Insight Crime on 20th May reported that a Venezuelan criminal gang known as “Evander” has migrated to the Caribbean nation of Trinidad and Tobago — sounding alarms about the expansion of organised crime elements to the islands amid Venezuela’s collapse. Evander (or the Deltano Liberation Front) is described as a Venezuelan megabanda (a criminal gang with more than 100 members).
Calvin Ayre on 20th May reported that the Omsbudsman said there should be an explicit carve-out for state-run lottery operations.
Accountancy Today on 20th May reported that the Joint Committee on the draft Registration of Overseas Entities Bill has issued a pre-legislative scrutiny report saying that loopholes in the new draft legislation against money laundering through the UK property market “need to be addressed”. It calls for its concerns to be rectified to ensure that the legislation “successfully deters money laundering in the UK property market”. The article mentions 5 areas of concern of the Committee, including enforcement, trusts, exemptions and out of date information.
20th May 2019
JAPAN WEIGHS EXPORT CONTROLS FOR CUTTING-EDGE TECH
Nikkei Asia Review on 19th May reported that Japan is considering restricting exports of advanced technology used in such applications as artificial intelligence and robots, following the lead set by recent American measures aimed at China.
AN ALARMING PICTURE OF ISRAELI EXPORT SALES
On 19th May, Haaretz reported on an Amnesty report is also said to show arms sales to 8 countries which violate human rights – including Mexico, South Sudan, Myanmar and UAE. The report calls for an overhaul of the export licensing system. It points out that Israel signed the UN Arms Trade Treaty, but its parliament has not ratified it. The relevant 2007 export control law does not impose a restriction involving cases where international or humanitarian law may be infringed.
IRAN’S TRICK TO SELL OIL FOR A 30% PREMIUM
Oil Price.com on 19th May reported that Iran has now reached an agreement with the Federal Government of Iraq in Baghdad to expand co-operation between the countries in the economically vital oil sector, including, critically, the sale of Iranian oil under the guise of Iraqi oil. It says that this trick was first used when the last full-scale international sanctions were increased in 2012. The immediate focus of the co-operation on shared fields will be the huge reservoirs under certain oil fields. It says that a key part of the co-operation agreement – which relates to joint pricing and marketing – is also going to be of huge monetary benefit for Iran, whilst bolstering Iraq’s burgeoning status as a top 5 global oil player, and it is said that a vast proportion of all Iran’s oil can be shipped to wherever Iraq oil is welcome, which is every major export destination in the world.
10 ANCIENT GREEK COINS RETURNING TO GREECE FROM THE US
The National Herald on 20th May reported that 10 ancient coins looted from Greece are to find their way back home after they were returned to Greek diplomatic authorities by the Department of Homeland Security in a ceremony at the Greek consulate in San Francisco. 5 of the coins tracked down had originally travelled to the opposite shore of the Atlantic via an internet company based in Munich. The coins had been minted on various Aegean islands and dated to about 600 BC and were then returned on the basis of an agreement signed by Greece and the US in 2011 concerning cultural goods and fighting antiquities smuggling.
DEUTSCHE BANK EMPLOYEES “FLAGGED SUSPICIOUS TRUMP, KUSHNER TRANSACTIONS”
Global News and others reported on 19th May an article in the New York Times that claimed that AML specialists at Deutsche Bank AG recommended in 2016 and 2017 that multiple transactions involving entities controlled by President Trump and his son-in-law, Jared Kushner, be reported to FinCEN, but that the Bank rejected employees’ advice and the reports were never filed.
CHINESE FIRMS’ MISSING $6 BILLION TESTS REGULATORS’ RESOLVE
KYC 360 on 20th May reported that the combined $6.1 billion from 2 Chinese companies – Drugmaker Kangmei Pharmaceutical Co Ltd and Kangde Xin Composite Material Group Co Ltd – has dumbfounded investors and forced regulators to take action. Regulators are investigating both cases and neither company has offered detailed explanations for the missing billions.
JERSEY’S TRUST SECTOR – LATEST DEVELOPMENTS AND TRENDS
On 16th May, Carey Olsen published an article which provides an overview of the island’s fiduciary sector, examining the latest developments and why clients continue to choose the jurisdiction.
NEW ZEALAND: POLICE AND CUSTOMS FOCUS ON FENTANYL
Stuff on 20th May published an article and video saying that the authorities, including police and customs, have been closely monitoring incidences of illicit fentanyl importation and overdoses. Police have developed an action plan for implementation should the drug become an issue, due to its high potency, addictiveness, and the harm it can cause to people who suffer from secondary exposure.
US CUSTOMS SEIZES 1,300 POINT OF SALE MACHINES
On 19th May, Newswatch.com reported that more than 1,300 counterfeit items with an estimated retail price of more than $2.4 million dollars were seized by US border officials last month, when officers conducted an inspection of 3 rail cars at the International Falls port of entry destined for Ranier, Minnesota. Officers discovered 1,315 counterfeit point of sale machines in violation of intellectual property rights regulations that have an estimated manufacturer suggested retail price of $2,453,400.
OVER 8 TONNES OF PANGOLIN SCALES SEIZED IN HAIPHONG, VIETNAM
On 16th May, the Voice of Vietnam reported that 8.3 tonnes of pangolin scales have been discovered inside a container in the northern city of Haiphong.
WHAT’S NEXT FOR THE PAYMENTS MARKET?
Banking Tech on 20th May published a White Paper which takes a detailed look at the current state of the payments industry, and future trends that could impact your business.
POLITICAL ELITE RENEWAL IN GEORGIA, MOLDOVA AND UKRAINE
On 16th May, Chatham House published a briefing paper which takes a closer look at the political leadership in Georgia, Moldova and Ukraine which reveals no fundamental changes in their modes of governance. This paper examines the factors that shaped the current context for political elite renewal in these 3 states. The legacy of the Soviet past and the challenging transition processes of the 1990s have delayed the emergence of a new generation of reformist leaders who practise the principles and values of good governance. This paper identifies 4 categories of elites active in current domestic politics in these 3 states. Social uprisings have created political openings for domestic reformers and the returned diaspora to take part in high-level politics, but vested interests of the old guard, unequal access to financial resources, and the limited political experience of newcomers have all damaged the potential for a level political playing field in these countries.
LETTER FROM 100 ORGANISATIONS TO US CONGRESS OVER ARMS EXPORTS CONTROL CHANGES
On 14th May, 100 organisations signed a letter to the US Congress expressing “strenuous” opposition to the Administration’s proposal to significantly weaken regulation and oversight of firearms exports. They argue that the transfer of export controls of semi-automatic pistols, assault-style firearms, sniper rifles, and ammunition from the US Munitions List under the authority of the Department of State to the less-stringent controls of the Department of Commerce will thwart congressional oversight and create new and unacceptable risks of exacerbating gun violence, human rights abuses, and armed conflict.
LIBYA: WHY BACKING ONE MILITIA AGAINST ANOTHER IS NOT THE SOLUTION
On 15th May, a Commentary on War on the Rocks reviews the ongoing conflict in Libya and the parties and persons involved. It concludes that there is no question that the decrepit Government of National Accord needs to be replaced with a more inclusive and legitimate body; and that the corrupt and predatory constellation of militias in Tripoli needs to be dismantled – but the way to do this is through a combination of political negotiations and technocratic tools, which were making slow but perceptible progress before Khalifa Haftar’s Libyan National Army attack on 4th April. It is not by backing one set of militias against another.
BRIEFING: COMPREHENSIVE RESTRICTIONS ON EXPORTS/REEXPORTS TO HUAWEI AND ITS AFFILIATES
On 20th May, Baker McKenzie published a Client Alert on restrictions effectively cutting Huawei off from sourcing US products and technology and likely barring its products from being used in US communications infrastructure and networks. The US export/re-export restrictions targeting Huawei. The expected prohibition on the use of Huawei products in US communications infrastructure is likely to take several months to implement. Huawei and 68 of its affiliates (collectively “Huawei EL Entities”) located in 26 countries have been added to the State Department “Entity List” identifies parties (e.g., businesses, research institutes, private and public organisations), that the US Government has found act contrary to US national security or foreign policy interests.
ISLE OF MAN CONFIRMS ADDING OF ISLAMIC STATE IN IRAQ AND THE LEVANT – KHORASAN (ISIL-K) TO SANCTIONS LIST
On 20th May, a news release advised that ISLAMIC STATE IN IRAQ AND THE LEVANT – KHORASAN (ISIL-K) had been added to the ISIL/Al-Qaida sanctions list, following the decisions of the UN, EU and UK.
ROMANIA TORPEDOES EU DEAL ON ALCOHOL EXCISE DUTIES OVER MOONSHINE
EurActiv on 20th May reported that EU Member States clashed on the reform of alcohol excise duties during a meeting of EU financial ministers, as the Romanian Presidency of the EU tried to raise the maximum limit on home distillation, in pursuit of its own national interest.
EU AUDITORS’ REPORT: TACKLING FRAUD IN EU COHESION SPENDING
On 16th May, the EU Court of Auditors published a report (Special Report 6/2019): Tackling fraud in EU cohesion spending: managing authorities need to strengthen detection, response and coordination. The report says that, despite improvements over recent years, EU Member States’ efforts to tackle fraud in cohesion spending remain too weak. Over 4,000 potentially fraudulent irregularities affecting the EU’s financial interests were identified between 2013 and 2017, and these represented almost €1.5 billion of EU support, 72% of which concerned cohesion policy, including the European Regional Development Fund, the Cohesion Fund and the European Social Fund. Responsibility for fighting fraud in these areas lies primarily with the Member States. The findings complement those in Special Report 01/2019: “Fighting fraud in EU spending: action needed”, published on 10th January, which covered the Commission’s management of fraud risk in EU spending. On 29th April, the Commission adopted a new Anti-Fraud Strategy addressing a number of recommendations made in this first report.
The report is available at –
LIBYA’S UN-BACKED GOVERNMENT RECEIVES LARGE ARMS SHIPMENT
On 20th May, Defence Web reported that forces loyal to Libya’s UN-backed Government of National Accord (GNA) have received dozens of armoured vehicles and other arms, including Turkish-made Kirpi vehicles. The vehicles arrived in Tripoli on 18th May aboard the Moldovan-flagged ro=ro vessel, Amazon Giurgiulesti, which had sailed from Turkey.
FRENCH PROSECUTORS WANT EX-ATHLETICS BOSS DIACK TO STAND TRIAL
RFI reported on 20th May that French prosecutors have recommended that the former head of athletics’ governing body IAAF, Lamine Diack, and his son, stand trial for allegedly delaying doping sanctions against Russia in return for payment, according to the French news agency AFP.
FORMER HONG KONG GOVERNMENT OFFICIAL ACCUSED OF CONCEALING SWEETENER FROM SISTER-IN-LAW OF GAMBLING TYCOON
On 20th May, the South China Morning Post reported that former Hong Kong government official Wilson Fung accused of concealing HK$510,000 sweetener from sister-in-law of gaming tycoon Stanley Ho. Prosecutors accuse him of serious misconduct in public office. Cheyenne Chan, former HK Express director, was also charged over a 2004 payment made when Fung was responsible for air traffic rights.
$185 MILLION SEIZED FROM RUSSIAN OFFICIAL IN STING OPERATION
The Moscow Times on 20th May reported that Russian authorities have seized $185.5 million from former FSB official Colonel Kirill Cherkalin, making him the country’s richest ex-law enforcement official under investigation for corruption. Cherkalin, former head of the FSB economic security department’s financial counterintelligence support unit, was recently charged with bribery of $850,000.
