A briefing from the Security Assistance Monitor says that the US remains the world’s largest purveyor of arms. US lawmakers and advocates have long sought to create safeguards against the misuse of the billions in US weaponry shipped abroad every year. It says that end-use monitoring (EUM) is intended to be the answer to those concerns and is aimed at satisfying statutory requirements for the US Government to provide assurances that arms are not being misused, diverted, or otherwise violating the terms of their export. Unfortunately, it says, the current EUM regime fails to address today’s concerns about the human impact of US arms transfers. The briefing is intended to give an overview of current EUM policies, dispel commonly held misconceptions of current EUM practice, and offer recommendations for how these regulations could be strengthened.
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On 20 September, Legal Futures reported that a law firm owner who ignored AML responsibilities – and even overrode a negative due diligence check – has been banned by the Solicitors Disciplinary Tribunal (SDT) from holding compliance roles. Silas Ogbonna also failed to undertake a simple internet search that would have told him that one of his clients was a PEP, triggering extra obligations.
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On 14 September, Nishimura & Asahi published an article about the results contained in the recent FATF mutual evaluation report on AML/CFT in Japan. Like many other states (as the article explains), Japan has been placed in enhanced follow-up. The article examines the findings of the MER and the action plan initiated by the Japanese government to close gaps that have been identified.
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Panama Covid-19 update – numbers of new cases and active cases continue to fall, the number of new infections being 18.5% down this week compared to the previous one. Today has seen 250 more new cases and 2 new fatalities reported, with there now being 4,033 active cases – 64 in ICU and 244 in other wards.
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19 SEPTEMBER 2021
GERMANY: PANAMA DENOUNCES AUCTION OF ARCHAEOLOGICAL ARTEFACTS CLAIMED TO HAVE BEEN ILLEGALLY TRAFFICKED
On 18 September, Critica and others reported that the Panmanian government had protested the planned sale of 7 items said to be of the Panamanian Pre-Colombian period. Mexico and Guatemala have also lodged protests against the sale of items by the auction house in Munich.
On 18 September, TVN reported that a trial due to begin on Monday, 20 September in Panama City could be being delayed until November or December. Among the defendants are the founders of the Mossack Fonseca law firm at the heart of the scandal – Ramón Fonseca Mora and Jürgen Mossack.
PAKISTAN: BANKER ARRESTED ON CHARGES OF ATTEMPTING TO INFLUENCE WITNESSES IN MONEY LAUNDERING CASE
On 19 September, ARY News reported that Muslim Commercial Bank (MCB) vice-president Asim Suri had been detained on charges of influencing witnesses in a money laundering case against PML-N president Shehbaz Sharif and others. He and MCB Group Head, Azhar Mahmood, were allegedly coercing prosecution witnesses, including bank officials, into changing their statements. Shehbaz Sharif is a Pakistani politician and the Leader of the Opposition in the Provincial Assembly of the Punjab.
SRI LANKA: TURMERIC SMUGGLING CONTINUES – 3 TONNES MORE SEIZED
On 19 September, the Daily News reported that over 3,704 kg of smuggled dried turmeric was seized by the Sri Lanka Navy during special operations on 16 September.
On 18 September, the Libya Observer reported that the Sudanese Rapid Support Forces (RSF) had announced that it had foiled an attempt to smuggle a shipment of weapons and explosives and arrested 4 individuals, amongst them foreigners, from a gang involved in illegal arms trade with Libya. It is said to have seized 2 GMC cars carrying 36 Kalashnikov rifles and 2 boxes of grenades in addition to the DShK cannon, an RPG-7 launcher, and a large number of ammunitions of various kinds.
PHILADELPHIA CUSTOMS OFFICERS SEIZE NEARLY $100,000 IN COUNTERFEIT CURRENCY FROM RUSSIA
A news release from US Customs & Border Protection on 15 September advised that the counterfeit euros and dollars were shipped in international air cargo from Russia and destined to an address near Chicago. It was manifested as ‘Play Money for Monopoly”.
500 ILLEGAL CRYPTO MINING FARMS INTERCEPTED IN KYRGYZSTAN
On 18 September, Cryptopolitan reported that Kyrgyzstan authorities have busted 500 crypto mining farms that were illegally operating in the country. It is said that they draw an excessive amount of energy from the power grids that often results in a shortage of power supply.
FORMER CHIEF OF RUSSIA’S WEX (BTC-e) CRYPTO EXCHANGE ARRESTED IN POLAND
On 17 September, the Coin Telegraph reported that Dmitry Vasiliev, the former chief of Russian cryptocurrency exchange Wex, has been arrested in Warsaw. Wex, which was previously known as BTC-e, was a well-known “dark” exchange in the early days of the cryptocurrency industry.
An article from the Center for Strategic and International Studies published an article on 15 September about options for changes to the US policy on remittances, which are relied upon by many people in Cuba. More than 90% of the Cuban diaspora is in the US, and hence most remittances come from there. By 2019, there were over 1.3 million Cuban-born persons living in the US, making Cubans and Cuban Americans the third-largest diaspora from the Americas — surpassed only by Mexico and El Salvador. There are formal and informal ways to send money to Cuba. However, it points out that, instead of hard cash, citizens are given “electronic” dollars, which can only be used at government-owned (GAESA) stores with higher prices. As a result, research is said to show that for every $1 of remittances sent via Western Union and later spent in GAESA shops, the military gains 74 cents, 61 cents of which comes directly from store sales.
