Calvin Ayre on 23rd June reported that police across the Asia-Pacific region traditionally treat quadrennial football tournaments as their own World Cup of Arresting Bookmakers and Bettors, and this year’s is proving no exception. For example, 12Bet has been linked to an operation by Vietnamese police targeting unapproved betting on the World Cup, where Ho Chi Minh City police arrested 4 individuals linked to an online gambling ring that handled over $26.2 million in wagers since police began monitoring the ring’s activities last year. In Thailand, 3,000 arrests were made in the first 4 days of the tournament.
23rd June 2018
WESTERN BALKANS AND THE PROLIFERATION OF FIREARMS
On the European Western Balkans website, in reporting the adoption by all western Balkan states of the Roadmap: a viable solution to the illegal possession, abuse and smuggling of small arms and light weapons in the Western Balkans until 2025, it is explained why the smuggling of small arms is so rife in the region. During numerous wars in the Western Balkans, huge amounts of arsenic and ammunition were left behind in the hands of citizens (between 500,000 and 1.6 million households in the region own firearms). A large number of such weapons, both legal and illegal, are subject to smuggling, but are also used for the commitment of numerous crimes, such as robberies, murders or femicide. For example, according to the latest Ministry of Interior estimates, there are about 220,000 pieces of illegal weapons in Serbia.
CHINESE FIRMS RUSH TO NORTH KOREA TO DISCUSS ECONOMIC CO-OPERATION
Yonhap News in South Korea reported on 22nd June that Chinese companies are rushing to North Korea to explore opportunities for economic co-operation and investment amid growing signs of China loosening sanctions on the North in exchange for its repeated denuclearisation pledges. The Pyongyang Spring International Trade Fair was held in the May 23rd to 25th to discuss co-operation with North Korean public enterprises in fields such as agriculture, electronics, machinery, construction, food, daily necessities and drainage, said the sources. It was one of the largest international events in North Korea and drew 260 corporate participants from 15 countries this year, with Chinese firms accounting for 70% of them. Chinese participation in the Pyongyang trade fair was also said to be linked to a ranking North Korean delegation’s 11-day tour of China’s major economic hubs in May.
FROM LEGAL TO LETHAL – CONVERTED FIREARMS IN EUROPE
In April 2018, the Small Arms Survey published this report. It starts by saying that the ease of access to converted firearms and their cheap prices make them attractive alternatives to lethal-purpose firearms in all corners of Europe. It also says that converted firearms are also challenging to investigate, which reinforces their appeal among criminals. Converted firearms include imitation guns such as alarm weapons and deactivated firearms that have been modified to function as real, lethal-purpose weapons. Basic engineering skills, available workshop space, and commonly used tools are often all that is required to perform some conversions. In the report, the Small Arms Survey undertook a detailed examination of the firearms conversion challenge in Europe and provides a typology of converted firearms, examines the nature and scope of the firearms conversion threat, reviews the mechanics of trafficking in converted firearms.
OIL PORTS ES SIDER AND RAS LANUF BACK UNDER EAST LIBYAN CONTROL
Defence Web reported on 22nd June that staff had been evacuated from terminals in Libya’s eastern oil crescent and exports were suspended the previous week when armed opponents of eastern-based military commander Khalifa Haftar stormed and occupied the ports. It said that the fate of the ports, 2 of Libya’s largest, is crucial to the partial, fragile recovery of the country’s oil industry. Their closure led to production losses of up to 450,000 barrels per day from a total national output of little over 1 million bpd. Libya’s national production was cut to between 600,000 and 700,000 bpd during the oil crescent clashes. East Libyan forces have now retaken the shuttered oil ports of Es Sider and Ras Lanuf.
OFFICIAL QUITS AFRICAN UNION ANTI-CORRUPTION BODY OVER ‘MULTIPLE IRREGULARITIES’
Rfi on 23rd June reported that a member of the African Union’s anti-corruption advisory board has resigned over the body’s alleged corruption. Daniel Batidam, who served for 3 years, denounces “multiple irregularities” within the organisation that are hindering its fight against graft. The Ghanaian was elected Chairperson of the AU Advisory Board on Corruption in 2015.
SMALL ARMS SURVEY REVEALS: MORE THAN 1 BILLION FIREARMS IN THE WORLD
Small Arms Survey says that there are more than 1 billion firearms in the world, the vast majority of which are in civilian hands, according to new research. It presents its findings on the number of firearms held by civilians, law enforcement agencies, and military forces in a series of 3 new Briefing Papers. The Survey estimates that of the 1 billion firearms in global circulation as of 2017, 857 million (85%) are in civilian hands, 133 million (13%) are in military arsenals, and 23 million (2%) are owned by law enforcement agencies. The new studies suggest that the global stockpile has increased over the past decade, largely due to civilian holdings, which grew from 650 million in 2006 to 857 million in 2017.
HYPERSONIC MISSILES: A NEW PROLIFERATION CHALLENGE
The blog of the US think-tank RAND, in March posted an item that says that while the world bemoans the lack of inspired solutions for dealing with the North Korean missile threat, another danger is present under the public’s radar: that of hypersonic missiles and their possible spread into international commerce. Hypersonic missiles travel at a speed of 1 mile per second or more—at least 5 times the speed of sound. They are able to evade and conceal their precise targets from defences until just seconds before impact. This leaves targeted states with almost no time to respond. It says that the US, Russia, and China are leading the race to develop hypersonic missiles, with France and India close behind. Japan, Australia, and Europe are all developing the component technologies, in some cases for ostensibly civilian purposes. Within 10 years, hypersonic missiles are likely to be deployed and potentially offered on the international market.
THE WCO MAGAZINE – FEATURE ON THE HARMONISED SYSTEM
Also in the June edition of the WCO News Magazine is a feature containing several articles marking the 30th anniversary of the Harmonised System (HS). The HS is a structured nomenclature comprising a series of 4-digit headings, most of which are further subdivided into 5- and 6-digit subheadings. It was developed as a core system so that countries and organisations adopting it could make further national subdivisions according to their particular needs. It has been adopted by nearly all countries, so that one can look at the first 4 digits and be able to identify (broadly at least) what the goods are. The Magazine gives an example of how HS code 0409.00.
SERBIA’S VALIANT EFFORTS TO PROTECT CULTURAL HERITAGE
In the June edition of the WCO News Magazine is an article which is introduced by saying that sites across Serbia are being dug over and destroyed by treasure hunters and antique traders, and that valuable cultural artefacts are ending up in auctions or antique fairs in the West, where they sell for amounts which, although very high, far reflect their actual cultural value and significance. This phenomenon is not limited to Serbia. Smuggling of artworks and antiques is estimated to be among the most lucrative forms of smuggling, and seizures of cultural goods are growing all over the world, which could indicate an increase in this phenomenon.
And another article in the Magazine on the same subject –
CULTURAL GOODS: INSIGHT FROM THE NETHERLANDS ON THE VALUE OF COLLABORATION
This article says that the Netherlands is committed to combating illicit trade in cultural goods and has taken a range of measures to achieve this over the years. Such measures include building a partnership between Dutch Customs and the Cultural Heritage Inspectorate (CHI), an institution that is part of the Ministry of Education, Culture and Science, and which is responsible for supervising compliance in relation to the import, export and transfer of ownership of cultural property. How this partnership came about and what it involves is described in detail.
CLEARANCE OF EXPRESS CARGO AND POSTAL ITEMS: SOUTH KOREA TESTS NEW ANALYTICAL TOOLS TO ROOT OUT FRAUD
A final article from the June edition of the WCO News Magazine presents an experiment that the KCS has been undertaking to see whether new analytical tools could help in testing a hypothesis related to commercial fraud via express cargo and postal items and identify potential illicit transactions.
ISLE OF MAN FSA PUBLIC WARNINGS
On 22nd June, the Financial Services Authority in the Isle of Man published public warnings about the following names and web addresses – Juwelz Holdings Limited and www.juwelzholdingsltd.com; Al-Khawam Investments Limited and www.al-khawaminvestment.com.
The Most Wanted fugitives pictured are thought to be on-the-run in Spain. These men and women are wanted in connection with serious crimes including rape, indecent assault of a child and drug trafficking. If you know the whereabouts of a wanted fugitive the NCA asks you to report to Crimestoppers anonymously: online via the Crimestoppers website, in the UK call 0800 555 111, or in Spain call 900 555 111.
The June edition of the WCO Magazine from the World Customs Organisation includes several articles on IFF, including its links to the smuggling of minerals such as gold. The articles deal with –
- an overview of the discussions which took place during the WCO Conference on Illicit Financial Flows and Trade Mis-Invoicing that was held in May 2018. This included discussion of the WCO Study Report on Illicit Financial Flows via Trade Mis-invoicing and the recommendations on how to combat it, such as ensuring customs authorities have sufficient powers, can access foreign exchange transaction databases and enhanced information-sharing between agencies (including tax authorities, FIU and between customs authorities).
- introducing the German Customs organisational structure and work processes to detect IFF and fight the concealment of the proceeds of fraud and crime.
- describing how a joint portal for Customs verification of minerals will contribute to fighting the smuggling of minerals, in particular gold, and related IFF. 3 West African countries (Ghana, Liberia and Sierra Leone) have announced the publication of a joint portal for Customs verification of minerals. The portal allows customs officers around the world to look up and verify mineral export permits issued by the 3 states. With more countries set to join, the portal will become an essential tool in addressing the smuggling of minerals such as gold and related illicit financial flows.
- explaining how the production and trade in gold is organised in Burkina Faso and the challenges faced in fighting gold smuggling. It says that the country has been transformed into a mining player specialising in the production of gold. Among the reasons for this growth in the country’s extractive industries are the tax breaks granted to investors and the arsenal of legal provisions put in place to make mining investment projects predictable and safer. Burkina Faso is said to be currently the 6th most attractive location in Africa for mining investors, beaten only by Botswana, Ghana, Morocco, Namibia and Zambia.
NTI has produced an interactive tutorial
Module 1 asks the basic questions –
- what is nuclear and radiological security?
- why is it important?
- how does nuclear safety and nuclear security differ?
- what is the role of the state?
- what is the role of the industry and nuclear operator?
- what is the international community doing to reduce the threat of nuclear and radiological terrorism?
In answer to the last question, it says that nuclear and radiological security is generally considered to be the responsibility of individual states, which set and enforce laws and regulations governing activities within their territories. However, all states have an interest in ensuring that nuclear weapons and weapons-usable materials are secure, and that all other states are meeting their security responsibilities. Numerous international initiatives address the dangers posed by unsecured nuclear and other radioactive materials around the world – but, the article cautions, current international instruments and activities are insufficient to ensure that all nuclear weapons, weapons-usable materials, and major facilities will be effectively protected against terrorist and criminal threats.
Module 2 deals with nuclear terrorism threats.
Module 3 deals with radiological terrorism and nuclear sabotage – explaining that radiological terrorism is the deliberate use of radioactive material to expose people to radiation and/or contaminating somewhere (such as with a “dirty bomb” or RDD).
Module 4 deals with illicit trafficking – are materials available on the black market and who is involved.
Module 5 deals with operator and government efforts to preserve nuclear security.
Module 6 deals with international policy responses and future prospects – noting that not all materials and facilities are covered by existing agreements and guidelines. One thing it asks is what is being done to minimise and eliminate weapons-useable nuclear material – civilian Highly Enriched Uranium (HEU), civilian plutonium and military materials.
Module 7 comprises a multiple-choice quiz to test understanding.
In April 2018, Project SAFTE (Studying the Acquisition of Illicit Firearms by Terrorists in Europe) conducted by experts from around Europe, led by the Flemish Peace Institute, published this report following In-depth country studies conducted in 8 EU member states by research teams (Belgium, Croatia, Denmark, Italy, France, Netherlands, Romania and UK), with chapters on neighbours North Africa and Ukraine.
The UK chapter from the report –
FROM THE IRA TO ISIS: EXPLORING TERRORIST ACCESS TO THE UK’S ILLICIT FIREARMS MARKET
This focuses on the illicit firearms market in the UK and the ways in which terrorists can access this market. Researchers have noted that a number of sources provide information on illegal firearms use in the UK (e.g. crime data and crime reduction evaluations, police reports, media reports), but limited research has been undertaken to understand the dynamics and key players in the UK illegal firearms market. Previous research undertaken on terrorist acquisition of firearms in the UK has focused primarily on the methods used by the IRA and other terrorist organisations involved in the conflict in Northern Ireland, with a strong emphasis on the international dimension of such acquisitions. Therefore, the report says, academic and policy-oriented research lags behind policy interest in terms of terrorist access to the UK illicit firearms market. The report seeks to address this lacuna by using a mixture of quantitative and qualitative investigative method.
Experts from the Royal United Service Institute presented research findings to European Parliament’s Special Committee on Terrorism. It explores the terrorist financing risks of virtual currencies, including cryptocurrencies such as Bitcoin. It describes the features of virtual currencies that present terrorist financing risks and reviews the open source literature on terrorist use of virtual currencies to understand the current state and likely future manifestation of the risk. It then reviews the regulatory and law enforcement response in the EU and beyond, assessing the effectiveness of measures taken to date. Finally, it provides recommendations for EU policymakers and other relevant stakeholders for ensuring the terrorist financing risks of virtual currencies are adequately mitigated. It says that in the near-term, terrorist use of virtual currencies is most likely to involve occasional use for specific and limited purposes, including:
- raising funds or procuring illicit items on the Dark Web;
- soliciting donations in crowdfunding campaigns conducted on social media and encrypted messaging platforms; and
- transmitting funds internationally among members of terrorist networks using P2P value transfers.
