from RUSI on 9^th October says that while the problem of detecting and tackling money laundering has taxed financial institutions and law enforcement for decades, trade-based money laundering adds a new dimension of complexity; but tackling it will require new collaboration and information sharing across the global trade, financial services and law enforcement communities. There are, it says, significant hurdles in the form of legal and commercial constraints, privacy concerns and alignment of incentives which became evident when the authors recently conducted over 60 interviews with these communities in the UK, Europe, North America, Middle East and Singapore.

https://rusi.org/commentary/addressing-abuse-trade-money-laundering-purposes

BUENOS AIRES’ MAIN INTERNATIONAL AIRPORT REMAINS A HOTSPOT FOR COCAINE SMUGGLING TO EUROPE

An article on Insight Crime on 9^th October reported that the dismantling of a major criminal organisation in Italy provides further evidence of the importance of the airport in Buenos Aires in cocaine smuggling. 2 dozen people were arrested in an operation in Palermo, the final destination for the cocaine flown from Argentina but discovered in Paris. Once in Paris, the smugglers transported the drugs by train and by car to Palermo. It is said that, with easy connections to Europe and corruptible customs officials, Argentina’s Ezeiza International Airport has long been known as a drug transshipment point.

https://www.insightcrime.org/news/brief/europe-buenos-aires-argentina-drug-smugglers/

SPAIN TESTS NO-DEAL BREXIT PASSPORT CONTROLS, CAUSING BORDER LOGJAM

On 9^th October, the Gibraltar Chronicle reported that cross-border commuters heading from Spain into Gibraltar faced delays as Spanish authorities intensified passport checks in a trial run of measures that could come into force in the event of a hard Brexit.

https://www.chronicle.gi/spain-tests-no-deal-brexit-passport-controls-causing-border-logjam/

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Nationals of nowhere

stateless

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OFAC v THE BRITISH ARAB COMMERCIAL BANK AND OFFSHORE USE OF THE US DOLLAR

On 7^th October, Steptoe & Johnson LLP published a briefing looking at the action of OFAC against the UK-based British Arab Commercial Bank (BACB) over violations of the Sudan sanctions regulations which, it says, demonstrates how challenging and complex it can be to assess whether offshore transactions in US dollars that involve US sanctions targets are in all respects outside of OFAC’s enforcement jurisdiction. It says that this case indicates that OFAC expects non-US institutions like BACB to look comprehensively at their US dollar funding arrangements. When transacting in dollars with US-sanctioned countries (or sanctioned parties), even if those transactions themselves do not touch the US financial system, this case shows that banks may be at risk if they limit their diligence into the provenance of such offshore US dollar pools and fail to confirm that the funds did not pass through the US. This is regardless of US Treasury officials having stated on the record that OFAC’s jurisdiction does not extend to the use of the US dollar itself. After considering the case in some detail, the article concludes by saying that non-US banks, particularly smaller institutions that may believe they are operating outside OFAC’s jurisdiction when conducting offshore dollar transactions, should carefully analyse this case in assessing their level of regulatory risk.

https://www.steptoe.com/en/news-publications/ofacs-case-against-british-arab-commercial-bank-and-offshore-use-of-the-us-dollar.html

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UNITED KINGDOM – GLOBAL BRIBERY OFFENCES GUIDE

On 27^th September, DLA Piper published a briefing providing a structured guide to bribery offences under UK law – primarily under the Bribery Act 2010. Aspects include the territorial extent of the law, who can be charged and can a parent company be responsible for actions of a subsidiary.

https://www.dlapiper.com/en/global/insights/publications/2019/09/bribery-offences-guide/united-kingdom/

This is one of a number of country-specific guides provided by the firm –

https://www.dlapiper.com/en/global/insights/publications/2019/09/bribery-offences-guide/

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US IMPOSES VISA RESTRICTIONS ON CHINESE OFFICIALS OVER MUSLIM TREATMENT