JAMAICA: CONTROVERSIAL NEW DIGITAL ID BILL THAT WOULD STORE CITIZENS’ BIOMETRIC INFORMATION COULD BE REPLICATED ACROSS THE CARIBBEAN
A post from Coda on 15 September reported on efforts to roll out a digital ID system that would provide Jamaicans with a national identity card while collecting their personal information and biometric data. It highlights objections to the Bill are part of a wider range of concerns — from privacy to human rights — surrounding the island nation’s biometric National Identification System (NIDS) as it heads into a likely vote in the Parliament this month. It is also said that that conversations about new digital ID systems are already underway in neighbouring Barbados, St. Lucia and the Dominican Republic. Concerns are also expressed about data protection and security, with a recent instance in which a government contractor allowed immigration documents and coronavirus test results of hundreds of thousands of travellers to Jamaica exposed on the Web.
WEBINAR:’ UNPICKING THE PROPOSED UK REGIME ON INTERNATIONAL DATA TRANSFERS. DIVERGENCE FROM THE EU?’
On 23 September, Field Fisher is to hold a webinar after the ICO in the UK launched a consultation on many aspects of international data transfer compliance under UK law. It will discuss the 3 main items of the consultation, the practical implications for those transferring data out of the UK and explore differences from the EU regime.
US: INDIAN NATIONAL JAILED FOR 22 YEARS FOR $10 MILLION ROBOCALL SCAM
On 17 September, Eastern Eye reported that an Indian national has been sentenced to 22 years in jail for defrauding over 4,000 people in the US of more than $10 million. Shehzadkhan Pathan, 40, operated a call centre in Ahmedabad from which automated robocalls were made to victims. A variety of schemes were used to convince victims to send money, including impersonating law enforcement officers from the FBI, DEA and representatives of other government agencies, and threatened victims with severe legal and financial consequences.
MALI: JUNTA DISMISSES WARNINGS NOT TO HIRE RUSSIA’S VAGNER ‘MERCENARIES’
On 19 September, an article from Rferl said that Mali’s ruling junta had dismissed warnings by Western governments not to hire “mercenaries” from private Russian security firm Vagner, saying it will do as it sees fit. Both France and Germany have said that a deal with Vagner would call into question their military commitments to the country.
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The UAE Central Bank has published this guide containing an investigations and pro-active risk analysis of emerging risks likely to be prevalent across the financial sector in UAE. It takes into account inherent financial crime risk, current COVID-19 pandemic impact, and the business environment. One section is concerned with typologies observed from March 2019 – March 2021 and the heightened external fraud threat on account of COVID-19.
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PANAMA COVID-19 UPDATE – while 255 new cases were reported today, there was only reported fatality, and both overall active cases and ICU numbers continue to fall, albeit slowly. There are now 4,059 active cases, with 64 in ICU and 238 in other wards.
Meanwhile, from Monday, 20 September, curfew measure will be completely lifted in the provinces of Darién, Bocas del Toro and the Guna Yala region. The 0100-0400 curfew will remain in force elsewhere, such as where we are in Panama City. In addition, churches, temples, parishes, chapels, chapels and other centres of worship will be permitted a maximum of 80% vaccinated occupancy (but only 50% unvaccinated), but with social distancing to be maintained.
18 SEPTEMBER 2021
UKRAINE SANCTIONS RUSSIANS OVER ELECTIONS IN OCCUPIED TERRITORIES AND NAVALNY POISONING
On 18 September, the Kyiv Post reported that the National Security and Defense Council had imposed sanctions on 86 Russians involved in the Russian parliamentary election being held on the occupied territory of Crimea and the Donbas. The list includes 33 State Duma (Russian parliament) candidates and 53 Russian territorial electoral commission members overseeing the 2021 Russian parliamentary election.
US AIMS TO HIT REVENUE STREAMS OF RANSOMWARE GROUPS WITH SANCTIONS
On 17 September, KION and others reported that the Biden Administration plans to impose new sanctions to disrupt the source of revenue of ransomware groups that have extorted major US firms of millions of dollars. OFAC also plans to issue updated guidance to companies on how to avoid breaking US law when making ransomware payments to cybercriminals.
BANGLADESH-INDIA BORDERS HAVE BEEN WITNESSING A RAPID INCREASE IN WILDLIFE SMUGGLING THROUGHOUT THE YEAR
On 18 September, the Business Standard reported that Bangladesh has long been a ground for collecting and illegally exporting exotic animals to India. A recent report by the Wildlife Conservation Society said exotic animals in Bangladesh such as Bengal Tigers, elephants, deer, pangolins, snakes, birds, and turtles are under serious threat. Since the end of 2019, 438 cases of wildlife trafficking were recorded by the Wildlife Crime Control Unit (WCCU) of the Bangladesh Forest Department and, according to the Hindustan Times, the BSF had seized at least 25 consignments of exotic animals till October 2020 throughout the year.
