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OTHER THINGS YOU MAY HAVE MISSED – MAY 24

Panama Covid-19 update – a bad day reported today, with no less than 349 new cases reported (getting on for the equivalent of almost 3 days’ worth), with 90 more tests said to be “pending” – I suspect (or hope) the figures may be due to some hiccup in test reports being published.  We now have had 10,926 cases and 7 more fatalities take us to a total of 306.  64 people are in the ICU and 266 others hospitalised.  Meanwhile, there were no less than 743 arrests in the previous 24 hours for breaking the lockdown curfew rules.

On a lockdown Sunday, the most exciting moment for the family was a giant Crested Caracara (a sort of large eagle/hawk things) hanging around outside…

24 May 2020

FIRST IRANIAN FUEL TANKER REACHES VENEZUELA AMID US SANCTIONS THREATS

On 23 May, Global News and others reported that the first of 5 tankers loaded with gasoline sent from Iran reached Venezuela.  Despite being an oil producer, Venezuelan oil is very heavy, hence the need for imported gasoline.

https://globalnews.ca/news/6979643/iran-venezuela-tankers/

 

CRIMINAL COMPLAINT FILED AGAINST SWISS TRADER KOLMAR FOR ALLEGED LIBYAN OIL SMUGGLING

On 23 May, Swissinfo and others reported that civil society groups have accused the Zug-based oil trader Kolmar of complicity in war crimes related to the purchase of oil from war-torn Libya.  TRIAL International alleges that Kolmar Group illegally smuggled oil from Libya between 2014 and 2015.  Meanwhile, the Times of Malta links the report to Malta being reportedly at the centre of a well-coordinated multi-million fuel smuggling operation, with stolen Libyan fuel traded easily in Maltese territorial waters and through established storage facilities inside the Grand Harbour and Birżebbuġa.  The latter newspaper says that the operation started following the 2011 collapse of Libya’s Gaddafi regime, evolved into a large criminal organisation coordinated by Maltese, Libyan and Sicilian businessmen.  It is claimed that the Swiss trader purchased more than 50,000 tonnes of gas oil stored in tanks in the Grand Harbour between 2014 and 2015.

https://www.swissinfo.ch/eng/libyan-oil_criminal-complaint-filed-against-swiss-trader-kolmar-for-alleged-oil-smuggling/45780052

https://timesofmalta.com/articles/view/fuel-trader-committed-war-crime-of-pillage-in-stolen-oil-says-ngo.794126

SWITZERLAND COOPERATES WITH VATICAN FRAUD INVESTIGATION

On 24 May, Swissinfo reported that the Swiss justice ministry has sent initial documents to the Vatican as part of an investigation into suspected bribery and money laundering related to a London property deal in which some Swiss banks are said to be involved.  The case is said to date back to 2012 when the State Secretariat of the Vatican decided to invest an estimated $310 million in a property in London with plans to build luxury apartments.

https://www.swissinfo.ch/eng/swiss-banks_switzerland-cooperates-with-vatican-fraud-investigation/45781238

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https://www.rferl.org/a/who-supplies-weapons-to-china/30628747.html

UK: 1,000 LAUGHING GAS CANISTERS SEIZED FROM CAR

On 24 May, Kent Online reported that 2 men have been arrested on suspicion of drugs and money laundering offences after being found in possession of more than 1000 “laughing gas” canisters, which is consumed via a balloon and is also known by its chemical name nitrous oxide.

https://www.kentonline.co.uk/bexley-and-bromley/news/1-000-laughing-gas-canisters-seized-at-park-227702/

HOW MANY DRONES ARE SMUGGLING DRUGS ACROSS THE US SOUTHERN BORDER?

In its June 2020 edition, Air & Space Magazine in the US said that the answer was that nobody knows.  It says that the the typical “narcodrone” is small and inexpensive, worth a few hundred dollars, but some unpiloted aerial smugglers are 6- and 8-motor aircraft, like those used in Hollywood film making, and can cost more than $5,000 and carry up to 35 lb.  Nobody knows, it says, how many narcodrones cross the border each day, and nobody knows how to stop them from coming.  Compared to other smuggling methods, it says, $5,000 for a drone is pocket change in the drug-running world, and a drone reveals nothing without sophisticated forensics.  Some experts suggest that as many as a thousand drones could cross the border each week, but not everyone agrees.  The article does report that US Customs & Border Protection headquarters recorded 170 reported incidents over the past 5 years, but the Border Patrol did not disclose how many drones had been recovered or seized, how many incidents resulted in arrests and convictions, the type and quantity of drugs recovered, where the incidents took place, and what type of drones were involved.  A CBP spokesperson admits that there are currently no approved [drone] mitigation countermeasures, at least in civilian airspace – military conflict zones are a different matter.  Radar and acoustic tracking are discussed, and the article reported that, in September 2019, CBP announced the purchase of 6 counter-drone systems, which detect and attack drones’ radio-frequency communications, for operational testing along the border in California, Arizona, and Texas.

https://www.airspacemag.com/flight-today/narcodrones-180974934/

 

 

 

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US REPORT: TRADE-BASED MONEY LAUNDERING

In his always informative and helpful blog, Kenneth Rijock directs one to the report from the US Governmental Accountability Office in April.  This report followed a study published by the GAO dated December 2019 (see an article about the study at https://www.jdsupra.com/legalnews/trade-based-money-laundering-gao-report-41307/) – https://www.gao.gov/products/GAO-20-314R

The latter includes presentation slides on the December study.

This new report examines –

  • what the available evidence indicates about the types and extent of international TBML activities;
  • the practices international bodies, selected countries, and knowledgeable sources have recommended for detecting and combating TBML; and
  • the extent to which ICE has effectively implemented the Trade Transparency Unit (TTU) programme and steps the US government has taken to collaborate with international partners to combat TBML.

GAO says that it analyed US agency and international body data and documentation, conducted a literature review, and interviewed U.S. officials and selected knowledgeable sources.

GAO recommends that DHS develop –

  • a strategy to maximize TTU program effectiveness; and
  • a performance monitoring framework for the TTU programme.

DHS concurred with the first, but did not concur with the second recommendation, citing data it already collects and challenges it faces.  GAO continues to believe the recommendation is valid, as discussed in the report.

The TTU is a programme involving 17 partner countries, the first being established in 2005.  The goal is to exchange trade data with partner TTU to allow agencies in each country to work together to better identify anomalies in trade data that may indicate TBML. For example, through the analysis of shared trade data, the partners may be able to determine if there is a discrepancy between the reported value of goods when they leave the US and the reported value of the goods when they arrive in the partner country (and vice versa).

https://www.gao.gov/assets/710/705679.pdf

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CRIMINAL COMPLAINT FILED AGAINST SWISS TRADER KOLMAR FOR ALLEGED LIBYAN OIL SMUGGLING

On 23 May, Swissinfo and others reported that civil society groups have accused the Zug-based oil trader Kolmar of complicity in war crimes related to the purchase of oil from war-torn Libya.  TRIAL International alleges that Kolmar Group illegally smuggled oil from Libya between 2014 and 2015.  Meanwhile, the Times of Malta links the report to Malta being reportedly at the centre of a well-coordinated multimillion fuel smuggling operation, with stolen Libyan fuel traded easily in Maltese territorial waters and through established storage facilities inside the Grand Harbour and Birżebbuġa.  The latter newspaper says that the operation started following the 2011 collapse of Libya’s Gaddafi regime, evolved into a large criminal organisation coordinated by Maltese, Libyan and Sicilian businessmen.  It is claimed that the Swiss trader purchased more than 50,000 tonnes of gasoil stored in tanks in the Grand Harbour between 2014 and 2015.

https://www.swissinfo.ch/eng/libyan-oil_criminal-complaint-filed-against-swiss-trader-kolmar-for-alleged-oil-smuggling/45780052

https://timesofmalta.com/articles/view/fuel-trader-committed-war-crime-of-pillage-in-stolen-oil-says-ngo.794126

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 23

Panama Covid-19 update – another 156 new cases, about the average for daily rates now, taking us to 10,577 in total, with 4 more fatalities, taking us to 299 total.

23 May 2020

GROUP PROCEEDINGS: THE NEW LEGAL PROCESS COMING TO SCOTLAND

On 21 May, an article from law firm Morton Fraser explains that, in the near future, the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 will introduce a type of class action to Scotland, known as “group proceedings”.  Under the new provisions, where 2 or more people have separate claims on the same, similar or related grounds to each other, the court will be able to authorise a representative party to bring proceedings on their collective behalf. Like class actions in other parts of the world, the proceedings will either take place on an “opt in” basis, where all the members of the group or “class” give their express consent to proceedings being raised, or on an “opt out” basis where proceedings are proposed on behalf of a group and if someone does not want to participate, they can decline to do so.

https://www.morton-fraser.com/knowledge-hub/group-proceedings-the-new-legal-process

BELGIUM: STRICT CONTROLS ON COVID-19 AID FOR COMPANIES WITH TAX HAVEN LINKS

The Brussels Times on 23 May reported that Belgian tax authorities will use all of the information at their disposal to check that state aid linked to the coronavirus crisis is not awarded to companies that work via tax havens.

https://www.brusselstimes.com/economics/113089/strict-controls-on-aid-for-companies-with-tax-haven-links/

ZIMBABWE CENTRAL BANK CHARGES ECOCASH DIRECTORS WITH MONEY LAUNDERING

On 23 May, the Zimbabwe Mail reported that the Reserve Bank of Zimbabwe’s FIU has brought charges against Ecocash, the company’s CEO Natalie Jabangwe and director Eddie Chibi, who is CEO of parent company Cassava Smartech, for failure to comply with obligations imposed on financial institutions and their officers, employees, directors and agents.

https://www.thezimbabwemail.com/main/zimbabwe-central-bank-charges-ecocash-directors-with-money-laundering

SUDAN RECOVERS $4 BILLION OF ASSETS FROM EX-PRESIDENT BASHIR

On 23 May, BNN Bloomberg reported that Sudan has confiscated assets valued at $4 billion from former President Omar al-Bashir, his family members and associates.  Bashir was overthrown by the army a year ago and was jailed in December.

https://www.bnnbloomberg.ca/sudan-recovers-4-billion-of-assets-from-ex-president-bashir-1.1440283

KYRGYZSTAN: SPOUSE OF ESCAPED FORMER DEPUTY SHADIEV SUSPECTED OF MONEY LAUNDERING

On 23 May, 24KG in Kyrgyzstan reported that the State Committee for National Security of Kyrgyzstan is said to be investigating Asel Shadieva (spouse of the runaway ex-deputy of the Parliament Askarbek Shadiev) on suspicion of money laundering.  It is alleged that Askarbek Shadiev registered his wife Asel Shadieva as owner of property to hide its criminal source of origin.

https://24.kg/english/153632_Spouse_of_escaped_Shadiev_suspected_of_money_laundering

CHANGES TO UK START-UP, INNOVATOR AND SOLE PROPRIETOR VISA ARRANGEMENTS

Dixcart has published a briefing about changes to UK Immigration Rules from 4 June.

https://dixcart.com/in653-changes-to-the-uk-start-up-innovator-and-sole-rep-visa-categories

THE NEVER-ENDING LIST OF ALLEGATIONS AGAINST MEXICO’S FORMER TOP COP

On 22 May, Insight Crime carried an article saying that the former head of Mexico’s federal police has been implicated in a money laundering scheme that moved millions in suspected bribes from drug traffickers. This is said to be just the latest revelation showing the staggering collusion between Genaro García Luna and the criminal groups he was supposed to fight.

https://www.insightcrime.org/news/brief/genaro-garcia-luna-mexico-allegations/

COULD CHINA’S DIGITAL CURRENCY UNSEAT THE DOLLAR?

On 20 May, an article from the Belfer Center in the US saying that in late April, China reached a significant milestone: after more than 5 years of research by its central bank, China became the first major economy to conduct a real-world test of a national digital currency – described as a clear sign that China is years ahead of the US in the development of what is likely to become a central component of a digital world economy.  It warns that the advent of such digital currencies will degrade the efficacy of US sanctions, limiting the country’s options to respond to national security threats from Iran, North Korea, Russia, and others.  It will also hamper the ability of U.S. authorities to track illicit financial flows.  It calls for the US to act now to protect its economic advantage in the coming era of national digital currencies.

https://www.foreignaffairs.com/articles/china/2020-05-20/could-chinas-digital-currency-unseat-dollar

THE NORTH KOREAN ECONOMY UNDER SANCTIONS AND COVID-19

On 22 May, 38 North published an article saying that, before covid-19 hit, Kim Jong Un had proposed at the end of 2019 a new approach to economic policy and management, one that reflected the harsh political realities and emphasised rational economic management.  One of its conclusions is that, in the near term, prospects look bleak, given the stalled US-DPRK nuclear negotiations and dormant inter-Korean relations.  Looking at the effect of covid-19 on the country, and other major issues it faces, it suggests North Korea will need to find a way to relate to the post-crisis changes and seek its future place in the international environment.

https://www.38north.org/2020/05/bbabson052220/

HOW THE US CAN BETTER SUPPRESS ILLEGAL DRUG TRAFFICKING IN THE CARIBBEAN

On 22 May, the Center for International Maritime Security published an article in the wake of President Trump announcing in April that he intended doubled counter-narcotics enforcement in the Western Hemisphere.  It says that the move includes forces in the Caribbean and eastern Pacific, but the Trump Administration appears particularly concerned with Venezuela.  The article argues that a more sustainable solution requires more than increased assets on the water for search and seizure.  Furthermore, it argues, without supporting local organizations and addressing the conditions driving so many Venezuelans to illicit activities, the impacts of the effort will not be sustainable.  The article suggests a number of options that could be adopted, warning that aiming to control drug trafficking will not make these criminal groups disappear – they will merely take alternate routes and capitalise on trading other illicit goods.  It proposes that the US must take a holistic approach to maritime security threats and empower local organisations to solve regional security challenges at their source.

http://cimsec.org/how-the-u-s-can-better-suppress-illegal-drug-trafficking-in-the-caribbean/43736

NEW DATA ON RADICALISATION IN THE US

On 14 May, START (the National Consortium for the Study of Terrorism and Responses to Terrorism at  the University of Maryland) published a new research brief and an update to its Profiles of Individual Radicalization in the United States (PIRUS) dataset, which now includes information on 2,226 Islamist, far-left, far-right and single-issue extremists who have radicalized to violent and non-violent extremism in the US from 1948 through 2018.

https://www.start.umd.edu/news/start-releases-new-data-radicalization-united-states

https://www.start.umd.edu/pubs/START_PIRUS_ResearchBrief_May2020.pdf

US – CFIUS AND EXPORT CONTROLS: A DETAILED ANALYSIS OF THE PROPOSED MANDATORY FILING CHANGES

On 23 May, Torres Law published an article following the publication of a proposed new rule that introduces important changes.  In the US, CFIUS is authorised to review and take action to address national security concerns arising from certain investments and real estate transactions involving foreign persons.  The mandatory filing applies to certain investments involving certain US businesses that produce, design, test, manufacture, fabricate, or develop one or more identified, critical technologies.  The article explains the changes being made which revises the scope of the mandatory filing for certain critical technologies to put the focus on export control requirements, and whether certain “U.S. government authorization” would be required to export, re-export, transfer (in country), or retransfer the critical technology or technologies produced, designed, tested, manufactured, fabricated, or developed by the US business to the foreign persons involved in the transaction or certain foreign persons in the ownership chain.  The article details the new test to be applied to determine whether a mandatory filing is required.  Consultation of the proposed rule change runs to 22 June.

http://www.torrestradelaw.com/posts/CFIUS-and-Export-Controls%3A-A-Detailed-Analysis-of-the-Proposed-Mandatory-Filing-Changes/208

COVID-19: ARE YOUR TERMS AND CONDITIONS READY FOR TRADE POST-LOCKDOWN?

On 21 May, an article from Ince posed this question, as well asking such things as: can I make my contract conditional on the COVID-19 restrictions being lifted? 

https://www.incegd.com/en/knowledge-bank/covid-19-are-your-terms-and-conditions-ready-for-trade-post-lockdown-?

ISRAEL: BENJAMIN NETANYAHU TRIAL BEGINS AT JERUSALEM DISTRICT COURT

On 23 May, various media reported that, after entering the record books last year as Israel’s longest-serving prime minister, Benjamin Netanyahu will once again make history when he becomes the country’s first sitting leader to go on trial.  He is to appear in Jerusalem’s district court for arraignment on a series of corruption charges.

https://www.dw.com/en/benjamin-netanyahu-corruption-trial-to-begin-in-israel/a-53532187

https://www.npr.org/2020/05/23/860166840/what-to-know-as-israels-netanyahu-goes-on-trial-for-corruption-charges

FATF EVALUATION OF RUSSIA

Tom Keatinge of RUSI had alerted everyone to the November issue of Financial Security from the Russian Federal Financial Monitoring Service which is concerned with the FATF evaluation of Russia, with on-site visits in March 2019.  The Service’s website includes links to Russia’s money laundering and terrorist financing national risk assessments.  The mutual evaluation report was published in December.

http://www.fedsfm.ru/content/files/documents/2020/fb25eng.pdf

http://www.fedsfm.ru/en/financial%20security

http://www.fatf-gafi.org/countries/n-r/russianfederation/documents/mer-russian-federation-2019.html

US NAVY SHIP TAKES DOWN DRUG VESSEL, SEIZES 1.5 TONS OF COCAINE

On 22 May, an article from the US Department of Defense published an article, with great photographs, saying that the guided-missile destroyer USS Pinckney, with an embarked US Coast Guard law enforcement detachment team, seized an estimated 3,000 lb of cocaine in the eastern Pacific Ocean.  The cocaine was aboard a small, low-profile vessel.

USN

https://www.defense.gov/Explore/News/Article/Article/2195112/navy-ship-takes-down-drug-vessel-seizes-15-tons-of-cocaine/

CROWDFUNDING-AN UNORTHODOX WAY OF MONEY LAUNDERING?

An article from January, republished on LinkedIn, claiming that, in a growing number of cases, crowdfunding websites are being used for illicit purposes — including money laundering.  It says that there are more than 450 crowdfunding platforms currently in existence and a World Bank report states that revenue from this method could reach $96 billion by 2025.

https://www.linkedin.com/pulse/crowdfunding-an-unorthodox-way-money-laundering-habib-cams-mba/

 

 

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PAPUA NEW GUINEA’S EX-PM PETER O’NEILL ARRESTED OVER CORRUPTION

On 23 May, Al Jazeera reported that Peter O’Neill, the former prime minister of Papua New Guinea who stepped down in 2019, has been arrested over corruption allegations after arriving back in the country, and in a case which is part of an investigation into the alleged unauthorised purchase of 2 Israeli generators while he was in power.

https://www.aljazeera.com/news/2020/05/papua-guinea-pm-peter-arrested-corruption-200523105245406.html

 

 

 

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US IMPOSES EXPORT CONTROLS ON 24 CHINESE ENTITIES FOR “SUPPORTING PROCUREMENT OF ITEMS FOR MILITARY END-USE IN CHINA”

Also on 23 May, the South China Morning Post reported that the US Commerce Department announced that 24 Chinese entities, businesses and government institutions, had been added to the Entity List, imposing additional licence requirements on, and limits the availability of most licence exceptions for, exports, re-exports, and transfers (in-country) to listed entities.  The 24 included the software giant Qihoo 360 Technology.

https://www.scmp.com/business/companies/article/3085788/us-slaps-sanctions-33-chinese-companies-and-institutions

https://www.commerce.gov/news/press-releases/2020/05/commerce-department-add-two-dozen-chinese-companies-ties-wmd-and

 

 

 

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US: EXPORT CONTROLS IMPOSED ON 9 CHINESE ENTITIES FOR ALLEGED HUMAN RIGHTS ABUSES

On 23 May, the South China Morning Post and others reported that the Institute of Forensic Science under the Chinese Ministry of Public Security, and 8 companies were added to a list of those with restricted access to US technology because they are “complicit in human rights violations and abuses … against Uygurs, ethnic Kazakhs, and other members of Muslim minority groups in the Xinjiang Uygur Autonomous Region”.  The additions add to the 28 listed in October.  They have been added to the Entity List, and this imposes a restriction on the export of US items subject to the Export Administration Regulations (EAR) to persons or organisations reasonably believed to be involved, or to pose a significant risk of being of becoming involved, in activities contrary to the national security or foreign policy interests of the US. The EAR imposes additional licence requirements on, and limits the availability of most licence exceptions for, exports, re-exports, and transfers (in-country) to listed entities.

https://www.commerce.gov/news/press-releases/2020/05/commerce-department-add-nine-chinese-entities-related-human-rights

https://newsinfo.inquirer.net/1279879/us-to-sanction-nine-chinese-entities-for-rights-violations

https://www.scmp.com/business/companies/article/3085788/us-slaps-sanctions-33-chinese-companies-and-institutions

 

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LIBYAN MERCENARIES USED RHIB SUPPLIED BY MALTA ARMS DEALER

On 15 May, Malta Today reported that a UN report said that a Maltese arms and logistics supplier charged with violating sanctions for providing 2 RHIBs used by mercenaries in Libya, was servicing a UAE group called Opus Capital, which is believed to be used as a front for the UAE support of Khalifa Haftar’s Libyan National Army.

https://www.maltatoday.com.mt/news/national/102347/malta_arms_dealer_supplied_rhibs_to_company_un_report_says_was_backing_khalifa_haftar

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 22

Panama Covid-19 update – thunder and lightning and long and heavy rain today – good job not able to go out to enjoy/endure it.  Meanwhile, another 151 new cases registered (10,267 total now) and 4 more fatalities (up to 295 now).