Reuters on 8^th October reported that the US had followed the adding of 8 companies and 20 government bodies to the Commerce Department’s Entity List, imposing trade restrictions, by the State Department imposing visa restrictions on Chinese government and Communist Party officials it believes responsible for the detention or abuse of Muslim minorities in Xinjiang province. The State Department announcement did not name the officials subject to the visa restrictions.

https://www.reuters.com/article/us-usa-china-muslims/u-s-imposes-visa-restrictions-on-chinese-officials-over-muslim-treatment-idUSKBN1WN29H

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OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 8

8^th October 2019

UN GRANTS SANCTIONS WAIVERS FOR EQUIPMENT NEEDED FOR WORLD CUP QUALIFIER IN PYONGYANG

The Korea Herald on 8^th October reported that the UN had granted sanctions waivers necessary for the football match and travel to North Korea. North Korea is to host the World Cup qualifier between the 2 Koreas October 15^th and sports gear and equipment are among luxury goods currently subject to UN sanctions.

http://www.koreaherald.com/view.php?ud=20191008000668

FCA 87 INVESTIGATIONS INTO UK CRYPTOCURRENCY BUSINESSES OVER THE LAST 12 MONTHS

Bitcoinist repeated on 7^th October a report from the Daily Telegraph and said that the number of cases represented a 74% increase from the number of inquiries recorded between October 2017 and October 2018. The investigations range from early-stage inquiries to full-on law enforcement action and come as fraud involving real or scam cryptocurrency is said to have surged.

https://bitcoinist.com/fca-cryptocurrency-scam-probes-up-74-in-12-months/

US: GAO CALLS ON FinCEN AND LAW ENFORCEMENT TO PROVIDE MORE INFORMATION TO FINANCIAL INSTITUTIONS ON SAR

ACFCS in its blog on 4^th October reported that the Governmental Accounting Office has published a report reviewing SAR and the US banking sector. Amongst the recommendations made are that FinCEN and law enforcement should provide financial institutions with more feedback on the value of the SAR they submit.

https://www.acfcs.org/fincrime-briefing-gao-tackles-sars-fincen-feedback-gap-u-k-evades-u-s-in-iran-sanctions-settlement-major-brazilian-banks-accused-of-laundering-and-more/

FREE TRADE ZONES: A PANDORA’S BOX FOR ILLICIT MONEY

On 7^th October, pressure group Global Financial Integrity published a report saying that governments around the world are increasingly turning to free trade zones (FTZ) as a means of promoting economic growth and investment, citing examples such as Africa’s largest FTZ in Djibouti. It says that there an estimated 4,300 FTZ worldwide. It warns that criminals see them as perfect places to manufacture and transport illicit goods, as controls and checks by authorities are often irregular or absent. Illegal transactions can be easily disguised as legal, using trade-based money laundering schemes that are notoriously difficult to detect. The report likens an offshore tax haven for illicit finance to an FTZ being a sort of haven for illicit trade (and associated crimes). It says that FTZ remain one of the weakest links in the fight against dirty money because of how easy it is to engage in the 3 stages of money laundering. It then takes a closer look at some of the largest and well-known FTZ in the world – in Paraguay, UAE and Panama.

https://gfintegrity.org/free-trade-zones-a-pandoras-box-for-illicit-money/

UK: MINISTERS MULL FORCING ESTATE AGENTS TO HAND OVER CLIENT DETAILS USING “GEOGRAPHICAL TARGETING ORDERS”

On 8^th October, The Negotiator reported that the UK Government is mulling plans to force estate agents to hand over information about suspected ‘dirty money’ vendors and buyers. This would be achieved by adopting the ‘geographical targeting orders’ similar to those being used in the US to tackle organised crime.

https://thenegotiator.co.uk/money-laundering-measures/

https://www.riskscreen.com/kyc360/news/posh-homebuyers-targeted-in-money-laundering-fight/

GIABA LAUDS TOGO’S EFFORTS IN TACKLING MONEY LAUNDERING AND TERRORISM FUNDING

On 7^th October, Togo First reported that the FATF-style regional body for West Africa, in its latest annual report on fighting money laundering and terrorism funding, is said to have lauded Togo for its improvements. However, it also noted an increase in corruption level in the country, saying that this impairs effective implementation of policies to fight money laundering.