UK GOVERNMENT EXPANDS USE OF ePASSPORT GATES TO 7 MORE COUNTRIES
On 20th May, the Home Office advised that visitors from Australia, Canada, Japan, New Zealand, Singapore, South Korea and the US will be able to use ePassport gates at ports across the UK and juxtaposed controls in a move designed to speed up border controls for low-risk countries. There were over 10 million arrivals in the UK by nationals from these countries in 2017. ePassport gates have been available to British and EU nationals since 2008. EU nationals will remain eligible to use them once the UK leaves the EU. The gates can be used by those aged 18 and over, and who are travelling using a biometric or ‘chipped’ passport. Those aged 12 to 17, and who are accompanied by an adult, are also able to use them. There are currently 264 ePassport gates in operation at 15 air and rail terminals in the UK and juxtaposed controls.
KENYAN GAMBLING OPERATORS SAID TO OWE THE GOVERNMENT$257 MILLION IN UNPAID TAX
Calvin Ayre on 20th May reported claims by the Kenyan government that gambling operators owe the government over a quarter of a billion dollars and these operators’ foreign execs risk deportation if they don’t pay up.
UKRAINE SEIZES COCAINE WORTH $51 MILLION IN CARGO SHIP
Customs Today on 20th May reported that Ukraine’s Security Service (SBU) says it has seized a shipment of South American narcotics worth some $51 million. The SBU said it found more than a quarter of a ton of cocaine hidden in “containers with bananas” during an inspection on a South American cargo ship that docked in the Black Sea port of Odesa. The statement did not identify the vessel’s country of origin.
AUSTRALIA PASSES NEW WHISTLEBLOWING LAWS
Out-Law on 20th May published an article saying that new Australian legislation which enhances protections available to whistleblowers will come into effect later this year. The requirements are extensive, and the consequences for failing to comply can be dire. Organisations will need to do prepare for the new laws, it says. The new whistleblowing laws include a requirement for a post-implementation review 5 years after the amendments commence to allow for the examination of the effectiveness of the new regime and to consider whether any further changes should be made.
SIGNIFICANT CHANGES TO CAYMAN ISLANDS TRUST LAW
On 20th May, Appleby published an article which identifies the key changes made by the Trusts (Amendment) Law 2019.
THE JIHADIST THREAT TO MINDANAO’S MORO PEACE PROCESS
An analysis published by the International Institute for Strategic Studies (IISS) on 20th May says that the government of the Philippines and the Moro Islamic Liberation Front have pledged to work together to implement a landmark peace deal that could end a decades-long insurgency in SE Asia, but the lingering threat from jihadi groups could shatter this fragile peace. Since the early 1970s, separatists have waged an armed campaign against the central government in Manila in pursuit of full independence or greater political autonomy for the region’s oppressed Moro Muslim population. After failed peace agreements and false dawns in 1976, 1989 and 1996, the past year has seen major progress.
INTERNATIONAL PICKPOCKETING GANGS MUST BE TREATED AS SERIOUS AND ORGANISED CRIMINAL NETWORKS
Illicit Trade on 20th May published this article following a Europol conference.
ROYAL MAIL TO INTRODUCE 1,400 PARCEL POST BOXES ACROSS UK
On 20th May, Parcel and Post Technology reported that the Royal Mail is introducing the UK’s first-ever parcel post boxes in locations across the country, over a 6-month period from August this year, marking the first major repurposing of the post box in the last 160 years. The launch will see the company convert existing boxes, which include a wider aperture and secure design. The initiative follows a successful trial of the boxes in 2018.
A post on the FCPA Blog on 20th May contained a useful comparison of the 3 key differences between the two sets of guidance.
On 20th May, the Fresno Bee carried an article saying that a former Fresno man who went from being an aspiring artist to an international arms dealer has been charged with illegally brokering the sale of military-grade arms, money laundering and conspiracy. Ara Dolarian, 58, of Dolarian Capital Inc, who lives in Sophia, Bulgaria, was visiting when US federal authorities arrested him. It says that a BuzzFeed article in 2014 shined the spotlight on Dolarian’s lucrative international arms dealing businesses that sold everything from Soviet T-72 tanks to rocket launchers. Dolarian is accused of trying to broker an illegal arms deal in 2013 and 2014 with the Nigerian government.
OCCRP on 20th May reported that Madagascar’s Anti-Corruption Agency (BIANCO) gave federal prosecutors the names of 79 Members of the National Assembly that it assessed were involved in a corruption scandal last year. The move comes less than 2 weeks before the parliamentary elections on May 27th, in which few of the accused are running. The 79 members are accused of taking payments of $14,000 to vote for the amendments during a secret meeting outside of the country’s capital.
Reuters on 20th May reported that Spanish police have raided several properties linked to a former ambassador to Venezuela and made several arrests as part of an investigation into alleged laundering of around €4 million euros from state-run oil company PDVSA, a judicial source said.
On 20th May, the new system came into operation. This means that consumers will soon see new traceability markings on the packs, together with the required security features. The markings will enable national authorities to track and trace the movements of these packs across the legal supply chain in the EU. The EU-wide system for tobacco traceability already started operations on 10th May, and economic operators (producers, distributors, shop owners etc.) across the EU have begun to register themselves, and their facilities in the system.
EU Regulation 2019/798/EU, from 21st May, amends a total of 59 entries on its Syria sanctions list. It also deletes the entries for Lt. General Fahid Al-Jassim; Brigadier General Ahmed Yousef Jarad; Brigadier General Mohsin Makhlouf; Major General Suheil Salman Hassan; Omran Ahed Al Zu’bi; Mohammed Turki Al Sayed; Isam Zahr Al-Din; Drex Technologies Holding S.A; and DK Group.
On 20th May, EurActiv reported that the Swiss have voted in a referendum to toughen their gun laws and bring them in line with EU legislation, heeding warnings that rejecting the change could have threatened relations with the bloc. A demand from the EU that the Swiss toughen their gun laws prompted a rare national debate over firearm ownership. The government had warned that a “No” vote would lead to Switzerland’s exclusion from the border-free Schengen travel region and also the Dublin accords regulating Europe’s asylum-seeking process.
A Resolution for the US Congress contains report which summarises the Department of State’s administration of the “Blue Lantern” end-use monitoring program for fiscal year (FY) 2018. The programme monitors the end-use of defence articles, technical data, services, and brokering activities exported through commercial channels and subject to Department of State licences or other approvals, including under the International Traffic in Arms Regulations (ITAR) Act. The aim of Blue Lantern is to help ensure the security and integrity of US defence trade and minimise the risk of diversion and unauthorised use of US defence articles, combats grey arms trafficking, uncovers violations, and builds confidence and co-operation among defence trade partners. The monitoring includes pre-licence, post-licence/pre-shipment, and post-shipment checks to verify the bona fides of foreign consignees and end-users, confirm the legitimacy of proposed transactions, and, to the extent possible, provide “reasonable assurance”. In FY 2018, 29% of cases were categorised as “unfavorable,” meaning the findings of fact were inconsistent with information in the licence application, or that certain information could not be verified – compared with 24.7% average from previous years (though the report says that this may be due to improved procedures and guidance used). The report details the reasons for the classification as “unfavourable”.
Hellenic Shipping News on 20th May reported that a tanker carrying Iranian fuel oil in violation of US sanctions has unloaded the cargo into storage tanks near the Chinese city of Zhoushan, according to ship tracking data on Refinitiv Eikon, with nearly 130,000 tonnes of Iranian fuel oil on board the tanker Marshal Z. The ship took on the cargo from a larger tanker off the coast of the UAE in January, transferred the fuel oil to a second tanker, the Libya, off the Malaysian port of Malacca later that month, but potential buyers wary of the US sanctions steered clear of the cargo. By March 22nd it had took the fuel oil back and anchored off the Malaysian and Singaporean coasts, before sailing to Hong Kong and finally to China.
The Hellenic Shipping News on 20th May reported that the UK Chamber has welcomed changes by the UK Ship Register (UKSR) that will allow owners from a broader group of countries to register their vessels in the UK. UKSR has announced that it is to expand its ownership eligibility, allowing more shipping companies from around the world to flag to the UK. The criteria have been widened beyond the current areas of the UK and Europe to include Commonwealth countries and bring the UK in line with the Red Ensign Group. The UKSR has also introduced a system for bareboat charter-out, so that ships can temporarily reflag for the period of a charter-party before returning to the UK flag when that agreement ends.
On 20th May, a release on Ekklesia reported that the NAO has published a briefing on the preparations made by the Department for International Trade for future trade negotiations. The publication is intended to assist Parliament in its understanding and scrutiny of government’s future trade deals.
The report is available at –
On 20th May, Legal Futures reported that international standards for lawyers advising on offshore commercial structures have been put forward at the same time as parliamentarians called for stronger laws on foreign ownership of UK property. The first report was produced by a joint task force on the role of lawyers and international commercial structures between the International Bar Association and the OECD. The task force has published a statement of 8 principles which it recommended that national legal regulators adopt and whose disregard should lead to disciplinary action. Meanwhile, the joint committee on the draft Registration of Overseas Entities Bill has published its pre-legislative scrutiny report, which welcomes the Bill, but calls for its concerns to be addressed to ensure that the legislation successfully deters money laundering in the UK property market. The 8 principles are –
- non-facilitation of illegal conduct;
- misuse of the duty of confidence and privilege;
- carrying out CDD;
- taking action where client conduct is, may be or becomes, illegal;
- multi-jurisdictional risk – a lawyer should ensure that transactions involving more than one jurisdiction are legal;
- not using illegally obtained information;
- disclosure of beneficial ownership; and
- any advertising by lawyers on international commercial structures should be transparent, accurate and truthful.
On 13th May, a briefing from Boehmert & Boehmert Anwaltspartnerschaft mbB on the World Trademark review website provided a description of the legal background and detention and seizure processes. It says that EU rules co-exist with Member States’ national provisions on customs intervention, which are usually contained in the relevant national substantive IP law offering subsidiary protection in relation to parallel or grey imports and intra-EU trade. It points out that, to strengthen the enforcement of IP rights, customs intervention has been extended to other types of infringement and the EU Regulation now also covers trade names, utility models, plant varieties, topographies of semiconductor products and circumvention devices. It also says that the definition of ‘counterfeit products’ has also been extended to include packaging, labels, stickers and brochures as such (even where presented separately from trademark protected goods) – but explicitly excludes from its scope parallel imports and overruns, as they have been manufactured as genuine goods. Moreover, the scope of the EU Regulation continues to exclude goods carried by passengers in their personal luggage, provided that these are for their own personal use. A new specific procedure for small consignments of counterfeit and pirated goods was introduced. The article touches on the treatment of goods in transit to a destination outside the EU.
19th May 2019
KIDNAPPINGS-FOR-RANSOM SPREADING ACROSS NIGERIA
The Kuwait Times on 18th May reported that in Nigeria there were 685 kidnappings countrywide in the first quarter of the year – an average of 7 per day. In Nigeria, it says, kidnappings for ransom have been a risk in the oil-rich south for decades, but in recent years, the practice has spread to other areas, with north-west Nigeria – the home region of President Muhammadu Buhari – an increasingly concerning criminal front. The causes are said to be multiple, including difficult economic times and overstretched security forces facing threats on several fronts – Islamist insurgents and land battles between herders and farmers.
MALAYSIA: AUTHORITIES FOIL ATTEMPT TO SMUGGLE 220 CROCODILES FROM INDONESIA
The Star reported on 19th May that a gang smuggling live crocodiles from Indonesia to supply local farms was busted in the south-eastern Tawau district. It is illegal to hunt crocodiles, collect crocodile eggs or remove them from the wild under any circumstances, and only licensed crocodile farms are permitted to sell crocodile meat or leather.
INDIA BUSTS INTERNATIONAL RED SANDERS SMUGGLING RACKET
The Hindu reported on 18th May that the Central Crime Branch busted an international red sanders timber smuggling racket and arrested 13 people. At a press conference, it announced recovery of 4,000 kg of Red Sanders. The gang allegedly sourced red sanders from neighbouring States and illegally exported consignments to Malaysia, China and Vietnam by air and sea.