22 May 2020

INTELLIGENCE AGENCY WARNS OF SECURITY CONCERNS LINKED TO FOREIGN INVESTMENT IN CANADA

On 21 May, CBC reported that the CISI warns of economic espionage’s ‘damage to our collective prosperity is very real’.  It has issued a warning about the national security risk posed by some foreign investment — but isn’t saying which state-owned enterprises and foreign state actors it’s particularly worried about.  CSIS’s annual report also touched on the threat posed in Canada by violent, ideologically-motivated individuals, including those associated with the so-called “incel” online movement.  Incel refers to “involuntary celibates” – members of an online subculture who define themselves as unable to find a romantic or sexual partner despite desiring one, a state they describe as “inceldom”.

https://www.cbc.ca/news/politics/csis-report-foreign-investment-1.5577049

The report is at –

https://www.canada.ca/content/dam/csis-scrs/documents/publications/PubRep-2019-E.pdf

HOW A RUSSIAN TYCOON’S BIG US CANNABIS BET WENT UP IN SMOKE

On 21 May, Rferl reported on the Genius Fund in California, whose billionaire owner, Dmitry Bosov, now deceased, had blown $165 million on the hemp-growing operation without generating much revenue.  Bosov was one of the oligarchs who made a fortune in the wild 1990s in Russia.  It reports on a lawsuit which reveals that ownership of his organisation was transferred in March to his Soviet-born, New Jersey-based friend and adviser – a man with an opaque employment history who goes by multiple names and who, in 2018, was caught up in a bizarre international chess scandal involving a long-time Russian regional leader who is under US sanctions and once claimed to have been abducted by space aliens.

https://www.rferl.org/a/not-so-green-on-the-other-side-how-a-russian-tycoon-s-big-u-s-cannabis-bet-went-up-in-smoke/30626340.html

UK: SECRET DOCUMENTS SHOWING HOW A LONDON COUPLE BROUGHT AT LEAST £14 MILLION OF ALLEGEDLY CORRUPT MONEY FROM AN “AZERBAIJANI LAUNDROMAT

On 21 May, the Evening Standard reported that a judge has ruled that the newspaper had an “important story to tell” as she granted permission for access to court papers submitted by the NCA into the husband and wife at the centre of “dirty money” allegations.  However, the judge also ordered that the couple’s names be kept secret at least until a later hearing.  She also ordered a temporary “stay” on the release of the full details of the allegations against them because of a pending judicial review over a separate legal issue relating to the case.

https://www.standard.co.uk/news/crime/standard-victory-in-secret-papers-fight-over-14m-dirty-cash-case-a4446946.html

PUSH PAYMENT FRAUD – HOW TO SPOT IT & HOW TO STOP IT UNDER COVID-19

On 21 May, an article from Baker McKenzie says that COVID-19 crisis presents fraudsters with a ripe opportunity to defraud businesses at a time when finances are tight, attention and resources are focused elsewhere, key staff may be absent and financial controls are under pressure.  It explains what push payment fraud is, and the rise in the fraud.  It goes on to explain how to spot and stop it, and what to do if it is suspected.

https://insightplus.bakermckenzie.com/bm/resilience-recovery-renewal/united-kingdom-warning-push-payment-fraud-how-to-spot-it-how-to-stop-it-covid-19

WHY ISOTONITAZENE IS NOT YET THE “NEW FENTANYL”

On 21 May, Filter Magazine carried an article saying that isotonitazene, a novel psychoactive substance (NPS), went from being practically unheard of to being implicated in a fatal overdose spike in the Midwest US amid warnings about the emergence of the designer drug.  Aka “iso”, it was first detected on-the-ground as early as March 2019.  The article says that anecdotal drug-user reports seem to signal that the already-limited presence of iso in the US is unlikely to surge anytime soon, and that may be because the producer of the novel opioid has allegedly discontinued it.

https://filtermag.org/isotonitezene/

CAYMAN LAWMAKERS PASS RAFT OF AML BILLS

On 22 May, Cayman Compass reported that Members of the Legislative Assembly have adopted 4 Bills related to Cayman’s AML/CFT regime.  Amendments to the Companies Law and the Limited Liability Companies Law introduce stricter administrative fines for Cayman’s beneficial-ownership regime, and ensure basic regulatory powers are listed on a company register and made available for public inspection.  Changes to the Trusts Law and the Banks and Trust Companies Law provide clarification for individuals conducting trustee services as a business.

https://www.caymancompass.com/2020/05/22/lawmakers-pass-raft-of-anti-money-laundering-bills/

UK: MONEY LAUNDERING – ESTATE AGENCY OR LETTING AGENCY BUSINESSES INFORMATION UPDATED

On 22 May, updated information from HMRC has been published for letting agency businesses, to help them decide if they need to register for money laundering supervision.

https://www.gov.uk/guidance/registration-guide-for-estate-agency-businesses#history

PIRATES ATTACKED A TANKER CLOSE TO SHORE OFF PORT HARCOURT

On 22 May, Defence Web reported that the Nigerian flagged tanker Preyor 1 radioed it was under attack and a ransom of $25 000 asked for. It is not clear from the report whether the ransom was paid, the ship released or whether it was boarded by Nigerian Navy marines. Before this, the Chinese-flagged fishing vessel Hailufeng 11 was hijacked with 18 crew members. All crew members were released unharmed and 10 suspected pirates apprehended.

https://www.defenceweb.co.za/security/maritime-security/pirates-strike-off-nigeria-2/

https://insurancemarinenews.com/insurance-marine-news/chinese-fishing-trawler-hijacked-quickly-rescued-by-nigerian-navy/

UK: FOOD FRAUD CONTINUES TO BE AN ISSUE IN THE GLOBAL FOOD SUPPLY CHAIN

On 22 May, a briefing paper from the Parliamentary Office of Science and Technology provides an overview of food fraud, including its drivers and impacts. It discusses methods for food authenticity testing, broader strategies to prevent food fraud and impacts of EU exit.  It explains that food fraud encompasses a range of activities including intentional adulteration or substitution of ingredients and mislabelling of food products and estimates of its worth range from $6.2 billion to $40 billion. Modern food supply chains and manufacturing infrastructure have greatly increased opportunities for it to occur, its scale and impact.  Examples of high-profile cases of food fraud include the addition of undeclared horsemeat to a variety of beef products in the UK and Europe in 2013, addition of melamine to baby formula in China in 2008 and the presence of other ingredients (including olive and myrtle leaves) in around one in four UK samples of oregano in 2016.

https://researchbriefings.files.parliament.uk/documents/POST-PN-0624/POST-PN-0624.pdf

DATABASE EXPOSES OFFSHORE HOLDINGS OF PROMINENT GERMANS

On 22 May, Der Spiegel reported that a group of internet activists has posted data from a Bahamas corporate registry online and searches of the database have turned up a number of prominent Germans whose offshore holdings weren’t previously known to the public.

https://www.spiegel.de/international/database-exposes-offshore-holdings-of-prominent-germans-a-065050b7-88f9-48b3-83b9-d474599de2ed

TEXAS MAN USING ONLINE NAME GENERATOR LATEST TO BE CHARGED WITH PPP LOAN FRAUD

On 22 May, an article from Foley Hoag LLP reported that Samuel Yates, a Texas man, allegedly used an online name generator to make up the names of hundreds of employees in an effort to obtain a $5 million loan.  Despite not employing anyone, Yates’ application allegedly claimed that he employed 400 people and had $2 million in payroll expenses.

https://www.jdsupra.com/legalnews/texas-man-using-online-name-generator-88556/

CHINESE NATIONAL IN US ARRESTED FOR ALLEGED ATTEMPTS TO ILLEGALLY OBTAIN $20 MILLION THROUGH COVID-19 SMALL BUSINESS LOAN PROGRAMMES

On 22 May, Kenneth Rijock in his blog reported that Muga Ma, aka Hummer Mars, is said to have sought government-guaranteed loans by means of false and fraudulent pretences and to have made false representations, alleging that some of his company’s business possessed a vendor contract with the State of New York to supply test kits and personal protective equipment, when he was not a registered vendor.  Ma allegedly falsely claimed that he had hundreds of employees, and presented fraudulent and doctored banks records, tax record, insurance records, payroll records, and audited financial statements to five lender banks.

http://rijock.blogspot.com/2020/05/chinese-national-seeks-to-defraud-us.html

ROADMAP LEADS WAY TO DIGITAL BILLS OF LADING

On 22 May, Lloyds Loading List reported that the Digital Container Shipping Association is launching a process to establish the open collaboration it says is necessary to achieve full adoption of electronic bills of lading.

https://www.lloydsloadinglist.com/freight-directory/news/Roadmap-leads-way-to-digital-bills-of-lading/76650.htm#.Xsfh80BFweE

SAUDI ARABIA LAUNCHED 117 COVID-19 GRAFT PROBES DURING RAMADAN

On 21 May, OCCRP reported that Saudi Arabia has initiated no less than 117 investigations into administrative and financial corruption related to the COVID-19 pandemic during the past month of Ramadan, the Control and Anti-Corruption Authority has said.

https://www.occrp.org/en/daily/12394-saudi-arabia-launched-117-covid-19-graft-probes-during-ramadan

UK “GLOBAL TARIFF” TO APPLY FROM 1 JANUARY 2021

An article from Dentons on 22 May considers the Tariff to replace the EU External Tariff from 1 January and what effect this will have.

https://www.dentons.com/en/insights/alerts/2020/may/22/uk-announces-global-tariff-to-apply-from-1-january-2021

UK AND EU CLASH OVER CRIME-FIGHTING DATABASE IN BREXIT TALKS

On 22 May, the Guardian reported on a dispute between the UK and EU in Brexit negotiations over the Schengen Information System (SIS II) database.  The UK is set to lose access to the database where police agencies share information.  UK police and Border Force were the 3rd largest user of the system in 2019 and issued over 36,000 alerts for persons and over a quarter of a million for vehicles.

https://www.theguardian.com/politics/2020/may/22/uk-and-eu-brexit-talks-clash-over-crime-fighting-database

CHINESE STEEL TRADE BODY SEEKS SUPPORT TO OPEN COUNTRY FOR SCRAP IMPORTS

On 22 May, Hellenic Shipping Report said that the China Metallurgical Information and Standardization Institute (CMISI), has begun to rally support from industry participants to accelerate its appeal for the country to open its doors for ferrous scrap imports.  The article explains that opposition to scrap imports began in 2017, as China sought to prevent itself being the region’s dumping ground for waste. Various bans and restrictions covering scrap took effect at the end of December 2018, and later widened in coverage to include more grades from July 2019.

https://www.hellenicshippingnews.com/chinese-steel-body-rallies-support-to-open-country-for-scrap-imports/

US CONSIDERING SANCTIONS ON INDIA OVER RUSSIAN MISSILE DEAL

On 22 May, Export Compliance Daily reported that the Trump Administration was said to be still considering imposing sanctions on India in retaliation for its purchase of a Russian air-defence missile system.

https://exportcompliancedaily.com/

POLAND’S HEALTH MINISTER DENIES CRONYISM AFTER GOVERNMENT BUYS “USELESS” MASKS FROM FAMILY FRIEND

On 15 May, Notes from Poland reported that Poland’s health minister has denied accusations of cronyism, after a newspaper uncovered evidence showing that his department had purchase over 100,000 masks from a family friend, but which turned out to be “useless”.  The minister subsequently resigned.

https://notesfrompoland.com/2020/05/15/polands-health-minister-denies-cronyism-after-purchase-of-useless-masks-from-family-friend/

HAS CORONAVIRUS BOOSTED MARITIME PIRACY?

On 19 May, Homeland Security Today carried an article which considers the impact of COVID-19 on maritime piracy, now and in the future.  It is said that, already, the first three months of 2020 have seen a 24% increase in pirate attacks and attempted attacks, over the same period in 2019, and the author of the article says that he worries that the coronavirus pandemic may make piracy even more of a problem in the coming months and years.  It concludes that, even with the early numbers suggesting an increase for 2020, global piracy still isn’t as high as it was during the Somali peak from 2009 to 2012 – but if economic conditions worsen around the globe and ships look like easy targets, more desperate people may turn to piracy, or ramp up their existing efforts in an attempt to survive.

https://www.hstoday.us/subject-matter-areas/transportation/has-coronavirus-boosted-maritime-piracy/

SOFTWARE ENGINEER CHARGED IN WASHINGTON STATE WITH COVID-RELIEF FRAUD

On 22 May, the DoJ reported that Baoke Zhang, 35, a software engineer, was charged in a complaint for allegedly filing fraudulent bank loan applications seeking more than $1 million in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

https://www.justice.gov/opa/pr/software-engineer-charged-washington-covid-relief-fraud

HOLLYWOOD FILM PRODUCER CHARGED WITH $1.7 MILLION COVID-RELIEF FRAUD

On 22 May, a DoJ news release reported that William Sadleir, 66, of Beverly Hills, has been charged with allegedly filing bank loan applications fraudulently seeking more than $1.7 million dollars in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

https://www.justice.gov/opa/pr/hollywood-film-producer-charged-17-million-covid-relief-fraud

UKRAINE: HEAD OF NATIONAL ANTI-CORRUPTION BUREAU DECLARED PLOT OF LAND THAT HE ILLEGALLY SOLD TO RUSSIANS 2 YEARS AGO

On 22 May, 112 UA claimed that the director of NABU, Artem Sytnyk, declared a land plot that he actually sold to the Russians in occupied Crimea and paid taxes and fees to the budget of the Russian Federation. For providing false information in the declaration, he faces up to 2 years in prison.

https://112.international/society/nabus-head-declared-plot-of-land-that-he-illegally-sold-to-russians-2-years-ago-51560.html

SEC FILES EMERGENCY ACTION AND TEMPORARY RESTRAINING ORDER AND ASSET FREEZE AGAINST A CALIFORNIA-REGISTERED INVESTMENT ADVISER AND HIS ENTITIES TO HALT AN ONGOING PONZI SCHEME TARGETING SENIOR CITIZENS IN SOUTHERN CALIFORNIA

On 22 May, a release on Mondo Visione reported that the SEC has announced that it has filed an emergency action and obtained a temporary restraining order and asset freeze against a California-registered investment adviser and his entities to halt an ongoing Ponzi scheme targeting senior citizens in Southern California.  The Complaint names Paul Horton Smith Sr, who is said to have offered and sold securities in his company Northstar Communications LLC, and used his investment advisory firm eGate LLC and insurance and estate planning company Planning Services Inc to market the securities.

https://mondovisione.com/media-and-resources/news/sec-shuts-down-fraudulent-investment-adviser-targeting-senior-citizens/

 

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AVIATION TYCOON ORDERED TO PAY $4 TO SOVEREIGN FUND MILLION OVER FRAUD AND BRIBERY DEALINGS

On 22 May, The National in UAE reported that a controversial US-Iranian aviation tycoon, Farhad Azima, 79, has been ordered to pay damages of more than $4 million over a series of plots to fleece the sovereign wealth fund of Ras Al Khaimah of millions of dollars.  Mr Azima said he would appeal against the ruling.

https://www.thenational.ae/world/europe/aviation-tycoon-ordered-to-pay-rakia-4m-over-fraud-and-bribery-dealings-1.1023413

 

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UK JOINT MONEY LAUNDERING STEERING GROUP CONSULTS ON POOLED CLIENT ACCOUNTS GUIDANCE

On 22 May, an article from Shearman & Sterling reported that the JMLSG has launched a consultation on draft guidance on Pooled Client Accounts – being a bank account opened with a financial institution by a customer, to administer funds that belong to the customer’s clients.  The consultation closes on 10 June.

https://finreg.shearman.com/UK-Joint-Money-Laundering-Steering-Group-Consult

The consultation paper is at –

https://secureservercdn.net/160.153.138.163/a3a.8f7.myftpupload.com/wp-content/uploads/2020/05/Consultation-version_Part-I-Chapter-5-Annex-5-V_PCAs_Board-approved.pdf

 

 

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FRONTEX RECRUITS FIRST WAVE OF EU BORDER AND COAST GUARD STANDING CORPS

On 21 May, Homeland Security Today reported that Frontex, the European Border and Coast Guard Agency, has extended job offers to candidates to become the first members of the European Border and Coast Guard standing corps, the EU’s first uniformed law enforcement service.  The first batch of more than 280 selected candidates have received job offers.  The standing corps will be composed of Frontex and EU Member States’ officers, who will at any time be able to support the Member States facing challenges at their external borders.

https://www.hstoday.us/subject-matter-areas/border-security/frontex-recruits-first-wave-of-european-border-and-coast-guard-standing-corps/

See also –

https://europa.eu/european-union/about-eu/agencies/frontex_en

 

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OFAC ADDS NAMES OF 2 SENIOR OFFICIALS TO NICARAGUA SANCTIONS

On 22 May, OFAC advised that Ivan Adolfo ACOSTA MONTALVAN and Julio Cesar AVILES CASTILLO have been added to OFAC’s SDN List.  They are said to be senior government officials supporting the corrupt Ortega regime.  The US Treasury says that, since April 2018, the Ortega regime has cracked down on political opposition, leading to more than 300 deaths, 2,000 injuries, hundreds of political and civil society actors imprisoned, and over 100,000 refugees fleeing the country.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200522.aspx

https://home.treasury.gov/news/press-releases/sm1019

 

 

 

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COLOMBIA ARRESTS 2 MAYORS, SEEKS ARREST OF 8 MORE OVER CORONAVIRUS CORRUPTION

On 22 May, Colombia Reports reported that Colombia’s prosecutor general has announced that 2 mayors have been arrested and another 8 would be arrested soon in a crackdown on corruption with coronavirus emergency funds.  Another 3 mayors were indicted on corruption charges, but will be allowed to remain free for the duration of their trial.  3 governors had been called in for questioning over their alleged attempts to embezzle emergency aid.

https://colombiareports.com/colombia-arrests-two-mayors-seeks-arrest-of-8-more-over-coronavirus-corruption/

 

 

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UK COURT THROWS OUT NIGERIAN OIL CORRUPTION CASE AGAINST SHELL AND ENI

On 22 May, Reuters and others reported that the High Court has dismissed a $1.1 billion case Nigeria had brought against Royal Dutch Shell and Eni related to a dispute over the OPL 245 oilfield, while a related trial in Italy continues.  The OPL 245 oilfield is also central to a corruption trial in Milan in which former and current Shell and Eni officials are on the bench, as well as court proceedings Nigeria started against JP Morgan, which processed some of the payments in question.

https://uk.reuters.com/article/uk-eni-shell-nigeria-court/uk-court-throws-out-nigerian-oil-corruption-case-against-shell-eni-idUKKBN22Y1PY

 

 

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UK ADDS 1 NAME TO ISIL/AL-QAIDA SANCTIONS LISTS

Following the decision of the UN on 21 May, on 22 May a Notice from HM Treasury advised that Amir Muhammad Sa’id Abdal-Rahman AL-MAWLA had been added to the UK Consolidated List.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/887040/Notice_ISIL_UN_220520.pdf

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US CRACKS DOWN ON SMUGGLING OF HAIRY-CLAWED MITTEN CRAB

On 22 May, National Geographic reported that, concerned about what might happen if a Chinese delicacy overruns the wild, officials ramp up investigations to halt imports.  The crabs were being imported by Asian markets and food suppliers to be sold in cities in the US.  It says that mitten crabs prey on local wildlife, they tunnel into the soft mud along riverbanks, triggering erosion; and they also pose a health threat – eaten raw or lightly cooked, they can transmit a parasite that attacks human lungs.  It says that in China a giant hairy crab-shaped museum exists, and that live mitten crabs have even been sold from refrigerated vending machines.  A startling photo shows part of the outcome of Operation Hidden Mitten, a joint investigation by the Fish and Wildlife Service and US Customs and Border Protection, seized nearly 15,000 live Chinese mitten crabs at multiple ports in Autumn 2019.

https://www.nationalgeographic.com/animals/2020/05/us-authorities-crack-down-on-smuggling-of-mitten-crabs/

 

 

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AUSTRALIA: CAN A COMPANY BE A SHADOW DIRECTOR OF ANOTHER COMPANY?

On 19 May, an article from Hall & Wilcox reflected on a recent High Court case.  It explains that to be considered a shadow director of a company, the directors of that company (acting as a board) must be ‘accustomed to act’ in accordance with that person’s instructions or wishes.  It then explains that, although a corporation or other body corporate cannot formally be appointed to the position of a director, a company can be a shadow director of another company.  The article says that it is important for companies (and individuals) to be aware of their relationship with, and influence over, the board of a company, and understand the risk of being deemed to be a director of that company and, among other things, a shadow director may be liable for insolvent trading of a company.

https://hallandwilcox.com.au/thinking/can-a-company-be-a-shadow-director-of-another-company/

 

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 21

Panama Covid-19 update – First the good news, Panama and Costa Rica have seemingly settled their dispute on trucks crossing the border; and elsewhere it is reported that complaints of transgender people have been, or are being, addressed (with only “men” allowed out one day, and “women” the next, where does a transgender or persons in the process of changing fall?).  However, we have passed the 10,000 cases barrier, with 139 new cases taking us to 10,116, with 4 more fatalities taking that total to 291.

As elsewhere, there have seemingly been moans on social media, asking why the lockdown is tighter here than in other places.  Apart from saying that the US and UK are not models to follow, with proportionally far worse deaths etc, people don’t seem to realise that the government action has meant that the medical services, and especially the ICU, have not been overrun.  If we had the sort of levels the US, UK and others have endured, there might not be around 70 people needing ICU places, but 10 times that – far more beds than could be available, with the same applying to others needing hospitals and medical care short of ICU treatment…

21 May 2020

VATICAN FINANCES, WHAT IS GOING ON?