On 17 September, the IMF released an Article IV report on Malta. Amongst its findings, on AML/CFT it said that – progress has been made in addressing a number of shortcomings in the AML/CFT framework, but challenges continue, and in June 2021, the FATF put Malta under increased monitoring (i.e. the “grey list”). In July 2019, Moneyval identified significant deficiencies with Malta’s AML/CFT framework. The authorities have since stepped up efforts to improve their understanding of money laundering and terrorist financing risks, enhanced AML/CFT supervision (including through the adoption of new risk-based tools), issued sector-specific AML/CFT guidance, implemented institutional changes to improve enforcement of cases, and created a new Asset Recovery Bureau. In late April 2021, Moneyval recognised Malta’s progress in technical compliance with the FATF Standards. However, due to remaining concerns over the effectiveness in implementing some aspects of the AML/CFT framework, in June 2021, the FATF put Malta on the “grey-list”. The IMF said that –
On 14 September, Dixcart reported that from 1 January investors will be blocked from buying properties in high-density areas such as Lisbon, Oporto and the Algarve. In addition, investment in any one of the non-real estate routes, will be required at increased levels. The changes (detailed in the article) are designed to drive investment towards Portugal’s low-density population areas, relieving pressure on higher density areas such as Lisbon, Oporto and the Algarve. Investment levels will also be increasing for each of the Golden Visa routes.
ST KITTS AND NEVIS CITIZENSHIP BY INVESTMENT: PRICE REDUCTION
On 14 September, Dixcart reported that the price reduction in relation to the St Kitts & Nevis Citizenship by Investment Programme, comes to an end on 31 December. The Programme grants qualified applicants instant visa-free access to over 150 countries and it is one of the oldest and most respected programmes of its kind. There is no requirement to travel to St Kitts & Nevis and there are no annual residency rules to maintain the passport.
NFT: TRADITIONAL COPYRIGHT ISSUES IN A TOKENISED WORLD
On 17 September, an article from Smart & Biggar was concerned with Non-Fungible Tokens (NFT), the latest development in disruptive blockchain technology innovations, this time in the world of digital art, collectibles, and even luxury goods. It says, amongst other things, that purchasers of NFT should be aware that even though ownership of the authentic digital asset is established through ownership of the NFT, the digital asset itself may be viewed, downloaded, and enjoyed by anyone. It goes on to say that, drawing parallels from the physical art world, owning an NFT is like owning a unique print of a piece of art signed by the artist, while multiple other individuals may simultaneously own identical unsigned prints. As discussed below, the artist retains the copyright in the underlying work; and that purchasing an NFT does not confer the underlying copyright in the digital work.
CHINA: USE OF INTERPOL TO REPATRIATE DISSIDENTS – THE CASE OF YIDIRESI AISHAN
On 9 August, Estlund Law carried a post about the case of Yidiresi Aishan, a private citizen and Uyghur activist in exile from China’s north-western region of Xinjiang, a predominantly Turkic-speaking ethnic group primarily from China’s north-western region of Xinjiang. A 34-year-old computer engineer and father of 3, he has resided in Turkey since 2012. He is said to have been employed as a web designer who also worked on a Uyghur diaspora online newspaper and assisted other activists in media outreach and collecting testimonies of abuse in China’s Xinjiang province. It is said that CCF, the commission that controls INTERPOL files, has blocked the Red Notice for Yidiresi Aishan.
UK: POLICE UPDATE NOTICE FOR PERMISSION TO SEARCH FOR RELEVANT INFORMATION ON DIGITAL DEVICES
On 16 September, the National Police Chiefs’ Council reported that a new form had been introduced after extensive consultation, including with victims’ groups, and police will also provide an additional ‘easy read’ version of the form. Replacing a temporary version introduced in September 2020, it is intended to help police and prosecutors balance the need to follow all reasonable lines of enquiry with the need to respect the privacy of victims and witnesses, while meeting disclosure obligations. The new Digital Processing Notice and supporting information to gain permission for searching digital devices has been launched across police forces in England and Wales. Examples of the forms are attached to the article from the NPCC.
NEW PAPER: OVERVIEW OF NUCLEAR SECURITY ARCHITECTURE AND AREAS OF WEAKNESS AND WAYS TO CLOSE GAPS
On 14 September, the Nuclear Threat Initiative organisation said that a new paper on the Global Nuclear Security Architecture finds significant limitations to the current patchwork that includes individual states’ domestic regulations and policies, informal groups of countries voluntarily working together to enhance certain aspects of nuclear security, and more formal binding treaties and international organisations that make up the global nuclear security architecture. It addresses evolving risks of nuclear terrorism and the enormous consequences that would result in terms of loss of life, health risks, damage to the environment, economic costs, or reduced public confidence in the continued use of peaceful nuclear technology.
FOREIGN DIRECT INVESTMENT (FDI): AN OVERVIEW OF THE EU AND NATIONAL CASE LAW
A paper from Clifford Chance says that, in recent years, we have seen the arrival of a new wave in FDI policymaking. FDI compliance has now become a top priority for investments within the EU for a broad range of sectors, defined as critical infrastructure (energy, transport, water, health, communications, media, data processing, or storage, aerospace, defence, electoral or financial infrastructure, sensitive facilities, and crucial real estate) and critical technologies (AI, robotics, cybersecurity, energy storage, nuclear technologies, nanotechnologies, and biotechnologies). The paper provides an overview of the developments in FDI regimes globally during 2021 and, more specifically it highlights the trends over the year in the EU and in a number of key EU Member States together with the UK. It involves an added focus on the reasons why FDI screening increasingly matters.
FORENSIC INVESTIGATIONS v CLAIMS TO LITIGATION PRIVILEGE – INCOMPATIBLE?