Several developments could elevate and shape the nature of these risks over time, especially:
- the proliferation of virtual currencies featuring high levels of privacy and anonymity;
- terrorists’ broader adoption and utilisation of encryption technology, social media and other online platforms;
- the nexus between terrorist actors and other criminal activity; and
- the general pace and shape of virtual currencies innovation and adoption more broadly
The prospect for sustained, larger-scale terrorist financing to emerge through developments such as the convergence of terrorism with cyber criminality presents a possible long-term risk of concern. This study considers these near- and long-term risks in detail.
In the EU, the newly-adopted 5th Money Laundering Directive is described as a useful first step, but more needs to be done to ensure its effectiveness, and it is important that the EU sustains a regulatory framework that remains relevant. It also says that robust information-sharing on the illicit use of virtual currencies is essential. As exchanges and custodial wallet providers are brought within the scope of AML/CFT requirements under the 5AMLD, public sector agencies should engage and share information with them. Formal public-private partnerships can facilitate these contacts and interactions.
22nd June 2018
IRANIAN INDICTED IN CHICAGO CHARGED WITH EXPORT OF ALUMINIUM TUBING USED IN MISSILE INDUSTRY
The Chicago Tribune on 21st June reported that an Iranian businessman, Saeed Valadbaigi, 56, attempted to illegally export from Illinois aluminium tubing used in the missile and aerospace industries, the size and type of aluminium was subject to US regulations for nuclear non-proliferation purposes. A warrant for Valadbaigi’s arrest was issued in 2016 and remains outstanding. Valadbaigi illegally exported to Iran titanium sheets from a company in northern Illinois and the material was routed through the Republic of Georgia, UAE and Malaysia, all locations where Valadbaigi controlled companies, prosecutors alleged. Valadbaigi also ordered acrylic sheets from a company in Connecticut in 2012 and falsely claimed they would be used in Hong Kong but later arranged for them to be shipped to Iran. In 2015, Nicgolas Kaiga was imprisoned for the use of his company, Industrial Metals and Commodities, as an intermediary to export the aluminium tubing to Belgium and then Malaysia.
FLIGHT ATTENDANT PLEADS GUILTY IN LA TO TURTLE SMUGGLING
2 News on 22nd June reported that US federal prosecutors say that Huaqian Qu, a Chinese national, and a flight attendant for China Eastern Airlines has pleaded guilty to attempting to smuggle nearly 2-dozen spotted and box turtles in a carry-on bag from Los Angeles to China.
MALAYSIA: SYNDICATE SMUGGLED IN OVER 100,000 WORKERS FROM BANGLADESH
The Star Online on 22nd June reported that a human trafficking syndicate, spearheaded by a Bangladeshi businessman with alleged political connections with the Home Ministry, smuggled in from Bangladeshi workers looking to land jobs in Malaysia.
JAPAN BANKS TO REPORT SUSPICIOUS MONEY TRANSFERS WITH NORTH KOREA
Asahi Shimbun on 22nd June reported that Japan’s financial regulator has told the country’s banks to report any suspicious money transfers involving 10 Japan-North Korea joint ventures. The Mainichi reported that there are suspicion that they may be involvement in illicit diversion of funds to North Korea, citing a UN Security Council investigation. These 10 companies include those handling stainless steel tubes used in the manufacturing of semi-conductors and sound equipment, a piano manufacturer and a company promoting the energy policy of the Workers’ Party of Korea. Those on the Japanese side included trade firms and food businesses based in the Kanto and Kansai regions, a building materials firm, and a company operating under the General Association of Korean Residents in Japan (Chongryon).
US IMPOSES VISA BAN ON SEVERAL D R CONGO OFFICIALS
Reuters on 22nd June reported that the US has imposed visa bans on several senior officials in the Democratic Republic of Congo for corruption tied to the country’s electoral process to send a “strong signal” about the need for a peaceful transfer of power, but the State Department did not name the individuals concerned.
BREXIT: CUSTOMS AND REGULATORY ARRANGEMENTS
The House of Commons Library published its latest briefing paper on 22nd June which considers the proposals the UK Government has made to satisfy the simultaneous objectives to leave the EU Customs Union, but have a cooperative ‘customs arrangement’ following Brexit; and to leave the Single Market, but maintain trade that is ‘as frictionless as possible’ following Brexit.
UK BANKING PROTOCOL “STOPS £25 MILLION OF FRAUD AND LEADS TO 197 ARRESTS”
On 22nd June Mortgage Finance Gazette reported that the Protocol, aimed at identifying and protecting potential fraud victims when they visit a bank or building society branch and which enables bank branch staff to contact police if they suspect a customer is in the process of being scammed, with an immediate priority response to the branch is hailed in an article. It is claimed that since the introduction of the Banking Protocol, 3,682 emergency calls have been placed and responded to through the scheme, with the average prevention per call equating to £6,720. In May 2018 the scheme prevented over £3 million in fraud – a monthly record – while 17 arrests were made. The scheme was first introduced as a pilot in London during October 2016, before a national roll-out began in May 2017. Since March of this year it has been implemented by all 45 police forces in the UK.
UK BORDER FORCE SEIZES 7 KG BANNED IVORY IN ANTI-WILDLIFE CRIME OPERATION
On 21st June, Border Force has seized almost 7 kg of banned ivory as part of an international operation against the illegal trade in wildlife and timber, as part of the 6-week global Operation Thunderstorm. Border Force officers at ports and airports across the country intensified their activity to coincide with the international operation and the news release lists an impressive haul of CITES items. Border Force has also supported an ivory surrender, led by the International Fund for Animal Welfare and ran from mid-July last year to the end of January but continues to receive support from the public. In April, Border Force officers from the Heathrow CITES team took receipt of more than 118 kg of voluntarily-surrendered ivory which was subsequently destroyed at a secure location.
SCOTTISH CHARITY REGULATOR (OSCR) NEW GUIDANCE FOR SCOTTISH CHARITIES ABOUT HOW TO REDUCE THE RISK OF FRAUD
On 6th June, the OSCR reported that it had produced new guidance which highlights some of the risks of fraud to which charities are vulnerable and provides practical advice for trustees on how to tackle it. The guidance tells trustees what their legal duties are, how they can reduce the risk of fraud. and how OSCR will consider instances of fraud in charities.
VAT: EUROPEAN COMMISSION WELCOMES ADOPTION OF NEW TOOLS TO COMBAT FRAUD IN THE EU
On 22nd June, a news release says that the Commission has welcomed the political agreement reached by EU Member States on new tools to close loopholes in the VAT system. These inconsistencies are said to lead to large-scale VAT fraud causing losses of €50 billion for national budgets of Member States each year. More use will be made of IT systems which should replace the manual processing of data. VAT information and intelligence on organised gangs involved in the most serious cases of VAT fraud will now be shared systematically with EU enforcement bodies. Finally, improved investigative coordination between tax administrations and law enforcement authorities at national and EU level will ensure that this fast-moving criminal activity is tracked and tackled more quickly and more effectively. The new measures will give a major boost to our ability to track and clamp down on fraudsters and criminals who steal tax revenues for their own gain. The new rules will be published in the Official Journal and enter into force 20 days later; but as the implementation of the automated access to the information collated by the customs authorities and to vehicle registration data will require new technological developments, their application will be deferred until 1st January 2020.
3.4 TONNES OF SEIZED GLASS EELS REINTRODUCED TO NATURAL HABITAT IN EU
On 22nd June, Europol issued a news release that during 2017/18 European law enforcement was able to seize 3,394 kg of smuggled glass eels with an estimated value of €6.5 million. 53 suspected smugglers were arrested and all seized eels have since been reintroduced into their natural habitat, which is crucial for the survival of the species.
ISRAEL’S CRYPTO REGULATIONS DRAMA DRAGS ON
Banking Tech on 21st June reported that Israel’s parliament decision to postpone the law regulating cryptocurrency exchanges by 4 months has ignited a lively debate in the country. The original law was to take effect on 1st June and the decision meant financial services providers and Israeli companies are without any regulation for these exchanges.
INTERNATIONAL DAY AGAINST IUU FISHING
ENACT Observer reported that on 5th June the first International Day the Fight against Illegal, Unregulated and Unreported fishing (IUU fishing) took place. It aims to raise awareness about UN Sustainable Development Goal 14 (SDG 14) on the conservation and sustainable use of oceans, seas and marine resources. It remined one that illegal, unregulated and unreported (IUU) fishing is affecting livelihoods and fuelling transnational organised crime at sea. SDG 14 calls for an end to IUU fishing by 2020.
US LAWMAKERS URGE OFFICIALS TO CONSIDER SANCTIONS AGAINST RUSSIAN BILLIONAIRE YEVTUSHENKOV
Rferl on 22nd June reports that 2 US lawmakers have urged the Trump Administration to consider hitting Russian billionaire Vladimir Yevtushenkov with sanctions and examine whether he has engaged in corruption. It was reported that Yevtushenkov’s holding company, AFK Sistema, would build medical facilities in Crimea. AFK Sistema controls Russia’s largest mobile-phone operator, MTS, which is traded on the New York Stock Exchange. The lawmakers’ letter also cites a US corruption probe involving MTS activities in Uzbekistan.
RUSSIAN POLITICAL PARTIES AND OTHERS ADDED TO UKRAINE SANCTIONS LIST
On 22nd June, Rferl reported that Ukraine on 22nd June has added 30 legal entities and 14 individuals to its blacklist of those sanctioned over Russia’s annexation of Crimea and Moscow’s backing of a separatist campaign in eastern Ukraine. The list now includes 1,759 individuals and 786 legal entities. The new additions include Russian political parties and other institutions that were involved in the conduct of Russian elections in the annexed Ukrainian region of Crimea. The list (in Ukrainian) is at –
GUARDIAN PODCAST: HOW BRITAIN LET RUSSIA HIDE ITS DIRTY MONEY
On 22nd June, the Guardian published a podcast saying that for decades, politicians have welcomed the super-rich with open arms – now they’re finally having second thoughts, but is it too late?
FATF-MENAFATF JOINT PLENARY WEEK – 24th-29th JUNE
On 21st June, FATF reported that FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF) will meet for 6 days of meetings to discuss important issues to protect the integrity of the global financial system and contribute to safety and security. The meetings will involve delegates from the 203 jurisdictions of the FATF Global Network, as well as the UN, IMF, World Bank and other partners. The topics identified include counter-terrorist financing: discussing the actions that FATF is taking in response to the changing terrorist financing threats, and in line with the counter-terrorist financing operational plan adopted in February 2018.
SETBACK FOR INDIA AS ITALY REFUSES TO EXTRADITE AGUSTAWESTLAND MIDDLEMAN
DNA on 22nd June reported that Italy has refused to extradite Carlo Gerosa, an alleged middleman in AgustaWestland bribery scandal, saying it did not have any mutual legal assistance treaty with India. Carlo Valentino Ferdinando Gerosa, 71, an Italian and Swiss national, was believed to be a key player in the bribery scandal.
TAIWAN ARRESTS 8 BITCOIN TRADERS ON SUSPICION OF FRAUD
Focus Taiwan on 22nd June reported that 8 people suspected of having amassed nearly US$49.55 million in illegal assets through a Bitcoin investment scheme have been arrested. The group running the scam has allegedly defrauded over 1,000 people in Taiwan with the promise of a large-yield return of as high as 355% after a year of investment in Bitcoin.
EAST TIMOR: 11 MINISTERS REJECTED DUE TO GRAFT PROBES
The Bangkok Post on 22nd June reported that the president of East Timor has refused to swear in 11 cabinet ministers because of corruption investigations in a rocky beginning for a new government formed after a protracted political stalemate. The President said that 8 nominated ministers, including those of finance and defence, and 3 vice-ministers cannot be sworn in because the public prosecutor’s office is investigating corruption cases against them. Some also have previous corruption convictions, he said.
UK PAYMENT REGULATOR TO PROTECT AGAINST PUSH PAYMENT SCAMS
Law 360 on 22nd June reported that the Payments Systems Regulator said it wants to make it harder for criminals to trick victims into sending them money and reduce the impact of these scams through initiatives that include stronger background checks on fraudsters before allowing them to open accounts.
TAX-EVADING CHINESE CRIMINAL GROUP OPERATING IN SPAIN IS DISMANTLED
On 22nd June, Europol reported that the Spanish Guardia Civil, in collaboration with the Spanish Tax Agency and supported by Europol, has dismantled a Chinese criminal organisation that fraudulently imported goods into the EU from China. The group made €40 million, evading tax on 75% of the profits, with the illicit benefits covertly transferred to China through different channels.
CAN I TAKE MY MEDICINE ABROAD?
Useful NHS webpage saying you need to, and helping you to, check what rules apply to taking your medicine out of the UK and into the country you’re going to. It, for example, reminds you that some prescribed medicines contain drugs that are controlled under the Misuse of Drugs legislation in the UK. This means that additional legal controls apply to these medicines and you may need a personal licence to take controlled medicines abroad.
COMBATING TERRORISM CENTER: CTC SENTINEL (JUNE/JULY 2018)
The latest edition of this online magazine from the CTC at West Point has been published and it includes –
The Surabaya Bombings and the Evolution of the Jihadi Threat in Indonesia
On May 13th, 3 churches in Surabaya, Indonesia, were targeted by suicide bombers comprising one single family of 6. These are the first suicide bombings involving women and young children in Indonesia, thus marking a new modus operandi. They also show an increased capability among Indonesian Islamic State supporters when compared to previous attacks. The article says that the attacks also bring to the fore the role of family networks and the increased embrace of women and children in combat roles.