On 20 May, the Catholic News Agency carried an article saying that a report in the Corriere della Sera sheds new light on the story of the real estate purchased by the Vatican Secretariat of State, saying it sheds new light on an affair.  It says that the purchase is at the centre of an intricate Vatican judicial affair, which led to searches in the Secretariat of State and the Vatican Financial Information Authority and the suspension of 5 Vatican officials, plus another suspended during the investigation.

https://www.catholicnewsagency.com/column/vatican-finances-what-is-going-on-sloane-avenue-and-more-4174

CLAIM THAT RUSSIAN OLIGARCH RECEIVED $50 MILLION “ANTIQUITIES” SHIPMENT LABELLED “FABERGE” AT PANAMA ADDRESS

The Intercept on 20 May carried an article about a shipment sent in April 2018 to Lamesa Arts Inc, a company listed in Panama and owned by Viktor Vekselberg, a Russian oligarch worth $13 billion.  Earlier that month Vekselberg had been placed under sanctions by the US government, the sanctions targets included Vekselberg and Renova Group, his holding company.  3 weeks after sanctions were announced, the Fabergé shipment was bound for Panama.

https://theintercept.com/2020/05/20/sanctions-russian-oligarch-vekselberg-faberge-eggs/

UK: CORPORATE INSOLVENCY AND GOVERNANCE BILL – MEASURES ANNOUNCED BY THE GOVERNMENT WILL HELP TO RELIEVE THE BURDEN ON BUSINESSES DURING THE COVID-19 OUTBREAK

A news release on 21 May from Companies House said that the measures in this Bill will relieve the burden on businesses during the coronavirus (COVID-19) outbreak and allow them to focus all their efforts on continuing to operate.  The Bill will introduce – temporary easements on filing requirements and AGM; new corporate restructuring tools to the insolvency regime to give companies the time they need to maximise their chance of survival; and temporarily suspend parts of insolvency law to support directors during this difficult time.

https://www.gov.uk/government/news/how-the-corporate-insolvency-and-governance-bill-will-help-your-business

https://www.pinsentmasons.com/out-law/analysis/corporate-governance-insolvency-bill

CARDIFF MAN JAILED IN SPAIN FOR TERROR OFFENCES

On 18 May, the BBC reported that a web designer from Cardiff has been jailed for 7 years in Spain for financing and supporting terrorism.  Ataul Haque and his brother Siful Sujan are said to have transferred funds and hi-tech equipment to Islamic State (IS) in Iraq and Syria.  Haque, who was originally from Bangladesh, was arrested in 2017 after his home in Spain, was raided by police. Haque was listed as a director of the now dissolved Cardiff-based company, Ibacstel.

https://www.bbc.com/news/uk-wales-52704166

SEC ALSO INVESTIGATING POTENTIAL US FEDERAL SECURITIES LAW VIOLATIONS BY PPP BORROWERS

On 21 May, Cooley reported that it is not just the DoJ that’s looking into PPP loans – although there appears to be plenty of that going on – the SEC’s Division of Enforcement is also conducting an investigation into certain PPP loan recipients to determine whether there have been violations of the federal securities laws.

https://cc.cooley.com/2020/05/21/sec-enforcement-investigating-potential-federal-securities-law-violations-by-ppp-borrowers/

ISRAEL: CONSULTATION ON DRAFT INSTRUCTIONS FOR CUSTOMS ENFORCEMENT OF CIVILIAN EXPORT CONTROLS

On 20 May, Herzog, Fox & Neeman published an article saying that on 18 May the Israeli Ministry of Economy and Industry (MOE) issued for public comment draft enforcement instructions for the Israeli Customs Administration. The goal of these instructions is to provide clarification to Customs regarding the enforcement of civilian export controls. It explains that Israel has 2 separate export control regimes – one regulates controlled defence exports and is administered by the MoD, and the other regulates controlled civilian exports (including dual-use goods) and is administered by the MOE. The distinction between these regimes is similar to the EAR/ITAR distinction under US export control laws.  The article says that the MOE export control department has been undergoing reform. These draft instructions are just one example of numerous efforts by the MOE to strengthen the civilian export control. The consultation runs to 8 June.

https://www.lexology.com/library/detail.aspx?g=7a3a1dc5-f6ec-4cfa-8ca7-6529e2537cff

GREECE: POLICE BREAK UP HUGE COUNTERFEIT TOBACCO FACTORY

On 21 May, the daily Mail reported that police in Greece have seized 21 tonnes of imported tobacco at a warehouse near Athens that was to be used to make counterfeit cigarettes.  It is said that Greece and Bulgaria have the highest smoking rates in the EU.

https://www.dailymail.co.uk/wires/ap/article-8344017/Greece-Police-break-huge-counterfeit-tobacco-factory.html

US TAPS NEW TOOLS TO FIND FRAUD IN VOLATILE COMMODITIES MARKET

On 21 May, Reuters reported that the Commodity Futures Trading Commission (CFTC) and DoJ had improved data analysis capabilities to enable it to detect and prosecute increasingly sophisticated forms of manipulation in the commodities futures markets which for decades have gone under-detected, according to officials and industry experts.  The DoJ fraud division is also said to be improving its capabilities with the creation of a sub-unit specialising in combating commodities fraud.  The DoJ is said to have recently targeted “spoofing,” whereby futures traders falsely create the impression of strong demand or supply and then capitalize upon the market reaction.  The article also says that the DoJ has increasingly worked in parallel with the CFTC, a civil agency, which over the past 3 years has gathered more detailed daily trading data from the exchanges it supervises.  The CFTC has detected traders placing bogus orders and genuine orders on the same side of the market and then abruptly cancelling the spoof orders to create the impression of a major change in buying or selling interest.

https://www.reuters.com/article/us-usa-doj-trading-insight/traders-beware-u-s-taps-new-tools-to-find-fraud-in-volatile-commodities-market-idUSKBN22X14E

SYRIA’S STOCK EXCHANGE ORDERS SEIZURE OF ASSAD COUSIN’S BANK ASSETS

On 21 May, OCCRP reported that the Damascus Securities Exchange has ordered the seizure of shares owned by Rami Makhlouf, the cousin of Syria’s president and one of the country’s richest tycoons, in 12 foreign banks with local branches.  It is said to be because of a failure to pay tax.  This happened after the government ordered the seizure of his and his family’s assets to guarantee the payment of $261 million owed to the state by his company Syriatel, and Makhlouf was reportedly from bidding on government contracts for 5 years.

https://www.occrp.org/en/daily/12386-syria-s-stock-exchange-orders-seizure-of-assad-cousin-s-bank-assets

HOW COVID-19 IS CHANGING THE ILLICIT DRUGS MARKETS

The UN Office on Drugs and Crime has produced a publication this month which says that measures implemented by governments to curb the COVID-19 pandemic have led to drug trafficking routes by air being disrupted, along with drastic reduction or increased interdiction in trafficking routes over land. Some drug supply chains have been interrupted and traffickers are looking for alternative routes, including maritime routes, depending on the types of drugs smuggled. These are some of the findings from this report on drug market trends during COVID-19, launched by UNODC.

https://www.unodc.org/documents/data-and-analysis/covid/Covid-19-and-drug-supply-chain-Mai2020.pdf

UK: DISCLOSURE PILOT “TO BE EXTENDED FOR ANOTHER YEAR”

On 21 May, Legal Futures reported that the disclosure pilot in the Business and Property Courts is likely to be extended until the end of 2021.

https://www.litigationfutures.com/news/disclosure-pilot-to-be-extended-for-another-year

US ADDS 23 NAMES TO THE LIST OF THOSE BARRED FROM INVOLVEMENT OR LICENSING INVOLVING DEFENCE EQUIPMENT ETC

On 21 May, the EU Sanctions Blog directed one to a Notice from the US State Department concerned 23 people all of whom were convicted in 2019 of violating or conspiring to violate the Arms Export Control Act.  They are thereby barred for 3 years from receiving export licences for defence articles and services and are prohibited from participating directly/indirectly in any transactions or activities regulated under ITAR.

https://www.europeansanctions.com/2020/05/us-state-dept-adds-23-to-arms-exports-statutory-debarment-list/

THE ITALIAN MAFIAS – THE EFFECT OF COVID-19

An article from Aperio Intelligence on 14 May is concerned with the effect of Covid-19 on organised crime groups in Italy article, with a brief analysis which focuses on the ‘Ndrangheta, and concentrates on the impact of the pandemic in Calabria, the southernmost region of mainland Italy, its home region. The article includes the following thumbnail description of the various “mafia” groups in Italy –

The ‘Ndrangheta – native to Calabria, the origins of this OCG date back to the 19th Century. Its operational structures, the ‘Ndrine and Locali, are family-based, and its influence spans from Italy to Germany, France, Belgium, the Netherlands, Switzerland, Canada, the US, Colombia, and Australia, among other countries;

Cosa Nostra – native to the Region of Sicily, its origins can be traced back to the 19th Century. It is the oldest, most traditional, and widespread manifestation of Sicilian OC. Cosa Nostra has infiltrated South Africa, Canada, the US, Venezuela, and Spain, where its emissaries traffic narcotics and facilitate money laundering;

Camorra – native to the Region of Campania, the origins of the Camorra date back to the 17th Century. As opposed to the ‘Ndrangheta and Cosa Nostra, the Camorra maintains a high-profile presence in the territories it permeates, which includes Spain, France, the Netherlands, Germany, Switzerland, the US, and parts of Eastern Europe and South America; and

Sacra Corona Unita – native to the Region of Apulia, its origins can be traced back to the 1980s. It is one component of Apulia’s OC, and has primarily been engaged in smuggling and illegal waste disposal. Outside of Italy, it maintains a presence in the Netherlands, Germany, Switzerland, and Albania.

https://www.aperio-intelligence.com/2020/05/14/covid-19-and-the-ndrangheta/

US LIFTS EXPORT BAN ON BAE SYSTEMS SAUDI ARABIA LTD

On 20 May, the US State Department lifted the “policy of denial” imposed on the company since 2011, imposed after it was found to have conspired to violate the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR) in a 2010 case.  Following a request from BAE, the State Department agreed to rescind the policy of denial concerning BAE SAL, including its divisions and business units, and successor entities.

https://www.federalregister.gov/documents/2020/05/20/2020-10863/bureau-of-political-military-affairs-rescission-of-policy-of-denial-concerning-bae-systems-saudi

OFAC: ZIMBABWE SANCTIONS REGULATIONS AMENDED

ON 21 May, OFAC advised of the new Regulations dated 15 May which contain an amendment to remove a general licence provision that authorised all transactions involving Agricultural Development Bank of Zimbabwe and Infrastructure Development Bank of Zimbabwe.  As this entity has been removed from the OFAC SDN sanctions list, there is no longer any need for the general licence provision in the Regulations.

https://www.treasury.gov/resource-center/sanctions/Programs/Documents/20200521_zimbabwe_reg_amendment.pdf

US: NEED TO ADDRESS AIR CARGO ADVANCED SCREENING (ACAS) PROGRAMME WEAKNESSES

On 16 May, Homeland Security Today reported that the Office of the Inspector General (OIG) at the Department of Homeland Security has released the results of an audit into high-risk cargo entering the US.  It looked at the Air Cargo Advanced Screening (ACAS) programme that the Transportation Security Administration (TSA) and U.S. Customs and Border Protection (CBP) established with the goal of identifying and preventing high-risk cargo from entering the country. However, the audit found that CBP did not always prevent air carriers from transporting high-risk air cargo from foreign airports into the US and identified weaknesses in the ACAS programme’s compliance procedures.  It was also found that that air-carrier compliance rates have worsened since the programme transitioned from a pilot to a federally-mandated programme in June 2018. The OIG made a number of recommendations to TSA and CBP.

https://www.hstoday.us/uncategorized/oig-cbp-and-tsa-need-to-address-air-cargo-screening-program-weaknesses/

The report is at –

https://www.oig.dhs.gov/sites/default/files/assets/2020-05/OIG-20-34-May20.pdf

FÉLICIEN KABUGA: AFRICA’S MOST WANTED MAN, ARRESTED – BUT HOW DID HE EVADE THE LAW FOR SO LONG

In its 23 May edition, The Economist posed this question.  Kabuga is seen as a bankroller of the genocide in which perhaps 500,000 Rwandans were murdered in 1994.  Attempts to capture him before failed (in 2003 an attempt ended with the would-be intermediary being murdered in Nairobi).  He has now been arrested, aged 84, in Paris.  It is reported that last year 8 Western countries mounted a fresh mission to find him. Surveillance operations against Mr Kabuga’s 11 children in Britain, France and Belgium eventually led to his discovery.  He is said to have lived in Switzerland, Germany, Belgium, the DRC and Kenya, as well as France, where the police say he had 28 aliases.

https://www.economist.com/middle-east-and-africa/2020/05/23/felicien-kabuga-africas-most-wanted-man-is-arrested

SCOTLAND BANS COMPANIES BASED IN TAX HAVENS FROM CORONAVIRUS RELIEF FUNDING

On 21 May, the Daily Mail reported that the Scottish parliament has voted to ban companies which are based in tax havens from covid-19 relief funding.  MSP approved the move after measures were put forward by the Scottish Greens.  It is said that this means businesses or individuals who are registered in tax havens, or are a subsidiary of an offshore company, will not be able to get support grants.

https://www.dailymail.co.uk/news/article-8344973/Scotland-bans-companies-based-tax-havens-using-coronavirus-relief-funding.html

DATA BREACHES REPORTED IN JERSEY HAS RISEN BY 40% IN THE PAST YEAR

On 21 May, the Jersey Evening Post reported that, with the new laws instituted in 2018, enquiries, breaches and complaints increased by 300% in 2018.  This trend continued in 2019 with respect to complaints and data breaches, albeit at the slower pace of an increase of 40%.   The Office of the Information Commissioner said that the Office had also investigated our first major breach.

https://jerseyeveningpost.com/news/2020/05/21/data-breaches-increase-by-40/

HONG KONG: SFC APPLIES TO WIND UP COMBEST HOLDINGS LIMITED (COMBEST) AND TO DISQUALIFY THE COMPANY’S EXECUTIVE DIRECTORS

A releasae on Mondo Visione on 21 May announced that the Securities and Futures Commission (SFC) has presented a petition to the Court of First Instance to wind up Combest Holdings Limited (Combest) and to disqualify the company’s executive directors, Mr Liu Tin Lap and Mr Lee Man To, and a suspected shadow director, Mr Ng Kwok Fai to protect the interest of Combest’s shareholders, creditors and the investing public.

https://mondovisione.com/media-and-resources/news/hong-kong-securities-and-futures-commission-seeks-court-order-to-wind-up-combest/

FAA APPROVES CARGO TO RIDE IN PASSENGER SEATS

On 21 May, American Shipper reported that, since domestic passenger carriers began operating some aircraft in cargo-only mode 2 months ago, they have been largely restricted to loading freight in the lower hold where baggage and shipments normally ride.  However, now the FAA has given temporary approval to carry freight in passenger cabins, on seats, and until the end of 2020.  It is said that more than 150 airlines around the world are using “ghost” freighters — no passengers, just cargo — in some form, according to industry experts. International aviation authorities have been quicker than the FAA to authorise cabin modifications for cargo.

https://www.freightwaves.com/news/breaking-faa-approves-cargo-to-ride-in-passenger-seats

 

 

 

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2020 UN NORTH KOREA PANEL OF EXPERTS REPORT: TAKEAWAYS FOR FINANCIAL INSTITUTIONS

On 18 May, an article in ACAMS Today set out to identify the key points for financial institutions from the recent UN Panel of Experts report on the functioning of UN sanctions on North Korea.

https://www.acamstoday.org/2020-un-north-korea-panel-of-experts-report-takeaways-for-financial-institutions/

 

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UN ADDS 1 NAME TO ISIL/AL-QAIDA SANCTIONS LIST

On 21 May, the UN announced that Amir Muhammad Sa’id Abdal-Rahman al-Mawla had been added to its sanctions lists.  He is said to be leader of Islamic State in Iraq Iraq and the Levant.

https://www.un.org/press/en/2020/sc14195.doc.htm

 

 

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Shipping, Sanctions & Crime – Red Flags, Prevention and Detection

On 14 May 2020, 3 US Government agencies – US Treasury, State Department and US Coast Guard, issued a joint Sanctions Advisory which was designed, in large part, to provide those engaged or involved in trade in the maritime industry with further information and tools to counter current and emerging trends related to illicit shipping and sanctions evasion.

These slides in the attached Powerpoint file set out to summarise the Red Flags and advice on how to detect and prevent illicit activity associated with sanctions violations.

 

SHIPPING, SANCTIONS AND CRIME

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ITALY BRIBERY PROBE – SICILY CORONAVIRUS RESPONSE CHIEF DETAINED

On 21 May, the BBC reported that Sicily’s coronavirus co-ordinator and 9 other healthcare officials have been arrested suspected of taking bribes from equipment and services contracts.  It is said that the contracts go as far back as 2016 and total nearly €600 million.

https://www.bbc.com/news/world-europe-52753502

 

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 20

Panama Covid-19 update – “only” 110 new cases reported today, making the approach to the 10,000 mark slower than one might have expected – we are now at 9,977, with 6 more fatalities (taking us to 287 to date) and 68 people in the ICU.  However, neighbour Costa Rica has closed its land border with Panama (an unneighbourly thing to do, you would have thought) – it also closed its border with Nicaragua.  This apparently causes difficulty with the movement and sourcing of some medicines and foodstuffs.

20 May 2020

RAIDS REVEAL MASSIVE FENTANYL PRODUCTION IN MYANMAR

An article in the New York Times on 19 May says that China’s crackdown on makers of the drug, which has fuelled the US opioid crisis, may have simply created opportunities for crime syndicates elsewhere.  A series of raids in Myanmar have resulted in the largest synthetic drug seizure on record in SE Asia including large quantities of fentanyl.  It says that 44 raids conducted by the Myanmar military and police between February and April netted nearly 200 million tablets of methamphetamine, 1,120 lb of crystal methamphetamine, 630 lb of heroin, almost 300 lb of raw opium, 640 lb of opium poppy and 990 gallons of methyl fentanyl. The drugs were worth more than $200 million — far more if measured by street value in the West.

https://www.nytimes.com/2020/05/19/world/asia/myanmar-drug-raid-fentanyl.html

AT&T ANNOUNCES CLOSING OF DIRECTV LATIN AMERICA OPERATIONS IN VENEZUELA

On 19 May, a statement from AT&T in the US announced that the US sanctions on Venezuela have prohibited the broadcast of Globovision and PDVSA’s channels, both of which are required under DIRECTV’s license to provide pay-TV service in Venezuela.  It says that AT&T was forced to close its pay TV operations in Venezuela, a decision that was made by the company’s US leadership team without any involvement or prior knowledge of the DIRECTV Venezuela team.

https://about.att.com/story/2020/directv_latin_america_venezuela.html

SFO CLOSES PROBE INTO ABB’S DEALINGS WITH UNAOIL

On 19 May, the Wall Street journal reported that the SFO began investigating ABB after it disclosed the results of an internal investigation into its business with Monaco-based Unaoil in 2017, which included allegations of improper payments to third parties.  SFO said its preliminary probe didn’t meet certain tests for pursuing a full-fledged prosecution.

https://www.wsj.com/articles/u-k-s-serious-fraud-office-closes-probe-into-abbs-dealings-with-unaoil-11589922794

UK: THE CRIMINAL DISHONESTY TEST – A SEISMIC CHANGE OR A MERE TREMOR?

On 19 May, Bryan Cave Leighton Paisner LLP published a briefing about a recent Court of Appeal case which emphatically endorsed the Ivey test for dishonesty, firmly dismissing the previous two-stage test in Ghosh and, in respect of a charge of conspiracy to defraud, there needs to be no requirement of an “aggravating feature” over and above a dishonest agreement which includes some unlawfulness in its object or means; and does not fall foul of Article 7 of the ECHR.  It starts by explaining that dishonesty is a key element in every offence under the Fraud Act 2006 and a myriad of other offences, including the common law offence of conspiracy to defraud, and that the previous test had applied from 1982.

https://www.bclplaw.com/en-US/insights/the-criminal-dishonesty-test-a-seismic-change-or-a-mere-tremor.html

PODCAST: THE CROOK ACT: TACKLING DEMAND-SIDE BRIBERY

In the latest TRACE podcast, Abigail Bellows with the Carnegie Endowment for International Peace describes how a $5 million surcharge could be levied on FCPA enforcement actions and then deployed quickly to support incipient anti-corruption efforts worldwide. This would address, in part, concerns that the victims of corruption rarely benefit from the substantial sums involved in settlements.

https://traceinternational.org/resources-podcast

NIGERIA: CUSTOMS IMPOUNDS TRUCKLOAD OF CODEINE SYRUP

On 20 May, TVC News reported that a Nigeria Customs Service strike force has impounded a truck loaded with 74,000 bottles of codeine cough syrup concealed in 374 cartons.  Other seizures also revealed the interception of foreign rice, vegetable oil and second-hand clothing.  Codeine is an opiate used to treat pain, coughing, and diarrhoea.

https://www.tvcnews.tv/customs-strike-force-impounds-truckload-of-codeine-syrup-others/

SWEDEN: NEW TEMPLATE FOR EXPORT END-USER STATEMENTS

On 12 May, Baker McKenzie reported that the Inspectorate of Strategic Products in Sweden introduced a new template for end-user statements.  From 1 September only end-user certificates based on the new template will be approved. The new template will be used for both civilian and military end-users/end-uses and can be found on the ISP website.  It explains that exporters of dual-use products are required to obtain information on their customers and to make an assessment regarding the possible risk diversion of exports.  Moreover, it is mandatory for exporters of dual-use items to obtain end-user certificates from the end-user when applying for an individual export licence.  The end-user statement certifies that the exported products will only be used for certain specified purposes and that the products will not be re-exported.  ISP provides templates which exporters are required to use in order to meet the requirements for these certificates.

https://insightplus.bakermckenzie.com/bm/international-commercial-trade/sweden-isp-releases-new-template-for-end-user-statements

WILLIAM HILL SET FOR £150 MILLION VAT REFUND WINDFALL FROM HMRC

On 20 May, various media sources reported that bookmaker William Hill is expected to net a tax refund of between £125 million to – £150 million after HMRC confirmed it would not appeal a court ruling which concluded fixed-odds betting terminals (FOBT) should be exempt from VAT.  HMRC has been fighting the betting industry for years after another bookmaker (Betfred) said it had been overpaying VAT on winnings on FOBT between 2005 and 2013.  It then successfully argued this was wrong because the very same games were exempt if played in casinos or online.

https://egr.global/intel/news/william-hill-set-for-150m-tax-refund-windfall-from-hmrc/

https://www.standard.co.uk/front/william-hill-to-scoop-150-million-after-taxman-overcharges-it-on-vat-a4445526.html

PRESERVING THE JCPOA

An article from ETH Zurich explains why the next 6 months are critical for the survival of the Joint Comprehensive Plan of Action (JCPOA) on Iran’s nuclear programme.  The author highlights how the corona crisis has presented Europe an opportunity to carry out a role in preserving the agreement.

https://css.ethz.ch/en/services/digital-library/publications/publication.html/6520f354-e500-4557-abb3-34fa407af389

CROATIA: FORMER POLITICAL LEADER’S WIFE AMONG MONEY SIPHONING SUSPECTS

On 20 May, Total Croatia News reported that police and the USKOK anti-corruption office have targeted a number of companies and about 30 persons for siphoning money via fictitious invoices – and these are said to include Ana Karamarko, wife of former HDZ president Tomislav Karamarko. It is alleged that those involved are suspected of charging non-existent services via fictitious invoices and tax fraud from 2017 until 2019.  Tomislav Karamarko stepped down as deputy prime minister and HDZ president in 2016.

https://www.total-croatia-news.com/politics/43710-ex-hdz-leader-s-wife-among-money-siphoning-suspects

RUSSIAN BARRIERS AGAINST COUNTERFEITERS ALONG THE NEW SILK ROADS

An article from law firm Gowling WLG published in IAM Media on 20 May says that a recent analysis of infringing shipments entering Russia identified important intermediary transit countries. Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan and Uzbekistan are hubs for illegal trade for Russia. The article explains the routes by which goods get into Russia, saying that the multipoint transit routes and their new directions create challenges for Russian customs control.  However, the article says that Russian Customs can now create special mobile groups that have the authority to stop and check any vehicles that have entered Russia (even those that have already been checked at the border) and over the last 3 years, these have managed to increase the amount of identified and suspended counterfeits several times over.  The article also notes that up to 90% of all international packages and parcels coming into Russia originate from Asia. China, Hong Kong and Singapore using the trading platforms AliExpress, eBay, JD.com and Amazon – with e-commerce boosting considerably the flow.

https://www.iam-media.com/russia-erects-barriers-against-counterfeiters-along-the-new-silk-roads

MOLDOVA CHARGES FUGITIVE OLIGARCH WITH FRAUD

On 20 May, New Europe reported that Moldovan prosecutors have charged tycoon Vlad Plahotniuc, former head of the Democratic Party and one of the country’s richest people, for his role in a massive bank theft.  He fled Moldova last year, denied all charges against him and blamed Russia for the investigation.  He is currently in the US and faces extradition procedures, but Moldova does not have extradition agreements the US – and he also has Romanian and Russian citizenship, and may choose not to return to Moldova.

https://www.neweurope.eu/article/moldova-charges-fugitive-oligarch-with-fraud

UK: COUNTER-TERRORISM AND SENTENCING BILL

On 20 May, a news release from the MoJ claims that this Bill will ensure that the sentences served by terrorists reflects the severity of offending and will strengthen the tools for monitoring them in the community.  It has released a factsheet explaining the Bill.  One element of the Bill sets out to close a gap in existing legislation by enabling the courts to find any offence with a maximum penalty of more than 2 years to have a terrorist connection (i.e. identifying it as an “aggravating factor”). This may result in a higher sentence than would otherwise be the case

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/886136/cts-factsheet.pdf

https://www.gov.uk/government/publications/counter-terrorism-and-sentencing-bill

US: IMPORT DETENTION ORDER TARGETS SEAFOOD FROM TAIWANESE VESSEL ON FORCED LABOUR GROUNDS

On 20 May, Sandler Travis Rosenberg reported that US Customs and Border Protection has issued a new withhold release order against imported goods made wholly or in part with seafood harvested by the Yu Long No. 2, a Taiwanese-flagged fishing vessel.