On 15 September, an article from Clyde & Co is concerned with a recent High Court case in England which it says provides a useful reminder of the risks posed to claims to litigation privilege in circumstances where the communication(s) in question may be referable to several competing motives. As ever, it says, the courts look at the substance rather than the form when assessing a claim to litigation privilege. The litigation privilege test is assessed as at the time of the communication, not wearing the spectacles of hindsight, and if the client has regulatory motivations for the instruction, it may increase the chance that litigation privilege will not apply.
CANARY ISLANDS TOURISM INDUSTRY BUILT ON WESTERN SAHARAN SAND
On 14 September, ENACT Africa reported that the sand trade between the Canary Islands and Western Sahara flouts international rulings over the latter, an occupied territory. It is said that the Canary Islands requires enormous quantities of sand to build amenities, hotels and housing for its tourism industry, and building companies source their sand from Western Sahara. It notes that the Court of Justice of the EU has ruled that any agreements between the EU and Morocco cannot be legally extended to Western Sahara. The only exceptions are those agreements that have the explicit approval of the people of the territory and which aim to benefit the immediate needs of the original Saharawi population. It is estimated that at least 750 000 tonnes were illegally extracted from Western Sahara and transported to the Canary Islands between 2012 and 2017.
On 17 September, an article from the Atlantic Council said that for months, the Biden Administration warned that it would sanction the Ethiopian government and its allies for the human-rights abuses, war crimes, and other mass atrocities they have allegedly committed in their year-long war with the Tigray People’s Liberation Front (TPLF). It says that now the Administration has chosen to issue what the Treasury calls an “empty EO,” meaning a sanctions regime is now in place but the executive order does not designate any individuals or companies. Instead, the Biden team launched a final and most elaborate warning shot.
RUSSIAN OLIGARCH VOWS TO APPEAL SWISS DECISION TO DROP CASE AGAINST ART DEALER
On 17 September, Rferl reported that lawyers for Russian billionaire Dmitry Rybolovlev say he will appeal a decision by Swiss prosecutors to close his case against a top art dealer he accused of swindling him out of more than $1 billion. He had accused Swiss art dealer Yves Bouvier of inflating prices on 38 works he acquired from 2003 to 2014. It also notes that Rybolovlev was himself charged with bribery and influence peddling in Monaco. Those charges have implicated several former ministers, forcing one, the justice minister, to retire over claims he accepted bribes.
ARRESTS IN BOSNIA OVER MEDICAL EQUIPMENT PROCUREMENT
On 17 September, OCCRP reported that people suspected of “abuse of official position or authority” in multi-million-dollar purchases of COVID-19-related medical protection equipment have been arrested in Bosnia and Herzegovina. Police in Republika Srpska, the country’s Serb-dominated region, searched 8 locations around the city of Banja Luka. The suspects are accused of taking advantage of the pandemic emergency to acquire large property benefits through the public procurement procedures.
MONEYVAL CARRIES OUT EVALUATION VISIT TO LIECHTENSTEIN
On 17 September, the Council of Europe announced that a team of evaluators from MONEYVAL carried out an onsite visit to Liechtenstein from 6 to 17 September. The eventual mutual evaluation report is scheduled for discussion and adoption at MONEYVAL’s 63rd Plenary meeting in Spring 2022.
PANDEMIC SEES US PARCEL VOLUMES GROW BY NEARLY 40% IN 2020
On 17 September, Parcel & Post Technologies reported that US parcel volume grew 37% year-on-year, reaching 20 billion, up from 15 billion in 2019. In 2020, around 640 parcels were shipped per second, compared with 466 in 2019. Between 2015 and 2020, US parcel volume doubled from 10 billion to 20 billion.
OXYCONTIN CREATED THE OPIOID CRISIS, BUT STIGMA AND PROHIBITION HAVE FUELLED IT
On 16 September, an excellent article in The Conversation said that, as a settlement was announced in the case against Purdue Pharmacy, 2020 was the worst year on record, with over 93,000 Americans losing their lives to fatal drug overdose. The drug overdose epidemic, now more than 2 decades long, has claimed the lives of more than 840,000 people since 1999. It also says that it is estimated the 1.7 million people in the US now use pharmaceutical opioids without a prescription – not that much less than the number of those using heroin (2.3 million). After years of research, the author of the article says that she has found was an increasingly dangerous drug environment for people who use drugs, often exacerbated by policies not founded in research and by attitudes that harm those affected. The OxyContin opioid painkiller was released in 1996 and Purdue Pharma, its maker, is said to have knowingly downplayed its addictive potential. The unintended consequences of policy and enforcement changes is illustrated by the fact that, in 2010, Purdue Pharma replaced the original OxyContin with version that was more difficult to crush and inhale – unfortunately, many people who were addicted to OxyContin then turned to heroin. This in turn led to a growing market for heroin paved the way for synthetic opioid fentanyl into the illegal drug market. It looks at alternatives to US policies, saying that ignoring the evidence will surely cost many more lives.
SOUTH FLORIDA STILL NUMBER 1 IN HEALTHCARE FRAUD COSTING MEDICARE BILLIONS A YEAR
On 18 September, the Miami Herald reported that the region recently accounted for $308 million, or 20%, of the $1.4 billion in false healthcare claims nationwide, according to a 6-week snapshot of criminal cases released by DoJ. Federal prosecutors in South Florida have also charged 52 defendants with healthcare fraud, or more than one-third of the 138 defendants prosecuted nationwide during that same time frame.