Children at War: Foreign Child Recruits of the Islamic State
The 2016 French Female Attack Cell: A Case Study
An all-female cell allegedly planned several attacks in France over a matter of days in September 2016, including an attempt to blow up gas cylinders near Notre Dame Cathedral. The suspected plotters were largely radicalized online, and social media was integral to both their recruitment and plotting. One of the Islamic State’s ‘virtual entrepreneurs,’ Rachid Kassim, helped guide their activities. Though the alleged plots failed, Kassim exploited the dedication shown by these women to shame males into attempting a subsequent wave of attacks.
PRIME MINISTER OF THE CZECH REPUBLIC “IS THE CONTROLLING PERSON OR BENEFICIAL OWNER OF AGROFERT”
On 22nd June, Transparency International reported that Transparency International Czech Republic has found in the Slovak Register that Andrej Babiš, Prime Minister of the Czech Republic, is shown as the controlling person (beneficial owner) of Agrofert a.s. and say that the findings may have serious implications for the areas of conflict of interest and EU funding policies. As the EU has ruled before that businesses owned by the politicians should not receive EU subsidies, there is a question of whether Agrofert’s eligibility to use public funds should be re-examined. The article mentions public proclamations made by Babiš that Agrofert was his former business and says that Babiš still dominates and controls Agrofert and so there is conflict of interest. Agrofert is a Czech-based conglomerate that operates in the agriculrural, food, chemical, construction, logistics, forestry, energy and media sectors and was founded by Babiš in 1993.
MARITIME INDUSTRY CONFRONTS CYBER RISK AND CHALLENGES WITH COMPLIANCE
Homeland Security Today in a report on a conference in London said that a shipping legal expert told the European Maritime Cyber Risk Management Summit that port officers cannot be expected to accurately gauge cyber compliance of ships, thus a system may develop of mariners carrying compliance certificates similar to oil-pollution prevention certification. The article notes that the EU Network and Information Security Directive gave Member States until May 9th to meet “certain national cybersecurity capabilities” while promoting information-sharing and mandating “national supervision of critical sectors” including transportation and water. The vice-president of sales and applications at Inmarsat Maritime told the conference that global cyberattacks cost $3 trillion to the world economy, 90% of crew at sea have never received cybersecurity training or guidelines, 95% of breaches came as a result of human error and 43% of crew have sailed on a ship that’s been compromised in a cyber incident of some kind.
Out-Law on 22nd June published an article saying that influential industry guidance aimed at helping pension providers and trustees to recognise and tackle pension scams has been updated, to reflect legal and technological changes since it first came into force in 2015.
The Pension Scams Industry Group (PISG) Code of Practice can be found at –
On 22nd June, a Notice from HM Treasury advised that Myrna Ajijul MABANZA and Abdulpatta Escalon ABUBAKAR had been added to the UK Consolidated List, having already been listed by the UN and EU.
On 22nd June, the ECJU issued Notice to Exporters 2018/16 saying that emails using “trade.gsi.gov.uk” email addresses will be switched off and “trade.gov.uk” used instead – both for individual staff and for general addresses such as email@example.com and Wassenaar.Reports@trade.gov.uk.
On 14th June, CMS published the latest version of its guide which provides a broad overview and
comparison of the anti-corruption laws across the countries covered in the guide from Albania to the UK. As with previous editions, in this Guide CMS provides answers to the following key questions for each of the 42 countries –
- what are the offences?
- who can be liable and when?
- what are the penalties?
- what are the defences?
This is a Transparency International report from April 2017 which says that large-scale cases of grand corruption in recent years have involved the acquisition of luxury property, vehicles and goods. This report examines the risk of luxury goods and assets being used to launder the proceeds of corruption, including in the art world and the marketplaces for superyachts, precious stones and jewels, high-end apparel and accessories, and real estate. The report laments that much remains to be done to reduce the scope for individuals using the proceeds of corruption to acquire and enjoy high-value goods and property, and to use these assets as a vehicle for laundering their ill-gotten gains.
Premium Times in Nigeria reported on 22nd June that authorities in Seychelles have opened a criminal investigation into the multimillion dollar assets which Senate President Bukola Saraki and his wife, Toyin, are believed to hold through offshore shell companies in tax havens. They are being targeted for their “suspicious” use of offshore shell companies as uncovered in the Panama Papers investigation. Investigators at the Seychelles FIU said they are interested in determining whether or not Mrs Saraki stood as a front for her husband in the ownership of some of the offshore holdings linked to the family.
On 22nd June, the EU announced the conclusion of this Convention. The Council of Europe says it has adopted this Convention to increase the effectiveness of existing international texts on the fight against terrorism. It aims to strengthen member states’ efforts to prevent terrorism and contains a provision on the protection and compensation of victims of terrorism. The Convention requires parties to criminalise the following acts when committed intentionally: public provocation to commit a terrorist offence; recruitment for terrorism; training for terrorism; and well as aiding and abetting, inciting and attempting the aforementioned offences. Its Additional Protocol was also approved, and this calls for a number of acts, including taking part in an association or group for the purpose of terrorism, receiving terrorist training, travelling abroad for the purposes of terrorism and financing or organising travel for this purpose, a criminal offence; and it also provides for a network of 24-hour-a-day national contact points facilitating the rapid exchange of information.
EU Regulation 2018/888/EU added Myrna Ajijul Mabanza and Abdulpatta Escalon Abubakar to its sanctions lists on 22nd June in line with the decision of the UN Sanctions Committee on 18th June.
US News on 22nd June reported that Shuren Qin, a Chinese national living in Massachusetts and the head of a company that distributes marine-related products was arrested on charges that he conspired with an entity affiliated with China’s armed forces to export devices to that country that could be used in anti-submarine warfare. He runs several China-based companies that import into China goods from the US and Europe with applications in underwater or marine technologies and includes LinkOcean Technologies, whose clients include Chinese research institutes and the naval warfare branch of the People’s Liberation Army, according to the charges. Prosecutors said that from 2015 to 2016, Qin exported 78 hydrophones, devices which can be used to monitor sound underwater, to Northwestern Polytechnical University (NWPU), a Chinese military research institute.
The International Atomic Energy Association on 21st June reported that over 150 representatives from 86 countries agreed at a meeting last week that the implementation of the Guidance, a non-legally binding document, was effective and concluded that a revision may not be required. It provides recommendations and details best practices for the import and export of radioactive sources. It aims to help reduce the risk of these sources falling outside regulatory control – i.e. getting lost or stolen and presenting a danger to people and the environment and details the relationship between an importing and exporting country and outlines what may be required on both a technical and administrative level for the proper international transfer of a radioactive source.
The Guidance is available at –
21st June 2018
TUSKS, BEAR BILE AND STUFFED BEASTS: INSIDE HEATHROW’S MORBID ‘DEAD SHED’
A depressing article in the Telegraph on 20th June, with the author having been permitted to visit a room at Heathrow Airport known as the “Dead Shed” where seized animal and other bits and pieces are stored and which is a training facility for the CITES team, whose job it is to disrupt the illegal wildlife trade at UK borders. One of the claims made by the team is that illegally-logged timber and unlawfully-sourced animal parts are often laundered through seemingly-reputable companies. One of the larger items to be seized by the CITES team was a bright-yellow sports car, which a well-known car manufacturer was trying to export to California and the interior of which used alligator leather with no export licence.
Illegal wildlife products
Number of seizures over 3 months: January to March 2018
ITALIAN CUSTOMS SEIZE SMUGGLED AFRICAN ARTEFACTS, ENDANGERED SPECIES AND CIGARETTES FROM PERSONAL EFFECTS IMPORT
The Independent in Nigeria reported on 21st June reported that Italian Guardia di Finanza said that they had intercepted a load of precious goods smuggled from Africa, including a Phoenician-Punic jug, possibly dating back to the 3rd Century BC, in a container shipped to Salerno from Eritrea in a container said to contain personal effects of 2 Italians returning home. Also found in the container were rare corals and shells, accessories made of snake and crocodile skin, African and Asian ivory as well as a large load of contraband cigarettes.
3 YEARS LATER AN INDIAN IDOL THEFT RACKET KINGPIN ARRESTED
The Indian Express reports on 21st June that 3 years after police seized 8 smuggled temple idols, the kingpin of the racket has been arrested. The theft and removal from India of such idols is a major problem.
CHINA: $33.5 MILLION SMUGGLED WINE NETWORK BUSTED
On 20th June, Drinks Business reported that another major wine smuggling bust had occurred in China, including 4,000 bottles of what was described as “blue chip” wine from Bordeaux. The smuggling ring operated in Zhuhai, a port city bordering Macau, and the wines were funnelled into the mainland by both under-reporting the value of the wines and hand-carrying by ‘coyotes’ – the parallel traders operating on the borders between the tax-free Macau and neighbouring Guangdong province. This is not the first time that Zhuhai has been thrust into the centre of Guangdong’s wine anti-smuggling campaign, another big bust having taken place in 2015.
US-LED COALITION KILLS THE ISIS CHIEF OF OIL SMUGGLING
Oil Price.com on 20th June reported that the coalition fighting Islamic State has killed the leader of the militants responsible for its oil and gas smuggling operations. It says that Abu Khattab al-Iraqi, the leader of ISIS’s oil network and who managed revenue generation through the illicit sale of oil and gas, was killed in Syria on May 26th, together with 3 other ISIS members affiliated with its oil and gas operations. The article also mentions that, according to a recent investigation by the New York Times and contrary to what has been assumed so far, black market oil sales were not the only and not even the largest revenue stream for ISIS – with “taxation” in its territory being greater.
The New York Times’ “ISIS Files” from April 2018 are available at –
NEW ZEALAND: BANKS USED BY THIRD PARTY TO OPERATE ACCOUNTS FOR UNLICENSED FINANCIAL SERVICES PROVIDER
On 21st June, Interest in New Zealand reported that the Reserve Bank says banks used by an employee to open accounts for financial services provider Worldclear in the name of another company probably didn’t know about the connection back to Worldclear. Worldclear Ltd was unable to establish and retain relationships with major New Zealand trading banks, apparently due to AML concerns held by the banks, so it hired Richard Whitham who set up T1 Holdings Ltd, which opened bank accounts and conducted financial transactions on behalf of Worldclear. A total of 26 bank accounts in T1 Holdings’ name were established with ANZ, ASB and BNZ, and with banks in Singapore and Europe.
MOVES TO BLOCK DIRTY MONEY FLOWING IN LOCAL REAL ESTATE IN AUSTRALIA
Financial Review on 20th June reported that the property sector is moving to shore up the local real estate sector against the effects of dirty money as Australia’s anti-corruption regime struggles to catch up with global standards. It says that the surge in investment from China especially has raised alarm bells. The federal government’s Black Economy Taskforce has recognised there is a problem and has proposed reforms to boost transparency and accountability. Foremost is extending the AML/CTF rules to cover non-financial businesses and professions such as real estate agents, jewellers, other high-value dealers, and trust and company service providers. The article mentions that neighbouring New Zealand is rolling out its own AML/CTF provisions progressively to various professions. The next stage will be applied lawyers, conveyancers, accountants, real estate agents, sports and race betting, and businesses that deal in certain high-value goods.
AFTERMATH OF THE “PANAMA PAPERS” IN AUSTRALIA
On 21st June, Financial Review carried an article about the effects of the release, in the light of a second tranche of leaked documents. Australia has raised $65 million in assessments, part of more than US$650 million raised around the world. The Australian Tax Office has completed 315 reviews or audits with another 81 audits still in progress. 3 individuals are under criminal investigation.
HOMELESS COUPLE IN BELGIUM WHO SHARED WINDFALL WITH FRIENDS ON TRIAL FOR MONEY LAUNDERING
The Guardian on 20th June reported that a homeless couple who found €300,000 in an old Singer sewing machine while squatting in an abandoned building are on trial for money laundering after giving away some of the windfall to people who had helped them in the past. The prosecution has accepted the couple, who are also facing charges of drugs possession, distributed the cash out of generosity. The owner of the abandoned building is said to want the cash returned.
PANAMA PAPERS: MOSSACK FONSECA WAS UNABLE TO IDENTIFY COMPANY OWNERS
The BBC on 20th June reported that a new leak of documents from the offshore service provider at the centre of the Panama Papers scandal reveals the company could not identify the owners of up to three quarters of companies it administered. It reports that 2 months after becoming aware of the data breach, Mossack Fonseca was unable to identify the beneficial owners of more than 70% of 28,500 active companies in the BVI as well as 75% of companies in Panama, according to new documents seen by BBC Panorama.
SFO: WHY THERESA MAY WANTED TO MERGE IT WITH THE NCA AND THE GOVERNMENT’S APPARENT RENEWED FAITH IN THE SFO
On 6th June, Squire Patton Boggs published the first of 2-part post looking at some of the infamous cases that may explain repeated attempts by Theresa May, first as Home Secretary and later as Prime Minister, to dismantle the SFO. On 12th June, the second part reflected on the important role the SFO continues to play in combatting corruption, fraud, and other forms of white collar crime, especially now its coffers have been boosted and Lisa Osofsky has been appointed the new Director.
SINGAPORE INTRODUCES DEFERRED PROSECUTION AGREEMENTS (DPA)
Reed Smith on 8th May published an article about the DPA framework in Singapore.
EUROPEAN COURT OF AUDITORS: EU CHEMICAL, BIOLOGICAL, RADIOLOGICAL AND NUCLEAR CENTRES OF EXCELLENCE – MORE PROGRESS NEEDED
On 19th June, the EU’s European Court of Auditors (ECA) published its report on the EU CBRN Centres of Excellence Initiative. The Initiative is the main scheme for mitigating chemical, biological, radiological and nuclear threats and risks from outside the EU. Though these risks are low, there are signs that they are on the rise and, if they were to materialise, their impact on the global health, environment and economy could be high. The ECA discusses whether the EU CBRN Initiative had mitigated the CBRN threat, concluding that it did but that many challenges remain, and the ECA makes a number of recommendations for improving the Initiative. In the Report it is said that the acquisition and malevolent use of CBRN components takes place, and the threat is expected to grow in the coming year.