https://www.strtrade.com/news-publications-withhold-release-import-detention-seafood-Taiwan-vessel-052020.html

US: DEPARTMENT OF LABOR AMENDED GUIDELINES FOR DEVELOPMENT AND MAINTENANCE OF A LIST OF FOREIGN-MADE GOODS IT HAS REASON TO BELIEVE ARE PRODUCED BY CHILD LABOUR OR FORCED LABOUR

On 20 May, Sandler Travis Rosenberg reported that the Bureau of International Labor Affairs is required to take steps to ensure that the goods on this list are not imported into the US if they are made with forced or child labour, including working with producers to help set standards to eliminate the use of such labour.  Legislation requires the production of an updated list every 2 years.

https://www.strtrade.com/news-publications-child-borced-labor-inputs-TVPRA-list-import-052020.html

THE ALTERNATIVE ROUTES FOR COCAINE FROM SOUTH AMERICA IN THE LIGHT OF COVID-19

On 20 May, an article from OCCRP examined the alternative routes traffickers of South American cocaine have adopted, as restrictions on usual sea and air routes resulting from the covid-19 crisis have affected the more usual routing methods.  The alternatives include use of Colombia’s banana exports (that industry being exempt from lockdown), and even human porters carrying the drugs across the Darien mountains and jungle into Panama for onward despatch.

https://www.occrp.org/en/coronavirus/what-lockdown-worlds-cocaine-traffickers-sniff-at-movement-restrictions

COLOMBIA’S COCA ERADICATORS SPARED FROM CORONAVIRUS LOCKDOWN

On 20 May, Insight crime reported that, while it has imposed a stringent coronavirus lockdown, the Colombian government has come under fire for allowing coca eradication campaigns to continue largely unabated, with squads of troops responsible for eradicating coca spared much of the restrictions.  In fact, it says, eradication efforts appear to have increased since the lockdown began.

https://www.insightcrime.org/news/analysis/colombias-coca-eradicators-coronavirus/

14 COUNTRIES FROM WEST AND CENTRAL AFRICAN (WCA) REGION IN WCO-COORDINATED EXERCISE TARGETING COMMODITIES MISUSED BY TERRORISTS, IN PARTICULAR FOR THE MANUFACTURE OF IED

On 20 May, a news release from WCO advised that ALAMBA 2020 took place from 7 to 17 March with the participation of 14 Member countries from West and Central African (WCA) region. The Customs administrations targeted commodities that were misused by terrorists, in particular those diverted for the manufacture of Improvised Explosive Devices (IED) for use in attacks in the region.  A total of 119 seizures were recorded, including: approximately 39 tons of cyanide; 7.8 tons of explosive components; 5,200 metres of detonating cords; 1,052 litres of nitric acid, 660 parts of igniters; and 220 litres of hydrogen peroxide.

http://www.wcoomd.org/en/media/newsroom/2020/may/119-seizures-from-14-wca-countries-during-wco-operation-alamba-2020.aspx

CAMBODIA’S AIR CARGO CONTROL UNIT SUCCESSFULLY TARGETS FALSELY DECLARED COVID-19 TEST KITS ON 8 OCCASIONS

On 20 May, a WCO news release advised that the Air Cargo Control Unit in Phnom Penh airport, established in the framework of the UNODC-WCO Container Control Program (CCP), detected a shipment containing around 100 COVID-19 test kits from Hong Kong, with the shipment was falsely declared as ‘Test Paper Sample’.  This was the the eighth shipment of suspected fraudulent COVID-19 test kits that were detained by this Unit. The shipments came from different countries in the Asia-Pacific region.

http://www.wcoomd.org/en/media/newsroom/2020/may/cambodia-air-cargo-control-unit-successfully-targets-fake-covid-19-test-kits.aspx

US COMMODITY FUTURES TRADING COMMISSION (CFTC): NEW GUIDANCE OUTLINING FACTORS CONSIDERED IN RECOMMENDING CIVIL MONETARY PENALTIES

A release on Mondo Visione on 20 May advised that the CFTC has announced that its Division of Enforcement has issued new guidance outlining factors the Division considers in recommending civil monetary penalties (CMP).  This is the first Division CMP guidance issued publicly since the Commission published its penalty guidelines in 1994.  The staff guidance provides a 3-pronged approach to evaluate the appropriate penalty to recommend to the Commission.

https://mondovisione.com/media-and-resources/news/cftc-division-of-enforcement-issues-civil-monetary-penalty-guidance/

ROSNEFT – CAN YOU DEAL WITH IT?
On 20 May, a short blog post from an analyst on sanctions policy at UK Finance says that recent developments around Rosneft, the Russian state-backed oil giant and its ventures in Venezuela have shed new light on the company; and she says that Rosneft makes for an ideal case study of the eco-system of US sanctions – and reminds one of the nuances between Sectoral Sanctions Identifications (SSI) and Specifically Designated Nationals (SDN).  She points out that while Rosneft itself has not been designated, 2 subsidiaries have been added to the SDN List – being Rosneft Trading SA and TNK Trading International SA, Swiss-based subsidiaries.

https://www.ukfinance.org.uk/news-and-insight/blogs/russian-oil-giant-swiss-daughter-and-venezuelan-dictator

AUSTRALIA: SHIPPER RELIEF AS BIOSECURITY LEVY DROPPED

On 20 May, Loadstar reported on the scrapping of the controversial plan for a biosecurity import levy following industry consultation.  The government had claimed it needed the funds to combat increased bio-threats, entering the country via supply chains.  The levy would have been collected by stevedores and passed down through the supply chain to importers.

https://theloadstar.com/shipper-relief-as-australias-plan-for-biosecurity-levy-is-scrapped/

AS CONFLICT ESCALATES IN LIBYA, THE ECONOMY VEERS TOWARDS CHAOS

On 19 May, a Commentary from US website War on the Rocks says that while Libya’s intensifying civil war and the coronavirus crisis occupy the few headlines the country garners, coverage is scant on the country’s economy, which is in increasing peril.  It says that the issues that the bankers and the politicians are fighting over are complex, representing the extent of dysfunction in Libya’s bifurcated system of governance, but they may well play a decisive role in the trajectory of the conflict.

https://warontherocks.com/2020/05/as-conflict-escalates-in-libya-the-economy-veers-toward-crisis

FinCEN DIRECTOR IDENTIFIES VIRTUAL CURRENCY COMPLIANCE RISKS AND COVID-19 RELATED ISSUES

A Client alert from Crowell Moring on 20 May reported that, on 13 May, the Director of FinCEN, Kenneth Blanco, delivered remarks during the first virtual Consensus Blockchain Conference.  He is said to have called for continued cooperation between the government and the virtual currency industry, cautioning that cybercriminals predominantly use virtual currencies to launder the proceeds of their criminal activities and to purchase the tools needed to conduct them.  He also highlighted 2 specific areas for consideration in the virtual currency space; appropriate AML/CFT controls in place for anonymity-enhanced cryptocurrencies, or privacy coins; and businesses located outside the US complying with BSA rules on AML etc.  The Alert says that the remarks suggest practical issues that virtual currency firms may wish to consider, including the AML/CFT compliance mentioned by Blanco and mechanisms to comply with the Travel Rule.

https://www.crowell.com/NewsEvents/AlertsNewsletters/all/FinCEN-Director-Identifies-Virtual-Currency-Compliance-Risks-and-COVID-19-Related-Issues-at-Consensus-2020-Conference

MATALAN CHIEF SUES PWC CLAIMING IT GAVE HIM BAD ADVICE OVER MONACO TAX HAVEN BILL

On 20 May, the Daily Mail reported that Matalan tycoon John Hargreaves, 76, is suing PwC over claims the accounting firm gave him bad advice before he relocated to Monaco over how he would be able to avoid tax.  He thought he could avoid paying capital gain and income taxes when he sold £237 million worth of shares in the retailer almost 20 years ago.  However, it is said that Hargreaves paid £35 million to HMRC 2 years ago but faces demands for another £135 million.

https://www.dailymail.co.uk/money/markets/article-8341319/Matalan-chief-sues-PwC-Monaco-tax-haven-bill.html

MALAWI SEEKS EXTRADITION OF “CASHGATE” FUGITIVE FROM SOUTH AFRICA

In its 21 May edition, the Nyasa Times reported that the country’s DPP has said that he will seek extradition of the fugitive, Limumbu Karim.  In the cash gate scandal, civil servants and contractors are accused of theft and money laundering in the country’s biggest corruption scandal in 2013.

https://www.nyasatimes.com/malawi-seeks-extradition-of-cashgate-fugitive-limumba-from-south-africa

SWISS PROSECUTOR FACES IMPEACHMENT PROCEEDINGS OVER FIFA PROBE

On 20 May, Swissinfo reported that Swiss Attorney General Michael Lauber faces impeachment proceedings over his handling of a FIFA corruption probe – a first in the history of the federal public prosecutor’s office.  He has come under scrutiny over how his office handled the FIFA corruption investigation and for holding undocumented meetings with FIFA President Gianni Infantino.

https://www.swissinfo.ch/eng/swiss-prosecutor-faces-impeachment-proceedings-over-fifa-probe/45774294

ONE OF RUSSIA’S MOST ADVANCED MISSILE SYSTEMS CAPTURED IN LIBYA

On 19 May, Forbes reported that Turkish-backed Libyan government forces have captured an advanced Pantsir-S1 air-defence system.  The Russian-made system was not supplied by Russia but is believed to have come from the UAE.  The airbase where it was found is controlled by the Libyan National Army (LNA), commanded by Khalifa Haftar.  The Pantsir-S1, known to NATO as the SA-22 Greyhound, combines both guns and missiles. It is reputed to be able to intercept cruise missiles and has been extensively used by Assad’s forces in Syria.

https://www.forbes.com/sites/hisutton/2020/05/19/feared-russian-missile-system-targeted-and-captured-in-libya

US ARRESTS EX-GREEN BERET AND SON ACCUSED OF AIDING GHOSN’S ESCAPE FROM JAPAN

On 20 May, Nikkei Asian Review reported that the 2 men are suspected of smuggling former Nissan chairman out of Japan in box.  Michael Taylor and his son, Peter, are 2 of the 3 men accused of orchestrating an elaborate plot to help former Nissan Motor Chairman Carlos Ghosn escape from house arrest in Japan.

https://asia.nikkei.com/Business/Nissan-s-Ghosn-crisis/US-arrests-ex-Green-Beret-and-son-accused-of-aiding-Ghosn-s-escape

 

 

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BOLIVIA PROBES OFFICIALS OVER VENTILATOR DEAL AFTER PUBLIC OUTCRY AND FIRES HEALTH MINISTER

Reuters and others on 20 May reported that Bolivian authorities have fired the country’s health minister and launched a probe into potential corruption after officials allegedly bought ventilators at inflated prices – $27,683 each, according to press reports.  It is said that 4 health ministry officials had been detained over the scandal and that some officials abroad and intermediaries involved in the deal would also be investigated.  The scandal emerged after Bolivian officials purchased 170 emergency respirators from the Spanish company, GPA Innova.

https://www.trtworld.com/americas/bolivia-fires-health-minister-as-probe-begins-over-ventilator-deal-36490

https://www.reuters.com/article/us-health-coronavirus-bolivia-ventilator/bolivia-probes-officials-over-ventilator-deal-after-public-outcry-idUSKBN22W337

 

 

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UK PUBLISHES UK GLOBAL TARIFF FOR POST-BREXIT IMPORTS

On 19 May, the Department for International Trade published the Tariff which will replace the EU External Tariff after 31 December.  The tariff rates will apply to imports into the UK unless some exemption or preference applies.  It does not cover import VAT and other import changes (such as excise duties on certain goods, like alcohol and tobacco).  Neither does it detail licensing or other restrictions, such as anti-dumping controls.  You can search the new Tariff using an 8-digit commodity code, a production description or a combination of the two things.

https://www.gov.uk/guidance/uk-tariffs-from-1-january-2021

 

 

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OFAC ADDS TO IRAN SANCTIONS LISTS – INTERIOR MINISTER, LAW ENFORCEMENT OFFICIALS AND PRISONS – ON HUMAN RIGHTS GROUNDS

On 20 May, OFAC advised that a number of individual and entities had been added to its sanctions list pursuant to the Countering America’s Adversaries Through Sanctions Act (CAATSA).  The new names include 2 Iranian prisons and the LAW ENFORCEMENT FORCES OF THE ISLAMIC REPUBLIC OF IRAN COOPERATIVE FOUNDATION, as well as an Interior Minister and senior law enforcement officials.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200520.aspx

https://home.treasury.gov/news/press-releases/sm1015

 

 

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BANKS NERVOUS OVER FRAUD LOSSES AS SINGAPORE OIL TRADERS COLLAPSE

On 20 May, Global Trade Review reported on Singapore’s beleaguered commodities trade sector, suffering a string of high-profile company collapses and allegations of fraud.  It says that the oil trading industry has been rocked by the sudden downfall of Hin Leong, founded in 1963 and which grew to become one of Asia’s largest fuel trading houses.  Then another trade faced difficulties after accusations of fraud.  One source quoted says that several examples of fraudulent practices have emerged in the sector.  Banks have been urged to continue support for the sector despite the problems.

https://www.gtreview.com/news/asia/analysis-banks-nervous-over-fraud-losses-as-singapore-oil-traders-collapse/

 

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EU COURT ADVISES AGAINST HEMP-DERIVED OIL IMPORTS BAN

On 20 May, EurActiv reported that the ECJ has said in a non-binding Advocate General Opinion that  prohibiting imports of cannabidiol oil (CBD) from other Member States is contrary to EU law since there is no scientific evidence that hemp-based products have psychotropic effects.  The case concerns the marketing in France of an e-cigarette using CBD oil imported from the Czech Republic, where organic hemp plants were processed.  It is said that the Opinion represents a symbolic victory for the CBD industry, whose European market is expected to grow 400% by 2023.

https://www.euractiv.com/section/health-consumers/news/eu-court-advises-against-hemp-derived-oil-imports-ban/

 

 

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NEW BRAZIL BANK REGULATIONS REQUIRE SIGNIFICANT COMPLIANCE CHANGES

On 20 May, a post on the FCPA Blog says that in October, new regulations from the Brazilian Central Bank will go into effect.  As the post mentions, the new regulations cannot be unconnected to Brazil being due to undergo a FATF evaluation next year.  The post provides an introduction to the new regulation which further increase obligations covering various compliance aspects.

https://fcpablog.com/2020/05/20/new-brazil-bank-regulations-require-significant-compliance-changes/

 

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 19

Panama Covid-19 update – “only” 2 more fatalities today, taking us here to 281 today, with 141 new cases reported, edging us closer to the 10,000 mark at 9,867.  70 people are in ICU.

19 May 2020

US CHARGES IRANIAN COMPANY AND EXECUTIVES WITH SANCTIONS VIOLATIONS

On 19 May, the Wall Street Journal reported that Payment24 allegedly helped Iranian citizens circumvent US sanctions to make purchases from US-based companies 2009-2018.  Seyed Sajjad Shahidian, Vahid Vali and the company, Payment24 have been charged with conspiracy to commit offences against the US, money laundering, identity theft and wire fraud.  Mr Shahidian was arrested in and extradited from the UK.  Services said to have been offered included a “package” consisting of a PayPal account, a fraudulent ID card, a remote IP address from the UAE, a Visa gift card, and tailored advice.

https://www.wsj.com/articles/u-s-charges-iranian-company-and-executives-with-sanctions-violations-11589853084

https://www.europeansanctions.com/2020/05/iranian-ceo-extradited-from-uk-and-charged-with-violating-us-sanctions/

LOS ANGELES-AREA REAL ESTATE AGENT PLEADS GUILTY TO COORDINATING MULTI-MILLION-DOLLAR SCHEME THAT FUNDED MARIJUANA GROW HOUSES

A news release from US Immigration and Customs Enforcement on 18 May advised that Lin Li, aka Aaron Li, 38, a real estate agent pleaded guilty to a federal criminal charge for coordinating a scheme that used millions of dollars to purchase nine residential homes in San Bernardino County that were then converted into illegal marijuana grow houses.  Between May 2013 and September 2017, Li facilitated the purchase by Chinese investors of 9 residential homes in Chino, Chino Hills and Ontario. While exercising control over these properties, Li converted or allowed the conversion of the houses to marijuana grow operations.

https://www.ice.gov/news/releases/los-angeles-area-real-estate-agent-pleads-guilty-coordinating-multi-million-dollar

COMMON LAW ON THE HORIZON FOR HUNGARY?

An article from SMARTLEGAL Schmidt & Partners for the International Law Office on 19 May reflects on a new Act, which entered into force on 1 April and fundamentally reforms the role of judge-made law in Hungary.  The article examines why this landmark Bill was passed, the extent to which it means the adoption of common law and what its potential impact will be on litigation in Hungary.  The Act marks a milestone in the development of Hungarian law (which belongs to the Romano-Germanic legal family), since it is a shift from the above principle according to which law is made by the legislature, towards common law, where the existence of judge-made law is widely accepted.

https://www.internationallawoffice.com/Newsletters/Litigation/Hungary/SMARTLEGAL-Schmidt-Partners/Common-law-on-horizon-New-law-reforming-litigation-enters-into-force

UK GOVERNMENT ISSUES GUIDANCE ON SHARING INFORMATION WITHIN CORPORATE GROUPS FOR AML PURPOSES

On 12 May, MacFarlanes published an article saying that the UK had issued a publication that provides guidance to international corporate groups on sharing information across borders to assist in AML/CFT efforts – a reminder from the UK government that it considers information-sharing to be crucial to effectively combatting financial crime and that FATF has previously published guidance on the practice, which it approves.

https://blog.macfarlanes.com/post/102g764/sharing-is-caring-uk-government-issues-guidance-on-sharing-information-within-co

US THREATENS SPANISH OIL COMPANY REPSOL WITH SANCTIONS OVER VENEZUELA

On 19 May, Olive Press reported that Repsol, Eni from Italy and India’s reliance have been told to suspend operations in Venezuela.

https://www.theolivepress.es/spain-news/2020/05/19/white-house-threatens-spanish-oil-giant-repsol-with-devastating-sanctions-if-it-doesnt-stop-drilling-in-venezuela/

TAIWAN TELLS US IT IS COMPLYING WITH NORTH KOREA SANCTIONS

On 19 May, Al Jazeera reported that, despite reports of involvement in ship-to-ship transfers, a senior Taiwanese security official told the US deputy representative for North Korea that the country was complying with sanctions, despite not being a member state of the UN.

https://www.aljazeera.com/news/2020/05/taiwan-tells-complying-north-korea-sanctions-200519044938360.html

SUCCESSFUL FUEL MARKING PROGRAMME AN ECONOMIC LIFELINE FOR MOZAMBIQUE

On 19 May, the African Exponent reported that the current contract for the fuel marking scheme expires in a few months, but it seems highly likely that it will choose to continue the programme.  It says that fuel smuggling and adulteration, however, have long been major issues draining Mozambique’s revenues and enriching criminal gangs.  It says that the illicit oil trade is a problem across Africa, costing the continent nearly $100 billion a year — but the so-called Maputo Corridor, comprising South Africa, Swaziland, and Mozambique, had emerged as a regional hotspot for and a pilot study in 2013-14 suggested that Mozambique was losing as much as $60 million a year.  However, fuel marking has resulted in an impressive uptick in tax revenues from fuel sales.  The article also says that the fuel marking programme has also provided Mozambican authorities with valuable insights into how organised crimes groups carry out fuel fraud.

https://www.africanexponent.com/post/7522-successful-fuel-marking-programme-an-economic-lifeline-for-mozambique

IRAN: IRANIAN COUPLE HAS BEEN SENTENCED TO DEATH FOR HAVING SMUGGLED HARD CURRENCY AND LAUNDERING $200 MILLION OF MONEY,

Daily Sabah on 19 May reported that Vahid Behzadi and his wife Najva Lasheidai, both in their early 40s and whose case had not previously been given a high profile, have reportedly been sentenced to death for having smuggled hard currency and laundering $200 million of money, as well as having been found with a stash of gold at their home.

https://www.dailysabah.com/world/mid-east/couple-in-iran-sentenced-to-death-over-laundering-200-million-hiding-stash-of-gold

MOROCCAN SMUGGLERS EMBARK ON LONG NEW ROUTE TO SHIP DRUGS TO EUROPE

Defence Web on 19 May reported that, with usual routes closed off due to the covid-19 crisis, Moroccan drug traffickers are making a circuitous journey involving food trucks and fishing boats to smuggle locally grown cannabis to market – with food trucks across Morocco and then fishing vessels sailing from Atlantic ports.

https://www.defenceweb.co.za/security/border-security/moroccan-smugglers-embark-on-long-new-route-to-ship-drugs-to-europe/

LATVIA: 8 MILLION ILLEGAL CIGARETTES SEIZED AT RIGA FREEPORT

On 19 May, Xinhua reported that Latvian customs officers have seized a haul of around 8 million illegal cigarettes while checking a container cargo at the Freeport of Riga.

http://www.xinhuanet.com/english/2020-05/18/c_139067003.htm

AUTHORITIES SEIZE 850,000 POOR QUALITY MASKS AT ATHENS AIRPORT

On 19 May, Ekathimerini reported that Greece’s Financial Crimes Squad (SDOE) has confiscated 850,000 poor quality face masks did not meet the necessary specifications and lacked international markings at Athens’ International Airport.  The seized shipment had been ordered by Greek import companies and were destined for the domestic market.

https://www.ekathimerini.com/252775/article/ekathimerini/news/authorities-seize-850000-poor-quality-masks-at-athens-airport

NEURAL NETWORK MODEL TO ASSIST CUSTOMS TO DETECT POTENTIAL FRAUDULENT TRANSACTIONS

A news release from WCO on 19 May announced that, as part of the WCO BACUDA (Band of Customs Data Analysts) project with the Institute of Basic Science (IBS) and the National Cheng Kung University (NCKU), WCO has developed a Dual-Attentive-Tree-aware-Embedded (DATE) neural network model to assist Customs administration to better detect transactions presenting risks of fraud.  The WCO BACUDA project was launched in September 2019 as a collaborative research platform focused on data analytics.

http://www.wcoomd.org/en/media/newsroom/2020/may/wco-bacuda-experts-develop-and-share-a-neural-network-model.aspx

IS NIGERIA TURNING AROUND ITS ANTI-CORRUPTION ENFORCEMENT?