TAIWAN: MAYOR, OFFICIAL AND OTHERS SENTENCED FOR CORRUPTION
In its 19 September edition, the Taipei Times reported that Pingtung Mayor Lin Hsieh-sung and Pingtung City Council Speaker Hsiao Kuo-liang, both members of the Chinese Nationalist Party (KMT), have been sentenced to several years in prison for corruption. 2 other defendants, a Pingtung County Council administrator and a contractor were also convicted on corruption charges.
ZIMBABWE: PRESIDENT MNANGAGWA BLOCKS PROSECUTION OF MINISTER OVER CORRUPTION
On 18 September, Bulawayo 24 reported that President Emmerson Mnangagwa is blocking attempts to bring to book the Minister of State for Masvingo, Ezra Chadzamira, who was arrested by investigators from the Zimbabwe Anti-Corruption Commission (Zacc).
INDIA: ENGINES OF POLICE PATROL BOATS STOLEN AND REPLACED WITH INFERIOR ONES
In its 19 September edition, The Indian Express reported that an investigation was ordered in January after a whistle-blower informed the Home Department in August 2020 that 23 engines had been stolen from boats deployed to patrol the Mumbai coastline, and replaced with old and low-powered engines – with the theft is alleged to have taken place in 2017-2018.
MOLDOVA: APROXIMATELY HALF A MILLION EUROS BELONGING TOFUGITIVE OLIGARCH SEIZED
On 18 September, ZDG in Moldova reported that the Agency for the Recovery of Criminal Assets within the National Anticorruption Center had announced that approximately €500,000, said to belong to Vladimir Plahotniuc, who faces allegations of money laundering, had been seized.
US TO REVIEW EXPORT POLICIES FOR ETHIOPIA, ERITREA, AND CYPRUS
On 17 September, Janes.com reported that the US State is preparing to add Ethiopia and Eritrea to its list of countries with a policy of denial for the transfer of military equipment under the International Traffic in Arms Regulation (ITAR), while extending its waiver for Cyprus. The updated policy toward Ethiopia and Eritrea came as a result of the recent conflict in the Tigray region in northern Ethiopia.
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On 17 September, the Environmental Investigation Agency produced a report about illegal imports of HFC through Romania, and the lack of action by the authorities. It says that more than 2 months after Romania was revealed to be a major illegal entry point in the EU for Chinese-made, climate-harming HFC refrigerants, zero enforcement action has been taken. Although the precise scale of the illegal HFC trade cannot be accurately estimated, the EIA believes it is significant, likely between 20-30% of the legal trade.
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Panama Covid-19 update – waiting to see if Panama makes it off the UK Red List on 1 October although, of course, the UK (rightly, in my opinion) remains on the Panama Red List.
Meanwhile, another 324 new cases and 3 new fatalities reported today, with there now being 4,199 active cases – 72 in ICU and 233 in other wards.
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17 SEPTEMBER 2021
EU GENERAL COURT HAS ANNULLED EARLIER ACTS RE-LISTING A FORMER MINISTER FOR AGRICULTURE, ANIMAL AND MARITIME RESOURCES UNDER EU’S LIBYA SANCTIONS
On 15 September, the EU Court of Justice issued a news release advising that the General Court had has annulled the 2019 and 2020 acts re-listing Abdel Majid Al-Gaoud, who in fact died in March 2021 and had been de-listed by the EU in April 2021. The case had been maintained by his son.
FACEBOOK: WEAK RESPONSE TO EMPLOYEES’ WARNING TO POSTINGS ON ILLICIT ACTIVITY
On 16 September, the Wall Street Journal article began by saying that in January a Facebook investigator revealed to staff that the Mexican cartels had been using Facebook to recruit. However, despite being in clear violation of Facebook’s rules, the company didn’t stop the cartel from posting on Facebook or Instagram. Having reviewed scores of internal documents the newspapers says that they show employees raising alarms about how its platforms are used in some developing countries, where its user base is already huge and expanding. They also show the company’s response, which in many instances is inadequate or nothing at all.
FOOD FRAUD AND COUNTERFEIT COTTON: THE DETECTIVES UNTANGLING THE GLOBAL SUPPLY CHAIN
On 16 September, the Guardian carried a report saying that in the complex web of international trade, proving the authenticity of a product can be near-impossible. It examines the work of a company named Oritain, founded in 2008, in Dunedin in New Zealand, is a kind of forensic detective agency – a supply-chain CSI. Oritain promises to determine with 95% accuracy if a coffee bean or a cut of meat is really from the source advertised on its label. The Guardian says that the counterfeit food market alone is worth $49 billion a year.
INDIA: CUSTOMS FINDS 827 SPIDERS SMUGGLED IN AIR POSTAL PARCELS FROM POLAND
On 17 September, Business World reported that over 800 spiders and spiderlings were found smuggled in 3 air postal parcels on 14 September. The parcels originated in Poland.
MALTA: WIFE OF FORMER PRIME MINISTER CHIEF OF STAFF ARRAIGNED ON MONEY LAUNDERING CHARGES
The Malta Independent on 17 September reported that the wife of former OPM chief of staff Keith Schembri has been arraigned on money laundering charges. Josette Schembri Vella is the wife of former OPM chief of staff Keith Schembri, who has also been charged with money laundering and corruption.
THE SWEDISH NARCOS ESCAPING THE COLD IN SPAIN’S COSTA DEL SOL
On 17 September, El Pais carried a report saying that criminal gangs have moved to Málaga province, taking their extremely violent tactics with them. They are feared for their cold-blooded modus operandi and their ability to penetrate any sector of society, and Marbella is their logistics hub. Swedish police’s National Operations Department (NOA) has confirmed this and add that the gangs are also gravitating to the Costa del Sol because of the popularity of Marbella.