BEIJING CONVENTION ON AVIATION SECURITY TO ENTER INTO FORCE ON 1st JULY
HFW on 20th June reported that following the recent ratification by the Turkish government, the ICAO has announced that the Convention on the Suppression of Unlawful Acts Relating to International Civil Aviation (the “Beijing Convention”) will enter into force on 1st July. The briefing identifies the key aspects of the Beijing Convention, its ramifications for the airline industry, and preparatory steps airlines should consider to ensure their observance. The Beijing Convention creates a new international legal framework by requiring States to criminalise a number of emerging threats to the safety of civil aviation. These include using an aircraft as a weapon and the organising, directing and financing of acts of terrorism. The briefing says that major trading nations that have signed the treaty include the US, UK, China and South Korea. However, none of these countries have, to date, formally deposited their instruments of ratification with ICAO. The events of 9/11 highlighted several weaknesses in the international legal regime relating to aviation security. Parties that ratify the Beijing Convention agree to criminalise the use of civil aircraft as weapons; the use of dangerous materials to attack aircraft or other targets on the ground; the illegal transport of Biological, Chemical, and Nuclear weapons and related material; and hijacking and attacks on air navigation facilities by coercion or technological means. For example, ICAO has stated that cyber attacks on air navigation facilities are likely to constitute an offence under the Beijing Convention.
MECHANISM ON THE WAY TO FIGHT TRANSNATIONAL CRIME IN CENTRAL AND WEST AFRICA
Defence Web on 20th June reported that a ground-breaking agreement adopted by police chiefs from Central and West Africa will boost efforts to fight transnational threats across these regions. The Central African Police Chiefs Committee (CAPCCO) and West African Police Chiefs Committee (WAPCCO) including Mauritania signed a declaration for co-operation on criminal and police matters.
FIXED ODDS BETTING TERMINALS (FOBT)
On 20th June, the House of Commons Library Service issued a briefing on the controversy in the UK over FOBT.
CEO OF AXACT DUBAI-BASED MONEY EXCHANGE COMPANY INDICTED IN PAKISTAN
On 21st June, DAWN in Pakistan reported that Axact CEO, Shoaib Ahmed Sheikh, and 2 directors of a Dubai-based money exchange firm had been indicted in a money laundering case.
$2.9 MILLION IMPOUNDED FROM LAO MONEY SMUGGLERS
On 21st June, the Bangkok Post reported that the Thai Anti-Money Laundering Office has impounded 98 million baht (about US$2.9 million) seized from 2 brothers from Laos who tried to smuggle the cash out of the country, hidden in their vehicle. The Finance Ministry requires travellers to declare possession of foreign currency in cash valued at about $13,500 or more when entering or leaving Thailand.
POLICE MOVE IN ON £13 MILLION SUSPECTED PENSION LIBERATION SCAM
iExpats.com on 21st June reported that a trustee had been suspended in connection with an alleged million pension liberation scam which offered retirement savers loans of up to 75% of their pension funds if they transferred to the scheme. The funds that were not paid out were invested in high-risk offshore projects, such as mining gem stones and processing olive oil. So far 2 advisers have been jailed for money laundering offences, while a third received a suspended sentence from the courts.
TRADE IN FAKE ITALIAN GOODS COSTS ECONOMY BILLIONS OF EUROS
The OECD on 20th June issued a news release saying that the global trade in fake Italian goods such as luxury handbags, watches, foodstuffs and car parts is taking a bite out of Italy’s economy equivalent to around 1-2% of GDP in terms of lost sales, according to a new OECD report. The “Trade in counterfeit goods and the Italian economy” estimates the total value of counterfeit and pirated Italian goods sold worldwide at over €35 billion for 2013, equivalent to 4.9% of global Italian manufacturing sales. This resulted in over €25 billion in lost sales by Italian companies in a year when Italy’s GDP was €1.6 trillion. The combination of trade in fake Italian products and imports of counterfeit goods resulted in a loss of public revenues in Italy equal to €10 billion, or 0.6% of Italian GDP. Counterfeiting and piracy also led to the loss of at least 87,000 jobs in Italy in 2013, equivalent to 2% of the country’s full-time equivalent employees.
QATAR-GULF CRISIS: ALL THE LATEST UPDATES
A-Jazeera on 15th June provided an update on the blockade of Qatar by Saudi Arabia and its other neighbours. 1 year ago, an air, sea and land blockade was imposed on Qatar by 4 Arab countries: Saudi Arabia, UAE, Bahrain and Egypt. The recent developments include, on May 27th, Qatar ordered shops to remove goods originating from a group of Saudi Arabian-led countries and the government will also try and stop products such as Saudi dairy goods from entering Qatar via a third country. Products originating from blockading states, which as a result of the blockade cannot pass the Gulf Co-operation Council (GCC) customs territory, have to undergo proper import inspections and customs procedures. On March 21st, an Iraq’s foreign ministry spokesman questioned the UAE’s claim that Qatar funded Shia-dominated paramilitary forces in Iraq. Also on March 21st, Qatar’s National Counter-Terrorism Committee, established in 2007, published its national “terrorist” list, including 20 individuals and 8 entities.
PEEL PORTS OFFERS ALTERNATIVE BREXIT IMPORTS PLAN
On 20th June, Port Strategy reported that Peel Ports, a major port operator in the UK, had provided an alternative option to introducing a warehouse into the supply chain routing for trade after the UK’s departure from the EU. Rather than goods being stored in a warehouse as contingency, retailers and manufacturers should build up contingency stock at a port of entry using stand trailers, with the operator also calling for cargo which is not perishable or urgent to be able to travel on unaccompanied services.
The report is available at –
MOZAMBIQUE CUSTOMS SERVICE SEIZES 1440 TONS OF CEMENT AT BORDER
Cemnet.com on 14th June reported that the Mozambican customs service has defended the seizure on 2nd June of 28,800 sacks of cement imported from South Africa, despite the insistence by the importing company, Kawena, that such imports are exempt from customs duty.
IRAN’S TOP LEADER OPPOSES JOINING AML BODY
On 20th June, Baker McKenzie reported that Iran’s Supreme Leader Ayatollah Ali Khamenei has publicly opposed joining FATF. Khamenei, who has final say on all state matters, said the parliament should instead prepare its own Bills against money laundering and terrorism, accusing the convention of merely “securing the interests” of big powers.
SIPRI RELEASES MAP OF MULTILATERAL PEACE OPERATIONS IN 2018
This new map showing all multilateral peace operations active as of May 2018 was issued on 20th June. The data is taken from SIPRI’s Multilateral Peace Operations Database, which contains extensive information on all multilateral peace operations (both UN and non-UN) conducted since 2000, including location, mandate, lead nations, number of deployed personnel and the organizations involved, budget and mission fatalities.
NEW BOOK: PREVENTING BLACK-MARKET TRADE IN NUCLEAR TECHNOLOGY
On 7th June, the James Martin Center for Nonproliferation Studies at the Middlebury Institute of International Studies at Monterey reviewed a new book saying that every nuclear weapons programme for decades has relied extensively on illicit imports of nuclear-related technologies. This book offers the most detailed public account of how states procure what they need to build nuclear weapons, what is currently being done to stop them, and how global efforts to prevent such trade could be strengthened. This book argues that preventing illicit transfers wherever possible is a key element of an effective global non-proliferation strategy. The UK price is £90, hardback.
BID TO REVEAL SECRET OWNERS OF SCOTTISH LAND
On 21st June, the Herald in Scotland reported that the Scottish Government has announced detailed proposals to try to expose the true owners of land – rather than untraceable firms at PO Boxes in the Caribbean or Channel Islands. It said it wanted to create a register which, if agreed, would “reveal for the first time the controlling interests of land owned by trusts and overseas companies”.
ROMANIA’S RULING PARTY LEADER GETS JAIL SENTENCE
EU Observer on 21st June reported that Liviu Dragnea, the head of Romania’s ruling Social Democratic Party (PSD), who is considered as the country’s true leader, was sentenced to 3½ years in prison for abuse of power. The ruling can be appealed.
ENDANGERED EELS AT RISK FROM EUROPE’S COCAINE RIVERS
EurActiv on 21st June reported that Europe’s river-dwelling creatures are threatened by traces of cocaine in some of the continent’s most well-known rivers, according to a new study, with migratory animals like the eel are particularly at risk. A new Italian study claims to have discovered that low levels of cocaine in rivers and other freshwater bodies are causing severe damage to eels.
LOOT FROM THE TIME OF SANI ABACHA BEING REPATRIATED TO NIGERIA
On 21st June, the Council on Foreign Relations reported that Nigeria’s Minister of Justice and Attorney General have said that the country has reached agreement with a number of countries, including the US, France, and UK, for the repatriation of $500 million in looted public funds. This follows an earlier agreement with Switzerland for the return of $321 million allegedly stolen by the former military head of state, Sani Abachi.
BRAZIL CHICKEN EXPORTS SLUMP AS EU BANS HAVE EFFECT
Reuters on 21st June reported that Brazilian chicken exports fell by 8.5% in the 5 months through May as the world’s largest exporter was hit by trade embargoes imposed by the EU following a food-sector corruption investigation, trade group ABPA said. Shipments to the EU fell the most, by 40%.
EU COURT UPHOLDS RELISTING OF UNNAMED “PROMINENT SYRIAN BUSINESSMAN IN THE OIL AND GAS SECTOR”
On 21st June, the European Sanctions Blog reported that the EU General Court has now upheld his 2016 and 2017 re-listings on the Syrian sanctions lists. He was relisted for being an “influential businessman operating in Syria” who supported or benefitted from the Syrian regime, and for being a member of the Syrian Parliament. The Court rejected HX’s argument that the Council had breached its obligation to state reasons by equating being an influential businessman in Syria with support or benefit from the Syrian regime.
GERMANY’S STRONG ANTI-BRIBERY ENFORCEMENT AGAINST INDIVIDUALS NEEDS TO BE MATCHED BY COMPARABLY STRONG ENFORCEMENT AGAINST COMPANIES
The OECD on 21st June published a news release following a recent evaluation of the country detailed in a new report by the OECD Working Group on Bribery. The Group made a range of recommendations to Germany and the Working Group raises concerns about the low corporate enforcement rate as well as an inconsistent approach to holding companies liable across the different Länder (states). The report also notes that the sanctions imposed on both individuals and companies are not always sufficiently deterrent and that whistleblower protection needs to be reinforced.
LAUNCH OF THE GIBRALTAR ASSOCIATION FOR NEW TECHNOLOGIES (GANT)
On 21st June, the Government of Gibraltar announced the launch of GANT, an association to be formed with the private sector. GANT will serve several purposes, primarily to enhance the development in Gibraltar of the use of blockchain and distributed ledger technologies (DLT) and other future developments, as considered appropriate, collectively referred to as “New Technology”, with a view to enhancing the reputation, integrity and public trust in this sector. GANT will also be tasked to raise the profile of “New Technology” in Gibraltar across a spectrum not necessarily limited to financial services.
COSTA RICA: A WELCOMING CARIBBEAN SHORE FOR HIGH-LEVEL ROMANIAN FUGITIVES
On 21st June, OCCRP carried a long and interesting article saying that 2 women, a top government minister and a chief prosecutor, found themselves fugitives, convicted on corruption charges and facing years in prison and they chose the same escape: Costa Rica. There they found help in the form of Mihai Radulescu, a Romanian businessman. The women have both applied for refugee status in Costa Rica which, if they get it, will protect them from extradition as if they were citizens.
WALES TO BRING FORWARD ALCOHOL MINIMUM UNIT PRICING
Out-Law on 21st June reported that plans to introduce a minimum unit price (MUP) for alcohol have been approved by members of the National Assembly for Wales.
TAKE AN ONLINE QUIZ TO SEE WHAT SORT OF NUCLEAR POSTURE YOU WOULD ADOPT
CNS at the Middlebury Institute has recently released an interactive quiz.
Dentons on 21st June reported in an article that on June 25th the amended EU Directive on Administrative Co-operation in the field of taxation (DAC6) will enter into force. The article goes on to explain the amendments’ provisions. Under DAC6, EU Member States will be obliged to include rules in their national legislation that will require advisors and/or their clients to disclose information on certain cross-border transactions and structures – the Directive speaks of ‘arrangements’ – to national tax authorities.
On 21st June, law firm Clifford Chance released its latest Anti-Bribery and Corruption Review. Among the highlights are that the theme of corporate criminal liability is a focus for governments with new initiatives in Australia, Germany and Poland. Germany has introduced a new law to implement a nationwide central competition register specifically covering corruption-related offences, while China has introduced stricter rules on commercial bribery. A draft Bill in Australia proposes further strengthening of the criminal offence of bribing foreign public officials, while both Russia and Spain have acted to tighten rules on bribery in public procurement. Italy has adopted new legislation to facilitate whistleblowing and, at the same time, the US and France have both introduced new incentives for companies to disclose corruption offences voluntarily and to co-operate with prosecutors during investigations, while Japan is proposing to implement a similar regime.
Ballard Spahr on 21st June published an article reporting on progress of this US legislation. It says that the new draft eliminates the beneficial ownership provision entirely; in its place, the Bill merely requires the Comptroller General “to submit a report evaluating the effectiveness of the collection of beneficial ownership information under the Customer Due Diligence regulation as well as the regulatory burden and costs imposed on financial institutions subject to it”.