On 19 May, a post in the FCPA Blog posed this question, saying that Nigeria’s anti-corruption law enforcement efforts are gradually growing more effective as practitioners adapt and innovate in response to many persistent challenges.  It reflects on research conducted by a University of Edinburgh-led team and some of its preliminary findings.

https://fcpablog.com/2020/05/19/is-nigeria-turning-around-its-anti-corruption-enforcement/

UKRAINIAN OLIGARCH IS BEING INVESTIGATED BY A US GRAND JURY

On 19 May, Buzz Feed reported that Igor Kolomoisky is accused of funnelling money from a Ukrainian bank into properties across the US.  The co-founder of PrivatBank is accused by Ukraine regulators of orchestrating a scheme to siphon money from the country’s largest bank and funnel it into prime properties, including landmark office towers and steel facilities across the US.

https://www.buzzfeednews.com/article/mikesallah/ukraine-billionaire-oligarch-money-laundering-investigation

SHIPPING GROUP PROMOTES STANDARDISED E-BILL OF LADING

On 19 May, American Shipper reported that 9 carriers in the Digital Container Shipping Association say eliminating paper from transactions will improve all aspects of the process, and that the COVID-19 pandemic has made the need for a standardized industry e-bill of lading (eBL) greater than ever.

https://www.freightwaves.com/news/shipping-group-promotes-standardized-e-bill-of-lading

ONLY SMALL AMOUNTS CONTINUE TO BE FROZEN UNDER UK TERRORISM SANCTIONS

On 19 May, HM Treasury released the latest set of quarterly statistics on the operation of counter-terrorism sanctions to 31 December.  These show that only £9,000 was frozen under Terrorist Asset-Freezing Etc Act 2010 powers, £18,000 under EU counter-terrorism sanctions and £31,000 under UN ISIL/Al-Qaida sanctions.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/886143/Quarterly_Report_to_Parliament_1_October_2019_to_31_December_2019.pdf

US COMMERCE DEPARTMENT EXPORT CONTROLS TARGETING HUAWEI AGAIN

On 19 May, Wilmer Hale provided details of the effects of further changes to export controls affecting Huawei which came into operation on 15 May.  It explains changes to the Direct Product Rule, a Rule which restricts exports and reexports of some foreign-produced items that are the direct products of certain controlled US-origin technology, software, a complete plant or any major component of a plant.  The amendment applied the Rule to a broader class of foreign-produced items when there is knowledge that the foreign-produced item will be exported, reexported or transferred (in-country) to an entity on the Department’s Entity List – which includes Huawei and affiliates.

https://www.wilmerhale.com/en/insights/client-alerts/20200519-commerce-department-escalates-us-china-technology-competition-targeting-huawei-again

CAN DHS SURVIVE TRUMP ERA?

On 18 May, The Crime Report carried an article saying that a bipartisan thinktank in the US has claimed that the Department of Homeland Security needs to free itself from political meddling and radically overhaul its infrastructure, or it will succumb to growing calls for its abolition.

https://thecrimereport.org/2020/05/18/dhs-needs-overhaul-to-end-abuses-under-trump-report/

UK SANCTIONS: KEY LESSONS LEARNED AS OFSI BEGINS TO FLEX ITS MUSCLES

On 19 May, Crowell Moring published an article reflecting on the role of the UK Office of Financial Sanctions Implementation in the light of recent actions, including the record £20 million fine for Standard Chartered.  The article says that there are a number of key takeaways from the case of relevance to companies seeking to understand how OFSI will implement its relatively new power to impose civil penalties.  It comments on these, and draws comparisons between the OFSI approach and the approach taken by the US and OFAC, including the fact that the penalty reduction for a voluntary disclosure could have been higher in the US, but the total penalty could have been higher.

https://www.crowell.com/NewsEvents/AlertsNewsletters/all/Key-Lessons-Learned-as-OFSI-Begins-to-Flex-its-Muscles

IRAN, NORTH KOREA, SYRIA, VENEZUELA AND CUBA CERTIFIED UNDER US ARMS EXPORT CONTROL ACT AS NOT COOPERATING ON COUNTER-TERRORISM EFFORTS

On 13 May, Homeland Security Today reported that this was the first year that Cuba has been certified by the US State Department as not fully cooperating since 2015.  The consequence of the move is that it prohibits the sale or licensing for export of defence articles and services and notifies the US public and international community that these countries are not fully cooperating with US counter-terrorism efforts.  Re Cuba it is noted that members of the ELN, who travelled to Havana to conduct peace talks with the Colombian government in 2017, remained in Cuba in 2019 and Cuba refused Colombia’s request to extradite 10 ELN leaders living in Havana after the group claimed responsibility for  bombing in January 2019.

https://www.hstoday.us/subject-matter-areas/counterterrorism/countries-certified-as-not-cooperating-fully-with-u-s-counterterrorism-efforts/

NATIONAL DIGITAL CURRENCIES: THE FUTURE OF MONEY?

On 19 May, the Belfer Center in the US said that its Economic Diplomacy Initiative, in collaboration with the Atlantic Council’s Global Business and Economics Program, is tracking the latest developments in central bank issued digital currencies.  It says that while many are in the early stages of research, central banks representing one-fifth of the world’s population say they are likely to issue a digital currency very soon.

https://www.belfercenter.org/publication/national-digital-currencies-future-money

US CHARGES TEXAS MAN WITH $5 MILLION-PLUS CORONAVIRUS LOAN FRAUD

On 19 May, Reuters reported that US federal prosecutors have charged Samuel Yates, 32, from Texas, with fraudulently seeking $5 million in loans from an emergency program established to ease the economic strain caused by the coronavirus pandemic.  Yates claimed to employ over 400 people, although in reality “no employees worked for his purported business,” prosecutors said in a statement.

https://www.reuters.com/article/us-health-coronavirus-usa-fraud/u-s-charges-texas-man-with-5-million-plus-coronavirus-loan-fraud-idUSKBN22V2PZ

US: JOINT PROBE LED TO THE SEIZURE OF $22 MILLION WORTH OF CRYPTOCURRENCY FROM DARKNET OPERATORS

On 19 May, Coin Telegraph reported that FinCEN has made its annual award whereby it recognizes law enforcement agencies for using Bank Secrecy Act reporting to successfully pursue and prosecute criminal investigations to a joint operation involving US Immigration and Customs Enforcement-Homeland Security Investigations, the US Postal Inspection Service, and US Secret Service.  This was in relation to a case where the agencies made 42 arrests, with the seizure of $22 million in various digital currencies, $3.5 million in cash, 120 firearms, 15 pill press machines, and a wide range of controlled substances.

https://cointelegraph.com/news/us-fincen-awards-secret-service-for-seizing-22-m-in-crypto

https://www.fincen.gov/news/news-releases/fincen-recognizes-law-enforcement-cases-significantly-impacted-bank-secrecy-act

UK: MAN ARRESTED IN BELFAST OVER ALLEGED COVID-19 LOAN FRAUD

On 19 May, the Belfast telegraph reported that a 38-year-old man has been arrested after allegedly attempting to fraudulently apply for a government Covid-19 support loan.

https://www.belfasttelegraph.co.uk/news/northern-ireland/man-arrested-in-belfast-over-alleged-covid-19-loan-fraud-39218076.html

PAYMENT PROCESSING COMPANY AND ITS FORMER EXECUTIVE $40.2 MILLION SETTLEMENT RE CHARGES THEY KNOWINGLY PROCESSED PAYMENTS AND LAUNDERED, OR ASSISTED LAUNDERING OF, CREDIT CARD TRANSACTIONS FOR SCAMS THAT TARGETED HUNDREDS OF THOUSANDS OF CONSUMERS

A release on Mondo Visione on 19 May advised that Atlanta-based First Data Merchant Services LLC, one of the leading payment processing companies, and its former executive Chi “Vincent” Ko will pay more than $40.2 million to settle Federal Trade Commission charges they knowingly processed payments and laundered, or assisted laundering of, credit card transactions for scams that targeted hundreds of thousands of consumers.  It is said that the company repeatedly looked the other way while its payment processing services were being used to commit fraud.  According to the FTC complaint, Ko, through his prior company, First Pay Solutions LLC, opened hundreds of merchant accounts for at least 4 scams.

https://mondovisione.com/media-and-resources/news/worldwide-payment-processor-and-payments-industry-executive-to-pay-402-million/

 

 

 

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THE WORLD’S DIRTY MONEY BY THE NUMBERS

On 19 May, Politico published an article, part of a series on “Europe’s dirty money secret”, that provides some statistics and data to illustrate the money laundering problem. It points out that two-thirds of all SAR came from just 2 EU countries (UK and Netherlands).  It examines which states perform best according to FATF marking, what are the top predicate crimes and which sectors are the best and worst in submitting SAR.

https://www.politico.eu/article/the-world-dirty-money-by-the-numbers

 

 

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FINCEN ADVISORY ON MEDICAL SCAMS RELATED TO COVID-19 WITH FILING INSTRUCTIONS FOR FINANCIAL INSTITUTIONS

On 19 May, FinCEN issued an advisory to alert financial institutions to rising medical scams related to the COVID-19 pandemic. It contains red flags, descriptions of COVID-19 related medical scams, and information on reporting suspicious activity. This is the first of several advisories FinCEN intends to issue concerning financial crimes related to the COVID-19 pandemic.

https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2020-a002

https://www.fincen.gov/sites/default/files/shared/May_18_Notice_Related_to_COVID-19.pdf

 

 

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SHIPPING, INSURANCE AND AML/CFT/CFP (updated)

SHIPPING, INSURANCE AND AML/CFT/CFP

INDEX

(updated to 19 May 2020)

 

  1. INTRODUCTION
  2. THE SHIPPING INSURANCE SECTOR
  3. THE THREATS FACED BY SHIPPING
  4. HOW CAN THE SHIPPING INSURANCE SECTOR PLAY ITS PART?
  5. MARITIME ANTI-CORRUPTION AGENDA ANNOUNCED
  6. CONCLUSION
  7. ANNEX: WHAT ILLICIT ACTIVITIES DO OR CAN INVOLVE SHIPPING?

 

INTRODUCTION

In a previous post I considered if shipping registries could have a role to play in ensuring that shipping is not used to circumvent not only UN (and other) sanctions, but also other export and trade controls, smuggling, human trafficking and other illicit activities[1].  Since that post was first published there been some encouraging developments, for example the Registry Information Sharing Compact (RISC) involving three leading open registries[2].  Announced in February 2020, this involved an agreement for the registries to inform one another if they de-register or deny registration to a merchant ship on suspicion that it has breached sanctions, and to pass on information if due diligence checks suggest that a violation of UN sanctions may be involved.

My point had been that, in addition to law enforcement and regulators, if other parts of what may be described as the industry’s supporting structure – including corporate service providers, lawyers and banks – have some role as “gatekeepers”, if only to prevent themselves becoming liable, then perhaps the registries also had a part to play.  After all, it is in everyone’s interest (except, of course, for the criminals, sanctions-busters and terrorist involved) to try to prevent of detect such illicit activities.

There are others involved in the shipping industry that might play a part.  In addition to the other obvious players – the owners and operators of the vessels and those supplying cargoes, passengers and crew – there are those that insure the vessels and their cargo, and the classification societies that provide guarantees as to technical and safety standards for the construction and operation of ships and offshore structures[3].

There have recently been some interesting initiatives and developments that indicate that some progress is being, or may be, made towards improving the performance of the shipping industry in the fight against criminal activity in general, and sanctions violation in particular.

 

THE SHIPPING INSURANCE SECTOR

Considering the insurance element, marine insurance covers the loss of ships, cargo, terminals and any transport of cargo by which the property is transferred, acquired or held between points of origin and final destination[4].

However, a marine policy typically covers only around three-quarters of the liabilities towards third parties that could arise, such as through collision, going aground or wreck removal.  To cover the remaining liabilities, in the 19th Century shipowners banded together to form what are termed Protection and Indemnity Clubs (or “P+I Clubs”)[5].

These P+I Clubs are a form of mutual insurance society where members pay a premium, which is then used to purchase reinsurance, with further calls made on members for payments should the club suffer excessive losses, though the club would seek to establish a reserve to cover such eventualities.  The club would not have a standard underwriting form, underwriters will tailor bespoke coverage for each insured, based on the nature and character of the risk, and the amount of insurance desired.  Traditionally, the clubs covered ship owners, ship operators and charterers – but membership was latterly opened to freight forwarders and warehouse operators.  The concept of P+I Clubs originated in London, but the soon spread to other major shipping jurisdictions around the world.

There is an International Group of P+I Clubs, linking 13 major P+I clubs and accounting for around 90% of ocean-going tonnage.  This international grouping operates by means of a pooling arrangement, so as to provide affordable but high-value insurance and reinsurance cover.  It also provides a forum for the sharing of news and views within the sector, and as a spokesperson for the industry.  Claims up to a set level[6] are dealt with by national clubs, with claims over that level shared between the member clubs.

To take one example, the American P+I Club[7] lists the main risks for which P+I insurance would provide cover for shipowners, operators and charterers for third party liabilities encountered in the commercial operation of their vessels[8].  These include –

  • loss of life, injury and illness of crew (including repatriation costs), or of passengers and other persons;
  • cargo loss, shortages or damage;
  • fines and penalties;
  • mutiny and misconduct by the crew; and
  • vessel diversion expenses.

Coverage can include loss due to collision (other than the standard collision clause found in a traditional hull policy), removal of a wreck, stowaways and repatriation costs, damage caused to fixed or floating objects, pollution and oil spill costs and liability under towage contracts.  The P+I coverage would not extend to risks that would fall under a workers’ compensation policy.

There are other, more specialised forms of insurance relevant to the shipping industry, such as that which may be made available for yachts and other pleasure craft and fishing vessels.  Then there is “war risk” insurance for specific regions of particularly high risk, and cargo insurance, where the premium and risk depends on the type of cargo involved.  A particular type of insurance that has developed over recent years is that for kidnap and ransom, which exists to pay for the release of a ship (and/or cargo and crew) held by pirates, and which has priority over claims made under any other policy[9].

 

THE THREATS FACED BY SHIPPING

In the previous post concerning registries, I briefly mentioned the various threats that could be faced by ships and shipping, and saying that in recent years extensive evidence of the role of shipping in a wide range of illegal activities, and not just in “traditional” smuggling and perhaps obvious crimes like human trafficking, but anything from the role played in the evasion of UN sanctions on North Korea to the involvement of vessels in illegal, unreported and unregulated (IUU) fishing[10].  That list is annexed below.

In another post, I compiled a list[11] (almost certainly incomplete and with only brief outlines of the topics included) of the various crimes, regimes and requirements that the average compliance officer in a regulated business might want to bear in mind.  Whilst not all of these would be relevant to the shipping industry (online gambling, for example), many were – in addition to those mentioned above, there were the quite obvious ones of trade-based money laundering and other trade-based financial crime[12]; import, export, transit and transhipment licensing violations; exchange control violations and bulk cash smuggling; modern slavery and other human rights abuses (including of the crews themselves[13]; bribery and corruption[14]; proliferation activities linked to WMD and their means of delivery[15] and related financing[16]; terrorism-related movements of people, goods and finances; breaches of UN, EU or other sanctions controls[17]; the shipment of counterfeit goods or blood or conflict diamonds[18]; and unreported and unregulated (i.e. illegal) fishing[19].

All of the above are in addition to the more obvious risks to shipping, through piracy, theft of vessels or cargo and threats to officers, passengers and crew.

There are huge amounts of money involved in trade-based financial crime[20], huge potential risks from terrorism and proliferation, and terrible suffering and hardship present in such things as human trafficking and slavery at sea.

In May 2020, the UK National Crime Agency announced the seizure of £8 million that was said to be part of a fund operated for the purpose of tax evasion, money laundering, bribery and corruption.  It involved a company incorporated in Liberia in the 1970s and purportedly set up to operate large container ships for an international shipping company.  However, the shipping company involved had no knowledge of the company and were able to show that it had never appeared on any of their balance sheets[21].

The again, the ships themselves, or their cargo, may be the “tool”, benefit or value being moved in a money laundering, terrorist financing or proliferation financing arrangement.  This is obviously the case for trade-based money laundering and other trade-based financial crime, where the cargo (real, non-existent, misdescribed or misrepresented) may be the main element.

 In 2018, the case of Engelhart CTP (US) LLC v Lloyd’s Syndicate 1221[22] provided an example of a fraud involving a ship’s cargo, and which in that case resulted in an insurance claim.  The cargo, said to be 7,000 tonnes of copper ingots carried in containers, turned out to be, in fact, only slag of no commercial value when the containers had to be opened to inspect a leak.  It transpired that the bill of lading, packing lists and quality certificates were all fraudulent.  The assured claimants were not party to the fraud.  They made a claim on the open policy held for a range of commodities – but as the “copper” involved had never existed there had been no cargo to be physically damaged or lost, and so the claim failed.  The claimant also failed in seeking to take advantage of a “shortage of contents” clause, given that the goods supposedly covered were, in fact, fictitious.  The insurers rightly argued that none of the clauses of the contract provided cover for the acceptance of fraudulent documents for a non-existent cargo.  Amongst other things, this case illustrates that shipowners and others cannot rely on the mere fact of not having been party to a fraud or other illicit activity when seeking recompense.

Another 2018 case[23] further underlined the above point.  In that case divers discovered drugs attached to the exterior of the ship’s hull (the Master and one of the officers were subsequently convicted of involvement in drug smuggling) and the ship remained detained by the authorities for 3 years, having been abandoned by its owners after 2 years.  The owners then made a claim against their insurers which ended up being rejected by the Court of Appeal and Supreme Court in the UK.  The owners had made their claim under “war risks” insurance and the courts held that the smuggling of drugs was not a “war risk”, and the “customs regulation exclusion” did apply[24].

The UK P+I Club, for one, has a formal AML policy[25] as part of its governance code.  It says that it seeks to ensure compliance with internationally recognised practices, standards and regulation for the prevention of money laundering.  This is good.  However, I would question to what extent that or any other P+I Club is integrated into any information-sharing and consultation arrangement that might exist, for example, were it a bank or other financial institution.  My own view is that they should be included, and have an important role to play, particularly in respect of sanctions and trade-based money laundering and trade-based financial crime.

In sanctions cases, the acquisition, chartering or use of the ship might be to evade prohibitions and restrictions in place.  Currently, the most high-profile situation involving the control of shipping in respect of sanctions measures probably involves North Korea (though the US sanctions involving Iran and continuing sanctions on Syria might vie for this title) – where ships, shipowners and even a (Russian) port service company[26] have been listed in sanctions lists.

In February 2018, the US Treasury published an Advisory detailing deceptive practices employed by and for North Korea and involving shipping, and risk mitigation measures that could be adopted[27]; in November 2018 it issued a further Advisory in similar vein, but this time addressing sanctions risks related to the shipping of petroleum products to Syria[28].  In August 2018, it had once more issued a warning in respect of North Korean sanctions, reminding the shipping industry, including flag states, ship owners and operators, crew members and captains, insurance companies, brokers, oil companies, ports, classification service providers, and others of the significant risks posed by North Korea’s shipping practices.

In May 2020, the International Group of P+I Clubs issued a Circular[29] reminding members of continuing evidence of sanctions violations by and for North Korea.  It called for P+I Clubs to exercise caution when fixing insurance contracts, reminding them of the need to adopt measures to mitigate the risk of sanctions violations, and employ the highest level of due diligence.  It specifically warns that any activity assessed to be in breach of sanctions would result in the withdrawal of insurance cover.

However, the threats arising from sanctions are not new, and at least one P+I Club has suffered as a consequence in the recent past.  In May 2013, the American P+I Club reached an agreement to pay the US authorities around $350,000 in settlement for the potential liability involved in 55 violations of US sanctions on Cuba, Sudan and Iran.  These related to the settling of P+I claims and providing security by way of letters of undertaking and letters of indemnity.  This may be one reason why this P+I Club at least now has fairly comprehensive guidance for its members on how to comply with US, EU and other sanctions prohibitions and restrictions[30].

The specialist UN agency, the International Maritime Organisation (IMO), does have a focus on what is describes as maritime security.  However, its concentration is on the safety and security of ships, and the people and cargo on those ships.  It touches upon, for example, human trafficking and terrorism, but in a rather, to my mind, narrow sense.  On terrorism, it says that it aims to provide an international legal framework to deal with those committing unlawful acts against ships (and fixed platforms on the continental shelf), including the seizure of ships by force; acts of violence against persons on board ships; and the placing of devices on board a ship which are likely to destroy or damage it. Notably, it does not mention financing and laundering activities that might be linked to those activities it does mention, or which may be entirely unrelated.

In November 2018, Project Alpha at King’s College London published a paper[31] which set out to examine the interplay between UN sanctions and the rules governing the maritime sector.  The paper demonstrated that IMO rules as constituted were poorly designed to facilitate the effective implementation of sanctions. As such, the paper argued that the maritime governance arrangements run counter to international peace and security requirements.  A number of issues and opportunities were identified, with vessel tracking, the question of registration and flags, and audits highlighted.  It concluded that sanctions implementation did not appear to have been taken into account by the IMO for the purposes of the international maritime administrative structures it had established, though, in many cases, these could be adapted to make them directly supportive of UN sanctions.  Likewise, the paper concluded, it seems likely that the UN Security Council has passed Resolutions on maritime issues concerning North Korea without fully considering the mechanisms for implementing them and, as the setter of standards for the industry, the IMO is perhaps uniquely placed to include in those standards the compliance with the Resolutions.

Finally, the risk might involve frauds directed against the insurers by means of the actual or purported total loss or vessel and/or cargo – a crime as old as the marine insurance industry, or even of shipping itself – and one to which the insurance industry might be expected to be most acutely attuned[32].

Currently, when a country is evaluated by FATF or one of its regional affiliates, the evaluation does not directly touch upon that country’s shipping registry (it would probably not be on the evaluation team’s visit schedule), and would likely only touch upon any shipping insurance element in the context of the overall insurance sector.  However, any scandal affecting shipping linked to the country can colour the evaluation and the outside perception of the integrity of the jurisdictions.  Furthermore, any such scandal would be likely to spill over, if not directly implicate, other business sectors (lawyers, corporate service providers etc).

In April 2019, it was announced that the IMO was to begin work on official guidance to combat maritime corruption.  An article at the time said that more than 28,000 individual incidents of corruption (predominantly bribery and so-called facilitation payments) had been reported since 2011[33].  The IMO also announced the setting up of a maritime anti-corruption agenda by its Facilitation Committee, and would draw upon the principles of the UN Convention Against Corruption – then the only legally binding international instrument combatting corruption.

A vessel involved in illegal activity, be it smuggling, sanctions violation or some other crime, also face the risk of being detained and seized by national authorities.  2019, for example, saw the seizure by US authorities of a North Korean ship detained in Indonesia for violation of US/UN sanctions and a large containership operated by the MSC shipping line found to be carrying a huge quantity of cocaine[34].

 

HOW CAN THE SHIPPING INSURANCE SECTOR PLAY ITS PART?

It appears to me that there three ways in which the shipping sector as a whole, including the P+I Clubs and their agents could help to improve the prevention and detection of crimes –

  • increase awareness of the risks, and possible indicators – there are bodies already in existence that track threats from piracy, and the International Maritime Bureau of the International Chamber of Commerce is an important one[35];
  • improve the availability, exchange and dissemination of information between all parties involved – between insurers, between agents, amongst shipowners, and establish channels of (two-way) communication between these and law enforcement and financial intelligence units;
  • enable or require other parties to also be aware of the risks, carry out checks and generally exercise appropriate due diligence – this could apply to all the agents, charterers and representatives used[36]

The third of these bullet points is that which I suggest would be the one that the shipping sector could most usefully take on board and implement.  Taken together with the other two, there should also be –

  • an improvement in (or even just implementing) “know your customer” and due diligence checks – on an ongoing basis and not only when taking on a new customer, client, supplier etc; and
  • each business or organisation needs also to undertake meaningful risk assessments of areas of business.

If these measures were put in place, they could not only help to prevent or detect illicit activity, but may well benefit the business or organisation directly by providing some degree of protection against allegations of not doing enough to prevent bribery, corruption or involvement.