HIGH-LEVEL GROUP TO START REFLECTION ON FUTURE OF EU CUSTOMS UNION
On 17 September, the EU advised that the Commission has announced the launch of a new special group tasked with identifying innovative solutions for the most pressing challenges facing the EU’s Customs Union. The ‘Wise Persons Group on Challenges Facing the Customs Union’ will advise EU institutions and Member States on how to prepare for new business models and technological developments, and how to efficiently manage the Customs Union to ensure agile and robust customs processes to accelerate the digital and green transitions.
MAN WITH EAST BELFAST UVF LINKS TO HAND OVER £60,000 PROCEEDS OF CRIME
A news release from the NCA on 17 September advised that a man with suspected links to the paramilitary East Belfast Ulster Volunteer Force has been ordered to hand over £60,000 proceeds of crime. The settlement figure comprises the proceeds from the sale of a motorhome (£45,000), plus an additional amount of £15,000, all suspected of having been acquired through the proceeds of fraud offences and money.
KYRGYZSTAN ADDS FORMER LEADERS OF CANADA’S CENTERRA GOLD TO WANTED LIST
On 17 September, Rferl reported that Kyrgyzstan has added several former leaders of Canada’s Centerra Gold company and its operator of the Kumtor Gold company to its wanted list as part of a widening investigation into alleged corruption during the development of a major gold-mining project. It is alleged that the former leaders of the Canadian company and its operator had been involved in “corrupt” activities through which they illegally pocketed up to $200 million in December 2013.
FORCED LABOUR AMONG ISSUES HAVE BEEN ADDED TO THE LIST OF TRADE BARRIERS ON WHICH THE OFFICE OF THE US TRADE REPRESENTATIVE IS SEEKING INPUT AS PART OF ITS ANNUAL REVIEW
On 17 September, Sandler Travis Rosenberg reported that comments on such barriers are due by 26 October.
UK: FIRST-EVER PROPERTY DEAL USING THE NEW QUALIFIED ELECTRONIC SIGNATURE (QES) BEING TRIALLED BY HM LAND REGISTRY
On 17 September, Legal Futures reported that QES is a more advanced form of electronic signature that does not need to be witnessed, with the signer’s identity verified by a ‘qualified trust service provider’ – an independent checker.
US: FRAUDSTER SENTENCED TO PRISON FOR LONG RUNNING PHONE UNLOCKING SCHEME THAT DEFRAUDED AT&T
A news release from US DoJ on 17 September advised that Muhammad Fahd, a citizen of Pakistan and Grenada, has been sentenced to 12 years in prison for his leadership role in a 7-year scheme to unlawfully unlock nearly 2 million phones to defraud AT&T Inc, inflicting more than $200 million in losses. Beginning in 2012, Fahd, 35, conspired with others to recruit AT&T employees at a call centre to unlock large numbers of cellular phones for profit.
FOUNDER OF $90 MILLION CRYPTOCURRENCY HEDGE FUND SENTENCED TO MORE THAN 7 YEARS IN PRISON
A news release from US DoJ on 17 September advised that Stefan He Qin, the founder of the Virgil Sigma Fund LP and the VQR Multistrategy Fund LP, a pair of cryptocurrency hedge funds in New York which claimed to have over $100 million dollars in investments, has been sentenced to 90 months in prison. It is reported that Qin’s investors discovered that his strategies weren’t much more than a disguised means for him to embezzle and make unauthorised investments with client funds. When faced with redemption requests he couldn’t fulfil, Qin doubled down on his scheme by attempting to plunder funds from VQR to satisfy his victim investors’ demands.
BITCOIN LEDGER AS A SECRET WEAPON IN WAR AGAINST RANSOMWARE
An article from Coin Telegraph on 16 September said that following the Colonial Pipeline hack, and using blockchain analysis, the FBI was able to follow the ransom payments fund flow and recover about 85% of the Bitcoin paid to ransomware group DarkSide. In fact, it says, blockchain analysis, which can be further enhanced with machine learning algorithms, is a promising new technique in the battle against ransomware. It takes some of crypto’s core attributes — e.g., decentralisation and transparency — and uses those properties against malware miscreants. It concludes by saying that continued advancements in blockchain analytics will provide investigators with more and even better insights over time, and as law enforcement agencies become increasingly adept in their use of these analytic tools, one can expect to see more, and bigger, ransomware seizures over time.
REASSESSING COUNTER TERRORISM FINANCING IN A TALIBAN-CONTROLLED AFGHANISTAN
On 17 September, an article from Just Security said that Taliban’s rapid takeover of Afghanistan set back decades-long efforts to integrate Afghanistan into the international community, including from an AML/CFT perspective. This is said to have been a policy area in which Afghanistan made substantial progress over the past several years to raise compliance standards. It is said that understanding Afghanistan’s post-9/11 economic history allows policymakers to better address the current crisis. It is said that the informal, lightly-regulated hawala financial system predominates in Afghanistan as most Afghans remain excluded from the formal banking system, and the catastrophic 2010 Kabul Bank collapse, sparked by high-level corruption, had also shattered confidence in the Afghan banking system. Due to economic sanctions against the Taliban and the limited financial connectivity in Afghanistan, the hawala system served as the primary financial lifeline for the Taliban – prompting the US Treasury to seek to combat such use. The article makes a number of recommendations for lawmakers in the US in the light of the Taliban takeover, and its control of the central bank and access to, and use of, hawala. For example, it recommends that the US and the international community must hold the Taliban responsible for fulfilling the previous Afghan government’s commitments to providing appropriate supervision of both the banking and hawala sectors and implementing key reforms of the hawala sector. It also says that cooperation with the Taliban government to combat common enemies (such as ISIS-K), as well as modifying the definition of the Taliban etc in US measures as, in the absence of clear guidance about the scope of the Taliban sanctions, prudent actors will likely treat the counterterrorism sanctions against the Taliban as a de facto jurisdictional sanctions programme against the country of Afghanistan as a whole.