LATVIAN JUSTICE MINISTER EXPRESSES NO CONFIDENCE IN PROSECUTOR GENERAL
Xinhua on 18th May reported that the Latvian Justice Minister has announced that he had lost confidence in Prosecutor General Eriks Kalnmeiers and accused him of a failure to clamp down on money laundering. The justice minister also called for an assessment of the prosecutor general’s job performance, which would effectively start a procedure of his removal from office.
KABUL-BASED IRANIAN BANK CLOSED OVER MONEY LAUNDERING CHARGES
Tolo News in Afghanistan reported on 19th May that the Central Bank confirmed that a Kabul-based Iranian bank, the Arian Bank, has been closed over money laundering charges. Arian Bank was established in 2004 and is said to have primarily engaged in commercial banking services in Afghanistan.
TAXMAN OPENS INVESTIGATION INTO CLAIMS UBER OWES £1 BILLION IN UNPAID VAT
On 19th May, City AM reported that Uber claims it is exempt from paying VAT because its drivers are self-employed and their earnings fall below the £85,000 threshold. However, HMRC is now looking into whether Uber is a transportation company and should therefore be liable to pay the tax.
THE EU FDI SCREENING REGULATION
On 17th May, McCann Fitzgerald published a briefing which looks at the implications of the Regulation to Ireland and Irish businesses. It says that EU Member States are not obliged to screen FDI, but Member State and European Commission co-operation and information sharing on FDI will increase. The EU Regulation 2019/452/EU on screening of foreign direct investment for possible security and public order risks came into force on 11th April, and its provisions will apply from 11th October 2020.
ANONYMOUS COMPANIES HELP FINANCE ILLICIT COMMERCE AND HARM AMERICAN BUSINESSES AND CITIZENS
On 6th May, the Financial Accountability and Corporate Transparency Coalition (FACT) Coalition in the US published a report which explains that the trafficking and smuggling of counterfeit and pirated goods is a very profitable illegal activity for many of today’s criminals and illicit networks and that these networks rely on the secrecy provided by anonymous entities to launder their ill-gotten-gains and escape detection.
THE THREAT REPRESENTED BY BDS ACTIVITY TO ISRAEL
In the April 2019 edition of the publication, Strategic Assessment, published by the Institute for National Security Studies at Tel Aviv University, contained an article about BDS. It explains that the BDS movement (Boycott, Divestment, Sanctions) was founded in 2005, and today encompasses hundreds of organisations all over the world that with no unified hierarchy or directive promote campaigns to boycott Israel, withdraw investments from it, and impose sanctions on it and associated elements. It says that between July 2017 and December 2018, the BDS movement published 4 lists presenting what it casts as significant achievements by the movement during that period. This article analyses the insights and the trends emerging from these lists with reference to the BDS campaign in particular, and the delegitimization of Israel in general. The article determines that the direct impact of many of the apparent achievements was limited, although some earned significant exposure and caused real damage. The main challenge posed by the BDS movement is at the cognitive level, in other words, its aim to instil negative attitudes toward Israel and blacken the country’s image. This article surveys the achievements boasted (rightly or wrongly) by the BNC in the name of the BDS movement (which the German courts recently declared to be unconstitutional under German law).
On 5th March, the NSG produced a 5-minute video explaining the activities of the NSG. The NSG is a group of nuclear supplier countries (“NSG Participating Governments”) that seek to contribute to the non-proliferation of nuclear weapons through the implementation of 2 sets of guidelines for their nuclear exports and nuclear-related exports. There are currently 48 NSG Participating Governments.
On 18th May, Customs Today published a short article about the port where recently 4 ships, including 3 oil tankers were attacked. Fujairah is the only emirate in the UAE that is located on the Arabian Sea, bypassing the Strait of Hormuz, which Iran has repeatedly threatened to close if a military confrontation with the US erupts. If the strait is closed, the UAE will be able to continue exporting oil from Fujairah, whose port would become a lifeline.
18th May 2019
VENEZUELA SELLS $570 MILLION FROM GOLD RESERVE DESPITE US SANCTIONS
The Business Times in Singapore reported on 18th May that Venezuela sold about $570 million in gold from central bank reserves, according to people with knowledge of the matter. It sold about 13.7 tonnes. Venezuela has sold 23 tonnes of gold since the beginning of April. Gold makes up the bulk of Venezuela’s reserves, and includes $1.2 billion worth with the Bank of England, which has blocked repeated withdrawal attempts.
NEW CRYPTO AML REGULATIONS IN THE ASIAN STATES
On 18th May, the Korea IT Times published an article summarising how key Asian states are now experimenting with a number of new policies to combat money-laundering linked to virtual currencies.
GERMANY LABELS ISRAEL BOYCOTT MOVEMENT BDS ANTI-SEMITIC
The BBC on 17th May reported that Germany’s parliament has condemned the Boycott, Divestment and Sanctions (BDS) group as an anti-Semitic, it being a movement calling for a cultural boycott of Israel over its policies towards Palestinians. The Bundestag said uses anti-Semitic methods to promote its political goals.
BAHAMAS SECURITIES REGULATOR PROPOSES RULES FOR TOKEN SALES
Coindesk on 17th May reported that the Bahamas’ securities regulator is pushing for a new framework for token projects. The Securities Commission of the Bahamas has filed a draft of the new Bill regulating token offerings not deemed securities, and lays out a procedure for registering such offerings and informing authorities and investors on the details of a token sale.
THERANOS: THE WHISTLEBLOWER WHO EXPOSED FRAUD TO MAKE THE BLOOD RUN COLD
On 18th May, the Irish Times published an article about the Theranos affair, saying that the saga of white-collar crime at blood-testing start-up Theranos only came to light when whistleblowers called time on the company’s dubious practices. It was the start-up everyone wanted to believe in. A young, female, college dropout, Elizabeth Holmes, sets up a biotech company in male dominated Silicon Valley promising a technological breakthrough in blood-testing and becomes a billionaire in the process. But in 2018 the SEC charged her and her right-hand man with “massive fraud”.
IRELAND: 9 FIRMS DISPUTING €2.5 BILLION IN TAX SOUGHT BY REVENUE
The Irish Times on 18th May reported that just 9 large companies are disputing an “enormous” €2.5 billion in tax payments demanded by the Revenue Commissioners. 3 cases are for sums of corporation tax greater than €100 million, a further 3 are for sums between €50 million and €100 million, and another 3 relate to figures between €30 million and €50 million. A further amount which is in dispute relates to an environmental levy of between €30 million and €50 million, rather than a corporation tax figure. The TAC, the office which deals with appeals, is dealing with a massive backlog of cases, with 14 staff last year working on 5,000 cases.
UK RACING INDUSTRY CONCERN OVER £17 MILLION BETTING LEVY SHORTFALL
Calvin Ayre on 17th May reported that the Horserace Betting Levy Board announced that the expected Levy income for the fiscal year ending March 31st will total around £78 million, “materially below expectations”. £95 million was collected last year, the first year the 10% levy was imposed on online operators.
FEARS DUBLIN PORT BAN COULD SIGNAL ‘END OF AN ERA’ FOR CRUISE SHIPS IN BELFAST
Customs Today on 18th May reported that fears that the Dublin Port Company will restricts the number of cruise ships entering its port from 2021 as it increases freight capacity container vessels post-Brexit, and when cruise ships can’t dock in Dublin, then Ireland as a whole could be removed from tour itineraries – which would also impact Belfast.
ELN STILL RECEIVING PAYMENTS FROM COMPANIES IN COLOMBIA
Insight Crime on 17th May reported that the recent arrest of an Argentine businessman, accused of financing the ELN – the National Liberation Army’s or Ejército de Liberación Nacionalin – between 2011 and 2015, has brought the ongoing ties between criminal groups and companies into the spotlight. He is also accused of helping extort other businessmen. In February, the Colombian army had also arrested one of the main public works contractors in Arauca, also on charges of financing the ELN’s Eastern Bloc – his company, Coinsac J&Y Ltda, had obtained 47 public works contracts from the state government and various municipalities. Extortion or “tolls” have also been a regular tactic for the ELN and the now demobilised FARC for decades.
FINANCIAL SYSTEM COULD BE DESTABILISED BY STRANDED CARBON-INTENSIVE ASSETS, WARNS BANK OF CANADA
The Bulletin of the Atomic Scientists on 17th May reported that the shift to a low-carbon economy is “underway” and sectors like oil and gas, as well as the banks that loan money to them, are exposed to risks from climate change that could spill over into destabilising “fire sales”. The central bank listed climate change as one of 6 vulnerabilities in the Canadian financial system in a report. Canadian capital markets hold US$436 billion representing fossil fuel companies, and much of Canadians’ retirement savings and pension funds are also tied up with the sector.
LONDON MARINE INSURERS WIDEN MIDDLE EAST THREAT ZONE AFTER SHIP ATTACKS
Hellenic Shipping News on 18th May reported that London’s marine insurance market has extended the list of waters deemed as high risk to include Oman, the UAE and the Gulf after ship attacks off Fujairah.
AUSTRIAN VICE CHANCELLOR RESIGNS OVER CORRUPTION ALLEGATIONS IN LEAKED VIDEO
On 18th May, UPI reported that Austria’s Vice Chancellor (i.e. deputy prime minister) Heinz-Christian Strache had resigned over corruption allegations after a secretly-taped video was leaked. He allegedly offered a woman government contracts in exchange for campaign support and suggested a potentially illegal donation system for the Freedom Party he leads.
NEW ZEALAND: LUXURY CARS AND THE MISSING MILLIONS – TRAIL INTO CONVICTED FRAUDSTER’S ASSETS GOES COLD
Stuff in New Zealand in its 19th May edition carried an article saying that millions of dollars and a rare Mercedes Roadster remain unaccounted for years after convicted fraudster Michael Swann, 64, was released from prison. He was found guilty in 2008 for his involvement in defrauding the Otago District Health Board (DHB) of about $16.9 million, one of the largest fraud cases involving a state employee at the time.
BULGARIA’S ANTI-CORRUPTION BODY FOUND DISCREPANCIES IN DECLARATIONS OF 738 PEOPLE IN POWER
The Sofia Globe reported on 18th May that Bulgaria’s anti-corruption commission said that it had found discrepancies in the statutory declarations of assets of 738 office-bearers at various levels of government filed between January and September 2018.
The regional FATF-style body, GAFILAT, reported on 17th May about a conference in Santiago, the aim of which was to prepare the country for the start of its mutual assessment process, through training on the assessment methodology, its background and implementation, as well as the criteria of compliance with each of the FATF 40 Recommendations. Such training was attended by officials from the relevant national AML/CFT authorities.
The Telegraph on 17th May reported that 6 people have been arrested in connection with a scheme promising to sidestep a controversial tax avoidance crackdown, involving the “loan charge”, which has been levied on contractors who used so-called disguised remuneration schemes dating back 20 years. 50 officers from HMRC swooped in 2 raids and searched premises in London, Guildford, Stevenage, Stratford-upon-Avon and Kent. 6 people have been arrested on suspicion of cheating the public revenue and committing fraud by false representation.
El Pais on 17th May reported the bizarre story of where a camper van had overturned and careered towards a sheer drop in the mountain pass of Puerto de la Mora, around 40 km north-east of Granada. The van’s driver and its 2 passengers suffered only minor injuries. Police discovered a suitcase holding €18,000 inside, and further investigation revealed a stash of notes under one of the seats that could, according to the police, be worth anywhere between €400,000 and €4 million. The 3 Lithuanians in the van, none of whom have a criminal record, have denied that the money belongs to them. The article says that the maximum amount of cash that can be transported legally in Spain is €100,000 – a higher sum requires a certificate from the tax agency or customs. Carrying cash across the border into another country reduces that figure to €10,000.
17th May 2019
3 AML FINES IN UK FOR MALTA-BASED GAMING COMPANIES
The Times of Malta on 16th May revealed that 3 of the 4 online gambling operators recently fined by the UK Gambling Commission for failures of AML and consumer protection were from Malta. Betit Operations will have to pay €1.6 million as, among other failures, it inappropriately offered bonuses and raised the deposit limits of a customer who deposited more than €126,000 over a 24-hour period. MT Secure Trade was found to have no interactions with a player who deposited €44,000 over 4 of its brands, with no source of wealth queries made. BestBet breached its licence conditions by having insufficiently trained staff in key positions and by having inadequate AML policies in place.