Finance Magnates on 21st June reports that 50 such companies are now listed on the Financial Services and Markets Authority warning page under the headline: CRYPTOCURRENCY TRADING PLATFORMS: BEWARE OF FRAUD!
On 21st June, Notice to Exporters 2018/15 notified that the Export Control Joint Unit control list classification service will re-open for use on 25th June. The service has been suspended since June 2014 for operational reasons. However, assessments against goods within sanction lists will not be available and if you wish to export to a country with restrictive measures (sanctions) legislation in force, one would need to consider the legislation carefully, seeking independent legal advice as required. Available through the online SPIRE system, the service offers assessment of goods against the UK strategic export control list.
In its 19th June review of recent litigation developments in Jersey, Ogier provided an update on the above law. It says that following Moneyval’s inspection of Jersey’s AML regime in 2015 and its subsequent report issued in May 2016 there has been a focus in Jersey to implement law and policy that will lead to more prosecutions related to financial crime. One of the key recommendations in the MONEYVAL report was the introduction of a non-conviction based confiscation regime in Jersey to apply in parallel with the conviction-based system. The Draft Law introduces the concept of a “civil forfeiture investigation”. The law includes provisions for production orders; disclosure orders; account monitoring orders against banks; and customer information orders against banks.
The South China Morning Post on 21st June reported that leaked files show passports of at least 4 Japanese nationals were used for identification when the offshore companies were established. The companies involved operated Japanese-language dating websites and were registered in Anguilla and apparently used the names of Japanese people without their permission to dodge responsibility in case of trouble. 3 of the 4 Japanese said they had nothing to do with the offshore companies, but all had travelled to Thailand over recent years. The fourth person could not be contacted.
On 20th June, the EU published a news release about the provisional political agreement reached by the European Parliament and Council on the Commission’s proposal for an EU Regulation on the freezing and confiscation of assets across borders which was confirmed by Member States. The proposal was adopted as part of the EU Action Plan to strengthen the fight against terrorist financing and contributes to completing the Security Union. The new Regulation will set a deadline of 48 hours to recognise and execute freezing orders. It will widen the scope of current rules on cross-border recognition: criminals can be deprived of criminal assets, even when the assets belong to their relatives. Finally, in cases of cross-border execution of confiscation orders, the victim’s right to compensation will have priority over States’ claims. See the factsheet from 21st December 2016 for more details –
On 19th June, Patterson Belknap published an article about a US case which, it said, offered a lifeline to the wife of a defendant convicted of tax fraud. She sought to argue that the tainted funds had been commingled with legitimately earned funds prior to their transfer and therefore could not easily be traced back to her husband’s crimes. In an appeal, the court concluded that because she had been barred by statute from participating in his criminal proceedings, due process demanded that she be given the opportunity to plead a plausible claim and this would provide her an opportunity to file an amended petition, if she could assert facts that would go beyond those in her current petition. Denying her the opportunity to present them “would raise significant due process concerns” the court said. The article concludes that the ruling will benefit other third-party forfeiture claimants who previously might have been denied the right to litigate an issue that was determined against them at a sentencing proceeding in which they could not participate. It is unfair — and now unconstitutional in the US — for the forfeiture rules to prevent a claimant from having an opportunity to litigate her entitlement to the property to be forfeited.
On 20th June, The Lawyer reported that the Financial Intelligence Service’s refusal to consent to a proposed transaction under Guernsey’s AML reporting regime has resulted in the Royal Court deciding its first private law action between the person claiming the asset and the financial institution holding it. The article from law firm Ogier concerns the case of Liang v RBC Trustees (Guernsey) Ltd which it says provides clarification of the legal framework for determining the source of funds which will be highly relevant to all regulated entities in Guernsey. The Court had previously held that a person seeking access to funds without the consent of the FIS can obtain relief from the Royal Court under certain conditions. Ogier says that Royal Court has tried to create a workable balance between the conflicting interests of the custodian and the beneficiary, and that the decision also highlighted the rights of the asset owner, saying that the Court must have the ability to make an order for payment if the asset owner can show that the funds are not proceeds of crime. However, it also says that whilst the Court has attempted to strike the right balance, the position still remains somewhat unsatisfactory from the perspective of both custodian and beneficiary.
20th June 2018
STRICT EXPORT REGULATIONS “MAY BE COSTING US INDUSTRY BILLIONS IN FOREIGN SALES” OF UAV
Defense News in the US on 19th June carried an article saying that a new report from RAND assessing the proliferation of unmanned aerial vehicles (UAV) suggests existing export controls for drones may hurt the US more than it helps. It says that limiting US drone exports has left a hole in the global market for the technology, especially in historically US-dominated Middle East markets, which has been readily filled by competitors — specifically China and Russia. It goes on to say that whilst the Trump Administration recently unveiled new export policies regarding military technology in an attempt to facilitate the transfer of military technology, but the changes do not change the status of drones under the Missile Technology Control Regime (MTCR), which has the effect of imposing a “strong presumption of denial” on US UAV, meaning they are only exported in rare circumstances. However, RAND found many countries already use such “Category I” machines, and others UAV just under the Category I limit. It says that Rand expects to “grow from about $6 billion in 2015 to about $12 billion in 2025”.
TOP TIPS FOR ASSESSING CFIUS APPLICATION
In a June 2018 commentary, law firm Jones Day says that the Committee on Foreign Investment in the United States (CFIUS), which currently has jurisdiction over foreign direct investment transactions that could result in foreign control over a US business, remains an important consideration for foreign parties looking to invest in the US and has and is developing (as changes are also underway in the EU and UK). The commentary offers 10 practical tips relating to CFIUS and the CFIUS review process, in case of concern that deals will be vetoed by CFIUS because, for example, the fear of it leading to unwanted technology transfer to China. One of the 10 tips concerns Export Control and Economic Sanctions Issues, saying that understanding the export control status of the products is critical to evaluating the nature and extent of CFIUS risk. Also, CFIUS clearance is not a licence to export-controlled technology or products to the country of nationality of the foreign buyer. In addition, CFIUS regularly requests information regarding a foreign buyer’s business dealings with US-sanctioned countries and entities and gathering such information can be challenging and not providing information relating to all relevant business may result in CFIUS rejecting the filing.
VIETNAM: MDMA DISCOVERED IN PARCELS SENT FROM EUROPE (INCLUDING THE UK) VIA POSTAL SERVICE
On 19th June, Vietnam Plus reported that Hanoi police had discovered methamphetamine drugs hidden in a parcel sent from the UK to Vietnam. A nylon bag containing 102 MDMA (ecstasy) pills were found inside the parcel, which had been declared as electrical components and switches. Earlier, on 13th June a parcel with MDMA inside transported from the Netherlands by express mail (EMS) to Vietnam was discovered. On April 20th about 9.35 kg of methamphetamine drugs were seized from a parcel from Belgium to Vietnam sent via EMS.
2 SENTENCED IN MIAMI IN TRADE-BASED MONEY LAUNDERING CASE
The Latin American Herald Tribune on 20th June reported that the owners of a Miami export business have been sentenced for $100 million unlicensed money transmitting and international money laundering scheme. They were sentenced for their roles in funnelling more than $100 million through the US financial system on behalf of various foreign businesses based predominantly in Venezuela. They used Miami Equipment and Export Company, a company they owned in Doral, Florida, to make the transmission on behalf of KCT, a large Venezuelan consortium of construction companies, and other entities located in Central and South America. After they received these funds from KCT or other companies, the defendants received instructions concerning where to send the money as well as fake invoices and contracts purporting to set forth a valid business reason for these payments. The fake invoices and contracts made the payments appear connected to legitimate business services being provided to their company, such as consulting or engineering services.
FORMER RUSSIAN PARLIAMENTARIAN VLADIMIR KHMEL ARRESTED IN SPAIN FOR LAUNDERING MILLIONS OF EUROS
Crime Russia on 19th June claimed that Russian entrepreneur Vladimir Khmel, who settled in Tenerife 9 years ago, had been arrested on suspicion of laundering money through real estate investments and tax evasion for €17 million. He was the former deputy of the Legislative Assembly of the Primorye Territory of Russia, but it is said he fled Russia after several criminal cases on large-scale smuggling of Chinese goods were instituted against him. It is alleged that, through his companies Global Bigfishing SL, Canary International Business Transconsulting SL, La Estrella Favorita SL, Canary Dream Charter SL, Sancho Panza Enterprises SL and Canariasxperiencie, he has invested in Spain the money he illegally obtained in Russia.
METROPOLITAN POLICE SEIZES RECORD £94.6 MILLION HAUL FROM CRIMINALS
Manx Radio on 20th June carried a report saying that the Metropolitan Police seized a record £94.6m from criminals in London in the last year, an increase of 40% on the previous 12 months. £55.5 million came from post-conviction confiscation orders. Virtual currencies are also included in the final total, with one case currently under investigation involving more than £4 million in various forms of digital cash being frozen. All of the money forfeited and confiscated is paid to the Home Office, which then returns a percentage to the force – in 2017/18, the Metropolitan Police received £9.55 million.
IRELAND: PERSONAL LIABILITY FOR CORPORATE CRIMES – CAN DIRECTORS AND MANAGERS BE PROSECUTED?
Irish law firm Matheson on 14th June posed and answered the question, saying that when regulators start corporate investigations, we are often asked whether directors, managers and other company officers can be prosecuted. The answer can be “yes”. An Irish Court of Appeal decision of January 2018 has clarified when prosecutions of individuals can occur., holding that individual liability depends on whether the individual has functional responsibility for a significant part of the company’s activities and direct responsibility for the area in controversy. The article goes on to explain more clearly what this means.
DRAMATIC RISE IN US SAR 1996-2015
SLOVAK FARMERS DRIVE TRACTORS INTO CAPITAL TO PROTEST ALLEGED EU SUBSIDY FRAUD
EurActiv on 20th June reported that dozens of farmers from across Slovakia drove their tractors into the capital Bratislava to protest against alleged irregularities in EU farm subsidy payments first made public by murdered journalist Jan Kuciak.
GAMBLING FIRM HIT WITH £2 MILLION PENALTY IN UK OVER PROBLEM GAMBLER
The BBC on 20th June reported that 32Red has been hit with a £2m penalty for failing to protect a problem gambler, who was allowed to deposit £758,000 with no money laundering or social responsibility checks.
CHANNEL ISLANDS: MEETING FOR SHAREHOLDERS OF COMPANY LINKED WITH ALLEGED $150 MILLION FRAUD
The Bailiwick Express on 20th June reported that shareholders and creditors of a fund linked with an alleged $150 million “fraud scheme” that lost some Jersey investors their life savings are due to meet. Guernsey-based Providence Investment Funds PCC Limited collapsed in August 2016 and is now under administration management. The meeting will be held under the island’s ‘Protection of Investors’ law. It comes months after the bosses of the Miami-based parent company – Antonio Carlos De Godoy Buzaneli (56) and Jose Manuel Ordoñez Jr (46) – were arrested. In Jersey, Lumiere’s former Managing Director, Christopher Byrne, will face a 6-week trial in August over more than a dozen charges relating to alleged dishonesty in dealing with investors in the Providence Fund.
HOW DID THE PNB BANK FRAUD IN INDIA HAPPEN? A 162-PAGE REPORT LAYS BARE THE LAPSES
Livemint on 20th June carries a story saying that the $2 billion fraud may have been orchestrated by a few rogue employees, but it escaped detection because of widespread risk-control and monitoring lapses in many areas of the bank, according to the bank’s own internal probe. India’s second-biggest state-controlled lender has previously alleged that a handful of staff at a single Mumbai branch issued fake bank guarantees over several years to help 2 jewellery groups. The report does not say whether the PNB investigators believe those involved in the monitoring failures were aware of the fraud.
US LAWMAKERS SAY ‘GOLDEN TICKET’ VISAS FOR INVESTORS NEED OVERHAUL
Bloomberg on 19th June reported that a visa programme that offers wealthy foreigners legal residence in the US if they invest in projects that create jobs needs to be overhauled or eliminated because of concern over fraud and threats to national security, senators from both parties said in a rare moment of bipartisanship. Congress created the EB-5 programme in 1990 to boost economic development, especially in low-income and rural areas.
CANADA TAKE AIM AT TERRORIST USE OF CRYPTOCURRENCIES, PREPAID CARDS
Canoe.com on 19th June reported that the Canadian federal government is proposing measures that take aim at shadowy payments made by terrorists and money launderers using virtual currencies and prepaid credit cards. The planned regulations would help close loopholes in Canada’s AML regime and address shortcomings pointed out by FATF. The government is accepting public comment on the planned measures until early September.
NOTICE TO EXPORTERS 2018/14: EU RENEWS RUSSIA CRIMEA AND SEVASTOPOL SANCTIONS
On 20th June, the UK Export Control Joint Unit published Notice to Exporters 2018/14 notifying the renewal until June 2019 of the EU sanctions.
MEMBERS OF HUGE DRUG-IMPORTATION CONSPIRACY TO SPEND LONGER IN JAIL AFTER APPEAL
The UK Attorney General’s Office issued a news release on 20th June saying that David Reece and Everton Bailey who were arrested as part of an investigation into a large-scale drug conspiracy will spend longer behind bars after the Attorney General referred the sentence to the Court of Appeal for being too low. Reece and Bailey were both originally sentenced to 16 years’ imprisonment but the Court of Appeal increased their sentences to 19 years each. In May 2017 a shipment of 142.5kg of high purity cocaine and heroin with a street value of £66.5 million was stopped in Belgium. The investigation identified 38 similar trips, at least some of which would have involved similar amounts of drugs.