On 27 May, the IMF released this Working Paper estimates the magnitude of the effect of a state being added to its Grey List by FATF using an inferential machine learning technique. It finds that grey-listing results in a large and statistically significant reduction in capital inflows.
On 17 September, FATF-style regional body MONEYVAL reported that a team had undertaken an onsite evaluation of the AML/CFT systems in Bulgaria. Carried out on 6 to 17 September, the onsite visit is an essential part of the mutual evaluation review of the country, and the report will be scheduled for discussion and adoption at MONEYVAL’s 63rd Plenary meeting in Spring 2022.
SANCTIONS INCOMPATIBILITY AND SPREAD, CONCERN MARINE INSURERS
On 16 September, Insurance Marine News reported on a recent expert panel discussion hosted by Maritime London as part of London International Shipping Week 2021.
CRIMINALS IN OTHER REGIONS LIKELY TO BE WATCHING SUCCESS OF GULF OF GUINEA PIRATES WITH INTEREST
On 16 September, an article in Insurance Marine News reported that the increase over the past few years in the level of kidnapping for ransom in the Gulf of Guinea is almost certainly being watched with interest by criminals in other coastal states with delta regions. This was a conclusion of an expert panel discussion hosted by law firm Ince.
ASSESSMENT OF MONEY LAUNDERING, TERRORIST FINANCING AND ILLICIT FINANCIAL FLOWS LINKED TO MARITIME CRIMINALITY IN THE GULF OF GUINEA
FATF-style regional body GIABA, which covers West Africa, has released a news release saying that it was seeking to recruit individual consultants to conduct country-specific studies on money laundering, terrorist financing and illicit financial flows linked to maritime criminality in the Gulf of Guinea. Expressions of interest are required by 30 September. The news release remonds one that the wider Gulf of Guinea, stretching from Cape Verde to Angola, is a major transit hub and facilitator of the region’s rapid economic growth which has averaged 7% since 2012. The Gulf of Guinea has also become a hub for global energy supplies with significant quantities of all petroleum products consumed in Europe, North America, and Asia transiting this waterway – but the number of attacks on shipping in the Gulf of Guinea is alarmingly high.
EU GENERAL COURT HAS DISMISSED THE APPLICATIONS OF 10 DEMOCRATIC REPUBLIC OF THE CONGO (DRC) NATIONALS AGAINST SANCTIONS LISTING
On 17 September, the EU Sanctions blog reported that the General Court had rejected the applications of 10 DRC nationals, including former officials, to annul their 2019 targeted sanctions re-listings.
20 YEARS AFTER 9/11, TERRORISTS COULD STILL GO NUCLEAR
An article from the Belfer Center (one of a series) said that investigations after the 9/11 attacks uncovered focused Al Qaeda efforts to get nuclear, biological, and chemical weapons. This nuclear programme reported directly to Ayman al-Zawahiri, now the leader of the group, and got as far as carrying out crude but sensible conventional explosive tests for the bomb programme in the Afghan desert. Weeks before 9/11, Osama Bin laden and Zawahiri met with 2 senior Pakistani nuclear scientists and discussed how Al Qaeda could get nuclear weapons. The article states that Al Qaeda has not managed to carry out a single successful attack in the US since 9/11, and asks if a terrorist nuclear attack is still something to worry about?
LAUNCH OF THE UN MANUAL OF GUIDANCE FOR COUNTERING KIDNAPPING AND EXTORTION
On 15 September, the UN Office of Counter-Terrorism (UNOCT) and the UN Office on Drugs and Crime (UNODC) launched this Manual dealing with Kidnap for Ransom Project (KFR). It seeks to provide Member States with good practices, tactics and strategies identified by experienced practitioners in the field of investigation of kidnapping from around the world. It is designed to be of assistance to policymakers, senior law enforcement officials and practitioners involved in the prevention and investigation of kidnapping and extortion offences.
The UN has released the Report of the Secretary General on the Work of the Organization 2021. It includes a chapter on drug control, crime prevention and combating terrorism.
UKRAINIAN PARLIAMENT TAKES STEPS TO IMPROVE CORPORATE GOVERNANCE
On 16 September, CMS Law reported that, on 15 July, the Ukrainian Parliament passed the first reading of the Draft Law “On Amendments to Certain Ukrainian Legislative Acts About Improving Corporate Governance of Legal Entities, for which the State is the Shareholder (Founder, Participant)” – part of a process of improving the corporate governance of state-owned companies. The article considers the chnages that would be made by the law, if enacted.
On 17 September, the WTO released this report which looks into the latest developments in world trade, with a detailed analysis of the most recent trends for trade in goods and services.