https://www.togofirst.com/en/economic-governance/0710-4084-giaba-lauds-togos-efforts-in-tackling-money-laundering-and-terrorism-funding

SINGAPORE: FORMER BANKER TO BE CHARGED WITH CHEATING VICTIMS OF MORE THAN S$1.9 MILLION
On 7^th October, Channel News Asia reported that a 33-year-old former personal banker will be charged with cheating, forgery and money laundering offences among other charges. He is accused of cheating victims of more than S$1.9 million 2015 and April 2018, having tricked victims into believing that their money would be put in fixed deposits or investments in financial products.

https://www.channelnewsasia.com/news/singapore/former-bank-officer-to-be-charged-with-cheating-money-laundering-11978704

JAMAICA: WITNESS SAYS MORE THAN $2 MILLION FOUND IN SAFE AT HOME OF ACCUSED IN MANCHESTER MUNICIPAL CORPORATION FRAUD TRIAL

On 8^th October, the Gleaner reported that an officer attached to the Financial Investigations Division (FID) revealed that during an operation in 2016 at the home of one of the accused in the multimillion-dollar Manchester Municipal Corporation fraud trial, there was a disclosure of the source of the monies seized.

http://jamaica-gleaner.com/article/lead-stories/20191008/witness-says-more-2m-found-safe-accuseds-home

UK: WARNING OVER SHIPPING SCAM TARGETING ARTISTS

The Shropshire Star on 8^th October reported warnings from a freight company executive of a significant increase in the number of international fraud cases involving the shipment of valuable art work, which he described as “the biggest scam we’ve seen in the shipping industry for many years”. Fraudsters involved in the scam are contacting artists and, in some cases, placing orders for art work worth thousands of pounds. They are then convincing artists that they have organised shipment of the goods through a genuine freight company and are requesting artists then make an up-front payment to reimburse the transportation costs.

https://www.shropshirestar.com/news/business/2019/10/08/warning-over-shipping-scam-targetting-artists

DOMINIC CHAPPELL, FORMER OWNER OF BHS, DENIES AVOIDING PAYING HALF A BILLION POUNDS IN TAX

On 7^th October, ICAEW reported that Chappell appeared at Southwark Crown Court for a plea hearing and pleaded not guilty to all 3 charges of cheating the public revenue.

https://economia.icaew.com/news/october-2019/dominic-chappell-denies-500000-tax-fraud

SWITZERLAND AND THE UAE TO BE REMOVED FROM EU TAX HAVEN LISTS

ICAEW on 7^th October reported that the blacklist which names countries or jurisdictions that do not co-operate with the EU on tax matters is to be amended – with the UAE dropped together with the Marshall Islands. 9 jurisdictions remain on the blacklist, including 3 US territories – American Samoa, Guam, and the US Virgin Islands – as well as Belize, Trinidad and Tobago, Oman, Samoa, and Fiji. A grey list also names countries that have committed to reform their tax regimes and includes the Cayman Islands, Turkey, Bermuda and the Bahamas. Switzerland will be removed from the grey list.

https://economia.icaew.com/news/october-2019/switzerland-and-the-uae-removed-from-eu-tax-haven-lists

COSTA RICA ENACTS CORPORATE CRIMINAL LIABILITY FOR ACTS OF BRIBERY

On 7^th October, Ropes & Gray published an article saying that Costa Rica is the latest country in Latin America to establish corporate criminal liability for acts of corruption, following the recent implementation of similar legislation in Argentina and Peru, expanded criminal liability in Chile, and enhanced administrative liability in Colombia. It is said that corruption remains a significant issue in the country. It says that, as the country pursues full membership in the OECD, Costa Rican authorities may seek to enforce the new law soon to address the OECD Working Group on Bribery’s criticism regarding the country’s lack of enforcement efforts to date. The law requires that a company take various steps (detailed in the article) in its compliance programme to qualify for a penalty reduction.