NORWAY’S NEW GAMBLING REGULATOR PREPARES FOR BATTLE WITH ONLINE OPERATORS
Calvin Ayre on 20th June reported that Norway has appointed a new gaming regulatory chief, just as the country prepares to go to war with unauthorised online gambling sites. Earlier this month, Norway’s government submitted the text of its “regulations concerning the prohibition of the processing of payments for gambling without a Norwegian license” to the European Commission for approval and Norway hopes to impose the new rules by January 1st 2019. Norwegian banks are already prohibited from directly processing payments on behalf of international gambling sites but the new rules make it clear that they are also forbidden from handling “payment transactions to and from companies that carry out payment transactions on behalf of gambling companies”.
WILDLIFE CRIME: GLOBAL SEIZURES AND ARRESTS IN TRANSCONTINENTAL OPERATION
A news release from Interpol on 20th June reported that an international operation against the illegal trade in wildlife and timber has seen hundreds of seizures worldwide as well as suspects arrested. Codenamed Thunderstorm and targeting the people and networks behind global wildlife crime, the operation involved police, customs, border, environment, wildlife and forestry agencies from 92 countries and resulted in millions of dollars-worth of seizures. The month-long operation in May has so far brought 1,974 seizures and the identification of some 1,400 suspects, triggering arrests and investigations worldwide. Further arrests and prosecutions are foreseen as ongoing investigations unfold. The second in a global ‘Thunder’ series initiated by the Interpol Wildlife Crime Working Group, co-ordinated by Interpol and the World Customs Organization (WCO) in conjunction with the International Consortium on Combating Wildlife Crime (ICCWC), which includes the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) Secretariat, UNODC and the World Bank
CHINA’S SANCTIONS ENFORCEMENT ON NORTH KOREA EASES AFTER THE SUMMIT
38 North reported on 19th June that reports are now coming in regular intervals that Chinese enforcement of sanctions on North Korea is becoming less and less strict following the summit between Donald Trump and Kim Jong-un.
ISLE OF MAN NOTIFIES IRAQ AND ISIL/DA’ESH/AL-QAIDA SANCTIONS CHANGES
On 20th June, the Isle of Man issued 2 news releases notifying that the Central Bank of Iraq had been removed from the lists of those subject to sanctions, and Abdulpatta Escalon ABUBAKAR and Myrna Ajijul MABANZA added to the ISIL/Da’esh/Al-Qaida lists.
HUMAN TRAFFICKING: SPAIN ACHIEVED PROGRESS, BUT FURTHER ACTION NEEDED AGAINST TRAFFICKING FOR LABOUR EXPLOITATION
A Council of Europe news release on 20th June advises that Spain has made progress in developing the legislative, institutional and policy framework against trafficking in human beings. However, improvements are needed in a number of areas, in particular more efforts are required to tackle trafficking for labour exploitation, says the Council’s Group of Experts on Action against Trafficking in Human Beings (GRETA) in a new report.
OFFENSIVE AND DANGEROUS WEAPONS: NEW OFFENSIVE WEAPONS BILL IN UK
On 20th June, the Home Office published a news release on a new Bill introduced into Parliament following a public consultation exercise that closed on 9th December. The new offences proposed are concerned with –
- proposals for new knife and amended offences
- updating the definition of a flick knife
- proposals for new acid and corrosive offences making it an offence to sell products with certain corrosive substances to under-18s and making it an offence to possess a corrosive substance in a public place
- proposal on firearms law to prohibit .50 calibre ‘materiel destruction’ rifles and rapid-firing rifles under section 5 of the Firearms Act 1968
INDIA: BANK OF MAHARASHTRA OFFICIALS AMONG 6HELD IN FRAUD BY DSK GROUP
The Times of India on 20th June reported that the Chairman/MD and an executive director of the bank were amongst 6 arrested for alleged involvement in a fraud. Police have also arrested DSK’s chartered accountant and the vice-president of its engineering department. The fraud is said to relate to the siphoning of large amounts of money raised by the DSK Group of companies through investors as well as banks and financial institutions, non-convertible debentures and money collected from home buyers in various housing projects.
SPANISH BANKS MOVE AHEAD WITH BLOCKCHAIN PLATFORM FOR DIGITAL ID
Finextra on 20th June reported that a consortium of Spanish banks is moving ahead with the development of a blockchain-based digital identity platform slated for live testing before the end of the year, a project to verify the identities of new clients and share the data with other consortium members.
OVERSEAS BUSINESS RISK – IRELAND
On 20th June, the UK Department for International Trade published this updated briefing providing details of the intellectual property, organized crime, human rights, bribery and corruption and terrorism risks that UK businesses may face when operating in Ireland.
PEOPLE-SMUGGLING RINGLEADER ARRESTED IN JOINT UK/BELGIAN OPERATION
An NCA news release on 20th June reported that the suspected ringleader of an organised criminal network thought to be behind hundreds of attempts to smuggle migrants into the UK has been arrested by the NCA. 31-year-old Albanian national Alket Dauti was detained at his home address in Penge, SE London.
POLICE RAID ADDRESSES ACROSS CROATIA TO BREAK ARMS TRAFFICKING NETWORK
Europol on 20th June reported that on 18th June the Croatian National Police identified 19 suspects of a criminal gang involved in international arms trafficking and smuggling, arresting 17 of them, in close co-operation with the German authorities and Europol. Over 40 weapons bound for Western Europe were seized as a result of co-ordinated raids across Croatia and Germany.
PROFESSIONAL FRAUDSTERS ARRESTED OVER DODGY SHOPS IN €8 MILLION SCAM INVOLVING “TRANSACTION MONEY LAUNDERING”
On 20th June, KYC 360 reported that police forces across Europe Police have arrested scores of individuals they believe are partly responsible for over 20,000 fraudulent transactions worth over €8 million. The fraud was conducted by professional fraudsters, skilled in e-commerce fraud, who set up fake online shops and bought and sold credit card data on the dark web, said Europol.
CONVICTED FELON ARRESTED IN LA AFTER POLICE SEIZE 553 ILLEGALLY-OWNED GUNS
Illicit Trade on 20th June reported that police in Los Angeles have discovered a massive haul of 553 illegally-owned firearms inside the home of a convicted felon after receiving information from one of his neighbours.
FORMER ANGLO IRISH BANK BOSS JAILED FOR 6 YEARS FOR FRAUD
Sky News on 20th June reported that David Drumm, 51, former chief executive of Anglo Irish Bank has been jailed for 6 years for inflating the failing bank’s balance sheet. He was convicted earlier this month by a Dublin court of conspiracy to defraud and false accounting. Drumm acknowledged the “huge error in judgement” in arranging the transfer of €7.2 billion to inflate the imploding bank’s balance sheet in 2008. A crisis of confidence and the bank’s multibillion euro bailout forced Dublin to take a €85 billion rescue package from the IMF and EU.
FOUNDER OF FRAUD INVESTIGATION COMPANY JAILED FOR TAX FRAUD
On 20th June, the Insurance Times reported that Rod Bond (with others), founder and a former director of Ravenstone, which offered fraud investigation and other reports. He left the business in 2009. He was jailed for submitting false tax returns and claiming £2 million in tax rebates.
COMMUNICATIONS ‘EXPLOSION’ HAMPERING DISCLOSURE, SAYS SENIOR JUDGE
The Law Society Gazette on 20th June reported that a senior Court of Appeal judge has said that an ‘explosion’ of electronic communications is stretching prosecution and defence resources to or beyond their limits. He gave as examples 2 rape cases –
- in one it took 630 hours for the police disclosure team to review the content of the 3 complainants’ mobile phones and Facebook accounts, without taking into account the time taken to actually download the phones at the lab, or the time taken to collate, review and schedule the products of the various reviews.
- in the other, where the complainant and defendant met on the dating app Tinder, 150 officer hours were required to examine 20,000 items of data – despite there being only 2 mobile phones to consider.
SEC JUST FROZE THE ACCOUNTS OF AN ICO FOR A SECOND TIME
Coindesk on 20th June reported that the SEC has taken action against a co-founder of the PlexCoin cryptocurrency project, having previously sued him for securities violations and fraud in 2017. On June 15th, the SEC obtained an emergency court order to freeze the assets of Dominic Lacroix. PlexCorp was believed to have raised $15 million from thousands of investors through the ICO. The SEC alleges that Lacroix has been tapping into funds raised since the previous freeze. Lacroix’s has also been given a 2-month jail sentence and his company $100,000 in fines for contempt of court.
FBI 2017 INTERNET CRIME REPORT
On 20th June, Alston & Bird published an article about the 2017 report that highlights trends and statistics compiled by the FBI’s Internet Crime Complaint Center (IC3) during 2017. There were 301,580 complaints which reported losses of over $1.4 billion. The report mentions 5 “hot topics” from 2017: business email compromise (BEC), ransomware, tech support fraud, extortion, and the Justice Department’s Elder Justice Initiative. The article explains what IC3 has to say about each of the 5 trends.
The report itself is available at –
CANADA SENATE APPROVES BILL TO LEGALISE RECREATIONAL MARIJUANA
On 20th June, Jurist reported that under the eventual Act the federal and provincial governments will regulate cannabis, with the federal government licensing dealers. It will still be illegal for anyone under the age of 18 to use recreational marijuana and it also remains illegal to possess more than 30 grams of dried cannabis in public.
COMPANY ENTITLED TO DAMAGES DESPITE AFFIRMING CONTRACT IN BRIBERY CASE
Out-Law on 20th June published an article which said that a company was entitled to bring a claim for damages against a contractor which had paid bribes to its former managing director, regardless of whether it had affirmed its commercial relationship with the briber after the bribery came to light. The defendant had sought to argue that affirmation of the contract by the claimant was enough to break the chain of causation altogether, meaning that it was not entitled to damages at all. This argument was rejected by the judge, who confirmed that right to damages operated independently of whether the contract stood. The claimant became aware of the payments in October 2015, the report says. However, it decided to carry on in “business as usual” until 30th June 2016 and the judge found that, by doing so, it had affirmed the contract, and that its decision to end the business relationship in June 2016 was therefore a repudiatory breach of contract.
TRUMP’S BORDER POLICIES “STRENGTHEN ORGANISED CRIME”
Insight Crime on 20th June carried an article explaining how the author considered that while the Trump Administration’s stated purpose of “zero tolerance” of illegal immigration on US borders is intended to lower crime rates, research shows that the net effect may be the opposite. The policy is to prosecute all those who cross the border illegally. The so-called zero tolerance approach is supposed to act as a deterrent. The article says that the policy is, however, shortsighted, in part because research shows that it may, in the long run, strengthen criminal groups. It then goes on to detail 5 reasons why the policy is counter-productive.
On 20th June, OCCRP published an article saying that 2 years after the original Panama Papers leaks, the German daily Süddeutsche Zeitung has received a fresh trove of leaked documents from Mossack Fonseca, the now-defunct Panamanian law firm. The new leak consists of 1.2 million documents which mostly cover the years 2016 and 2017. OCCRP says that the resulting investigation of these new documents has enabled journalists to tie many loose ends, to uncover even more wrongdoing, and to reveal new twists and turns in what was once a hermetically closed world of offshore dealings.
On 20th June, Eversheds Sutherland provided an update on the Blocking Regulation designed to protect EU companies from the extra-territorial effects of US sanctions on Iran. Amongst other things it makes it illegal for EU companies to comply with certain prohibitions in US sanctions legislation. It is for the EU Member States to decide what penalties are to be imposed for breaches of the relevant provisions and, for the most part, Member States have declined to engage in any enforcement activities. Updates are intended to deal with the re-imposition of Iran sanctions by the US following the US withdrawal from the JCPOA. The briefing provides details of changes made and concludes by saying that the European Parliament and the Council now have a period of 2 months to object to the Proposal before it is adopted as EU law (although they may choose to signal earlier that they will not object, thus allowing the measure to come into force earlier). The Commission hopes that the updated Blocking Regulation will come into force before 7th August, when the first set of US secondary sanctions on Iran are due to be re-imposed.
On 20th June, the above Act was added to the Isle of Man Government legislation website. It received Royal Assent on 19th June. It introduces new AML requirements relating to unregulated trustees, foundations and other matters. These amendments are being proposed principally in response to recommendations made by MONEYVAL. The amendments include those concerned with unregulated trustees and foreign trustees not resident in the Isle of Man; the criminal jurisdiction relating to certain offences; penalties for failing to comply with a requirement to produce information to a competent authority; record- keeping requirements for foundations; and powers of the Registrar of concerning information submitted by, or required from, companies, partnerships, LLC and foundations.
In the latest TRACE podcast, Judd Hesselroth and Alexandra debate the merits of the ISO anti-bribery standard and the associated accreditation process.
A Europol news release on 20th June reported that the new EU Terrorism Situation and Trend Report describes terrorist incidents and activities on European soil. 9 EU Member States reported a total of 205 foiled, failed and completed terrorist attacks in 2017 (2016: 142). This is a 45% increase compared to 2016 and a shift from a downward trend that started in 2014. 975 individuals were arrested in the EU for terrorism-related offences and most of these arrests were related to jihadist terrorism, for suspicion of participating in activities of a terrorist group; planning and preparing attacks; and facilitation activities such as dissemination of propaganda, recruitment and financing of terrorism. In the section on the financing of terrorism, from page 11, the report notes –
- One major investigation focused on a large network of Lebanese nationals offering money laundering services to organised crime groups in the EU and using a share of the profits to finance terrorism-related activities of the Lebanese Hezbollah’s military wing. The co-operation of these money launderers and Hezbollah’s military wing was a clear example of a nexus between organised crime and terrorism.
- Another investigation uncovered the mechanism used by foreign terrorist fighters (FTF) to obtain financial support from their families in Europe through a network of facilitators and money collectors, the FTF being in Syria, Iraq and Libya.