WHISTLEBLOWING CULTURE “VITAL TO PROTECT JERSEY’S FINANCE INDUSTRY”
On 16th May, the Jersey Evening Post carried an article quoting a local advocate who had attended the annual conference of ICSA, where attendees heard from Martin Moloney, director general of the Jersey FSC say that the control focus was increasingly on individuals – looking for are failures to know source of funds, failures to collect CDD information, with these generating criminal prosecution instead of just a “slap on the wrist”. It was said in the article that said that it was the increased requirement from for more prosecutions, which was driving the change and this would lead to more transparency and more whistleblowing.
ITAR EXEMPTION FOR TRANSFERS BY OR FOR US GOVERNMENT: 6 THINGS YOU NEED TO KNOW
On 22nd April, Arent Fox published an article saying that, after years of waiting, the new International Traffic in Arms Regulations (ITAR) licence exemption for transfers of defence articles and services by or for the US government came into effect on 19th April. However, it says that while the introduction of the revised exemption is largely positive for exporters, there are a few new boxes to check. The article highlights 6 aspects an exporter needs to look out for. It points out that those who export certain countries on behalf of the US government, but deliver to a non-US government party, will need a licence or other approval in most cases; and exporters outside the proscribed countries must obtain a written direction from the right person in the relevant US government agency and check all aspects mentioned in the article.
ARGENTINA CORRUPTION TRIAL AGAINST FORMER PRESIDENT FERNÁNDEZ SET TO PROCEED
KYC 360 on 17th May reported that the Supreme Court says the first corruption trial against former President Cristina Fernández is still scheduled to start shortly, despite a judicial order that her opponents feared could delay the trial into the presidential campaign season or beyond.
SFO: WHICH WAY FROM HERE?
On 15th April, Carmelite Chambers published an article discussing the future focus and direction of the SFO under its new Director, Lisa Osofsky. It concludes that the signs point towards Osofsky having a vision of a dynamic SFO, focused on streamlining and channelling its resources to bring successful prosecutions and with an emphasis on company responsibility through the use of DPA. Whether that vision comes to fruition, remains to be seen.
IRELAND: CORPORATE GOVERNANCE RECORDS – HOW IMPORTANT ARE THEY?
Mason Hayes & Curran on 3rd May published a briefing saying that it is important to have the corporate governance records up to date to comply with Irish Law. It is also important to be ‘diligence-ready’ should your company be seeking funding from investors or if you are selling the company. One of the first items on the agenda for potential investors or buyers will be to carry out diligence on your company beginning with the request for and review of the corporate governance records. It lists the various corporate governance records, and includes a schedule of those entitled to examine or inspect such records.
RUSSIA TRADE WITH THE MIDDLE EAST AND NORTH AFRICA
This chart shows Russia’s trade turnover with the Middle East and North Africa (MENA) Region, which amounts to 5.46%.
RUSSIA: HEAD OF FSB SECRETIVE UNIT CHARGED FOR $850,000 BRIBERY
The Moscow Times on 17th May reported that Colonel Kirill Cherkalin was head of the FSB economic security department’s financial counterintelligence support unit. The department played key roles in investigations surrounding former economy minister Alexei Ulyukayev, deputy prime minister Mikhail Abyzov and the tycoon brothers Ziyavudin and Magomed Magomedov. He was fired in 2013 after the investigative Novaya Gazeta newspaper uncovered his lavish property in an Italian lakeside resort. 2 of Cherkalin’s former colleagues, Dmitry Frolov and Andrei Vasilyev, have also been apprehended on charges of fraud.
TRINIDAD & TOBAGO: FORMER POLITICIAN TO PAY $300,000 AFTER LOSING FRAUD CASE
The Trinidad & Tobago Guardian on 16th May reported that former Tobago Asemblyman Handel Beckles has been ordered to repay $300,000 plus costs to an elderly couple, after they alleged that he fraudulently induced them to hand over cash over a period of time.
AUSTRALIA: RUGBY PLAYER TRADED EXOTIC ANIMALS TO PAY OFF DEBT TO CONVICTED FRAUDSTER
The Daily Mail reported on 17th May that a disgraced rugby player, Martin Kennedy, told a Sydney court that he illegally imported and exported exotic animals to pay off debts owed to a convicted fraudster.
BRAZIL STUDIES REDUCTION OF CIGARETTE TAX TO CURB SMUGGLING
Customs Today on 16th May reported that, by the end of June, the Ministry of Justice should decide on a tax reduction on cigarettes manufactured in Brazil. In March, an ordinance established a working group to assess whether tax changes would help “reduce the consumption of low-quality foreign cigarettes”. The introduction of this group was criticised by health specialists and by sector agencies, including those linked to the Ministry of Health itself. Professionals in the area affirm that the measure would not be sufficient to repress the illicit cigarette market, would contribute to the increase in the number of smokers and would entail costs.
CARGO SHIPS STOPPING IN DJIBOUTI MAY BE DENIED ENTRY INTO US
On 17th May, Sandler Travis Rosenberg reported that the US Coast Guard will impose certain conditions of entry on all vessels that visited any port in Djibouti (other than the Doraleh Container Terminal or the Doraleh Oil Terminal) in their last 5 port calls. Any vessel that does not meet these conditions may be denied entry into the US – because it has determined that ports in Djibouti are not maintaining effective anti-terrorism measures and that Djibouti’s designated authority’s oversight, access control, security monitoring, security training programmes, and security plans, drills, and exercises are all deficient.
SOLICITOR STRUCK OFF FOR WEAVING ELABORATE “WEB OF DECEPTION”
Legal Futures on 17th May reported that an experienced partner has been struck off after dishonestly drawing on hundreds of thousands of pounds of client money to top up private investments, and then covering it up. The ensuing “web of deception” involved faking letters about non-existent investments he had claimed were purchased with the misappropriated money and inventing extensive correspondence to obscure the omission.
COUNTRIES DEPENDENT ON COMMODITIES HIT 20-YEAR HIGH
On 16th May, the UN Conference on Trade and Development (UNCTAD) reported that the number of countries that depend on commodities has reached its highest level in 20 years, says a new UNCTAD report. UNCTAD defines a country as dependent on commodities when these account for more than 60% of its total merchandise exports in value terms. Commodity-dependent countries increased from 92 between 1998 and 2002 to 102 between 2013 and 2017. Commodity dependence affects developing countries almost exclusively, according to the report. Commodity-dependent developing countries are vulnerable to negative commodity price shocks and price volatility.
UK P+I CLUB 150th ANNIVERSARY
2019 marks the 150th anniversary of the foundation of the UK P&I Club founded in 1869. The website looks at the Club’s history, and plans for tomorrow.
SATELLITE IMAGERY AND VESSEL TRACKING SHOWS DPRK VESSEL MOVING BETWEEN BULK PORTS IN NORTH KOREA AND CHINA
NK Pro on 17th May reported that satellite imagery from Planet Labs and vessel location tracking analysed by NK Pro show a DPRK ship, Jin Hung 8, recently moving between North Korean and Chinese bulk handling ports, facilities capable of processing sanctioned materials like iron and coal.
LATEST CONTAINER SHIP FIRE LEADS RO-RO OPERATOR GRIMALDI TO CALL TIGHTER CONTROLS ON GOODS TRAVELLING BY SEA
Loadstar on 17th May reported that the 1998-built Grande Europa was hit by a double blaze on 15th May – the second container ship fire in as many months. Owner Grimaldi is quoted as saying that preliminary investigations suggest the fires started from 2 different new vehicles on board, and spread to nearby units. After what it describes as the “umpteenth case” of a fire breaking out in vehicles transported by cargo vessels, Grimaldi has called for tighter regulations on what can be transported at sea.
THE MUSLIM BROTHERHOOD IS NOT A TERRORIST ORGANISATION
A article in Foreign Affairs on 17th May argued that designating it would undermine the US. In late April, President Trump announced that he would seek to have the State Department designate the organisation a Foreign Terrorist Organization (FTO). It notes that, in 2017, the State Department decided that the group did not meet the legal requirements of an FTO, since it is not a unitary organisation and does not have an established pattern of violence, and the Brotherhood has not change since then. It is suggested that the departure of Rex Tillerson has allowed Trump to ignore the legal definition of an FTO, and that the move might be to curry favour with Egypt’s President Sisi.
PORTUGAL: THE WAY AHEAD FOR ANTI-CORRUPTION
An article from Transparency International on 17th May says that (like many other countries) degrading trust between Portuguese citizens and government institutions is an increasing concern for political and opinion leaders. In the last several years, citizens have watched as corruption scandals, cases of ethical misconduct and conflicts of interest exploded across Portugal. New cases of corruption surfaced in Parliament this year, including some Members of Parliament who are accused of pocketing extra money by overcharging taxpayers for trip expenses. However, it says that there have been small, incremental anti-corruption advances at the national level, including importantly, in the judicial system. The Public Prosecutor’s Office (PPO) seems more determined to fight corruption and the new Attorney General, Lucília Gago, recently reaffirmed this notion.
4 MORE BANKS NAMED IN DEUTSCHE BANK BRIBERY LAWSUIT IN LONDON
Bloomberg on 17th May reported that the middleman who confessed to paying bribes over trades he helped arrange between Deutsche Bank and a Dutch housing firm said he was also getting commission payments from other major lenders, including Barclays, Citigroup, Societe Generale and BNP Paribas.
MEET THE BRAZZAVILLE FOUNDATION: THE ROYAL-BACKED UK CHARITY ACCUSED OF ‘LAUNDERING’ THE REPUTATION OF AN OIL-RICH AFRICAN AUTOCRAT
Finance Uncovered on 15th May published an article claiming to reveal details about a royal-backed UK charity accused of bolstering the regime that runs one of Africa’s most authoritarian and kleptocratic countries. It was established in 2014 to tackle environmental challenges, help broker peace in Libya and raise awareness about the scourge of fake medicines in Africa – all causes about which its trustees appear to be sincere and passionate. But some Congolese experts and opposition activists exiled in Europe have viewed the charity with suspicion, believing some of its activities to be reputation-laundering vehicles for their country’s authoritarian president, Denis Sassou-Nguesso. Finance Uncovered’s investigation into the charity’s origins is said to have raised new concerns. It was set up by Jean-Yves Ollivier, a wealthy French commodities trader who has been a friend of Sassou-Nguesso for more than 30 years, with the help of one of Britain’s most controversial PR gurus, Lord Tim Bell, who became a trustee.
UK: MEDICAL CANNABIS UNDER PRESCRIPTION
On 17th May, the House of Commons Library published a briefing pack prepared ahead of the debate to be held in the Commons Chamber on 20th May medical cannabis under prescription. The subject for the debate has been selected by the Backbench Business Committee. It also produced a briefing paper on the medical use of cannabis.
UK: THE RETENTION AND DISCLOSURE OF CRIMINAL RECORDS
On 17th May, the House of Commons Library published a briefing which sets out the rules in England and Wales governing the retention and disclosure of conviction and non-conviction information held on the Police National Computer (PNC) and the Police National Database.
EU SHRINKS TAX HAVEN BLACKLIST AND REMOVES UK, DUTCH TERRITORIES
Reuters on 17th May reported that the EU has removed the British overseas territory of Bermuda, the Dutch Caribbean island of Aruba and Barbados from the bloc’s blacklist of tax havens, leaving no EU territory still on the list.