https://www.jdsupra.com/legalnews/costa-rica-enacts-corporate-criminal-97918/

US AID GROUP SENDS CANNED MEAT TO NORTH KOREA

On 8^th October, the Yonhap News Agency reported that the Mennonite Central Committee, an international Christian relief group, shipped 144,000 cans of meat to North Korea for a year to March to help the nation cope with food shortages. The organization has been providing humanitarian aid to North Korea since 1995.

https://en.yna.co.kr/view/AEN20191008004300325?section=nk/nk

ASSESSMENT OF RIGHT-WING MILITIA EXTREMISM IN THE US

On 7^th October, the Divergent Options website published a report saying that individuals radicalised on the far right-end of the political spectrum remain an awkward elephant in the room for policymakers; and that the rise of alt-right ideology, availability of firearms, and increased militia membership over the past decade creates a unique problem for policymakers.

https://divergentoptions.org/2019/10/07/assessment-of-right-wing-militia-extremism-in-the-united-states/

DON’T FORGET BIOLOGICAL THREATS

On 3^rd October, Security Magazine published an article saying that events in the immediate past has elevated issues such as cybersecurity and drones to the top of risk forecasts. These are critical, it argues, but biological threats (or “biothreats”) deserve attention more than ever – and yes, even corporate security professionals should care. The Anthrax attacks of 2001 brought biothreats back to the foreground in the public eye, but nearly 20 years have passed since then, and have since been overshadowed by many kinetic- and cyber-attacks. Hence biothreats have also been low on the list of corporate security priorities because of the very tangible reasons for focusing on concerns such as cybersecurity and drones. The article details why biothreats need more attention, citing numerous recent developments — both natural and man-made — which it says are real causes for worry that security teams need to track. Most worrying is that there is a lack of preparedness – according to the Global Preparedness Monitoring Board, a body convened by the World Bank and WHO. The article then provides advice for finance professionals – first, make sure your organisation is prepared; second, get serious on health and medical intelligence; and finally, corporate security professionals should think big and think far when it comes to biological threats in the same way that they currently do about other emerging issues and technological challenges.

https://www.securitymagazine.com/articles/91034-dont-forget-biological-threats

UK: DISQUALIFIED DIRECTOR JAILED FOR SECOND TIME FOR ILLEGALLY RUNNING COMPANY

On 7^th October, the Insolvency Service reported that John Cotton, 70, a disqualified director, has been jailed for a second time after he illegally ran a Dudley-based manufacturing company soon after leaving prison. He was given a 14-month prison sentence and a 10-year directorship disqualification. Michael Clarke, 57, was given a 12-month prison term and a 5-year directorship disqualification after for assisting John Cotton carry out his criminal activities. The court heard that John Cotton had a history of convictions for obtaining credit while bankrupt dating back to 1988 before being jailed for 61 months in July 2011. He was convicted of running a company with the intention to defraud and was also banned from running companies for 15 years. He left prison in 2014 but, in direct breach of his 15-year directorship disqualification, began illegally managing a company, of which a fellow inmate, Michael Clarke, was the registered director.

https://www.gov.uk/government/news/disqualified-director-jailed-for-second-time-for-illegally-running-company

3 MULTI-MILLION-POUND PENSION LIBERATION BOSSES BANNED FOR TOTAL OF 34 YEARS

A news release from the Insolvency Service on 3^rd October reported that 3 directors – Kevin John Kirkwood (39), Gary Quillan (48), and Gregory Gerard Garrett (49) – who liberated just under £12 million worth of pension funds have been disqualified for a total of 34 years. The companies at the centre of the case were G Loans and KJK Investments.

https://www.gov.uk/government/news/multi-million-pound-pension-liberation-bosses-banned-for-34-years

PODCAST: VANUATU – PASSPORT TO PARADISE

In the second part of a BBC World Service series on the purchase of passports and citizenship this episode says that in Vanuatu, a tiny Pacific nation, a booming passport sale scheme has locals asking why their citizenship is up for sale, so soon after a hard-won battle for independence. Over 30% of state revenue comes from passport sales. Growing Chinese influence in the region is also becoming a concern.