- The cases of financing of terrorism together illustrate the diverse methods that the financing of terrorism may employ, from very basic to highly complex schemes.
- In terrorism financing, cash transactions, in which couriers may be used, and unregulated and illegal financial networks take a prominent role.
- Many prominent hawala operators are based in the UAE, which frequently serves as the international platform for illicit finance activities. Money being transferred via the hawala system generally moves from – and not to – the EU, and It is probable that hawala is used more often by support networks that send money to terrorist organisations abroad than for plotting attacks within the EU.
- Diaspora communities living in the EU play a significant role in financing and procurement activities for conflicts in their countries of origin.
- Calls for donations are made in mosques, via websites and web for a; and non-profit organisations (NPO) may be used for money laundering and terrorism financing under the umbrella of humanitarian activities.
- The Partiya Karkeren Kurdistan (PKK, Kurdistan Workers’ Party) is known to systematically and, if need be, forcibly collect funds in the EU to finance its activities; it also uses front organisations and charities in the EU for this purpose and is suspected of being involved in criminal activities.
- Kidnapping remains a high-profile form of jihadist terrorism impacting on foreign nationals overseas.
- Most terrorist activities with which the EU was confronted in recent years, irrespective of affiliation, were inexpensive and did not require external sources of funding.
- In addition to licit employment incomes, state subsidies and social benefits, funds provided from like-minded individuals within the community are the main sources of income.
- Dissident Republicans in Northern Ireland are associated with both minor and serious criminality, including drug dealing, extortion and fuel laundering.
- Anarchist and right-wing extremist groups are mainly financed by their members through contributions and fundraising events.
- Members of the anarchist and left-wing extremist milieus have been found to sometimes revert to crime (robberies of banks and supermarkets).
- Virtual currencies, among which Bitcoin is the most well-known, have gained popularity, but the expansion of use among terrorist organisations, however, seems to be slow and has not yet matched the use made of them by organised crime groups, especially those involved in cybercrime.
On 20th June, the European Sanctions Blog reported that Theresa May has said that she would be pushing for enhanced EU sanctions against Russia at the next meeting of EU leaders.
On 19th June, The American interest carried an interesting and informative article – strongly recommended to provide a historical context to the current situation of the US in AML matters – which starts by saying that for decades, the US has been one of the leading destination havens for wealthy individual offshore investors; and that despite record corporate profits, soaring inequality, and high debt levels, the US is on the verge of the US becoming the largest tax haven in history. It notes that the most striking omission from the recent EU blacklist was the US. It then notes that, as of 1960, there were only about a dozen secrecy havens that really counted, mainly in Europe and the Western Hemisphere. As of 2018 there are more than a hundred “conduit and destination” havens, in every time zone. The article claims that only in the arenas of law enforcement and national security is the US somewhat “disadvantaged” when it comes to attracting dodgy money. It says that the US has been a technical “tax haven” of sorts since the early 1920s, when it first introduced zero taxes on the interest income earned by “non-residents aliens” on their U.S. bank deposits though few foreigners bothered to take advantage of this rule. The first large-scale inflows into the US arrived in the late 1960s and early 1970s from Latin American drug cartels – as a result, the US Treasury then implemented stricter rules for currency deposits in banks, but these remained loosely enforced until the 1980s. Then, in the mid-1980s, the first surge in flight capital inflows to US banks appeared, mainly from heavily indebted developing countries like Mexico, Venezuela, Argentina, Brazil, Nigeria, and the Philippines; and the favourable tax benefits enjoyed by NRA who bring their financial and human capital to the US have expand dramatically since the 1980s. The article claims that cross-border investors are finding that when it comes to secrecy and asset protection, it is hard to do better than LLC or trusts provided by “onshore” states like Delaware, Nevada, Wyoming, and South Dakota, especially when it comes to buying US real estate – this trend beginning with Wyoming’s pioneering creation of “limited liability companies” (LLC) in 1977 though by the late 1990s LLC were available from all 50 U.S. states. However, it notes that the US Treasury and Congress have to date opposed public registration of ultimate beneficial ownership for companies, LLC, and trusts and they have declined to support reciprocal information exchange with all other OECD members, let alone the Tax Global Forum or the world at large. The article concludes by saying that if any jurisdiction in the world deserves to be “blacklisted,” by the EU or anyone else, it is the US.
DRAMATIC RISE IN US SAR 1996-2015
Modern Ghana on 20th June reported that authorities in Nigeria say they will close their border with an unnamed neighbouring country within the next few days to stop foreign rice being smuggled in. “Poisonous materials” and “arsenic” are among the substances a minister claims are present in rice imported from China and SE Asia into Africa. Nigerian authorities have not yet disclosed which neighbouring country the smuggled rice is coming from, local media say the country in question is Benin.
However, the Independent in Nigeria claimed the neighbour affected was Cameroon, in a report on the seizure by the Navy of a ship smuggling rice – the vessel carrying 2,860 bags of foreign rice.
19th June 2018
NEW “ITALIAN RESIDENT NON-DOMICILED” TAX REGIME TO DRAW HIGH NET WORTH INDIVIDUALS TO ITALY
On 14th June, LCA Studio Legale published a short article about the scheme whereby individuals who move their fiscal residence to Italy may opt for a substitute income tax regime on foreign income by a payment of a yearly substitute tax of €100,000. The regime may be extended to family members by a payment of an additional substitute tax of €25,000 for each family member.
WHAT IS “SPEARFISHING”?
On 14th June, law firm Foley and Lardner published a short piece concerning a recent DoJ news release announcing the arrest of 74 people allegedly engaged in email frauds. The article included a quote from the news release of the most common of the so-called “spearfishing” schemes (aka business email compromise of BEC) –
- “Romance scams,” which lull victims to believe that their online paramour needs funds for an international business transaction, a US visit or some other purpose;
- “Employment opportunities scams,” which recruits prospective employees for work-from-home employment opportunities where employees are required to provide their PII as new “hires” and then are significantly overpaid by check whereby the employees wire the overpayment to the employers’ bank;
- “Fraudulent online vehicle sales scams,” which convinces intended buyers to purchase prepaid gift cards in the amount of the agreed upon sale price and are instructed to share the prepaid card codes with the “sellers” who ignore future communications and do not deliver the goods;
- “Rental scams” occur when renters forward a check in excess of the agreed upon deposit for the rental property to the victims and request the remainder be returned via wire or check and back out of the rental agreements and ask for a refund; and
- “Lottery scams,” which involves persons randomly contacting email addresses advising them they have been selected as the winner of an international lottery.
FinCEN CALLS ATTENTION TO TRANSACTIONAL RED FLAGS ASSOCIATED WITH INTERNATIONAL CORRUPTION BY PEP
On 14th June, Cadwalader Wickersham and Taft published an article about a FinCEN Advisory describing how corrupt foreign “politically exposed persons” (PEP) access the US financial system. The Advisory provides a list of red flags that may help identify methods used to hide the proceeds of human rights abuses and other illicit international activities. The Advisory also provides examples of suspicious activities by PEP and their financial facilitators.
US SENATE VOTES TO REINSTATE ZTE BAN THAT NEARLY SHUT DOWN THE COMPANY
The Verge and others reported on 18th June that the Senate had voted to reinstate a ban on ZTE that prevents the Chinese telecom company from buying US components and using US software. However, the article cautions that it is still not clear if the reversal will make it into law: it has to clear a conference with the House of Representatives, and then avoid a veto from President Trump, who advocated for cutting a deal that would lift the ban.
SLOVENIAN POLICE TAKE DOWN EUROPEAN ARMS SMUGGLING RING
Xinhua on 19th June reported that Slovenian police have smashed a 23-member criminal ring involved in international arms smuggling and trafficking, arresting 15 of them, in cooperation with law enforcement from several other countries. Investigations and house searches were also conducted in Croatia and Spain. The weapons had been “intended for criminal rings from the Western Balkans that have their cells in larger EU countries and are involved in smuggling drugs from South America to Europe and cultivate drugs in Spain”, a senior official said.
VIJAY MALLYA “USED FORCE INDIA F1 TEAM AND IPL TEAM FOR MONEY LAUNDERING”
The Times of India on 19th June reported that Mallya, currently fighting extradition from the UK, alleges that he used his Formula One team and the Royal Challengers of Bangalore IPL cricket team as part of his money laundering. It is alleged that Mallya laundered the loan money with the help of shell companies with dummy directors that were controlled by him. He had also procured properties in name of these companies, and that he also allegedly took part of the money abroad through over-invoicing of lease rent for aircraft which he procured from a Mauritius-based company for his Kingfisher Airlines.
MALTA INTRODUCES MEASURES AIMED AT ATTRACTING SHIP & YACHT MANAGEMENT COMPANIES
KPMG on 18th June published an article saying that the Maltese Government has recently confirmed its commitment towards the Shipping and Maritime cluster through the recently introduced Legal Notice 140 of 2018. The measures include a favourable Tax Rate of 15% on employment income derived by individuals with respect to work or duties carried out in Malta (or in respect of any period spent outside Malta in connection with such work or duties). Ship Managers may be eligible to benefit from the tonnage tax exemptions with respect to the income derived from the management of vessels.
BRITISH PORTS ASSOCIATION WELCOMES NEW REPORT ON NORTHERN “FREE PORTS” STRATEGY PROPOSAL
The British International Freight Association on 19th June reported that the British Ports Association has welcomed the renewed focus on role that ports play in regional and national UK economies (post-Brexit) in a new report on ‘Supercharged Free Ports’.
MORE THAN £240,000 COUNTERFEIT FOOTBALL KITS SEIZED AT EAST MIDLANDS AIRPORT
The Burton Mail on 19th June reported that Leicestershire County Council’s trading standards team had been taking part in a 2-month long exercise. More than 12,000 fake kits were seized during 27 separate incidents.
CRIMINAL RECORDS DISCLOSURE CHALLENGE REACHES THE SUPREME COURT
The Law Society Gazette on 19th June reported that the Supreme Court begins hearing a challenge by human rights group Liberty to rules requiring anyone with multiple convictions, no matter how minor, to disclose them to future employers. Liberty argues the requirement breaches privacy rights under article 8 of the European Convention on Human Rights, and that the system is arbitrary and disproportionate, and must be urgently reformed.
LITRG: REDUCE THE IMPACT OF CROSSING THE VAT THRESHOLD BEFORE CONSIDERING LOWERING IT
The Chartered Institute of Taxation on 18th June announced that the Low Incomes Tax Reform Group (LITRG) has sounded a note of caution on any reduction of the UK VAT threshold in the near future. LITRG says it is hugely concerned that any lowering of the VAT threshold at this time could threaten seriously a small business’ ability to remain competitive in its marketplace if its trade is mainly with non-VAT registered customers.
KENYA WILL DEPORT ANY FOREIGNERS INVOLVED IN ILLEGAL GAMBLING
Calvin Ayre on 18th June reported on the campaign against Chinese-owned gambling machines intensifies. The Cabinet Secretary is quoted as saying that the illegal gambling machines that have proliferated in retail shops across the country were “a threat to our society” and the government “shall not accept” their continued existence. He was speaking at the symbolic torching of gambling machines brought into Kenya illegally.
5 ESSENTIAL ELEMENTS OF CORPORATE COMPLIANCE (2018 EDITION)
On 19th June, Baker McKenzie announced the newly revised and updated edition of “5 Essential Elements of Corporate Compliance” and “A Short Guide to 5 Essential Elements of Corporate Compliance”. It has distilled into 5 essential elements what it considers the requirements: leadership, risk assessment, standards and controls, training and communication, and oversight. The 2018 edition of the publication is said to provide fresh expert insight on effectively managing corporate compliance efforts in today’s evolving regulatory and enforcement environments. The pages are filled with practical insight, intuitively divided by the 5 elements, for all companies with extended enterprises–both domestic and multinational–seeking to deter, detect, prevent, and, when necessary, remediate illegal practices or other misconduct. The publication (downloadable from the webpage) also addresses a wide array of related risk management considerations, from effective culture and governance to active programme awareness and adherence.
LATEST FRONT IN DENMARK CLAIM FOR $2.1 BILLION IN RETIREMENT FUND FRAUD
The New Jersey Law Journal from Law.com on 18th June reported that New Jersey is the latest front in a battle by the government of Denmark to recoup $2.1 billion it allegedly lost to a tax fraud scheme perpetrated by retirement funds and their managers. It reports that Denmark’s tax authority, SKAT, has filed 40 suits in the District of New Jersey, and another 100 or more in courts across the US since early May, to recover funds it claims to have paid out on fraudulent tax refund applications. It claims administrators of pension, profit-sharing and stock bonus plans falsely claimed to own stock in Danish companies and submitted fraudulent documentation to SKAT for refunds of taxes they claim were withheld on dividends from the alleged stocks. The alleged pay outs began in 2012 and were discovered in August 2015.
COUNTERING CHEMICAL, BIOLOGICAL, RADIOLOGICAL AND NUCLEAR THREATS FROM OUTSIDE THE EU: BETTER GOVERNANCE, BUT CO-OPERATION SHOULD BE MORE TARGETED
On 19th June, the EU’s Court of Auditors published a report on the EU CBRN Centres of Excellence Initiative (which aims to mitigate chemical, biological, radiological and nuclear threats and risks from outside the EU) saying that EU action in partner countries to counter chemical, biological, radiological and nuclear (CBRN) threats from outside the EU has improved capacities and co-operation at national and regional level, but activities still need to be prioritised according to the level of risk. It also says that funding should be concentrated in areas relevant to security and an adequate risk management approach should be developed.