What might be a significant assistance for insurers, in February 2020 details were released[37] about a information-sharing agreement between the 3 largest open registries (which together account for 41% of the world’s merchant shipping tonnage), then joined by 4 smaller registries[38] in March, to inform one another if they de-register or deny registration to a merchant ship on suspicion that it has breached sanctions, and to pass on information if due diligence checks suggest that a violation of UN sanctions may be involved.

The Registry Information Sharing Compact (RISC) is said to address the requirement set out in UN SCR 2321 (2016)[39] that “all Member States shall de-register any vessel that is owned, controlled, or operated by the DPRK, and further decides that Member States shall not register any such vessel that has been de-registered by another Member State”.

It has been suggested that RISC would provide more benefit, and hence reassurance, to smaller registries which may be more vulnerable to exploitation by the like of North Korea.  Indeed, it may be that the existence of RISC would drive use of those registries not party to the agreement, or will stimulate greater, or more complex, evasion techniques.

It would obviously be useful if the information that might be shared between registries could inform the risk assessment and intelligence activities of the insurers.  However, the initial agreement only catered for cooperation between registries, and not other third parties.

In May 2020, the International Group of P+I Clubs released a circular[40] on a common standard for vessel tracking by clubs, saying that the ability to track using AIS had become an important part of clubs’ sanctions compliance programmes, and that all of the clubs in the International Group had agreed a common standard of tracking.  Among other things, the Circular warned that there would be grounds to deny P&I cover on the basis of imprudent or unlawful trading where an owner trades his vessel in breach of sanctions, disguising its location by manipulating or withholding the transmission of AIS data.

 

MARITIME ANTI-CORRUPTION AGENDA ANNOUNCED

In April 2019, it was reported[41] that the International Maritime Organization (IMO) has announced it will begin work on official guidance to combat maritime corruption.  The article says that more than 28,000 individual incidents of corruption – predominantly bribery and “facilitation payments”, where shipping operators pay onshore officials to accelerate or circumvent administrative processes – have been reported since 2011.  The IMO has agreed to include the formation of a maritime anti-corruption agenda in the work programme for its Facilitation Committee in response to requests from several states, with support from the International Chamber of Shipping (ICS).  The proposed maritime anti-corruption agenda is expected to draw on the UN Convention Against Corruption (UNCAC), which came into force in 2005 and has been adopted by 186 countries.  The UNCAC is currently the world’s only legally binding instrument combating corruption.

 

CONCLUSION

As with the shipping registries, it appears to me that the role or roles that the P+I Clubs in particular could play in combating serious trade-based crime, and especially sanctions violations and proliferation activities has been under-appreciated in the past.  They need to be included in any discussion, and any information-sharing arrangements.  The May 2020 initiative of the International Group of P+I Clubs is a welcome start and, hopefully, an indication of proactive movement and not just a knee jerk reaction to increasing US pressure.

The increasing spread of anti-bribery and anti-corruption legislation, and of legislation seeking to penalise human rights abuses – with the EU (pre-Covid-19) having made noises about extending environmental, social and governance requirements, all of which can have extra-territorial effect (or might apply anyway because it is the law of the flag state of the vessel concerned) presents a threat to insurers and their clients and members of P+I Clubs.

Whether or not FATF and similar bodies directly addresses the activities and shortcomings of shipping registries and the marine insurance sector, there remains the real risk of problems in those areas, or spilling over from those areas into others which are evaluated by FATF and others, affecting evaluations, ratings and perceptions of a jurisdiction.

The detailed Advisory from OFAC in May 2020 may be seen as a step forward in pressure on the maritime insurance sector, and there have already signs of increased compliance (which may also indicate behind the scene pressure on the sector).  The Covid-19 pandemic that came as a bolt out of the blue in 2020 has heavily impacted the shipping industry, and it is too early to say what longer term effects this might have on the maritime insurance sector.  In the short term, however, it has already (though the lockdowns and other mitigation efforts, as much as any infections) severely limited how, and to what extent, normal compliance activity is carried out.  It is possible that while this might provide a short-term advantage to those seeking to avoid controls, a longer term consequence could be greater adoption of more advanced, automated or AI-based systems, resulting in more (and hopefully better) compliance activity than previously.

Therefore, if only from the purpose of self-protection it appears to make sense for businesses and organisations involved to examine, revise and upgrade (or implement) controls and procedures.

It also appears important, from a jurisdiction’s point of view, to ensure that the shipping sector as a whole is included in any national risk assessment, and in any consultative and information-sharing arrangements.

 

Ray Todd

18th August 2018

Updated 19 May 2020

 

ANNEX

WHAT ILLICIT ACTIVITIES DO OR CAN INVOLVE SHIPPING?

 

These can be many and various, and include –

  • Violating UN or EU (or US or regional bodies’) sanctions that can impose such things as arms embargoes or more general trade embargoes[42]. They can also restrict or prohibit the use of a country’s vessels in trade with a country or entity – the obvious current example involves the DPRK[43], though in July 2019, King’s College London published a report and case study showing that despite US and EU sanctions, Iran and Russia have been transferring oil and refined petroleum products to Syria, with some western companies and western-flagged vessels were wittingly or unwittingly involved in oil and jet fuel transfer to Syria[44].  In November 2019, it was announced that the US would target shipping companies that are in breach of sanctions and aggressively enforce measures across the globe to clamp down on such practices[45].  P+I Clubs have warned that any activity assessed to be a breach of sanctions would result in the withdrawal of insurance cover[46];
  • Smuggling of goods into or out of a territory – smuggling has a long history and still goes on and can include the illicit removal of goods as well as the illicit supply; such as the removal of oil from territory controlled by ISIS in Iraq during the conflict there. Almost anything may be smuggled, from the traditional alcohol and tobacco to arms and military equipment, endangered species, timber, currency, gold, oil, coal etc.  The Italian authorities used to regularly detain small coaster-type vessels involved in the contraband cigarette and tobacco trade around the Mediterranean.
  • Drugs trafficking – perhaps the most high-profile of smuggling activities. Sometimes the entire vessel may be used, particularly smaller pleasure craft or fishing vessels.
  • Human trafficking – of higher profile in recent years due to the migrants attempting to reach Europe from North Africa. It may be people smuggling of those who want, and pay, to make the journey, or the trafficking of those effectively enslaved to be used in providing sexual services or enforced labour.
  • Illegal Unreported and Unregulated (IUU) fishing and illegal fishing – the UN Food and Agriculture Organisation (FAO) estimates that perhaps 30% of all catches are composed of IUU fishing. It is neither a new phenomenon, nor confined only to the high seas[47].  The FAO also says that those involved need not be using flags of convenience but says that the root cause of IUU fishing is a lack of effective flag State control.  Since 2010, EU operators who fish illegally anywhere in the world, under any flag, risk substantial penalties proportionate to the economic value of their catch, which deprive them of any profit[48].  IIU fishing may also the use of enforced labour (see below).  Illegal fishing is defined by the UN Office for Drugs and Crime as encompassing all fishing activities conducted in contravention of national and international laws, as well as agreed regional fisheries management and conservation measures[49], such as fishing beyond allowable catch limits, taking of juvenile fish and prohibited fish species, and fishing during closed seasons or in closed areas[50].
  • Use of enforced labour – the exploitation of seafarers has a long and depressing history. The UN International Labour Organisation (ILO) defines enforced or forced labour as meaning where persons are coerced to work through the use of violence or intimidation, or by more subtle means such as manipulated debt, retention of identity papers or threats of denunciation to immigration authorities[51]. In the present day, the most oft cited example is connected to IUU fishing (see above)[52].  Under US law, the importation of anything produced using forced or indentured labour is prohibited and other countries will have similar laws.[53]  The UN and individual countries, notably Canada, are promoting “social responsibility” laws that impose on businesses in one country responsibility for human rights and other abuses carried out by them, or on their behalf, in other countries.  The so-called “Ruggie Principles” comprise the responsibility of the state and the company to ensure human rights are protected[54].
  • Environmental crime – this could involve the unauthorised disposal of oil[55], waste or other unwanted materials by a ship. It could overlap with smuggling (as well as bribery and corruption), where the unauthorised disposal involves dumping the material in a place where this was not allowed (such as in the infamous Ivory Coast incident in 2006)[56].  IUU fishing above could also be considered an environmental crime.
  • Bribery and corruption – may be connected to any of the above, and in the US, UK and increasingly elsewhere, involvement in bribery or corruption anywhere in the world can be an offence under your own domestic law. Not only that, as in the UK, failure to have adequate processes in place to prevent and detect bribery and corruption within your organisation can constitute an offence, with very recently the first conviction in the UK for such an offence[57].
  • Money laundering – this too may be connected to any of the above – the vessel may be bought with, or otherwise financed by, the proceeds of the illegal activities. The classic example may be the pleasure craft bought with the ill-gotten gains of its owner.  However, one should bear in mind that trade-based money laundering, and other trade-based financial crime, is thought to far exceed “normal” money laundering, and that the ship, its operations and cargo may be an intrinsic part of the crime itself[58].
  • Tax evasion (or avoidance), which may then be linked to money laundering, is also a factor to be considered. Even where the registry involved has done nothing wrong under maritime law, it can be tainted if it is then revealed that there was something amiss in the purchase, ownership, management or operation of the vessel.  A good example occurred in late 2017, then the Paradise Papers alleged that certain wealthy individuals had benefitted from an advantageous VAT arrangement on the acquisition of business jets in the Isle of Man[59].  Doubts were also expressed about arrangements involving yachts.  Though the ones mentioned in the report did not fly the flag of the Isle of Man, the Island nevertheless has a sizeable number of expensive pleasure craft on its register and doubts and suspicions do not always need evidence.
  • Terrorist financing – as with money laundering, this may be connected to any of the above, in that they were a means of raising funds for the terrorist body, or were (as was the case with the shipment of oil from Iraq by ISIS) an essential element of the body’s activities.
  • Proliferation of weapons of mass destruction (WMD) and delivery systems – it would be a mistake to think that this heading only applied where UN sanctions applied, such as in respect of DPRK. In fact, prevention of proliferation of WMD and their delivery systems (such as missile systems), can not only fall under the heading of sanctions, but also that of smuggling in general, or be linked to potential use by terrorists.  It also links with export and trade controls below, and involve dual-use items and technology as well as actual components or the finished objects themselves.
  • Export and trade controls – like with several other of these headings, this overlaps with several of the foregoing. Export (and import) controls, including licensing requirements and outright prohibitions, with the avoidance, evasion or ignoring of them are obviously closely linked to what might be considered to be smuggling.  Trade controls exists in several countries, including the UK, and extra-territorial effect, requiring a licence from the home state of the owner and/or shipper for movements between two other countries[60].  An example of the effect of this requirement is the need for those providing armed anti-piracy security on British ships to obtain a licence from UK authorities (which covers the movement of the weapons and related equipment required)[61].
  • Piracy and armed robbery at sea[62] – this seems self-explanatory[63] and is more generally seen as a risk of being a victim of the sort of maritime piracy such as that seen off Somalia, the Gulf of Guinea and South-East Asia[64]. On the other hand, the pirates must get their vessels from somewhere.  It is notable that there exists specific guidance[65] for kidnap and ransom insurance and the payment of ransom[66].

Any or all of the above could or would involve organised crime or terrorist organisations, and some may also involve state actors in the form of unscrupulous states, officials or official bodies.

—————————————————————————————————————————————-

[1]  https://wordpress.com/post/raytodd.blog/3168

[2]  Panama, Liberia, and the Marshall Islands.

[3]  Classification societies set technical rules based on experience and research, confirm that designs and calculations meet those rules, survey ships and structures – both during construction and commissioning and periodically thereafter – to ensure that they continue to are in accordance with the rules.

[4]  For a fuller description of marine insurance and its scope see https://thelawreviews.co.uk/edition/the-shipping-law-review-edition-5/1170842/marine-insurance

[5]  2019 saw the 150th anniversary of the UK P+I Club being celebrated: https://www.ukpandi.com/uk-pi-150th-anniversary/message-from-the-chairman/ For a brief history of P+I Clubs, see: https://www.hellenicshippingnews.com/what-is-protection-and-indemnity-insurance/

[6]  Currently $10 million.

[7]  https://www.american-club.com/

[8]  It is worth noting that the American P+I Club paid a (reduced) $350,000 penalty to US authorities in 2013 to settle 55 apparent violations of US sanctions against Cuba, Sudan and Iran, having settled claims and provided letters of undertaking and letters of indemnity.  While this seems to have alerted that particular club (see below), one would have thought that it would also have highlighted sanctions violations as another pertinent risk for other clubs too.

[9] Under English law at least, the payment of ransom to pirates is not, in itself, illegal, and there is anyway a strong moral argument to do to secure the release of any individuals held.  However, it should be noted that care has to be taken not to breach any relevant sanctions measures involving terrorist groups as, in essence, pay outs may be made to criminals, but not to or for terrorists.  For example, see https://www.gov.im/news/2015/aug/07/united-nations-and-european-union-sanctions-ransom-payments/

Modern piracy is by no means as rare as one might think; see https://www.icc-ccs.org/piracy-reporting-centre/live-piracy-map for a map detailing attacks made in 2018.  See also guidance on www.maritimeglobalsecurity.org, a stakeholder in which is the International Group of P+I Clubs.

[10]  The EU Regulation to prevent, deter and eliminate IUU fishing entered into force on 1st January 2010.  The European Commission reports that it is working actively with all stakeholders to ensure coherent application of the IUU Regulation.  Meanwhile, Greenpeace has issued lists said to contain the names of irresponsible fishing operators and the companies behind them – http://blacklist.greenpeace.org/home

[11]  https://wordpress.com/post/raytodd.blog/3429

[12]  See https://www.gov.im/media/1348726/notice-1000-man-trade-based-money-laundering-july-18.pdf

[13]  Seen as a particular risk in IUU fishing; see http://www.ilo.org/global/topics/forced-labour/policy-areas/fisheries/lang–en/index.htm

[14]  Even more of a risk given the extra-territorial reach of such legislation as the Bribery Act 2010 in the UK and the Foreign and Corrupt Practices Act in the US.  The UK P+I Club has an anti-bribery policy, for example, to meet the requirements of the Bribery Act: https://www.ukpandi.com/about-us/corporate-governance/compliance-regulatory/anti-bribery-policy/

[15] Including procurement and transport of materials, components, fuel etc and delivery systems, such as rockets and missiles, and their components, guidance systems etc.

[16]  See https://www.gov.im/media/1352777/notice-1008-man-proliferation-and-proliferation-financing-risks-2-jul-18.pdf

[17]  In May 2020, OFAC issued a detailed Advisory to the maritime industry, specifically referring it to insurance companies and P+I Clubs, warning of the risks of sanctions evasion and what could and should be done to prevent and detect evasion attempts – ss page 9 of the Advisory: https://www.treasury.gov/resource-center/sanctions/Programs/Documents/05142020_global_advisory_v1.pdf

[18]  See https://www.gov.im/media/80563/sanctions-notice-27-kimberley-process-certification-scheme-imports-and-exports-of-rough-diamonds-27-10-16.pdf

[19]  Aka IUU fishing.  In May 2019, the captain and 2 crew from a “notorious” IUU fishing vessel were fined and sentenced to prison in Sao Tome et Principe in a case that shed light on the little publicised scourge, and which was said to illustrate how difficult it was to bring maritime criminals to justice – the ship flew a Nigerian flag but was owned by a Spanish investor and operated through a shell company in Panama. It had changed hands many times over the years: http://adf-magazine.com/maritime-trials-and-tribulations/

[20] $950 billion in 2014, according to the Global Finance Initiative.

[21]  https://www.nationalcrimeagency.gov.uk/news/nca-recovers-8-million-linked-to-international-organised-crime

[22]  https://www.shlegal.com/insights/shippingbulletin—november-2018#fraudulentdocuments

[23]  Navigators Insurance Company Ltd and others v Atlasnavios – Navegacao Lda, The “B ATLANTIC”

[24]  Interestingly, in its report of the case, Stephenson Hardwood made the point that: “Although the smuggling was a wrongful act done intentionally without just cause or excuse, it was not ‘malicious’ within the meaning of insuring clause 1.5. In the context of war risks insurance policies, ‘malice’ has to involve spite, ill-will or the like which is directed towards property or persons. Drug smugglers do not intend for a vessel to be detained or for any other property or persons to be lost or damaged. To the contrary, they intend that the drugs avoid detection, that the vessel, property and persons remain unharmed and therefore that the intended recipients get what they have paid for.”: https://www.shlegal.com/insights/shippingbulletin—november-2018#fraudulentdocuments

[25]  https://www.ukpandi.com/about-us/corporate-governance/compliance-regulatory/anti-money-laundering-policy/

[26]  Sanctions imposed in August 2018 by the US Treasury on Profinet Pte, which provides services at Nakhodka, Vostochny, Vladivostok, and Slavyanka, were thought to be the first time such sanctions had been imposed on a port services operator (its director was also designated by the US Treasury).  This perhaps indicates that the reach of such measures continues to expand into new and hitherto largely unaffected areas.

[27]  https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/dprk_vessel_advisory_02232018.pdf

[28]  https://www.treasury.gov/resource-center/sanctions/Programs/Documents/syria_shipping_advisory_11202018.pdf

[29]  https://www.igpandi.org/article/democratic-peoples-republic-of-korea-dprk-sanctions-enforcement-update

[30]   https://www.american-club.com/

[31]  https://projectalpha.eu/discussion-paper-un-maritime-sanctions-and-the-international-organisation/

[32]  A classic case was that of the scuttling of the supertanker Salem in 1980, a case that also involved sanctions-busting with oil being delivered to apartheid South Africa.  The story is an amazing one, and well worth reading.  The architect of the scam, jailed for 35 years in the US in 1985, but then escaped from prison 3 years later.  See http://archives.datapages.com/data/phi/2004/85.htm

[33]  https://www.governmenteuropa.eu/maritime-anti-corruption-agenda/92958

[34]  For a summary of US laws on the seizure of vessels, see: https://www.americanshipper.com/magazine/daily/?year=2019&month=7&day=12&page_number=4&via=asdaily

[35]  Established in 1981 (in the wake of the Salem scandal), it is a non-profit making organisation that acts as a focal point in the fight against all types of maritime crime and malpractice.  It has MoU with both the World Customs Organisation and Interpol, and the International Maritime Organisation has urged governments, all interests and organisations to co-operate and exchange information with each other and with the IMB with a view to maintaining and developing a co-ordinated action in combating maritime fraud.  The IMB provides an authentication service for trade finance documentation. It also investigates and reports on a number of other topics, notably documentary credit fraud, charter party fraud, cargo theft, ship deviation and ship finance fraud.

[36]  With the increase in such systems as the EU’s Authorised Economic Operator (AEO) scheme and security requirements for the pre-clearance of cargo entering the US, such requirements could be built into agreements with third parties – which would no doubt be useful when applying for AEO status or the equivalent.  It would also be of use to defend one’s position if implicated by another’s nefarious activities – the UK Bribery Act, for example, provides for a defence if a business has adequate arrangements in place to prevent bribery taking place.

[37]  https://www.hellenicshippingnews.com/the-registry-information-sharing-compact-is-a-major-step-forward-in-sanctions-enforcement/

[38]  St Kitts and Nevis, Comoros, Honduras and Palau.

[39] https://documents-dds-ny.un.org/doc/UNDOC/GEN/N16/407/50/PDF/N1640750.pdf?OpenElement

[40]  http://www.gard.no/Content/29697320/MemberCircular_5_2020.pdf

[41]  https://www.governmenteuropa.eu/maritime-anti-corruption-agenda/92958

[42]  In November 2018, Project Alpha at King’s College London published a paper examining the interplay between UN sanctions and the rules governing the maritime sector, showing how the sanctions impose requirements on shipowners, shipping companies that go beyond the rules of the International Maritime Organisation (IMO).  The paper also argues that the IMO rules do not permit the effective implementation of sanctions, and it identifies a number of issues and opportunities for changes to be made to the rules. See https://projectalpha.eu/discussion-paper-un-maritime-sanctions-and-the-international-organisation/

[43]  In April 2019, Lloyds of London issued Market Bulletin Y5246 to advise that existing due diligence and monitoring procedures should be reviewed and validated in relation to marine cargo and hull exposures in the light of North Korean, Syrian and Iran sanctions risks, including proliferation risk.

[44]  The case study involved the supply of oil and jet fuel to Syria and involved Russia as well:  https://www.kcl.ac.uk/news/sovfracht-indictment-and-oiljet-fuel-transfer-to-syria

[45]  https://www.hellenicshippingnews.com/u-s-sets-sights-on-shipping-companies-for-sanctions-evasions/

[46]  https://www.igpandi.org/article/democratic-peoples-republic-of-korea-dprk-sanctions-enforcement-update

[47]  http://www.fao.org/fishery/iuu-fishing/en

[48]  https://ec.europa.eu/fisheries/cfp/illegal_fishing_en

[49]  https://www.unodc.org/documents/organized-crime/GPTOC/Issue_Paper_-_TOC_at_Sea.pdf

[50]  In May 2019, there occurred a rare victory against IUU fishing when the captain and 2 crewmen from a “notorious” vessel were fined and imprisoned in Sao Tome et Principe, a small state that relies on fishing.  An article on the case illustrates the current difficulties in bringing such maritime criminals to book: http://adf-magazine.com/maritime-trials-and-tribulations/

[51]  http://www.ilo.org/global/topics/forced-labour/definition/lang–en/index.htm

[52]  In May 2018, the Indonesian authorities detained a Togo-flagged vessel described as a “slave ship” http://www.straitstimes.com/asia/se-asia/indonesia-seizes-alleged-slave-ship-wanted-by-interpol

[53]  It prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured child labour – including forced child labour. Such merchandise is subject to exclusion and/or seizure, and may lead to criminal investigation of the importer(s).

[54]  http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

[55]  In 2011 it was claimed that up to 810,000 tons of oily waste is intentionally and illegally dumped into the world’s oceans by commercial vessels.

[56]  In 2006, a ship registered in Panama, chartered by the Singaporean-based oil and commodity shipping company, offloaded toxic waste to an Ivory Coast waste handling company which disposed of it at the port of Abidjan, giving rise to a health crisis in the country.

[57]  On 21st February 2018, Skansen Interior Limited was found guilty of failing to prevent bribery under section 7 of the Bribery Act after the jury were unconvinced that the company had adequate procedures in place to prevent bribery.

[58]  For more information on trade-based money laundering see https://www.gov.im/media/1348726/notice-1000-man-trade-based-money-laundering-29-sep-17.pdf

[59]  https://www.icij.org/investigations/paradise-papers/offshore-gurus-help-rich-avoid-taxes-jets-yachts/

[60]  The classic example, would be a licence required from the UK for a UK company to ship arms from South Africa to India.

[61]  For more information see https://www.gov.im/media/814275/notice-279t-man-trade-control-licensing-27-10-16.pdf and https://www.gov.uk/government/publications/open-general-trade-control-licence-maritime-anti-piracy

[62]  See The Shipping Law Review: https://thelawreviews.co.uk/edition/the-shipping-law-review-edition-6/1195084/piracy

[63]  Piracy is defined in Article 101 of the UNCLOS as ‘any illegal act of violence or detention … committed for private ends by the crew … of a private ship … directed … against another ship … or against persons or property on board such ship’ on the high seas or in a place outside the jurisdiction of any state.