EU STARTS NEW PROGRAMME TO FIGHT GRAFT AND ORGANISED CRIME IN BOSNIA
OCCRP on 17th May reported that the EU has launched a €2.2 million initiative to fight corruption and organised crime in Bosnia and Herzegovina. EU4Justice aims to increase co-operation between facets of the defragmented criminal justice system in Bosnia – including law enforcement agencies, prosecutors, and judges – in order to improve the country’s responses to serious crime. Over the next 2 years the project will work to strengthen the supervision and control of prosecution offices and to increase the capacity, resources, and control of the Office of the Disciplinary Council, and will also hold joint training on fighting organised crime, corruption, and various economic crimes (such as tax evasion and fraud). It will improve the results of seizures of illegally acquired assets.
NEW ZEALAND DRUG SYNDICATE HAD INSIDERS AT AUCKLAND AIRPORT TO IMPORT US METH, COURT HEARS
Stuff on 17th May reported that the prosecution says a syndicate that was importing methamphetamine into New Zealand from the US, had contacts working for them inside Customs or New Zealand Post at Auckland International Airport.
DANISH GAMBLING AUTHORITY LAUNCHES NEW AML INITIATIVE
Baker McKenzie on 17th May reported that the Spillemyndigheden, announced the official launch of a whistleblower programme that aims to combat money laundering within the nation’s regulated gambling industry, to report violations or potential violations of Denmark’s anti-money laundering laws taking place at their companies.
HONDURAN PRESIDENT’S BROTHER ADMITS TO KNOWING DRUG LORDS
Baker McKenzie on 17th May reported that a brother of the president of Honduras admitted to US federal agents that he’d accepted presents from violent drug traffickers he’d known for years and once asked Honduran officials about money the government allegedly owed the traffickers. Recently unsealed documents show what Juan Antonio “Tony” Hernández told agents last November, after he was arrested at Miami International Airport on his way back to Honduras.
NEW PIRATES OF THE CARIBBEAN DRIVEN BY VENEZUELA CRISIS, HURRICANES, CLIMATE CHANGE
Homeland Security Today carried an article on 17th May saying that the risk of pirates in the Caribbean is expected to grow over the next few years for “cruisers and cargo ships alike,” fuelled by corrupt governments in countries bordering the sea that don’t have the capacity to fight the pirates and the escalating ruin in Venezuela, factors similar to what drives piracy in Somalia and Nigeria. This is according to a new report from a UK company called Intelligence Fusion. Climate change and extreme weather could also drive up the pirate population, as well as pollution, overfishing or any other factors that harm the fishing industry.
On 17th May, HM Treasury published a Notice advising that Nessim Ben Mohamed Al-Cherif Ben Mohamed SALEH AL-SAADI had been removed from its Consolidated List following the decision of the EU.
A news release from the NCA on 17th May advised that the National Economic Crime Centre (NECC) brought together regulators in the legal, finance and property sectors to make sure businesses’ supervisory systems to identify potential money laundering activity were fully up to scratch. A total of 250 visits and compliance reviews were carried out, which will be followed up with assessments or disciplinary action in some cases. Regulators are continuing to analyse the visit reports to identify any further breaches. The NECC is also in the process of referring 3 suspected professional enablers to regulatory bodies in connection with ongoing investigations into illicit finance.
A Notice from HM Treasury on 17th May announced that the ISLAMIC STATE IN IRAQ AND THE LEVANT – KHORASAN (ISIL-K) had been added to the ISIL/Al-Qaida sanctions lists, following the decision of the UN and EU.
The Cyprus Mail on 17th May reported that a team from the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism has arrived in Cyprus for a comprehensive review of Cyprus’ corporate, legal and financial sectors. The final report and conclusions are expected by the end of this year.
On 17th May, the US Treasury announced that OFAC had designated a Mexican magistrate judge and a former Mexican governor, among others, due to their involvement in corruption activities. Magistrate judge Isidro Avelar Gutierrez is said to have links to Cartel de Jalisco Nueva Generacion (CJNG) and the Los Cuinis Drug Trafficking Organization (Los Cuinis). Roberto Sandoval Castaneda, the former governor of the Mexican state of Nayarit, is said to have engaged in an array of corruption activities, such as the misappropriation of state assets and the receipt of bribes from Mexican drug trafficking organisations, including CJNG. 6 other Mexican individuals and 6 Mexican entities linked to CJNG or Los Cuinis have been designated, as well as 3 other Mexican individuals and 4 Mexican entities because of their links to Sandoval Castaneda.
Loadstar on 17th May reported that e-commerce and tariffs are continuing to deplete warehouse availability worldwide, with parts of the US also seeing space eaten up following states’ legalisation of marijuana – for it to be grown in internal “controlled spaces”. Recently, Addidas announced that it would use more air freight in the next 2 quarters as it struggles to find warehouse space.
On 17th May, the EU announced its new framework that allows the EU for the first time to impose sanctions on persons or entities that are responsible for cyber-attacks or attempted cyber-attacks, who provide financial, technical or material support for such attacks or who are involved in other ways. Sanctions may also be imposed on persons or entities associated with them. EU Regulation 2019/796/EU refers.
THIRD COUNTRIES ALIGN WITH EU ANTI-CYBER ATTACK SANCTIONS REGULATION
On 12th April, it was announced that Turkey, North Macedonia, Montenegro, Serbia, Albania, Bosnia and Herzegovina, Iceland, Norway, Moldova and Georgia had aligned themselves with the EU Council Decision involved.
Defense One on 16th May reported that the US State Department wants to expand a little-known effort that offers countries cash to buy American-made weapons if they give up Russian-made arms. The European Recapitalization Incentive Program, is already helping 6 eastern European countries buy new helicopters or armoured vehicles. While State has not yet identified countries outside of Europe, it’s exploring countries in Central Asia, SE Asia and Africa. Since the program began about a year ago, the State Department has pledged $190 million for 6 projects in 6 countries in Eastern Europe.
On 16th May, the OECD published a news release saying that governments should treat the opioid epidemic as a public health crisis and improve treatment, care and support for people misusing opioids. Overdose deaths continue to rise, fuelled by an increase in prescription and over-prescription of opioids for pain management and the illicit drugs trade, according to a new OECD report. The report examines how, over the past few years, the crisis has devastated families and communities, especially in North America. It documents that deaths are also rising sharply in Sweden, Norway, Ireland, and England and Wales. Between 2011 and 2016, in the 25 OECD countries with available data, opioid-related deaths increased by more than 20%.
The report is available at –
On 17th May, Trade Vistas published an article which opens by saying that monitoring payments to spot “trade-based money laundering” has been a lesser priority for private banks within the larger world of financial crime prevention – but also saying that trade-based money laundering has become the weakest link in AML initiatives, so banks and government officials are strengthening international collaboration to crack down on criminals who hide and launder their dirty money in global trade transactions. Trade financing to support payments include a suite of services such as bank guarantees, document collection, import/export loans, pre-shipment loans, trust receipts, warehouse financing, and structured trade financing. Financial institutions have common guidance provided by trade sector organisations on red flags and ways to comply with KYC legal requirements for trade finance transactions. However, it cautions that banks only have sufficient visibility into trade transactions that require documentation on the underlying transaction but 80% of world trade is “open account”, where banks may have little direct involvement, or may provide pre-shipment financing, without information about the nature of the shipment itself. The article, which highlights the involvement of the fraud in dealings with developing countries, concludes by saying that both government-to-government collaboration and the deployment of innovative technologies to analyse big data and predict illicit behaviour will be key ingredients to staying ahead of this trend and enabling unimpeded growth of legitimate businesses engaging in global trade.
On 16th May, the House of Commons Library published a briefing paper that provides information on how to trace ownership of a property or piece of land in England and Wales, in the process it also provides a summary of land ownership and what is meant by registered and unregistered land.
EU Regulation 2019/791/EU has deleted Nessim Ben Mohamed Al-Cherif Ben Mohamed Saleh Al-Saadi from its ISIL/Al-Qaida sanctions list, but has added ISIL-K, following the UN designating that entity.
16th May 2019
TURKEY’S CITIZENSHIP BY INVESTMENT PROGRAMME
On 14th May, Bener Law Office published an article intended to an overview of Turkey’s citizenship by investment (CBI) programme, focusing particularly on real estate investments. It says that Turkey’s immigration investment programme provides a very direct and quick path to citizenship, which makes it particularly attractive to citizens from emerging economies looking for a passport will allow them to travel more easily than their current passport. Since January 2017, several categories of investments to qualify for pursuit of Turkish citizenship, including capital investments, government debt instruments, investing in a business that employs at least 50 Turkish nationals, venture capital investments. In September 2018, the required investment threshold amounts were significantly lowered across these categories. For real estate, investments of $250,000 now qualify for the citizenship by investment programme.
CHANGE IS COMING TO AUSTRALIAN PARALLEL IMPORTATION LAW
On 2nd May, Russell Kennedy Lawyers published a update on “parallel importation”. The term refers to the situation where genuine goods, marked with a registered trade mark with the authorisation of the rights holder outside the country, are purchased by a third party – the “parallel importer” – who imports and sells them. The proposed changes in Australia are intended to facilitate parallel importation to the benefit of consumers by limiting the strategic use of such restrictions by trade mark owners, and a new section inserted into the relevant Act in August 2018 comprehensively sets out the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark. Trade mark owners will no longer be able to prevent parallel importers from relying on the parallel importation defence through assignments and other corporate and contractual arrangements.
HIGHLY ENRICHED URANIUM FROM UK SENT TO TENNESSEE FOR STORAGE
The Aiken Standard on 15th May reported that nearly 700 kg of HEU is being securely stored at the Y-12 facility, and uranium will eventually be downblended for fuel purposes. The uranium came from the Dounreay nuclear site, which is on the Scottish coast.
OVER 70 ARMIES USE BELARUSIAN DEFENCE PRODUCTS
On 15th May, the Belarussian Telegraph Agency reported a statement made by Chairman of the State Military Industrial Committee of Belarus Roman Golovchenko during the opening ceremony of the international defence technology expo MILEX 2019.
RUSSIA EASES ARMS RESALE RULES TO AVOID SANCTIONS
The Moscow Times on 15th May reported claims that Russia had relaxed rules that required secondary arms buyers to inform Russia in writing that it was the final buyer (or end-user). These countries could then avoid direct contact with Russia by making the primary arms buyer responsible for informing Moscow that the secondary buyer vows not to resell the weapons. It is said that the measures do not target China, India, Egypt, Algeria and Vietnam, which either ignore U.S. sanctions or negotiate exceptions for themselves.
INCA ARTEFACTS RETURNED TO PERU FROM US AND ARGENTINA
Gulf Today on 16th May reported that 134 pre-Columbian treasures including clay idols and textiles from the Inca Empire have been returned to Peru from the US and Argentina. Many were voluntarily returned after being illegally smuggled out of Peru.
UKRAINE: UKROBORONPROM DEFENCE STATE ENTERPRISE HAS 10 DAYS TO PREPARE FOR FINANCIAL AUDIT
On 15th May, 112 UA reported that in February February journalist investigations revealed allegations that the son of a close Poroshenko ally had organised a corruption scheme to smuggle spare military equipment parts from Russia in 2015. State defence facilities purchased the smuggled spare parts from private companies at highly inflated prices, and the organisation knew the origin of the smuggled parts but agreed to purchase them.
GREECE: FORMER CHAIRMAN OF ATHENS’S HENRY DUNANT HOSPITAL AND HIS WIFE GUILTY OF MONEY LAUNDERING
On 15th May, Ekathimerini reported that the conviction relates to the €1.58 million that Martinis was said to have been paid by the company Hospitalia International as part of a deal to upgrade the Dunant’s equipment. In February, Martinis was given a 7-year suspended sentence following his conviction for offering “free medical treatment” to prominent individuals.
FORMER MEDIA MOGUL CONRAD BLACK GRANTED A PARDON FROM PRESIDENT TRUMP
MSN reported on 16th May that Lord Black of Crossharbour, 74, former proprietor of the Daily Telegraph and a number of other world newspapers, served more than 3 years in prison after being convicted of fraud and obstruction of justice in 2007.