EU COMMISSION WELCOMES AGREEMENT TO IMPROVE THE FUNCTIONING OF EUROJUST AND BOOST CO-OPERATION BETWEEN NATIONAL AUTHORITIES AGAINST CROSS-BORDER CRIME
On 19th June, the EU reported on the agreement reached by the European Parliament and the EU Member States on the reform of Eurojust, which helps EU national judicial authorities to team up and to fight against cross-border crime and terrorism. The new rules will facilitate the co-operation between Eurojust and its national members, with national authorities, with Europol and other agencies (such as the European Border and Coastguard Agency and OLAF). The new rules will also allow for a close co-operation between Eurojust and the future European Public Prosecutor Office, which will be a specialised body to investigate and prosecute crimes against the EU budget, such as corruption or fraud with EU funds, or cross-border VAT fraud.
UKRAINE ANTI-CORRUPTION COURT LAW NEEDS AMENDING: IMF CHIEF
Reuters reported on 19th June that the head of the IMF welcomed the adoption by Ukraine’s parliament of a law to create an anti-corruption court, but said lawmakers needed to amend it to guarantee the court’s effectiveness.
REPORT PUBLISHED INTO LLOYDS’S HANDLING OF HBOS READING FRAUD CASE
City AM and others on 19th June reported that the publication of a damning internal report into an historic fraud case at HBOS Reading branch in which those involved deliberately pushed small firms out of business before stripping their assets for personal gain between 2003 and 2007. 6 people, including former HBOS managers, are currently serving a combined 47 years in prison for the offences involved. The report alleges that top executives at HBOS understated the extent of liabilities left by the fraud to regulators and to shareholders ahead of the takeover of the stricken bank by Lloyds in early 2009. It also alleges serious misconduct by auditors KPMG.
THE STEINHOFF SAGA
On 19th June, News 24 in South Africa published the first of a series of in-depth features which sheds light on the company’s remarkable growth – and spectacular collapse. This is Part One: from humble beginnings in Germany to a massive global holding company which, in the UK, owns Poundland, Benson for Beds and others. Comprehensive and fascinating…
IDENTITY THEFT USED IN INTERNATIONAL MONEY LAUNDERING SCHEME – €211,000 FROZEN IN IRELAND FORFEIT
On 19th June, the Irish Times reported that the High Court has ruled as proceeds of crime a sum of €211,000 held in bank accounts opened by a person using an alias Darren H Barnett) and who registered a company (Harglena Global) purporting to sell luxury yachts. CAB had the funds frozen in 2016, which had discovered that in 2010 Barnett fraudulently obtained the UK passport number attributed to another person.
SOUTH AFRICAN ACCOUNTING BODY CHARGES FORMER CFO WITH MISCONDUCT LINKED TO GUPTAS
Reuters on 19th June reported that the South African Institute of Charted Accountants (SAICA) said said it would charge the former chief financial officer of state-owned company Eskom, Anoj Singh, with serious misconduct related to a $43 million loan to the Gupta business family. Singh was suspended as CFO of the company last July before resigning in January as investigations into corruption at Eskom began.
HOW TO REPORT SUSPECTED FRAUDULENT COMPANY ACTIVITY TO UK COMPANIES HOUSE
On 19th June, Companies House issued updated guidance on how to report suspected fraudulent company activity to Companies House and find out what action it can take.
ITALY ARRESTS 102 MAFIA SUSPECTS WITH BALKAN SMUGGLING LINKS
On 19th June, OCCRP reported that Italian police arrested 102 suspects after a 12-year investigation into mafia families that allegedly rule Puglia region on Italy’s southeast coast and are responsible for large-scale drug trafficking from the Balkans. Among those arrested was a businessman called Roberto De Blasio, who sat on the local chapter of the Italian Anti-Racketeering Association, FAI. The families are part of the Sacra Corona Unita, a consortium of crime groups that operate in the heel of Italy.
MASSIVE CRACKDOWN ON METAL THEFT: OVER 350 TONNES SEIZED IN 12 EU MEMBER STATES
On 19th June, Europol reported in a news release that the operation took place in twelve EU Member States: Belgium, Bulgaria, Cyprus, France, Germany, Greece, Italy, Poland, Portugal, Romania, Spain and the UK. 54 846 people, 42 237 vehicles, 7 986 environmental companies and scrap dealers, 589 border areas and 2 572 other hotspots (including harbours and rail transport sites, energy, telecommunications infrastructures and customs shipments) were checked by law enforcement. As a result of the operation, 117 suspects were arrested, alongside 1,311 individuals who were convicted of minor offences and then released. A further 1,659 crimes were discovered to have been committed (75 cases of theft, 60 of knowingly receiving stolen goods, 137 environmental crimes and 1,387 cases of miscellaneous crimes) and 2,763 administrative violations were noted. Moreover, police officers seized 357,874 kg of metal (worth almost €890 000), including 92,982 kg of copper valued at around €540,000, as well as 983 solar panels and 140 vehicles.
CUSTOMS BROKERS AND IMPORTERS IN “DUTY-FREE” SCAM IN BVI
On 18th June, BVI News reported that a number of local importers and Customs brokers have been implicated in connection to a recently launched scheme to defraud Her Majesty’s Customs and, by extension, the Government. They are alleged to have been ‘doctoring’ invoices and other customs documents in order to import items into the territory without paying customs duties. Following the 2017 hurricanes, the government had introduced a temporary policy in which certain items imported into the country was exempted from duties. This ended on 31st March, but those who had purchased goods before that date have until June 30th to ship those items into the territory free of duty – since then, persons were changing dates on certain documents to reflect a purchasing date prior to March 31st.
NEW PANAMA LAW SMALL STRIDE TOWARDS REMOVING DIRTY MONEY STIGMA
Insight Crime on 19th June reported that Panama is seeking to clean up its image as a financial crimes haven by passing new regulations. On June 11th it passed a Decree which requires the country to automatically share tax-related financial information with 33, primarily European, nations – using OECD Common Reporting Standards (CRS).
VIETNAM MOVES TO REMOVE ITS MILITARY FROM BUSINESS
On 14th June, Asia Times reported that on June 7th, the National Assembly, Vietnam’s legislature, approved an amendment to a law passed last year that will commit the Ministry of National Defense to substantially reduce the number of military-owned businesses. It reports that, in recent years, that number has been reduced from over 300 to 88. The new amendment’s aim is to reduce that number to just 18, before divesting the military from almost all of its economic activities. At present, military-owned businesses dominate several areas of the economy, including the crucial telecoms sector. For example, Military-owned Viettel Group, the country’s largest telecoms operator with subsidiaries abroad, reportedly earned almost $2 billion in profit last year, up 12% from 2016. However, some analysts are thus doubtful that full divestment will happen any time soon.
ISLE OF MAN: UPCOMING CHANGES TO “FIT AND PROPER” ASSESSMENTS
On 19th June, the FSA in the Isle of Man advised that the changes to fitness and propriety assessments, notified in March, are due to commence on 1st August. The Regulatory Guidance, Forms and related documents have now been finalised and can be accessed online.
SEC SHUTS DOWN $102 MILLION PONZI SCHEME
On 19th June, a news release on Mondo Visione reported that the SEC had filed charges and obtained an asset freeze against the individuals and companies behind a $102 million Ponzi scheme that bilked investors throughout the US. The SEC alleges that the defendants defrauded more than 600 investors through sales of securities in issuers they controlled, including First Nationle Solution LLC, United RL Capital Services, and Percipience Global Corp.
ENFORCING ACCOUNTABILITY FOR USERS OF CHEMICAL WEAPONS
On 19th June, the Center for Strategic and International Studies published a report saying that, in 2012, a 20-year moratorium on state employment of chemical weapons use was broken. Since then, there have been more than 200 uses, against civilians, military targets, and political enemies. Accountability for these recent attacks has been limited or non-existent, which threatens the credibility of the non-proliferation regime and only encourages further use. It says that leaders must find the political and moral strength to use a full spectrum of tools to re-establish this system of restraint.
On 19th June, Eversheds Sutherland published its latest quarterly financial crime horizon scanning booklet. The booklet summarises key financial crime related legal and regulatory changes expected over the next 18 months to 2 years, as well as providing electronic links to key resources. The changes mentioned include –
- US withdrawal from Iranian JCOPA and the imposition of wind-down provisions for non-US entities
- FCA consultation on changes to the Financial Crime Guide (FCG) – proposing to add a chapter on insider dealing and market manipulation to the FCG and also make a number of general changes as a result of recent regulatory changes to ensure the guide remains up to date.
- UK public consultation on reforming the law of search warrants
- FATF UK mutual evaluation
- UK asset recovery action plan will set out how the UK is responding to the challenges involved in improving the recovery of the proceeds of crime
- House of Lords Select Committee appointed to review Bribery Act 2010
- UK Treasury Committee launches economic crime inquiry, looking at the AML and sanctions regime in the UK; and considering economic crime as it affects consumers as well as the effectiveness of financial institutions in combatting economic crime
- EU Proposal for a Directive on countering money laundering by criminal law
- EU: combating fraud and counterfeiting of non-cash means of payment – proposed Directive to include provisions on expanding the scope of fraud offences to include transactions through virtual currencies; harmonising the definitions of some online crime offences; introducing minimum level for the highest penalties; clarifying the scope of jurisdiction to ensure cross border frauds are better dealt with, improving EU-wide criminal justice cooperation and improving prevention and awareness-raising to reduce the risk of becoming a victim of fraud
Europol on 19th June published a news release reporting that Spanish National Police, supported by Europol, has dismantled 3 clandestine laboratories and seized more than 5 million doses in an operation against the production of illicit medicines, with 29 people arrested. The raw material was imported from China and, once in Spain, transferred to the laboratories where the final product was made. The doses were distributed in several gyms in Madrid and internationally through the Netherlands.
On 19th June, the Law Society Gazette reported that the Insurance Fraud Bureau (IFB) has announced the conclusion of the latest series of trials in which 77 fraudsters either pleaded or were found guilty in “cash for crash” insurance fraud cases. Investigations had begun by Gwent Police into a garage in Cardiff called EASIFIX, with enquiries lasting 4½ years before the IFB was called in. The bureau was able to link the damaged vehicles, as well as vehicle parts found at the garage, with a number of deceptive insurance claims. In all, 82 incidents linked to 230 claimants were identified, resulting in the eventual arrest and charging of dozens of people. Most were prosecuted for a range of offences, including conspiracy to defraud and fraud by misrepresentation.
On 19th June, HM Treasury issued a Notice advising that following a UN decision on 7th June, and EU Regulation 2018/875/EU, the Central Bank of Iraq had been removed from the UK sanctions lists.
On 19th June, HM Treasury issued a Notice advising that Myrna Ajijul MABANZA and Abdulpatta Escalon ABUBAKAR had been added to UN lists on 18th June and were consequently now included on the UK Consolidated List.
Following the recent Billy Caldwell case, the Home Secretary has announced a review into the scheduling of cannabis for medicinal purposes. If the review identifies significant medical and therapeutic benefits, then the intention would be to reschedule cannabis for medicinal use. The first part of the review will consider the evidence available for the medicinal and therapeutic benefits of cannabis-based medicines. This will inform which cannabis-based medicines should be taken forward to part 2 of the review, will provide an assessment based on the balance of harms and public health needs, of what, if anything, should be rescheduled.
On 19th June EurActiv reported that the EU’s chief Brexit negotiator says that the UK needs a reality check and will not be able to remain part of the European Arrest Warrant after it leaves the EU. Michel Barnier issued a blunt warning that the UK would not enjoy the same access to police, judicial and security instruments when the 21-month transition period that follows its formal departure from the EU ends in December 2020. The UK proposal would involve the UK remaining part of Europol, the agency which co-ordinates police intelligence across the EU, and the European Arrest Warrant, which allows criminal suspects to be extradited to face trial in another EU country. However, Barnier insisted that this would not be possible.
KYC 360 on 18th June carried an article that started by saying that the tenants in buildings 6-9 of the prestigious Europort complex in Gibraltar might be surprised to learn that, until recently, their offices were owned indirectly by a close relative of Syrian dictator Bashir al Assad. Rifaat al Assad has been nicknamed the Butcher of Hama for his role in the brutal 1982 Hama massacre in which tens of thousands of Syrians were killed. It says that it is understood that no freeze has yet been placed on Assad’s Gibraltar properties, and the trustees are moving swiftly to sell the company which owns the buildings. However, the article says that the trustees are selling the assets to another trust of which they and their family members are themselves the beneficial shareholders; and furthermore the beneficiaries of the purchasing trust are said to include both Gibraltar’s Financial Services Minister and a Member of the Board of Gibraltar’s Financial Services Commission, who happen to be brothers. The public became aware of the deal through a recent Supreme Court judgement, which ruled that the sale could proceed.
On 19th June, EU Directive 2018/843/EU was published in the Official Journal. This Directive, known as the 5th Money Laundering Directive, amends the 4th Money Laundering Directive. It will enter into force 20 days after it has been published in the Official Journal, i.e. 9th July.
On 19th June, the EU published Council Decision 2018/880/CFSP which renewed EU sanctions to 23rd June 2019.
Latham & Watkins LLP on 18th June reported that a new UK policy establishes a commitment to providing victims of overseas bribery with compensation; however, important questions remain that will impact implementation. It reports that general principles recently issued included the statement that UK enforcement agencies have committed to consider whether victim compensation is appropriate in “all relevant cases,” including those resolved by prosecution, a deferred prosecution agreement (DPA), or a civil settlement; and using remedies under the Proceeds of Crime Act 2002 or the Powers of Criminal Courts (Sentencing) Act 2000. It is noted that the UK has provided compensation on at least 5 occasions in cases of overseas bribery since 2014.