[64]  Although an attack on an Italian vessel in the Gulf of Mexico was reported in late 2019.

[65]  I am aware of such in the UK, and was personally responsible for drawing up such guidance in the Isle of Man, see: https://www.gov.im/media/1362739/terrorism-and-the-financing-of-terrorism-final-sept-2018-v2.pdf

[66]  The rule of thumb is that one can pay “ordinary” criminals, but not terrorists.

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OFAC ADDS SHANGHAI SAINT LOGISTICS LIMITED TO IRAN SANCTIONS LISTS

On 19 May, OFAC advised that SHANGHAI SAINT LOGISTICS LIMITED, with addresses in Beijing and Shanghai, had been added to its SDN List.  It is said to be a general sales agent (GSA) for or on behalf of Iranian airline Mahan Air, and this is the seventh designation of a GSA to Mahan Air since 2018.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200519.aspx

https://home.treasury.gov/news/press-releases/sm1014

 

 

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£8 MILLION LAUNDERED CRIMINAL MONEY RECOVERED BY NCA AFTER AN INVESTIGATION INTO A CORRUPT LIBERIAN SHIPPING BUSINESS ACCOUNT

A news release from the NCA on 19 May said that the money was part of a fund operated for the purpose of tax evasion, money laundering, bribery and corruption.  The NCA investigation began when Commerzbank AG London approached the National Economic Crime Centre after noticing unusual activity on an account held by a Liberian company called ‘The Albatross Limited’.  The company behind the account was incorporated in Liberia, West Africa, in the 1970s and was purportedly set up to operate large container ships for an international shipping company.

https://www.nationalcrimeagency.gov.uk/news/nca-recovers-8-million-linked-to-international-organised-crime

 

 

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UK COURT OF APPEAL: SUSPECT UNDER INVESTIGATION HAS REASONABLE EXPECTATION OF PRIVACY

On 19 May, the Law Society Gazette reported that the Court had dismissed an appeal by a news agency barred from revealing the identity of a US businessman identified in documents concerning a bribery probe.  It said that those under investigation by law enforcement bodies have a reasonable expectation of privacy up to the point they are charged.  The case involved a leaked mutual legal assistance sent from the UK to a foreign government.

https://www.lawgazette.co.uk/law/suspect-under-investigation-has-reasonable-expectation-of-privacy-coa-rules/5104320.article

 

 

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SOUTH AFRICA TRAFFICS THOUSANDS OF ENDANGERED WILD ANIMALS TO CHINA IN ‘CORRUPT AND GROWING’ TRADE

The Independent on 18 May reported that South African traders with China are illegally selling thousands of wild animals threatened with extinction and endangered, under the guise of legal exports, according to an investigation.  The report says at least 5,035 live wild animals were exported to China from 2016 to last year.

https://www.independent.co.uk/news/world/africa/china-wildlife-trade-coronavirus-south-africa-illegal-rhino-lion-bat-ems-a9513226.html

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 18

Panama Covid-19 update – the loudest, heaviest rain I’ve heard yet today, with more thunder, and it’s not the rainy season yet.  Meanwhile, 120 new cases (9,726 total, edging us towards the 10,000 mark) and 4 more fatalities, taking the total to 279.

18 May 2020

AUSTRALIA: ACCUSED MONEY LAUNDERER LINKED TO $10 MILLION FUNDING FOR AN STOCK EXCHANGE-LISTED COMPANY AIMING TO PRODUCE HAND CLEANSER

On 18 May, KYC 360 reported that a bankrupt underworld figure accused of cleaning money for drug kingpin Tony Mokbel is understood to have raised $10 million in funding for an ASX-listed company Skin Elements.

https://www.riskscreen.com/kyc360/news/accused-mokbel-money-launderer-linked-to-10m-bid-to-clean-hands/

GERMANY: BaFin ORDERS NOTICE ON ALL IRAN AND NORTH KOREA BUSINESS

Bird & Bird reported that the German Federal Financial Supervisory Authority (BaFin) issued a  requirement for written notice, with effect from 14 May, of all business and transactions conducted in connection with Iran or North Korea. The requirement affects all “obliged entities” covered by the country’s AML law and all insurance businesses supervised by BaFin.

https://www.twobirds.com/en/news/articles/2020/germany/bafin-orders-notice-on-all-iran-and-north-korea-business

THE IMPACT OF THE MALIAN CRISIS ON THE GROUP OF FIVE SAHEL COUNTRIES

The Stockholm International Peace Research Institute on 18 May published a paper saying that the so-called ‘Malian crisis’ has now become a regionally multidimensional crisis. Economic, social, political and human dimensions are fed by structural and continuing dissatisfaction of marginalized and vulnerable populations.  The fall of Muammar Gaddafi’s regime in Libya (2011) and the subsequent destabilisation of Mali (2012) have had protracted consequences throughout the Sahel region which was already affected by structural factors of fragility such as climatic, economic and development challenges.  This is the third paper from SIPRI on the situation and it analyses regional and national policy responses that—with limited success so far and to the detriment of development policy—aim to address key security challenges, as part of the “spillover” effects of the Malian crisis in the neighbouring states that make up the Group of Five Sahel (G5 Sahel) countries—Burkina Faso, Chad, Mauritania and Niger.

https://www.sipri.org/commentary/topical-backgrounder/2020/impact-malian-crisis-group-five-sahel-countries-balancing-security-and-development-priorities

UK: CHANGES TO AUTHORISED ECONOMIC OPERATOR (AEO) APPLICATIONS

On 18 May, HMRC advised in Customs Information Paper 6/2020 that applications must be submitted using the EU Customs Trader Portal from 1 June.  This will not change the way HMRC checks your application or visits your business before it approves your application.  You need to ask HMRC for access to the portal (which can take up to 5 days).

https://www.gov.uk/guidance/changes-to-authorised-economic-operator-applications-cip-6

EU SUED FOR FUNDING ‘FORCED LABOUR’ ERITREA HIGHWAY

On 13 May, EU Observer reported that a Dutch NGO is suing the EU for financing road work projects in Eritrea, a country where forced labour is used, amid calls by Green MEPs to suspend the funding.  Some €80 million of EU trust funds have been channelled into equipment and materials to renovate a highway.

https://euobserver.com/foreign/148353

PORTUGAL SUSPENDS FOREIGN WASTE IMPORTS

On 18 May, EurActiv reported that Portugal, which attracts huge mounds of rubbish from other European states because of its low waste management fees, has suspended imports of trash until the end of 2020 to protect domestic landfill capacity.  The country has already blocked 246,000 tonnes of trash from entering since the start of the year and no new imports will be accepted.

https://www.euractiv.com/section/circular-economy/news/portugal-suspends-foreign-trash-imports-to-cope-with-own-waste-surge/

DENMARK ADOPTS NEW DIVIDEND TAX MODEL AFTER MULTIPLE FRAUD CASES

On 18 May, BNN Bloomberg reported that Denmark is adopting broad changes to how foreign investors are refunded dividend taxes in the wake of the “Cum-Ex” tax scandal across Europe.  Denmark has filed cases against almost 500 firms and individuals across 5 countries for allegedly claiming refunds to which they weren’t entitled and has so far settled with 61 US pension funds to claw back about $233 million.

https://www.bnnbloomberg.ca/denmark-adopts-new-dividend-tax-model-after-multiple-fraud-cases-1.1437769

MORE THAN 300 CHANNEL ISLAND RESIDENTS HAVE HANDED OVER PREVIOUSLY UNPAID TAXES TO HMRC AMID A CRACKDOWN

Bailiwick Express in Guernsey on 18 May reported that 867 individuals living as “tax exiles” admitted previously failing to pay tax in 2018-19 compared to just 66 the previous year and, of these, 40% were residents of the Channel Islands,  Around 1 in 10 were from Isle of Man residents, while 6% were from residents of Switzerland.

https://gsy.bailiwickexpress.com/gsy/news/island-expats-cough-cash-amid-hmrc-corona-crackdown/#.XsKN90BFweE

REPORT REVIEWING THE EVIDENCE BASE ON UK CROSS-BORDER DIGITAL TRADE AND POTENTIAL IMPROVEMENTS TO DATA SOURCES

On 14 May, the UK Department for Digital, Culture, Media and Sport published a news release which said that, despite the growing importance of cross-border digital trade, little is known about its nature and scale. The report identifies possible sources of data on digital trade and compiles relevant statistics for the UK, and data gaps and proposes ways to fill them.

https://www.gov.uk/government/publications/understanding-and-measuring-cross-border-digital-trade

RWANDA GENOCIDE SUSPECT ARRESTED IN FRANCE WITH INTERPOL SUPPORT

A news release from Interpol on 16 May advised that Félicien Kabuga, indicted by the International Criminal Tribunal for Rwanda (ICTR), a man wanted in connection with the 1994 Rwandan genocide, and subject of an INTERPOL Red Notice, has been arrested by French police.  A Red Notice for the now 84-year-old was issued by INTERPOL in 2001 at the request of the ICTR.

https://www.interpol.int/News-and-Events/News/2020/Rwanda-genocide-suspect-arrested-in-France-with-INTERPOL-support

TUNISIA GOVERNMENT RELAUNCHES WAR ON CORRUPTION

On 15 May, Asharq-Al Awsat reported that the Tunisian government has decided to refer 21 high-ranking customs employees to compulsory retirement for suspected graft.  Government sources confirmed that the decisions fall in line with the anti-corruption campaign launched by Tunisian Prime Minister Youssef Chahed in 2017.

https://english.aawsat.com/home/article/2285206/tunisia-government-relaunches-war-corruption

ONLY THOSE CUSTOMS-AUTHORISED TO BE ABLE TO IMPORT TOBACCO PRODUCTS INTO NEW ZEALAND

On 15 May, Devdiscourse reported that the New Zealand Government will close a loophole that allowed some people to import cigarettes and loose-leaf tobacco for manufacturing cigarettes and ‘roll your owns’ without excise tax being paid. The legislation, which does not affect duty-free allowances for travellers, has been passed by Parliament.

https://www.devdiscourse.com/article/headlines/1051643-only-customs-permitted-to-be-able-to-import-tobacco-products-in-nz

GERMAN CUSTOMS SEIZED RECORD AMOUNT OF NON-EU DRUGS IN 2019

On 15 May, Xinhua reported that the German customs authority said it had seized “record quantities” of drugs originating in non-EU countries in 2019, with cocaine seizures at German ports increased to 10 tonnes.

http://www.xinhuanet.com/english/2020-05/15/c_139060376.htm

cbp

UK-FLAGGED TANKER REPULSES PIRATE ATTACK IN GULF OF ADEN

On 18 May, Hellenic Shipping News reported that armed pirates attacked a British-flagged chemical tanker in the Gulf of Aden but were repulsed.  The pirates approached the Stolt Apal in 2 speedboats some 75 nautical miles off Yemen.

https://www.hellenicshippingnews.com/uk-flagged-tanker-repulses-pirate-attack-in-gulf-of-aden-ship-manager/

PIRACY IS ON THE RISE, AND CORONAVIRUS COULD MAKE IT WORSE

On 18 May, Hellenic Shipping News reported that in 2019, there were fewer attacks and attempted attacks on ships than there had been in 25 years.  However, the first 3 months of 2020 have seen a 24% increase in pirate attacks and attempted attacks, over the same period in 2019.  The author of the article reports that the coronavirus pandemic may make piracy even more of a problem in the coming months and years.

https://www.hellenicshippingnews.com/piracy-is-on-the-rise-and-coronavirus-could-make-it-worse/

US: “MASSIVE FRAUD” AGAINST STATE UNEMPLOYMENT INSURANCE PROGRAMMES

The Krebs on Security blog on 18 May reported that a well-organized Nigerian crime ring is exploiting the COVID-19 crisis by committing large-scale fraud against multiple state unemployment insurance programmes, with potential losses in the hundreds of millions of dollar – filing unemployment claims in different states using Social Security numbers and other personally identifiable information (PII) belonging to identity theft victims.  The post refers to a US Secret Service memo on the matter.

https://krebsonsecurity.com/2020/05/u-s-secret-service-massive-fraud-against-state-unemployment-insurance-programs/

THE US HAS A CHANCE TO TARGET DEMAND-SIDE BRIBERY

A post on the FCPA Blog on 18 May says that while companies are prosecuted aggressively (in certain countries, like the US and UK at least) the misconduct by government officials typically escapes notice, or at least prosecution.  However, it says that the US Congress has a chance to establish one by adopting the Countering Russian and Other Overseas Kleptocracy Act (aka CROOK Act – you have to admit that the US comes up with good abbreviations…).

https://fcpablog.com/2020/05/18/the-u-s-has-a-chance-to-target-demand-side-bribery-with-the-crook-act/

MALAYSIA: MONEY LAUNDERING AND TAX EVASION CASE OF FORMER PM’S WIFE VACATED TO GIVE WAY TO AN ONGOING CORRUPTION CASE

The trial of the wife of former Malaysian PM Najib Razak, Datin Seri Rosmah Mansor, for money laundering and tax evasion , which was set for this month has been vacated to make way for her ongoing corruption trial involving the solar hybrid project for rural schools in Sarawak.  The judge, who is presiding both cases, said he is giving priority to the ongoing solar hybrid case before proceeding with the money laundering case.

https://www.bernama.com/en/general/news.php?id=1842701

UKRAINE UPDATES ITS RUSSIA SANCTIONS

On 18 May, EU Sanctions Blog reported that Ukraine has amended its Russia sanctions regime with effect from 14 May.  235 entities in total are currently subject to sanctions (233 having been delisted).  377 people (down from 848 in 2019) are subject to an asset freeze, travel ban, and a prohibition on participating in the privatisation of Ukrainian assets.  A new decree also renews the ban for 3 years on Russian ISP such as Mail.ru and Yandex, and Russian social media sites.

https://www.europeansanctions.com/2020/05/ukraine-updates-its-russia-sanctions-list/

US: TSA TO ‘MAXIMIZE INNOVATION AND TECHNOLOGY’ TO COUNTER INSIDER THREATS TO TRANSPORTATION

On 15 May, Homeland Security Today reported that the US Transportation Security Administration (TSA) has released a framework to thwart insider threats in the transportation sector. The Roadmap is intended to “streamline processes, identify requirements and capabilities, and leverage partnerships to proactively mitigate risks” associated with insider threats.  It says that TSA began conducting counter insider threat activities early in its existence and established a formal program in 2013. It has consistently identified insider threat among its enterprise-level risks.

https://www.hstoday.us/uncategorized/tsa-to-maximize-innovation-and-technology-to-counter-insider-threats-to-transportation/

CRIMINALS SET UP STALL ON UK GOVERNMENT IT MARKETPLACE TO PEDDLE EMAIL FRAUD SERVICES TARGETING ‘GULLIBLE’ PUNTERS

The Register on 18 May reported that the Cabinet Office has confirmed that scammers and/or jokers broke into the UK government’s Digital Marketplace to promote a round-the-clock “bespoke” fraudulent email service that preys on “gullible consumers”, at £10,000 a time, from “Fraud Consulting Ltd”.

https://www.theregister.co.uk/2020/05/18/uk_g_cloud_fraud_as_a_service/

FOLLOW THE FBI’S SWEEPING LA CITY HALL CORRUPTION INVESTIGATION THROUGH THE YEARS

On 18 May, Laist.com published an article saying that it has attempted to assemble the full scope of the FBI investigation into Los Angeles city hall using piecemeal documents and snippets of information that have been released so far. To help keep track of what it knows, it put together a timeline combining important dates and milestones, starting in 2016.

https://laist.com/2020/05/18/los-angeles-city-hall-fbi-corruption-investigation-timeline-englander-huizar.php

DEMOCRATIC REPUBLIC OF CONGO WILL NOT RENEW A CONTRACT WITH BELGIAN MANUFACTURER SEMLEX TO MAKE ITS PASSPORTS

The Daily Maverick in South Africa reported on 18 May that prosecutors have been investigating allegations of money laundering and corruption by Semlex, which makes biometric passports for DRC under a contract agreed under former President Joseph Kabila that expires on 11 June.  It says that, at $185, Congo’s passport is among the world’s most expensive, even though its people are on average among the poorest.

https://www.dailymaverick.co.za/article/2020-05-18-congo-says-it-wont-renew-contract-with-passport-maker-semlex

LEBANESE CENTRAL BANK OFFICIAL CHARGED IN CURRENCY PROBE

On 18 May, AP reported that a Lebanese prosecutor has charged a senior central bank official – Mazen Hamdan, the head of cash operations at the bank – with manipulation of the exchange rate and money laundering as part of an ongoing probe amid the country’s financial turmoil.  He is the most senior official to be named in an ongoing probe into possible financial wrongdoing against the backdrop of a deepening liquidity crunch, negative economic growth, soaring inflation and a massive state debt.

https://apnews.com/5dd4cdddf278e7259ee848fa61002657

17 COUNTRIES FAIL TO IMPLEMENT EU FIFTH AML DIRECTIVE

On 18 May, STEP reported that the EU Commission has now launched enforcement action against more than half of the EU’s Member States for failing to fully transpose the 5AMLD into their national law by the 10 January.  The UK and 8 Member States – Austria, Belgium, the Czech Republic, Estonia, Greece, Ireland, Luxembourg and Poland – received letters of formal notice.

https://www.step.org/news/seventeen-countries-fail-implement-eu-5amld

THE ESTONIAN COMPANY FORMATION AGENT, A KIEV CALL CENTRE SCAM, CARIBBEAN SHELL COMPANIES AND POOR SWEDES

On 18 May, OCCRP provided further information linked to the alleged call centre scam for defrauding people across the world by convincing them they were making investments in stocks, bitcoins, and foreign currencies through legitimate financial firms. The scheme is currently under investigation in Sweden.  All 61 Estonian companies found to be linked to the so-called Milton Group were set up by the same Estonian company formation agent – who denies involvement in any crime. The agent offers off-the-shelf firms for prices starting at €600, and virtual office services, including a contact person and mail forwarding, for an additional €500 a year.  25 of the companies in the Estonia-St. Vincent network have Swedish directors or owners, most of them hail from Stockholm or small towns nearby and several are related to each other.  However, these Swedes are unlikely company directors, and at least one claims that his identity must have been hijacked.

https://www.occrp.org/en/fraud-factory/fraud-factory-firms-traced-to-penniless-proxies

MOLDOVA ACCUSES TYCOON OF INVOLVEMENT IN $1 BILLION FRAUD

On 18 May, Reuters reported that Moldova’s Prosecutor General said that one of the country’s richest people, Vladimir Plahotniuc, had been charged with involvement in the theft of $1 billion from Moldovan banks in 2014-2015 – which saw the equivalent of an eighth of the republic’s GDP stolen from 3 of its largest banks.  Moldova has already jailed former prime minister Vlad Filat and businessman Veaceslav Platon in connection with the scandal, in which money was for year siphoned overseas through dubious loans, asset swaps and shareholder deals.

https://www.reuters.com/article/us-moldova-plahotniuc-crime/moldova-accuses-tycoon-of-involvement-in-1-billion-fraud-idUSKBN22U27T

HONG KONG SFC FINES FIRM OVER $110 MILLION THIRD-PARTY DEPOSITS WITH NO REVIEW OF SOURCE OF FUNDS

On 18 May, Finance Magnates reported that the Securities and Futures Commission has fined Southwest Securities (HK) HK$5 million for failing to meet AML/CFT laws.  It is said that the listed brokerage firm violated the rules in 2016, as it did not conduct relevant CDD and handled third-party deposits without auditing the names of the originators.

https://www.financemagnates.com/forex/brokers/hong-kong-sfc-fines-southwest-securities-over-third-party-deposits

E62CBC95-CFDE-4F9F-B4BF-7B9890B03FEF_w1300_r0

https://www.rferl.org/a/russia-pakistan-among-biggest-spenders-on-nuclear-weapons/30618712.html

US: CIVIL ACTION FILED TO FORFEIT RARE CUNEIFORM TABLET FROM HOBBY LOBBY

On 18 May, a news release from Immigration and Customs Enforcement advised that a civil complaint has been filed to forfeit a rare cuneiform tablet bearing a portion of the epic of Gilgamesh, a Sumerian epic poem considered one the world’s oldest works of literature. Known as the Gilgamesh Dream Tablet, it originated in modern-day Iraq and entered the US contrary to federal law. The tablet was later sold by an international auction house to Hobby Lobby Stores Inc, a prominent arts-and-crafts retailer based in Oklahoma City, for display at the Museum of the Bible.

https://www.ice.gov/news/releases/civil-action-filed-forfeit-rare-cuneiform-tablet-hobby-lobby

 

 

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VESSEL MONITORING AND P&I INSURANCE – NEW GUIDANCE

On 18 May, Insurance Maritime News reported that the International Group of P+I Clubs has released a circular, published by all its Group Clubs, on common standard for vessel tracking, saying that the ability to track vessels using their Automatic Identification Systems (AIS) has become an increasingly important part of Clubs’ sanctions compliance programmes. All International Group Clubs have now agreed a common minimum standard of tracking.

https://insurancemarinenews.com/insurance-marine-news/vessel-monitoring-and-pi-insurance-international-group/

A copy of the Cicular is at –

http://www.gard.no/Content/29697320/MemberCircular_5_2020.pdf

 

 

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LATVIA CHARGES EX-SWEDBANK EMPLOYEES WITH MONEY LAUNDERING

On 18 May, OCCRP reported that Latvia’s Prosecution Office pressed charges against 11 people, including former Swedbank’s employees, accusing them of money laundering.  The accused employees have allegedly ignored AML procedures, allowing suspicious transactions to take place for years, all the way to 2017.

https://www.occrp.org/en/daily/12362-latvia-charges-ex-swedbank-employees-with-money-laundering

 

 

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MONEY LAUNDERING ON LONDON’S STREETS – REMITTANCE AND FOREIGN EXCHANGE SHOPS

On 17 May, an article from Politico claims that loopholes in Britain’s cash transfer system fuel a surge in crime and drug trade.  It says that money remittance and foreign exchange shops on high streets are the lifeblood of immigrant communities who send funds home, but in London, they are also playing a key role in a vicious drugs trade and fuelling a surge in violent crime.  London is said to have 9,000 such shops, according to the latest data, but police and industry representatives say the real number is likely to be much higher because many operate without registration.  The NCA estimates that at least £1.5 billion in criminal proceeds are laundered through MSB in the UK every year, the majority of it in London. In February, the NCA published an Amber Alert to warn registered MSB that serious organised crime networks were specifically targeting the sector for its weaknesses in detecting dirty cash.  Another problem highlighted is that responsibility for cleaning up the sector lies with 3 institutions that only rarely work together: HMRC; the Financial Conduct Authority (FCA), which oversees most companies in the finance sector; and the police.

https://www.politico.com/news/2020/05/17/money-laundering-on-londons-streets-264793

 

 

 

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EUROPEAN COMMISSION’S AML ACTION PLAN

On 13 May, Wilmer Hale published an article saying that on 7 May the Commission issued a comprehensive and ambitious Action Plan and public consultation designed to strengthen the EU legal framework to fight against money laundering and terrorist financing, following a wave of recent high-profile money laundering scandals at European banks. The article focuses on the Action Plan’s proposal to establish a new EU-level supervisory and enforcement body to monitor and enforce companies’ compliance with EU AML/CFT legislation.  The Action Plan is built on 6 pillars aimed at harmonising EU rules.  Available for consultation, respondents have until 29 July to reply.

https://www.wilmerhale.com/en/insights/blogs/WilmerHale-W-I-R-E-UK/20200513-closing-the-door-on-dirty-money-the-european-commissions-antimoney-laundering-action-plan#page=1

 

 

 

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COORDINATING SANCTIONS AFTER BREXIT: CONSIDERATIONS FOR THE FUTURE OF UK SANCTIONS POLICY

An Occasional paper from RUSI on 13 May considers how the UK will coordinate sanctions initiatives with its allies after Brexit.  It outlines both the benefits and challenges that the UK will face when coordinating sanctions with the EU and the US.  While sanctions coordination with the EU might be easy in the short term, it says, maintenance of this coordination will become increasingly challenging without a formalisation of sanctions communication channels and a strengthening of the EU’s own implementation and enforcement mechanisms.  While coordinating with the US on sanctions will no doubt provide added impact for UK sanctions measures, the paper finds that the ‘special relationship’ which UK has pursued for decades with the US in other areas of defence and security is not fit for the sanctions realm.

https://rusi.org/sites/default/files/20200513_sanctions_web.pdf

 

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THINGS YOU MAY HAVE MISSED – MAY 17

Panama Covid-19 update – Sunday lockdown, just as well with heavy rain, lightning and thunder like the crack of doom in the afternoon… Meanwhile, it has been announced that 157 new cases, taking us closer to the 10,000 mark at 9,606.  There have been 6 more fatalities, making it 275 to date in the just over 2 months since the state of emergency began.  69 people are in ICU, a considerable reduction on previous totals – though whether this reflects those recovered or died is unclear.  However, the Rt rate is still quoted at 1.336, so I guess there won’t be any major changes to controls in the near future.