https://www.bbc.co.uk/programmes/w3cszz66

US: ANCIENT CAMBODIAN ARTEFACT SEIZED FROM PROMINENT AUCTION HOUSE AND PREPARED FOR REPATRIATION

A news release from Immigration and Customs Enforcement on 8^th October advised that agents had seized an ancient Cambodian sandstone sculpture dating back to 921-945 AD and valued at approximately $350,000. Originally purchased by a private collector in California, the statue was discovered for sale at a prominent San Francisco auction house following the collector’s death in 2015. It will be returned to the Cambodian people.

https://www.ice.gov/news/releases/ancient-cambodian-artifact-seized-prominent-bay-area-auction-house-prepared

US DEPARTMENT OF COMMERCE ADDS 28 CHINESE ORGANISATIONS TO ITS ENTITY LIST

A news release from the Commerce Department on 7^th October advised that the Bureau of Industry and Security of the Department had announced that it will add 28 Chinese governmental and commercial organisations to the Entity List for engaging in or enabling activities contrary to the foreign policy interests of the US. It explains that this action constricts the export of items subject to the Export Administration Regulations (EAR) to entities that have been implicated in human rights violations and abuses in China’s campaign targeting Uighurs and other predominantly Muslim ethnic minorities in the Xinjiang Uighur Autonomous Region (XUAR). The 8 companies affected (along with 20 government bodies) included Hikvision Digital Technology, Megvii Technology Inc and SenseTime Group Ltd, Dahua Technology Co, IFLYTEK, Xiamen Meiya Pico Information Co , Yitu Technologies and Yixin Science & Technology Co. However, the Wall Street Journal said that the action is unlikely to have a major practical impact on the Chinese firms, which rely on plenty of non-US suppliers and have had months of advance warning to diversify their supply chains away from US companies, and do not prevent American companies from selling certain goods made outside the US to these firms, as they have been doing with Huawei.

https://www.commerce.gov/news/press-releases/2019/10/us-department-commerce-adds-28-chinese-organizations-its-entity-list

UK: EXPORT CONTROL (SANCTIONS) (AMENDMENT) ORDER 2019

This Order has come into force in the UK, making amendment to various existing subordinate legislation concerned with export controls. It adds Eritrea to the list of countries subject to transit controls for Category B goods (which include small firearms and light weapons). It also makes technical amendments to the 2014 Order concerned with sanctions in respect of Crimea and Sevastopol, as well as creating a specific exemption to allow certain activities necessary for certain flights within the ExoMars 2020 Mission Framework. Technical amendments are also made to the 2014 Regulations concerned with sanctions on Sudan, South Sudan and the Central African Republic, and adding a new offence for contravention of restrictive measures in respect of South Sudan. The Order also create a new offence and penalty for failure to comply with a requirement or condition included in an authorisation granted under the Venezuela Sanctions Regulation, and offences in connection with the trade restrictions on North Korea.

http://www.legislation.gov.uk/uksi/2019/1236/pdfs/uksi_20191236_en.pdf

FBI WARNS ABOUT ATTACKS THAT BYPASS MULTI-FACTOR AUTHENTICATION

ZD Net reported on 7^th October that in September the FBI issued a security advisory to private industry partners about the rising threat of attacks against organisations and their employees that can bypass multi-factor authentication (MFA) solutions. The FBI listed recent incidents where hackers had used these techniques to bypass MFA and steal money from companies and regular users alike.

https://www.zdnet.com/article/fbi-warns-about-attacks-that-bypass-multi-factor-authentication-mfa/

STATE-OWNED CHINESE OIL COMPANY PULLS OUT OF IRAN DEAL DUE TO US SANCTIONS

On 7^th October, the South China Morning Post reported that state-owned CNPC had pulled out of $5 billion South Pars field deal, this coming after 6 Chinese companies and 5 executives were sanctioned by the US for transporting oil out of Iran.

https://www.scmp.com/news/china/diplomacy/article/3031901/chinese-oil-giant-cnpc-may-be-latest-bow-us-sanctions-iran

CONTRACT MANAGER FLEX DISCLOSES POTENTIAL US SANCTIONS VIOLATION

On 8^th October, it was revealed that California-based Flex Limited had disclosed that certain company-affiliated operations outside of the US may have violated US sanctions. An internal investigation is said to be underway, and the potential violations are said not to involve Syria, Sudan or North Korea.