The Week provided a briefing on Black and what he did –
TURKEY IMPOSES TAX ON ALL IMPORTED E-COMMERCE GOODS
Ahval on 15th May reported that Turkey will charge import taxes on all goods ordered from abroad, with the exception of books, dropping an existing waiver for lower-value items. It is said that the government was responding to complaints from local businesses that previous arrangements created unfair competition. Turkey will impose import duties of up to 20% on the e-commerce goods, as well as other items arriving by post, from the end of May.
FIATA PUBLISHES BEST PRACTICES ON QUALITY OF CONTAINERS
On 14th May, Forwarderlaw published an article saying that, in April, the FIATA Working Group on Sea Transport published a guide outlining problems and best practices in “Container Shipping and Quality of Containers”. This follows on from its guide for best practices in respect of demurrage and detention of containers, published last year. It explains that containers standards come under 2 major international agreements:
- the Convention for Safe Containers (CSC), which sets structural certification standards enabling CSC certified containers to enter and move through the global supply chain easily; and
- the rules and policies established by the International Maritime Organization (IMO) in respect of safe packing of Cargo Transport Units (including 2016 changes requiring a Verified Gross Mass statement for all containerised cargoes).
Commenting on the new best practices guide, it points out that containers are owned and provided by the shipping lines, and it is the obligation of the carrier to provide clean and seaworthy containers.
THE DEFINITION OF, AND APPROACH TO, THE TAXATION OF CRYPTOCURRENCIES IN MALTA
Dixcart brief IN 589 said that the Malta Commissioner for Revenue has issued 3 guidelines regarding the tax treatment of distributed ledger technology (DLT) assets. Each of the guidelines relates to a different tax: income tax, VAT, and the duty payable on documents and transfers.
INCREASING DEMAND FOR MALTA FREEPORT SERVICES AND REGULATION OF MALTA FREE ZONES TO PROMOTE FURTHER EXPANSION
A briefing from Dixcart IN588 about Malta’s free zone set-up, says that, as one of the Mediterranean’s key transhipment ports, Malta Freeport represents a strategic platform for shipping lines that have chosen it as their Mediterranean hub port, being located at the crossroads of some of the world’s greatest shipping routes and at the heart of the Europe/Maghreb/Middle East triangle. Since 1988, it says that Malta Freeport has enjoyed remarkable growth and is now a major transhipment port in the Mediterranean region, enjoying positive international recognition, as a reliable and credible port, with global carriers. It says that the Maltese Authorities have created new legislation, the ‘Malta Free Zones Act’ which provides for the regulation and administration of the business of the Free Zones in Malta, with the objective of encouraging economic development and the generation of employment in Malta – it provides a regulatory framework and has introduced the concept of public/private partnerships to operate in the free zones.
HOW IOS GROUP “SUPERSIZED” THE SHELL COMPANY GAME
On 15th May, OCCRP published an article about the Irish-Latvian company. It says that, for almost 30 years, IOS Group created shell companies for international clients, playing a major, though apparently passive, behind-the-scenes role in multiple high-profile money laundering cases. It says that a new investigation show that IOS Group’s shell company business also laid the administrative foundation for the Troika Laundromat, a massive financial scheme set up and controlled by Troika Dialog, once Russia’s largest private investment bank. Companies created by IOS Group have featured in a number of high-level scandals involving tens of billions of dollars in illicit financial activities. The article gives a history and description of the Group, saying that IOS Group was founded in Dublin as IOS Financial Services in 1992, and IOS Group incorporated thousands of shell firms in the U.K. and BVI alone; others were registered in Panama, the United States, Hong Kong, Cyprus, and elsewhere. Its menu of services included registration and fee facilitation, legal services, annual payments for certificates of good standing, and composition of financial statements. In some cases, clients were billed for “ready-made” companies with “full sets” of documentation prepared by IOS Group for use as needed.
CHINA TO HELP CAMBODIA DEAL WITH CHINESE GANG
OCCRP on 15th May reported that the Chinese embassy in Phnom Penh has promised assistance to Cambodian police after a video surfaced in which a Chinese gangster declares he will seize control of a major Cambodian city while 20 other men, shirtless and tattooed, cheer him on. A Cambodian government report recently said that Chinese nationals were the most criminally active foreigners in Cambodia. Cambodia’s immigration department estimates 78,000 Chinese nationals live in Sihanoukville alone–only a fraction of whom have work permits.
SPANISH CUSTOMS INTERCEPT BOAT WITH 5 TONNES OF HASH
The Majorca Daily Bulletin on 14th May reported that Customs Service agents in Palma were involved in intercepting a boat on which 5 tonnes of hashish had been hidden.
CHINESE CUSTOMS SEIZES OVER 1,000 HUMAN PLACENTA EXTRACT INJECTIONS
Xinhua on 14th May reported that Customs officers in the city of Qingdao, east China’s Shandong Province, said they have seized a large amount of human placenta extract injections from an inbound flight from Japan. Human placenta extract injections are biological products, which need special quarantine certificates and approval.
PAKISTAN AGREES TO AML REFORMS AS PART OF $6 BILLION IMF BAILOUT DEAL
On 15th May, Baker McKenzie reported that Pakistan will implement fiscal and regulatory reforms, including strengthening its controls against financial crime, as part of a 3-year, $6 billion bailout agreement reached with the IMF, the organisation said.
UK: POSSESSION AND SUPPLY OF NITROUS OXIDE AND POWERS OF SEIZURE
On 15th May, PNLD published a Q&A asking what legislation do police need to consider in relation to this issue? Do police have a power to seize such substances?
IMPOSTER WEBSITES PROMPT REGULATORY WARNING TO FINANCIAL INDUSTRY IN US
King & Spalding on 15th May reported that on April 29th, FINRA published an Information Notice alerting to a potential increase in member firms falling victim to imposter websites – websites designed to appear legitimate but that actually serve as a vehicle to compromise users’ personally identifiable information (PII) or login credentials for the purpose of effecting financial fraud. FINRA warns that member firms are increasingly being targeted regardless of whether they have an existing online presence.
IT’S THE LUXURIES THAT GIVE IT AWAY – TO FIGHT CORRUPTION, FOLLOW THE GOODS
On 16th May, KYC 360 carried an article saying that it is almost certain that some of the profits made by all sellers of luxury goods come from criminals who have siphoned off government funds. The author says that, using data for 32 high-income and emerging economies, research have found a strong correlation between luxury item expenditure and societal corruption – including substantially higher luxury car sales in OECD countries with higher perceived corruption levels.
MEMBER STATES SHOULD STEP UP EFFORTS TO TACKLE FRAUD IN EU COHESION SPENDING, SAY AUDITORS
A news release from the European Court of Auditors said that, despite improvements over recent years, EU Member States’ efforts to tackle fraud in cohesion spending remain too weak, according to a new report from the European Court of Auditors. Member States’ assessments of the effectiveness of their anti-fraud measures are too optimistic, say the auditors. Detection, response and co-ordination still need substantial strengthening to prevent, detect and deter fraudsters effectively. Over 4,000 potentially fraudulent irregularities affecting the EU’s financial interests were identified between 2013 and 2017.
The report is at –
UK OFFENSIVE WEAPONS BILL 2018 RECEIVES ROYAL ASSENT
On 16th May, the Home Office published updated documents relating to this Bill, which will introduce new powers to tackle knife crime, acid attacks and the risk that criminals could obtain powerful firearms. Amongst other things, it will prohibit high energy and rapid firing firearms and a device known as a bump stock which increases the rate of fire of rifles and provide for compensation for owners of such weapons. The Bill received Royal Assent on 16th May.
EU FINES 5 MAJOR BANKS OVER $1 BILLION FOR CURRENCY COLLUSION
On 16th May, Al Jazeera reported that traders from 5 banks colluded to rig the foreign exchange market, European anti-trust regulators have found. Barclays, RBS, Citigroup and JPMorgan were fined €811.2 million in one settlement, while a second saw a further €257.7 million fine levied on Barclays, RBS and MUFG Bank (formerly the Bank of Tokyo-Mitsubishi).
UK NOTICE TO EXPORTERS 2019/07: OGEL FOR EXPORT OF DUAL-USE ITEMS TO EU MEMBER STATES UPDATED
On 16th May, the Export Control Joint Unit published this Notice saying that the Department for International Trade has updated the open general export licence for export of dual-use items to EU Member States.
SFO FREEZES £12 MILLION PROPERTY IN LCF PROBE
On 16th May, the Evening Standard reported that the SFO has frozen more than £12 million worth of property belonging to people linked to the collapse of London Capital & Finance. Restraint orders prevent the men or their families from selling the assets, and were made under section 41 of the Proceeds of Crime Act 2002.
4 ARRESTED AS UK, DUTCH AUTHORITIES LAUNCH JOINT BIODIESEL INVESTIGATION AT GREENENERGY
Reuters reported on 16th May that 4 people were arrested and addresses raided in the UK, the Netherlands and Belgium in a joint Anglo-Dutch investigation into biodiesel trading at British road fuel supplier Greenergy, the SFO said.
JOSU TERNERA – LONG-TIME LEADER OF ETA, THE SPANISH BASQUE TERRORIST GROUP – ARRESTED
Kenneth Rijock in his blog on 16th May reported that Josu Ternera, a fuguive since 2002, has been arrested in a joint French-Spanish law enforcement operation, in Sallanches in the French Alps, near the Swiss and Italian borders.
UN RECOGNISES JERSEY’S ASSET RECOVERY WORK
A news release from Jersey on 16th May reported that officials of the United Nations Office on Drugs and Crime (UNODC) have recognised Jersey’s good practice in returning stolen assets to their rightful country, at an international meeting in Addis Ababa. It says that there was significant international interest in the FRACCK signed between Jersey and Kenya – Governments of Kenya, Jersey, Switzerland and the UK have co-operated in developing the Framework for Return of Assets from Crime and Corruption in Kenya (FRACCK).
GOZNYM MALWARE: CYBERCRIMINAL NETWORK DISMANTLED IN INTERNATIONAL OPERATION
A news release from Europol on 16th May reported that an unprecedented, international law enforcement operation has dismantled a complex, globally operating and organised cybercrime network. The criminal network used GozNym malware in an attempt to steal an estimated $100 million from more than 41,000 victims, primarily businesses and their financial institutions. A criminal Indictment returned by a federal grand jury in Pittsburgh has charged 10 members of the GozNym criminal network with conspiracy. Searches were conducted in Bulgaria, Georgia, Moldova and Ukraine, and criminal prosecutions have been initiated in Georgia, Moldova, Ukraine and the US. The GozNym network exemplified the concept of “cybercrime as a service,” with different criminal services such as bulletproof hosters, money mules networks, crypters, spammers, coders, organisers, and technical support.
2 CHARGED WITH GANGMASTER OFFENCES IN MERSEYSIDE – WITH 41 ROMANIANS UNCOVERED
A news release from the Gangmasters and Labour Abuse Authority (GLAA) on 14th May reported that 41 Romanian workers were found by GLAA officers during a multi-agency operation in March 2018 tackling suspected labour exploitation in Liverpool.
GERMAN AND ITALIAN POLICE BREAK UP GANG BEHIND FAKE EXTRA VIRGIN OLIVE OIL CONSPIRACY
Illicit Trade on 16th May reported that an international operation coordinated by Europol has resulted in the dismantling of an organised criminal network behind the fraudulent sale of huge quantities of counterfeit extra virgin olive oil in Germany and Italy. The operation that targeted the gang, which involved police investigators, from both countries, resulted in the arrest of 20 suspected gang members, as well as the seizure of 150,000 litres of fake extra virgin olive oil. Investigators participating in the operation conducted raids at 20 properties in multiple locations, and impounded five lorries that were intercepted while carrying 23,000 litres of counterfeit oil each.
ECUADOR: ROBBERS ATTEMPT TO BOARD VESSEL OFF CABO PASADO
Hellenic Shipping News reported that 10 robbers on 2 speed boats approached an underway bulk carrier. The crew on duty spotted the robbers and sounded the alarm, and the bulk carrier increased the speed, commenced evasive manoeuvres and started to spray the speed boats with fire hoses. The assailants aborted the robbery attempt.