17 May 2020

HOW CHINESE PROSPECTORS EXPLOIT LOCAL MINERS TO CASH IN ON NIGERIA’S GOLD

On 17 May, Punch in Nigeria reported that the The absence of a ready market for Nigerian artisanal miners to sell their products paved the way for Chinese nationals to take over the illegal mining of gold in the country, and the Chinese are largely behind the smuggling of gold out of Nigeria, a lucrative venture which has resulted in the loss of billions of dollars in revenue for the Federal Government.

https://punchng.com/how-chinese-prospectors-exploit-local-miners-to-cash-in-on-nigerias-gold/

CHINESE POLICE UNCOVER SCAM THAT STOLE 46,000 BITCOIN FROM VICTIMS

On 17 May, Zycrypto reported what it described as a scam called WoToken. The police investigators uncovered more than 500 levels of the hierarchy inside the Ponzi scheme, with over 700,000 registered users.  The scheme is alleged to have stole more than 46,000 bitcoins, 56,000 BCH coins, 2.039 million ETH, 292,000 Litecoin, and 684,000 EOS; and obtained over $1 billion.

https://zycrypto.com/chinese-police-uncover-plustoken-like-scam-scheme-that-stole-46000-bitcoin-from-victims/

US: PROTECTING ATTORNEY WORK PRODUCT IN INTERNAL INVESTIGATIONS – WHAT IS PROTECTED BY PRIVILEGE

An article from Hogan Lovells on 16 May concerned a case involving interview memoranda drafted following an internal investigation conducted on behalf of a company’s audit committee to address issues that independent auditors flagged and, the company argued, in anticipation of potential litigation with the SEC.  However, the district court rejected the argument, and found that outside counsel’s memoranda were not created in anticipation of litigation and thus, the work product protection did not apply.

https://www.jdsupra.com/post/fileServer.aspx?fName=49c940e2-e1c7-4e39-831b-a005a09767e4.pdf

MEDIA IN THE EAST CARIBBEAN BUZZING ABOUT THE EXPOSURE OF CORRUPTION IN CARIBBEAN CRICKET

On 17 May, Kenneth Rijock in his blog said that Michael Holding, one of the world’s most prominent bowlers, and a well-known commentator, has exposed 3 specific instances of corruption.  Also involved is a $134,000, reportedly made from an anonymous offshore account, in Dominica that is said to be disappeared.

http://rijock.blogspot.com/2020/05/dominica-implicated-in-caribbean.html

EXEMPTIONS FROM LIABILITY UNDER THE UN CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) IN A SITUATION WHERE THE SELLER BREACHES THE CONTRACT BY FAILING TO DELIVER THE GOODS DUE TO COVID-19

On 17 May, Jurist carried a guest article asking if there are any exemptions from liability under the United Nations Convention on Contracts for the International Sale of Goods (CISG) in a situation where the seller breaches the contract by failing to deliver the goods due to COVID-19.  It says that international trade of goods across borders is conducted within a complex web of international and domestic regulations and involves a complex set of arrangements between sellers/exporters and buyers/importers. However, it concludes that any successful application of an exemption, due to COVID-19, would be decided on a case by case basis.

https://www.jurist.org/commentary/2020/05/israr-khan-cisg-covid19/

BILLIONAIRE DIVORCE UNCOVERS SECRETIVE WORLD OF TRUSTS IN SOUTH DAKOTA

On 6 May, CNBC carried an article saying that the divorce case offers a rare window into the highly secretive world of asset trusts in South Dakota and says that South Dakota is fast becoming a mini-Switzerland for the world’s rich trying to shield their assets.  It is said that analysts and local politicians estimate that $250 billion to $900 billion is now stashed in South Dakota trusts by the likes of Chinese billionaires looking to keep their fortunes out of reach of the government, Europeans looking to avoid taxes and Americans looking to shield wealth from spouses.  In the divorce case, it is alleged before the divorce, according to the lawsuit, the husband transferred assets into new trusts that limited or shut out the wife’s interests and, in keeping with South Dakota law, he was not required to notify her of the changes, according to the lawsuit.

https://www-cnbc-com.cdn.ampproject.org/c/s/www.cnbc.com/amp/2020/05/06/how-marie-and-ed-bosarges-divorce-spotlights-south-dakotas-asset-trusts.html

MANAGING SEMICONDUCTOR US EXPORTS TO CHINA

On 5 May, a paper from the Center for Strategic and International Studies discussed the problem of controlling semiconductor exports to China, arguing that the goal is (or should be) not to prevent China from building its own semiconductor industry. The US can slow this, but it cannot stop it – the goal is (or should be) to keep the US semiconductor industry strong.  It argues that the Trump Administration should base decisions on 2 general criteria the measures should not harm US companies more than China, and the measures should not be symbolic, attempting to restrict sales or transfers of commodity technologies or technologies available from foreign sources.  It goes on to provide 7 conclusions that can help guide US policy on semiconductors and China.  It does say that export controls should be part of a larger strategy, and that the best outcome would let US companies continue to sell to China to protect market share and revenue in ways that do not give China strategic advantage, and that export regulation is essential but not sufficient.

https://www.csis.org/analysis/managing-semiconductor-exports-china

GERMANY EXPORTS MILLIONS IN ARMS TO LIBYA WAR BELLIGERENTS, DESPITE EMBARGO

On 17 May, Deutsche Welle reported that despite supporting an embargo, Germany has exported €330 million in weapons to countries involved in the war in Libya.  Between 20 January and 3 May, Germany approved €308.2 million in arms destined for Egypt alone.  It also approved €15.1 million in arms exports for Turkey and €7.7 million for the UAE.  Turkey supports the Government of National Accord (GNA), which is backed by the UN, while Russia, Egypt, and the UAE support rival forces led by Khalifa Haftar.

https://www.dw.com/en/germany-exports-millions-in-arms-to-libya-war-belligerents-despite-embargo

 

 

 

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OTHER THINGS YOU MAY HAVE MISSED – MAY 16

Panama Covid-19 update – today was the first Saturday for a month when men (Saturday being a “man” day) were allowed out to shop, during their 2-hour time slot.  For the past month the weekend has seen a total lockdown, but from this week this applies only to Sunday.  Also, from Monday one is permitted to exercise outside your property, but only in the immediate vicinity, within 1 km of your home – running, skating and cycling is mentioned (but how much cycling can you do within a 1 km limit?).  I obviously went out to do a bit of shopping, avoiding the police checkpoint on a side road (they were more interested in checking cars), to at least get a bit more exercise (I am lucky to have a set of exercise machines on the veranda to use, while watching the birds and squirrel on the bird feeder)…

Meanwhile, 181 new cases (now 9,449 total to date), with 3 more fatalities (the total to date now being 269).  More worrying is that the Rt infection rate has seemingly risen to 1.336, which is not good.

16 May 2020

JAMAICA: CANNABIS LICENSING AUTHORITY PROTOCOLS TO FACILITATE THE IMPORT AND EXPORT OF CANNABIS BY LICENSEES

A news release from the Jamaica Information Service on 15 May advised that the CLA has put in place protocols to facilitate the import and export of cannabis by licensees, as it awaits promulgation of the Dangerous Drugs (Cannabis Import and Export Licensing) Regulations 2020.  When the import/export regulations are promulgated, Jamaica will be one of 10 countries in the world with an export regime.  Cannabis or its oil has already been exported to Canada, Australia and the Cayman Islands.  The CLA has issued 60 licences since October 2017 and 15 export authorisations to seven licensees since November 2018.

https://jis.gov.jm/cla-facilitating-import-and-export-of-cannabis-as-it-awaits-regulations/

DESPITE VAST OIL RESERVES, VENEZUELA SMUGGLING GASOLINE FROM COLOMBIA AND BRAZIL

On 15 May, Insight Crime reported that, despite having the world’s largest oil reserves, years of mismanagement and theft have led Venezuela to a bizarre turn of events.  Gasoline is so scarce in the country that, in recent months, smugglers have been bringing it in from Colombia and Brazil.

https://www.insightcrime.org/news/analysis/venezuelas-gasoline-colombia-brazil/

CHINESE AUTHORITIES SEIZE 1,600 SMUGGLED SHRIMP BROODSTOCK.

On 15 May, Undercurrent News carried a report saying that the broodstock that had been smuggled into China, probably via Vietnam and from the US or Thailand. Broodstock are mature animals for use in breeding.

https://www.undercurrentnews.com/2020/05/15/chinese-customs-seize-1600-smuggled-shrimp-broodstock/

FinCEN FINDS STRONG CORRELATION BETWEEN COVID-19 AND DIGITAL CURRENCY SCAMS ENCOURAGES INSTITUTIONS TO STAY ALERT

On 16 May, Coingeek reported that the FinCEN Director has said that FinCEN has noticed an increase in coronavirus-related digital currency scams and exploitation. FinCEN had already called in a 16 March news release for financial institutions to stay alert as the virus spread.

https://coingeek.com/fincen-finds-strong-correlation-between-covid-19-and-digital-currency-scams

https://www.fincen.gov/news/news-releases/financial-crimes-enforcement-network-fincen-encourages-financial-institutions

AUTHORITIES BUST ROMANIA AND MOLDOVA-BASED HACKING GROUP TARGETING HOSPITALS

On 15 May, Stiripesurse in Romania reported that prosecutors and judicial police conducted 3 home searches in Romania and Moldova at the members of a hacker group dubbed “Pentaguard” and aimed at dismantling an organised criminal group specializing in cybercrime.

https://www.stiripesurse.ro/authorities-bust-romania-and-moldova-based-hacking-group-targeting-hospitals_1465236.html

UK RUSSIAN AIRLINE BOSS ACCUSED OF £2.3 MILLION FRAUD SAYS SHOULD NOT BE EXTRADITED BECAUSE JAILS ARE UNSAFE

On 15 May, the Daily Mail reported that a Russian airline boss accused of a £2.3 million fraud should not be extradited because jails in her homeland are unsafe, a London court has been told.  Prosecutors claim Alevtina Kalashnikova, 46, stole money whilst while working at VIM Airlines between 2014 and 2017 and allegedly worked alongside CEO Alexander Kochnev to use the now defunct air carrier as a pyramid scheme moving foreign currency into their own accounts.  CEO Alexander Kochnev and Chief Accountant Yekaterina Panteleyeva were arrested in Russia in 2017.

https://www.dailymail.co.uk/news/article-8324211/Russian-airline-boss-46-accused-2-3million-fraud-VIM-not-extradited-court-hears.html

EX-RUSSIAN BANKERS GUILTY OF MULTI-BILLION DOLLAR FRAUD

Credit Strategy on 15 May reported that staff from Mazars, the international advisory firm, have been appointed as joint trustees in the bankruptcy of Ilya Yurov and Nikolay Fetisov, the former owners of Russian bank National Bank Trust (NBT), which had over 1.5 million depositors and collapsed in December 2014.  In January 2020, the High Court in London handed down a judgment which established that Yurov and Fetisov, along with a third owner, Sergey Belyaev, were involved in a significant fraud.  The trustees will work to recover the bankrupts’ assets for the benefit of the creditors, including NBT.

https://www.creditstrategy.co.uk/turnaround-restructuring-insolvency-news/mazars-appointed-as-trustees-to-ex-russian-bankers-guilty-of-multi-billion-dollar-fraud

6 TEXAS PHARMACY OWNERS AND MARKETERS CHARGED IN $14 MILLION KICKBACK SCHEME

A news release from the US DoJ on 13 May advised that 6 Dallas-area pharmacy owners and marketers have been charged in a superseding indictment for their roles in a scheme involving compound drug claims to TRICARE and the US Department of Labor (DOL), the vast majority of which were the product of over $14 million in illegal kickbacks and bribes.  It is alleged that the conspirators allegedly engaged in a scheme to pay kickbacks and bribes for the referral of TRICARE and DOL beneficiaries to obtain expensive compound drugs.

https://www.justice.gov/opa/pr/six-texas-pharmacy-owners-and-marketers-charged-14-million-kickback-scheme

CHINA BLACKLISTS 6 EXECUTIVES LINKED TO $4.2 BILLION FRAUD

On 15 May, Accounting Today reported that China’s securities regulator has blacklisted 6 executives for their role in a $4.2 billion accounting scandal at Kangmei Pharmaceutical Co., one of the country’s biggest drugmakers.

https://www.accountingtoday.com/articles/china-blacklists-six-executives-linked-to-4-2b-fraud

JOHANNESBURG FAMILY ACCUSED OF RUNNING SOUTH AFRICA’S BIGGEST CANNABIS CARTEL RETURNS TO COURT

IOL on 15 May reported that Patrick Brass, 64, and his 10 co-accused that include his ex-wife Vanessa, 3 sons, Jared, Wade and Justin, and 6 others, had secured a stay of prosecution in August 2018.  The Brass family and co-accused had successfully argued that prosecuting them while a case concerning legality of dagga use was still pending at the highest court was prejudicial.  However, the subsequent case had the effect that it legalised smoking of dagga and cultivating of dagga (cannabis) in one’s home, but did not legalise large-scale cultivating and trading of dagga.

https://www.iol.co.za/the-star/news/joburg-family-accused-of-running-sas-biggest-dagga-cartel-returns-to-court-47978080

GUERNSEY: NEW INSOLVENCY REFORMS

An article from Ogier on 14 May says that Guernsey has recently approved a significant set of reforms to our insolvency legislation, to bring it in line with comparable jurisdictions such as England.  A rules committee is also working on a set of corresponding rules to deal with the finer procedural points that affect a Guernsey insolvency.  A separate blog post from Ogier explained the new reforms. However, this article sets out to review the reforms in the context of the wider cross-border insolvency piece, alongside existing case-law, and examine how Guernsey can, and will, play its part in cross-border insolvencies and restructurings that will be an inevitable consequence of the current COVID-19 pandemic.

https://www.ogier.com/publications/crossing-borders-in-guernsey-insolvency-reforms

MARKETPLACES THAT ARE REPORTEDLY NOTORIOUS FOR BEING COUNTERFEIT HAVENS: BELARUS

An article from Gowling WLG on 14 May is the latest instalment in a regular series on marketplaces around the world that are reportedly notorious for being counterfeit havens.  It looks at Belarus, described by Interpol as a targeted transit country for crime groups smuggling illicit merchandise between Asian and European market.  It is said that, in the context of the Belt and Road Initiative, the governments of China and Belarus recently joined in an effort to tackle the international trade in counterfeit goods.  It is said that counterfeit goods found in Belarus are mainly manufactured and imported from outside of the country. Therefore, the most effective anti-counterfeiting measures are those taken to stop counterfeit goods from entering the country at the border.

https://gowlingwlg.com/en/insights-resources/articles/2020/counterfeit-hotspots-in-belarus/

IRAN COMPLAINS INSTEX TRANSACTIONS UNSATISFACTORY

On 16 May, an article in Eurasia Review reported that Iran’s deputy foreign minister for economic diplomacy expressed dissatisfaction with the volume of transactions that Tehran has been able to carry via a financial mechanism the EU has devised for trade with Iran, known as INSTEX.

https://www.eurasiareview.com/16052020-iran-complains-instex-transactions-unsatisfactory/

US AUTHORITIES GUIDANCE INCREASES EXPECTATIONS FOR OFAC SANCTIONS RISK ASSESSMENTS AND COMPLIANCE DUE DILIGENCE RELATED TO MARITIME INDUSTRY

A briefing from Clifford Chance followed the recent Advisory from OFAC and others: “Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities”.  This discusses 7 recent trends in deceptive shipping practices in trade connected to Iran, Syria, and North Korea and suggests way to enhance and adapt due diligence and sanctions compliance policies and procedures to better identify those trends and to manage associated sanctions risks.  The brief says that the Advisory significantly “raises the bar” for what the US authorities will consider adequate sanctions risk controls for the industries discussed, and companies are well advised to check their current controls and practices against it.

https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2020/05/Rising-Tide-US-Authorities-Guidance-Increases-Expectations-for-OFAC-Sanctions-Risk-Assessments-and-Compliance-Due-Diligence-Related-to-Maritime-Industry.pdf

THE WHITE HOUSE ESTABLISHES “FORCED LABOR ENFORCEMENT TASK FORCE”

On 15 May, Crowell Moring published an article saying that, on May 15, President Trump issued an Executive Order establishing the “Forced Labor Enforcement Task Force” required by the US-Mexico-Canada Agreement (USMCA) implementing Act.  That Act requires the Department of Homeland Security to establish a Task Force as the central hub for the US Government’s enforcement of the prohibition on imports made through forced labour – and to improve coordination among US agencies to prohibit forced labour imports and ensure the continuation of forced labour prohibition under US law.

https://www.cmtradelaw.com/2020/05/the-white-house-establishes-forced-labor-enforcement-task-force-under-section-741-of-usmca-implementation-act/

UK: TORY MONEY DONOR RICHARD COOK LINKED TO ROW INVOLVING FRAUDSTER

The National in Scotland, and others, on 16 May reported that a former Scottish Tory candidate at the heart of the Brexit dark money row has found himself caught up in a million pound scandal involving a bankrupted Ayrshire businessman, a convicted American fraudster,  oil wells in Houston, the “Old Firm” (i.e. Glasgow’s Celtic and rangers football clubs), and at least 34 out-of-pocket investors. The sources claims that East Renfrewshire businessman and political donor, Richard Cook, was a trustee on a deed of trust between a Scottish company known as HGEC Capital Ltd and a Texas oil firm run by a man described by a judge almost a decade earlier as “a repeat offender with criminal convictions for securities fraud”.

https://www.thenational.scot/news/18454980.tory-dark-money-donor-richard-cook-linked-row-involving-fraudster/

https://www.opendemocracy.net/en/dark-money-investigations/exclusive-dup-dark-money-man-in-very-unusual-investment-scandal/

THE STRATEGIC IMPLICATIONS OF INDIAN CORRUPTION

The Diplomat on 13 May carried an article about what it describes as a massive network of corruption now being unravelled which has major geopolitical and security implications that reach far beyond India.  It warns of risks to potential investment in India as a series of court cases currently underway in India is starting to explain why India has not yet lived up to its potential. What is being alleged is a decades-long complex, sophisticated, high-stakes scheme that led to the multibillion-dollar capture and manipulation of core elements of the Indian economy, masterminded by some of India’s most senior leaders. It says that the highest profile arrest so far is India’s former finance minister, Pallaniappan Chidambaram.

https://thediplomat.com/2020/05/the-strategic-implications-of-indian-corruption

LEBANESE ARMY ARRESTS 16 OVER MONEY EXCHANGE FRAUD

Al Arabiya on 16 May reported that 16 people in Lebanon, mostly Syrians, have been arrested for money transfers and “illegal” currency exchange operations using licensed companies and offices as a front, in a government crackdown on exchange rate manipulation.

https://english.alarabiya.net/en/business/economy/2020/05/16/Lebanon-army-arrests-16-over-money-exchange-fraud.html

 

 

 

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SOME SYNTHETIC BIOLOGY MAY NOT BE COVERED BY THE BIOLOGICAL WEAPONS CONVENTION

An article in Lawfare on 14 May says that while today viruses are considered to be an infectious biological agent and are categorically banned as a method of warfare by the Biological Weapons Convention, some types of synthetic biology (SynBio) may pose a similar dilemma and yet may not be covered by the same restrictions.  It says that SynBio includes a host of technologies used to redesign organisms by engineering them to have new properties or abilities, or to use nonbiological materials that mimic biological effects, and a scientific uncertainty has opened a lacunae in the law, and it is unclear whether the member states of the BWC can close it.

https://www.lawfareblog.com/some-synthetic-biology-may-not-be-covered-biological-weapons-convention

 

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SCOTTISH FIRMS LOOM LARGE IN UKRAINE DIRTY MONEY BLACKLIST

On 16 May, The Scotsman carried a feature on how an analysis of Ukrainian government public records gives another glimpse at just how often UK corporate entities are being red-flagged in that country.  It found that more than 700 Scottish, English, Welsh and Northern Irish firms are “blacklisted” in Ukraine.  It says that the businesses are all listed on a searchable database of thousands of international corporate entities subject to special sanctions, usually because of suspicious money transfers.  It is said that Ukraine introduced its blacklist at the turn of the century as it tried to stem capital flight and address irregularities in the movement of money.  It lifted its regime of special licensing in 2019 but the economy ministry still publishes a searchable database of international companies which were subject to the rules.

https://www.scotsman.com/news/politics/revealed-scottish-firms-loom-large-ukraine-dirty-money-blacklist-2855719

 

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UK: CORPORATE CRIME – THE “DIRECTING MIND AND WILL” OF A COMPANY

2 posts from law firm Herbert Smith Freehills on 5 and 15 May were concerned with 2 recently released judgments in the UK which consider the “directing mind and will” of a company. The cases concern charges against Barclays plc and Barclays Bank plc relating to events flowing from the 2008 global financial crisis. The courts found that senior executives, including the CEO and CFO, did not represent the required “directing mind and will” of Barclays in the circumstances.  The judgments examined the well-known (and criticised) doctrine of “identification” and who constitutes the “directing mind and will” of a company and provide practical lessons on corporate governance in the criminal context.

https://hsfnotes.com/corporate/2020/05/15/corporate-crime-the-directing-mind-and-will-of-a-company

https://hsfnotes.com/fsrandcorpcrime/2020/05/05/no-directing-mind-and-will-found-in-sfo-prosecution-of-barclays/

 

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