SHORTAGE OF VETS FOR UK EXPORTS COULD BE HIGHLIGHTED BY NO-DEAL BREXIT

On 8^th October, Loadstar reported that a shortage of veterinary surgeons in the UK could provide a serious obstacle to exports of live animals and animal products to the EU in the event of a no-deal Brexit.

https://theloadstar.com/no-deal-brexit-will-also-show-problems-of-not-enough-vets-for-exports

UK’S ‘BIGGEST DRUG SMUGGLING GANG’ SMASHED

On 8^th October, various media reported that Britain’s biggest-ever drug smuggling gang has been smashed after billions of pounds worth of narcotics was brought into the UK. NCA officers arrested 13 men across the country in dawn raids. The NCA had seized 351 kg of cocaine, 92 kg of heroin, 250 kg of cannabis and 1,850 kg of hemp/hashish, with a total street value of more than £38 million, in 3 consignments in September 2018. Investigators believe more than 50 tonnes of drugs worth billions of pounds were imported from the Netherlands, between February 2017 and October 2018, hidden in lorries carrying vegetables and juice. 4 men and 2 women from the Netherlands, who were arrested in April this year as part of the same investigation, are awaiting extradition to the UK.

https://www.belfasttelegraph.co.uk/news/uk/uks-biggest-drug-smuggling-gang-smashed-38574714.html

https://www.bbc.co.uk/news/uk-49973186

https://www.nationalcrimeagency.gov.uk/news/nineteen-arrested-over-uk-s-biggest-ever-drugs-racket

A YEAR AFTER SWITZERLAND BEGAN EXCHANGING BANK ACCOUNT INFORMATION PROBLEMS APPEAR

On 8^th October, Private Banker carried an article saying that a year ago the Federal Tax Administration began sharing bank account information with tax authorities in other countries. Switzerland has shared financial account information with a further 63 partner countries, the FTA said. These include India, and it is estimated that India deposits account for 0.07% of the total aggregate foreign client funds held with Switzerland-based banks. The shared information includes identification data, account and financial information, as well as information concerning the financial institution, account balance and capital. However, the FTA said that it had suspended the information exchange with Bulgaria following a leak of financial account details, and it withheld information from 12 other states which either did not meet required standards or chose not to receive information (these include the BVI, Cayman Islands, Cyprus).

https://www.verdict.co.uk/private-banker-international/news/swiss-banking-secrecy-ended/

16 DOMAINS ADDED TO SWITZERLAND’S ONLINE GAMBLING BLACKLIST

On 8^th October, Calvin Ayre reported that the Swiss Lottery and Betting Board (Comlot) has issued an updated blacklist of international online gambling operators who continue to serve local punters without local permission. The original list in September contained 65 domains while the new list has increased that number up to 81. The article highlights that Bet365’s main .com domain appeared on September’s list, while October’s list added the company’s Italian-licensed site. Calvin Ayre also commented that the Federal Gaming Commission (ESBK) issued its own online gambling blacklist in September and it contained numerous domains not included on Comlot’s chart – but has yet to update its blacklist this month.

https://calvinayre.com/2019/10/08/business/switzerland-expands-international-online-gambling-blacklist/

UK: CHINESE NATIONAL USED FALSE IDENTITIES TO SOURCE HUNDREDS OF PROPERTIES FOR ORGANISED CRIME

A news release from the NCA on 8^th October advised that Fenu Xu, 43, a Chinese national who was responsible for operating a network of properties used by organised crime groups for prostitution or cannabis farms, has pleaded guilty to 22 fraud, false ID and money laundering offences.