EBA TIGHTENS OUTSOURCING REGIME FOR WIDER RANGE OF FIRMS UNDER NEW GUIDELINES
On 16th May, Osborne Clarke published an article saying that the European Banking Authority issued updated outsourcing guidelines for financial institutions on 26th February, a single regime encompassing both outsourcing and cloud outsourcing has been introduced, and far more expansive, detailed and prescriptive for financial institutions caught within its remit. Rather than only applying to credit institutions, as the previous 2006 guidelines did, the new guidelines also apply to investment firms and payment and e-money institutions. The article says that one of the main aims of the guidelines is to ensure that the outsourcing of functions by institutions does not result in the delegation of the management body’s responsibility for the activities of the institution and compliance with its regulatory obligations. Management bodies need the ability to appropriately oversee and manage the outsourcing of functions by the institution.
IS DHS DOING ENOUGH TO SECURE KEY US CITIES FROM NUCLEAR TERRORISM?
Homeland Security Today on 13th May reported that the DHS’s Securing the Cities (STC) programme seeks to give state and local agencies the ability to detect and deter nuclear terrorism, including dirty bombs. It provides funding for equipment, such as radiation detectors, and training for up to 5 years. However, it says that the Government Accountability Office found DHS does not fully track programme spending and performance, and has not addressed challenges to sustaining these programmes. A law enacted in December 2018 requires DHS to develop an implementation plan for the STC programme.
FINCEN ANNUAL AWARDS PROGRAMME TO RECOGNISE IMPORTANCE OF BANK SECRECY ACT REPORTING BY FINANCIAL INSTITUTIONS
A news release from FinCEN on 16th May said that its Director hosted the 5th annual FinCEN Director’s Law Enforcement Awards Program, during which he recognised the efforts of several law enforcement agencies that used Bank Secrecy Act (BSA) reporting to successfully pursue and prosecute criminal investigations. It says that the BSA’s record-keeping and reporting requirements help to create a financial trail that law enforcement agencies use to track criminals, their activities, and their assets. It recognised actions by several agencies, including the IRS (including for a US-Mexico operation targeting third party launderers) and the SAR Review Team at ICE.
MAN ACCUSED OF $98 MILLION FRAUD SCHEME IN PUERTO RICO
The Daily Mail on 16th May reported that Federal officials in Puerto Rico say Gopalkrishna Pai has been indicted in a $98 million fraud scheme after taking advantage of a law designed to attract wealthy investors to the US territory.
SINGAPORE-BASED BUSINESSMAN JAILED FOR ROLE IN MONEY LAUNDERING SCHEME
The Straits Times on 16th May reported that Paul Gabriel Amos, a Singapore-based company director, has admitted in court his connection with a 2008 case in which Citibank in New York was duped into transferring $27.2 million from the corporate account of the National Bank of Ethiopia (NBE) to various beneficiaries worldwide. Amos had received a call from a friend asking him for an account into which to transfer ill-gotten gains. According to court documents, that friend told Amos about his involvement in various projects with the Ethiopian government and how he had helped cheat it of money, and Amos agreed to take part in the plan on condition that he would receive a cut of the criminal proceeds.
HOW ONE MAN UNCOVERED A MONEY LAUNDERING SCHEME INVOLVING $230 BILLION
On 16th May, CBS News published an article and video about Howard Wilkinson, whose suspicions led to the uncovering of an enormous money-laundering case involving approximately $230 billion, maybe the largest such scheme ever found, as he was working for Danske Bank’s branch in Tallinn.
A DoJ news release on 16th May contained remarks made by Deputy Assistant Attorney General Richard W. Downing at the 5th German-American Data Protection Day about the Clarifying Lawful Overseas Use of Data Act – or CLOUD Act. He set out to dispel some of the misunderstandings and to explain more precisely, what the CLOUD Act does and does not do and, to do so, contracts the CLOUD Act model with the status quo ante. He explained how authorises the US to enter into bilateral agreements to facilitate the ability of law enforcement partners overseas to get electronic evidence. He said that the bilateral agreements will require the foreign party adhering to certain baseline commitments to privacy and civil liberties, and partners must have adequate substantive and procedural laws on cybercrime and electronic evidence on the books. The CLOUD Act also amended an existing US law – the Stored Communications Act – to make explicit the long-held legal principle that a company operating within a country’s territory can be compelled to produce stored data within its possession, custody, or control, regardless of where it stores that data (after the Microsoft case). He goes on to say that nothing in the CLOUD Act’s clarification of US law expands US jurisdiction over foreign companies or any other entity; or expands the categories of providers subject to US jurisdiction; or alters who falls under the jurisdiction of US courts; it merely confirms the obligations of the providers that already do. He also said that nothing in the Act creates any new legal authorities under US law – it does not give law enforcement any new legal process to acquire data, nor does it reduce in any way the burden on a US investigator seeking a warrant and the approval of an independent judge.
On 16th May, the US Treasury added 5 Russian individuals and the TEREK SPECIAL RAPID RESPONSE TEAM in Chechnya to its Magnitsky sanctions list. Elena Anatolievna Trikulya and Gennady Vyacheslavovich Karlov were added for their involvement in the Sergei Magnitsky affair itself. Abuzayed Vismuradov, Ruslan Geremeyev, Sergey Leonidovich Kossiev and the Terek Special Rapid Response Team were added in connection with activities in Chechnya.
On 16th May, Corker Bining posted in its blog an article about a recent judgment of the Court of Appeal in R v Fulton, saying that calculating benefit is not always so simple. It asks, what about cases where the offender conducts business that is in some respects unlawful, but in all other respects legitimate? Or where the offender ‘obtains’ property ‘in connection with’ unlawful conduct, but does not retain it? Mr Fulton worked as an account manager conducting foreign exchange services at a money services bureau and carried out foreign exchange transactions knowing that the funds were the proceeds of Missing-Trading Intra-community (also known as ‘MTIC’ or ‘carousel’) fraud. The MSB processed around £29.75 million of transactions for the companies involved, of which Fulton handled around 60%. Dismissing the appeal by Fulton, who claimed the confiscation order was disproportionate, the article says that prosecutors will be grateful that Fulton joins the body of law confirming that, whilst a confiscation order cannot be punitive, the court need not strive to be lenient nor resolve ambiguities in favour of the offender.
The Mortgage Finance Gazette on 16th May reported that loopholes have been identified at Companies House that enable individuals to register as a director, run businesses and commit fraud and money laundering, even after they have been struck-off from holding company directorships. Research by fraud investigation technology provider HooYu found that of the 6,700 currently disqualified directors, there are over 800 (1 in every 8) that still appear to have an active directorship. The analysis also uncovered over 500 so called “chameleon” directors who have been disqualified as a director, then subsequently made changes to their name or date of birth in order to register a “clean” directorship.
On 15th May, the FSA published its response to a consultation on legislation has now been made and will come into operation on 1st June. The purpose of the consultation was to obtain views in relation the proposed introduction of a dedicated AML/CFT Code for Specified Non-Profit Organisations (SNPO) – currently SNPO must comply with a 2015 Code, which is applicable to a wide range of sectors. At the same time, the FSA, in conjunction with the DHA and Treasury conducted a consultation into changes to the wider AML/CFT framework, which included an update to the 2015 Code. There were only 2 responses received, and these were broadly supportive of the update to the framework and respondents understood the rationale behind the update.
15th May 2019
CANADA: WHEN IS A PAINTING OF ‘NATIONAL IMPORTANCE’?
On 14th May, the Law Times published an article about a case where the Federal Court of Appeal said that a 127-year-old impressionist painting is of “outstanding significance”” and “national importance” and may not be exported from Canada. The case involved a painting sold to a gallery in the UK, after 60 years in the private collection of a Canadian collector. The application was refused, this decision being upheld by a seven-member review board. The board said that the painting was on the Canadian Cultural Property Export Control List, and was of such outstanding significance and national importance that “its export would significantly diminish the national heritage”. The article considers the criteria for refusal of an export licence, saying that Parliament had intended to give the review board “broad discretion” to assess what constituted “national importance”.
AUSTRALIA: CANNABIS COMPANY EXPORT LICENCE
Business News Australia on 15th May reported that THC Global, a developer of medicinal cannabis and a distributor of hydroponics equipment, had been granted a new export license approved by the Office of Drug Control. Needing more product, THC will boost growing capacity at its existing Northern NSW cultivation site by an additional 150,000sq meters. Another company, it is said, called EVE will also be able to purchase cannabis which has been cultivated from the new site in order to produce its signature ‘cannabis honey’ under the Meluka Health brand.
ALLEGED “KIDNAPPING” OF TANKER BY VENEZUELA
On 15th May, the PanAm Post reported that Venezuela’s intelligence service, SEBIN, is said to have recently forced the crew of the “Manuela Sáenz” to transport oil to Cuba, reflecting a new strategy of piracy and hijacking to evade sanctions. It is alleged that intelligence officials decided to replace the captain when he refused to take the ship to the island, and intimidated the crew who had protested against the measure, and that during the voyage the vessel’s GPS tracker system was disconnected,
WORLD BANK GROUP SANCTIONS SIEYUAN ELECTRIC OVER FRAUD
Modern Ghana on 14th May reported that the World Bank had announced the 15-month debarment of Shanghai-based Sieyuan Electric Co., Ltd, a company that specializes in research and development relating to electric power technology, in connection with alleged fraudulent practices under the Inter-Zonal Transmission Hub Project, which was part of the Western Africa Power Pool Programme. It means that Sieyuan and its affiliates are ineligible to participate in World Bank-financed projects, and is part of a settlement agreement under which the company acknowledges responsibility for the underlying sanctionable practices.
UKRAINE CIVIL SOCIETY GROUPS CALL FOR US SANCTIONS AGAINST GOVERNMENT OFFICIALS
The Kiyv Post on 14th May reported that Ukrainian civil society groups are seeking US sanctions on Prosecutor General Yuriy Lutsenko and Interior Minister Arsen Avakov. 20 organisations cited the Global Magnitsky Act, which allows U.S. authorities to block assets and impose visa bans on people who have committed human rights offenses or are involved in corruption schemes and they accused Avakov and Lutsenko of gross violations of human rights, sabotage of reforms, corruption and obstruction of justice — accusations the individuals deny.
TAIWAN-NORTH KOREA (NON-)TRADE
On 14th May, an article in 38 North examined the trading relationship between Taiwan and North Korea. It starts by saying that North Korea attempted to sell submarine designs to Taiwan in 2016, saying that it was not the first business overture between Taiwan and North Korea, though it is the one most closely tied to Taiwan’s security. It says that interest persists in expanding commercial and business opportunities with the North. It points out that Taiwan is not a member of the UN and therefore is not obligated to comply with UN Security Council sanctions on North Korea – nonetheless it scrupulously complies with these sanctions. Trade with North Korea fell to zero in 2018, following the decision by the Taiwanese government to impose a total ban on trade with North Korea in September 2017.
WHY A CENTRALISED KYC DATABASE WILL NEVER BE VIABLE
Tech Radar Pro on 14th May published an article (by the CEO of a KYC support company) seemingly triggered by the imminent “death” of Bloomberg’s Entity Exchange platform due to lack of uptake, described as the latest confirmation of this fact. It starts by saying that the sharing model where a group of companies agree on standards to exchange information on request seems like a good idea. However, it argues, every centralised KYC project has serious faults that are the same in every FATF jurisdiction, problems that have proven so far to be insurmountable. First, a centralised KYC repository is a great hacker target – and a huge reputational and civil liability risk. Second, legislation such as GDPR has increased the risk of holding pooled information. The political and economic haggling between regulated institutions is impossible to overcome, and there is the issue of exposing customer data among competitors. Finally, there is the question of who actually owns the personal KYC data and who can profit from it.