https://www.nationalcrimeagency.gov.uk/news/chinese-national-used-false-identities-to-source-hundreds-of-properties-for-organised-crime

BELGIUM: ALMOST 500 FIREARMS SEIZED IN RAIDS

Focus WTV in Belgium on 8^th October reported on an investigation in West Flanders into the illicit trafficking of licensed and banned firearms. This led to 11 searches and 7 arrests. In one raid no less than 4 vans were loaded with heavy weapons, grenades and ammunition. Banned or license-barred firearms were seized, including fully automatic machine guns and historical weapons from the Second World War, especially German and Russian. A dozen grenades were also seized. Police also came across a large arsenal of weapon parts. Not all the weapons were destined for criminals, but were sold to amateurs and non-licensed collectors.

https://www.focus-wtv.be/nieuws/monstervangst-parket-neemt-bijna-500-verboden-vuurwapens-beslag

US COMMODITY FUTURES TRADING COMMISSION ENFORCEMENT ACTIONS AGAINST 2 AFFILIATE MARKETERS OF BINARY OPTIONS TRADING

A release on 8^th October reported that the CFTC had announced that it had filed enforcement actions against two affiliate marketers, David Sechovich and Peter Szatmari for creating and disseminating millions of fraudulent solicitations to open and fund retail binary options trading accounts on websites operated by unregistered, off-exchange brokers.

http://www.mondovisione.com/media-and-resources/news/cftc-files-enforcement-actions-against-two-affiliate-marketers-for-binary-option/

The CFTC has also issued a Fraud Advisory on binary options schemes and their trading platforms –

https://www.cftc.gov/ConsumerProtection/FraudAwarenessPrevention/CFTCFraudAdvisories/fraudadv_binaryoptions.html

US: AIR CHARTER OPERATOR GUILTY OF COCAINE DISTRIBUTION

On 8^th October, AIN Online reported that Khamraj Lall of New Jersey, has been found guilty by a federal jury in New Jersey of conspiracy to distribute cocaine and money laundering, among other crimes. He owned a now-defunct private jet charter business called Exec Jet Club based in Florida, and used the proceeds of his cocaine empire to purchase jets, houses and cars, as well as paying more than $2 million in cash to a Florida contractor to build a hangar in Guyana. In 2014, a search of the aircraft in Puerto Rico uncovered $470,000 in cash in a suitcase hidden in the tail of the airplane, and another $150,000 in cash hidden under a passenger seat. Lall has also been subject to confiscation of his interest in 2 jets, 2 airplane hangars, and multiple properties, as well as a monetary penalty of $9.3 million.

https://www.ainonline.com/aviation-news/business-aviation/2019-10-08/air-charter-operator-guilty-cocaine-distribution

NEW BIMCO CYBER SECURITY CLAUSE FOR THE OFFSHORE OIL AND GAS INDUSTRY

On 8^th October, Ince Law published a briefing saying that BIMCO has released its new Cyber Security Clause 2019 for inclusion in contracts. It sets out the cyber security arrangements that should be in place, the parties should use reasonable endeavours to ensure that any third party contractors adopt the same arrangements. It also requires a notification regime and contains a standard provision to limit liability in the absence of gross negligence or wilful misconduct.

https://www.incegd.com/en/knowledge-bank/new-bimco-cyber-security-clause

HOW ISIS CREATED A CURRENCY

An article in Yahoo Finance on 6^th October said that the ISIS self-declared caliphate created its own currency consisting of 10 coins ranging in value from nearly a thousand dollars to pennies, as it sought to replace US, Iraqi and Syrian banknotes with purpose-built coins backed by the gold, silver and copper standard. It says that the currency, the dinar, was modelled on coinage from a medieval Islamic empire named the Umayyad Caliphate, the leader of which – a man named Abd al-Malik ibn Marwan – issued coins to economically connect Muslims who were scattered across the Middle East. In 2015, the dinar was made compulsory for civilians living under ISIS control – and at its peak, ISIS controlled 10 million people across Iraq and Syria.

https://finance.yahoo.com/news/sharia-goldbugs-isis-created-currency-205315776.html

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