AML REGULATION OF CRYPTOCURRENCY: US AND GLOBAL APPROACHES 2019
On 14th May, Allen & Overy said that members of Washington, D.C.’s Financial Services Regulatory and Litigation and Investigations groups recently authored an article on US and global cryptocurrency AML risk considerations. The article first appeared in the April 2018 edition of the ICLG to: Anti-Money Laundering, but has been updated to reflect the current state of AML regulation of cryptocurrency in the US and in selected jurisdictions across the globe.
THE CONSEQUENCES OF VOLUNTARY AML SELF-DISCLOSURE IN THE US
On 9th May, an article (available to read free online) from Crutcher LLP on the ICLG website looks at the question of whether or not to voluntarily disclose. It looks at what it calls “uncertain” guidance from the DoJ and that of other agencies, recent BSA/AML and FCPA resolutions and other considerations.
CONTEMPORARY ASIAN DRUG POLICY – INSIGHTS AND OPPORTUNITIES FOR CHANGE
The RAND Corporation has published a report, the outcome of research, which says that, historically, countries in Asia have addressed illicit drug use and supply with harsh punishments, including compulsory treatment and the death penalty. The region has long espoused the goal of creating a drug-free society, a goal that has been abandoned in other parts of the globe for being infeasible. The report describes the illicit drug policy landscape for the Association of Southeast Asian Nations (ASEAN), plus 3 other countries (China, Japan, and South Korea), which account for about 30% of the world’s population. The authors also present 3 case studies on the shifting drug policy landscape in Asia:
- the violent crackdown on people who use or sell drugs in the Philippines;
- Thailand’s move from a similar crackdown toward an alternative approach of reducing criminal sanctions for drug use and improving access to medication treatment and needle exchange; and
- China’s emergence as a major source of many new chemical precursors and drugs, like fentanyl, that are exported outside Asia.
One of the findings of the research was that China is a leading source of legitimate chemicals for global markets, but gaps in regulatory oversight and an abundance of manufacturers permit illicit export of precursors and synthetic drugs, including fentanyl. China has attempted to bring new chemicals under regulatory control, but producers are quick to adapt, impeding efforts to stem the flow to global markets.
ILLICIT INFLUENCE: THE USE OF ENERGY AS A LEVER FOR INFLUENCE BY RUSSIA
On 25th April, NPO C4ADS published Part 2 of a report into the ways Russia is said to exercise hidden and illicit influence in or over Western countries. Part 1 in December 2018 looked at the Russian-domiciled First Czech Russian Bank (FCRB) and money laundering by corrupt elites on a massive scale through the “Russian Laudromat”. Part 2 says that the Russian government has learned to use energy (oil and gas) to cultivate politically important relationships in consumer countries and, at the same time, Russia uses its tools of asymmetric influence, including political interference and disinformation, in furtherance of its energy goals.
MORE THAN HALF OF THE UK’S VERY LARGE PRIVATE COMPANIES LACK A CLEAR CORPORATE GOVERNANCE FRAMEWORK
On 15th May, Baker McKenzie reported results of a survey saying that, as the Government reforms requiring very large private companies to report on their corporate governance arrangements come into force, over a quarter of the affected companies surveyed say that they are still struggling to implement the changes necessary to comply, with 56% noting that they lack a clear corporate governance framework in their organisation. 50% admit that they have limited or no budget available to address the new reporting requirements, though 80% say that good corporate governance is a priority for their board.
GIBRALTAR: POLICE HAVE ARRESTED A SENIOR CIVIL SERVANT ON SUSPICION OF MISCONDUCT IN PUBLIC OFFICE AND FRAUD BY ABUSE OF POSITION
The Gibraltar Chronicle on 15th May reported that this stems from an ongoing investigation in which 3 local men were arrested over allegations of conspiracy to defraud a local company and several computer misuse offences.
IMPACT OF THE 2017 US SANCTIONS ON VENEZUELA
On 14th May, the Brookings Institute published a paper referring to a research paper “Economic sanctions as collective punishment: The case of Venezuela”, which set out to assess the causal effects of the financial sanctions imposed by the US on Venezuela in August 2017. In the new paper, the authors revisit the evidence for the claims made in the earlier research paper for the sanctions’ effects, and present several findings. The new paper finds that the methodology used was unfit to estimate the causal effect of the 2017 sanctions on the Venezuelan economy, and thus the conclusions were invalid. The new analysis finds insufficient evidence to conclude that the sanctions were responsible for the worsening of the socio-economic crisis in the country, and the bulk of the deterioration in all the socio-economic indicators occurred prior to the August 2017 sanctions.
SANCTIONS: UKRAINE HAS INTRODUCED AN EMBARGO ON RUSSIAN CEMENT AND PLYWOOD
On 15th May, a news release announced a Resolution to expand the list of prohibited goods originating from Russia – now banned are Portland cement, aluminous cement, slag cement, sulfate cement and similar hydraulic cements, painted or unpainted, ready or otherwise, as well as plywood, panels veneered panels and similar materials with layered wood.
DISCLOSURE OF TAX AVOIDANCE SCHEMES: TAX AVOIDANCE USING OFFSHORE TRUSTS (SPOTLIGHT 52)
On 15th May, HMRC published a Spotlight concerning decisions by the First-tier Tribunal in 2 cases using tax avoidance schemes and disguised remuneration arrangements to avoid tax and National Insurance – Hyrax Resourcing Limited and Curzon Capital Limited. In both cases, the arrangements were designed to disguise income for which tax and NI contributions would be due. Scheme users were rewarded with amounts paid as loans which they ultimately owed to an offshore benefit trust. The FTT agreed with HMRC in both these cases that the arrangements were notifiable under the DOTAS rules.
VAT FRAUD: NEW TOOL TO HELP EU COUNTRIES CRACK DOWN
On 15th May, the EU announced the launch of the latest EU weapon to help cut down on criminal VAT fraud, and will allow Member States to rapidly exchange and jointly process VAT data, leading to earlier detection of suspicious networks. The launch of the Transaction Network Analysis (TNA) tool comes as recent media investigations once again laid bare the huge costs of VAT fraud for public finances, with criminal gangs profiting at the expense of honest taxpayers.
PIRATE ATTACKS CONTINUE IN WEST AFRICA
Defence Web on 15th May reported that the Gulf of Guinea has recorded its third ship hijacking this month, with a chemical tanker captured off Togo, as the region continues to see a spike in maritime insecurity. Last month the International Maritime Bureau noted that the Gulf of Guinea represented a high number of piracy and armed robbery attacks at sea, with 22 incidents reported in the first quarter of 2019, and the region also accounted for all of the worldwide crew kidnappings.
UK: MUTUAL LEGAL ASSISTANCE REQUESTS
On 15th May, the Home Office published information for competent authorities abroad (and in the UK) about obtaining evidence within the UK (or abroad) to assist in criminal investigations or proceedings. The assistance includes the exchange criminal record information between EU states and civil recovery requests.
KENYA: BOND TRADERS FINED FOR INSIDER TRADING FRAUD
On 15th May, the Standard Digital reported that another bond trader, Rodrick Muhoro, has been fined $2 million by the Capital Markets Authority (CMA) for insider trading of State-issued bonds. CMA had in February fined former CBA Capital bond trader David Maena $1.6 million for supplying Muhoro with insider information on bond trades.
2 ARRESTED IN CORRUPTION INVESTIGATION AT GENEVA AIRPORT
Swissinfo on 15th May reported that 2 people, including the head of security at Geneva airport, have been arrested in a corruption case involving the awarding of publicly-funded contracts.
FinCEN REISSUES REAL ESTATE GEOGRAPHIC TARGETING ORDERS (GTO) FOR 12 METROPOLITAN AREAS
On 15th May, FinCEN announced the renewal of its Geographic Targeting Orders (GTO) that require US title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold remains $300,000 for each covered metropolitan area. It says that GTO continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises.
BRITISH COLUMBIA TO HOLD PUBLIC INQUIRY INTO MONEY LAUNDERING
On 15th May, City News reported that the British Columbia government will hold a public inquiry into money laundering, following 2 reports examining money laundering in the province in the past few months.
DEUTSCHE BANK PANAMA PAPERS PROBE LEADS TO MORE GERMAN RAIDS
The Luxembourg Times and others on 15th May reported that suspects’ homes, more than 20 banks, tax advisers and asset-management companies have been raided in a tax evasion investigation. The raids are said to target clients who enlisted help from the bank’s BVI unit to set up offshore companies.
BAHAMAS: CROWN SEEKING A SECOND TRIAL FOR FORMER PROGRESSIVE LIBERAL PARTY SENATOR ON CHARGES OF BRIBERY AND EXTORTION
The Nassau Guardian on 15th May reported that Crown prosecutors are seeking a second trial for former Progressive Liberal Party Senator Frank Smith on charges of bribery and extortion. Smith was acquitted in February of allegations that from 2016 to 2017 he abused his position as Public Hospitals Authority (PHA) chairman.
UK: 4 ONLINE CASINO OPERATORS FINED £4.5 MILLION
On 15th May, ShareCast reported that the Gambling Commission had fined 4 online casino operators into standards of AML controls, with many others told to improve their procedures and/or formulate action plans. It follows £14 million in penalties being issued to other operators in November as a result of the same investigation. The new penalties range from £230,000 to £2.2 million.
A news release from Eurojust on 15th May reported that, in a major operation, co-ordinated by Eurojust, authorities from Romania, Spain, France, Italy, Hungary and Portugal took action against an organised crime group involved in illegal fishing in contaminated waters, tax evasion and money laundering. The contaminated fish was stored in, and transported to, several EU countries in improper and unsanitary conditions, and then sold to Romanian companies. The criminals were former fishermen who developed a sophisticated mechanism for poaching and purchasing fish from contaminated waters where fishing is prohibited as the fish in those areas is unfit for consumption. The contaminated fish was sold to Romanian companies, which were especially set up as ‘ghost’ fish marketing companies. They used fake invoices and other falsified documents to resell the fish in Spain, France, Italy, Hungary, Portugal and Romania.
On 14th May, a news release from the UN advised that the DIRECTORATE GENERAL OF BAGHDAD ELECTRICITY DISTRIBUTION, the IDRISI CENTRE FOR ENGINEERING CONSULTANCY (ICEC), the NATIONAL CENTRE FOR ENGINEERING AND ARCHITECTURAL CONSULTANCY and the STATE ENTERPRISE FOR FERTILIZER INDUSTRIES have been removed from the Iraq sanctions list.
On 14th May, a news release from the UN advised that NESSIM BEN MOHAMED AL-CHERIF BEN MOHAMED SALEH AL‑SAADI has been removed from the sanctions list following the review of delisting request submitted through Office of Ombudsperson.
HM Treasury followed suit on 15th May –
The Taiwan Times on 15th May reported that Australian Border Force (ABF) stopped 15 Taiwanese nationals linked to telephone fraud from entering Australia, all of whom were deported back to Taiwan. They had their visa cancelled and were extradited back to Taiwan, and were suspected of traveling to Australia to carry out “boiler room” scams. Australian authorities also identified another 20 Taiwanese nationals who were about to travel to Australia to take part in the scheme.
On 14th May, Wilmer Hale published an article about one element of a speech by Mark Steward, Director of Enforcement and Market Oversight at the UK FCA. This concerned the FCA now conducting ‘dual-track’ AML investigations…that might give rise to either criminal or civil proceedings. It points out that the FCA has not brought a single criminal prosecution under the current regulations, and only a handful under the preceding regulations. This, it says, begs 2 further questions: is there any real utility to the FCA carrying out dual-track investigations, when the likelihood of a criminal prosecution seems so limited; and ought the FCA to be pursuing these cases criminally at all? The article looks further into these, and says that Steward’s tacit acknowledgement that the FCA’s criminal powers have been underused raises a further, interesting thought: ought the FCA to be pursuing systemic money laundering failings by way of a criminal action at all? It argues that Steward appears to be saying that money laundering offences are in some way morally incumbent upon the FCA to pursue them by way of a criminal, rather than a civil action.