A COMPARATIVE STUDY OF WORLD BANK AND OTHER CORRUPTION-BASED EXCLUSION SYSTEMS
On 16 September, the GW Law Government Procurement Law Program co-hosted a webinar with the World Bank Office of Suspension & Debarment and the ABA International Anti-Corruption Committee, where a panel of experts discussed the recently published Global Suspension & Disbarment Directory, the first-ever consultative resource on exclusion systems where corruption has been found. The Directory captures data and information on the exclusion systems of 23 different countries and institutions and is for anyone interested in learning about how these jurisdictions employ exclusion to prevent wayward suppliers from accessing public funds.
The video of the presentation and panel discussion is at –
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On 17 September, the Atlantic Council published the latest edition of this publication which reviews the Summer’s designations and delistings with data visualisations and breaks down how China has applied its new Anti-Foreign Sanctions Law. It explores the current state of sanctions against the Taliban and the growing effort to combat global corruption and human rights abuses through sanctions policy. Since the start of this year, China has more than doubled its total sanctions. But its expanding regime is no aberration. Since January, Russia, France, Switzerland, Canada, the EU, UK, and US have all seen a substantial increase in their total sanctions. In fact, the only major listing authority that has not seen a total increase has been the UN.
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On 13 September, the Belfer Center published the slides from a presentation on the evolving global threat to nuclear and radiological transports to the Transport Security Unified Stakeholders Group. It says that attacks on transports are a constant threat, and that the theft of plutonium or highly-enriched uranium (HEU) could lead to a horrifying catastrophe, and that sabotage could also provide a serious threat. It also refers to the risk from a so-called “dirty bomb” (or a radiological dispersal device or RDD). It concludes that there remains a serious remaining risk.
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Field Fisher has published an article saying that, in August, the Information Commissioner’s Office launched a consultation on how organisations can continue to protect personal data when it is transferred outside of the UK. This consultation by the ICO has been eagerly anticipated, after the European Commission approved the final text of the Standard Contractual Clauses (SCC) on 4 June. The ICO has invited responses to the consultation by 7 October. This is the first of a series of 3 posts covering these separate aspects of the consultation.
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On 17 September, Transparency International reported on an organised network of institutional patronage behind the looting of endangered mukula wood in Zambia. Fresh revelations come nearly 2 years after an Environmental Investigation Agency (EIA) initial report about the alleged “Mukula cartel” which implicated top government officials and politically exposed persons under the previous Patriotic Front government. These implicated top government officials and politically exposed persons (PEP) under the previous Patriotic Front government.
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On 17 September, OFAC announced that it was designating members of a network of Lebanon- and Kuwait-based financial conduits that fund Hizballah, as well as designating members of an international network of financial facilitators and front companies that operate in support of Hizballah and Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). Together, it says, these networks have laundered tens of millions of dollars through regional financial systems and conducted currency exchange operations and trades in gold and electronics for the benefit of both Hizballah and the IRGC-QF. OFAC says that Hizballah, with the support of the IRGC-QF, uses the revenues generated by these networks to fund terrorist activities, as well as to perpetuate instability in Lebanon and throughout the region. 13 individuals and 8 entities have been listed. In addition, the existing entry for Lebanese nation Ali Qasir has been amended.
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On 17 September, the Krebs on Security blog reported that a jury in California has reached a guilty verdict in the trial of Matthew Gatrel, charged in 2018 with operating 2 online services that allowed paying customers to launch powerful distributed denial-of-service (DDoS) attacks against Internet users and websites.
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On 17 September, the Times of Malta reported that Ali Muuse Igaale, 40, a leading member of the local Somali community who was found with €160,000 in undeclared cash at the airport in August has pleaded not guilty to money laundering. He was booked on a flight to Istanbul. He has lived in Malta for 8 years and runs a barber and a clothing outlet. A court has been told that the source of the €160,000 that had been found in his possession could not be traced, and that €10,000, handed back to Igaale, while on remand in prison, as the maximum amount of money permissible in terms of cash control regulations, appeared to have since gone missing.
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On 17 September, France 24 reported that the Economic Community of West African States (ECOWAS) has imposed sanctions against the junta in Guinea and demanded they return the country to constitutional rule within 6 months. It decided to freeze the financial assets and impose travel bans on Guinea’s military leaders and their relatives, insisting on the release of President Alpha Conde and a short transition.
On 17 September, CNN reported that Biden had signed a new Executive Order authorising broad sanctions against those involved in perpetrating the ongoing conflict in Ethiopia as reports of atrocities continue to emerge from the Tigray region. The US did not immediately impose sanctions under the new Order, but said that it was “prepared to take aggressive action” unless the parties – including the Ethiopian government, the Eritrean government, the Tigray People’s Liberation Front, and the Amhara Regional Government.
OFAC also issued 3 General Licenses permitting certain transactions, and associated FAQ.
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Panama Covid-19 update – the EU has said that it will recognise the digital vaccination certificates issued in Panama, so now we can at least travel to France, Spain etc. Perhaps not the UK, however, as Panama remains on its Red List. Interestingly, today it was reported that Panama’s own Red List of 20 high-risk countries’ travellers also includes the UK (as well as notably the US as well), although other Western European countries (if you don’t count Greece) are not on the list, which says something, I guess.
Incidentally, I noticed that all the staff inside the British Embassy today appeared to be wearing masks, something I am not sure would see in all offices in the UK itself (despite the UK perhaps being in reality a higher risks place than Panama).
Meanwhile, today sees a further fall in active cases, but alongside a further 373 new cases and 6 new fatalities (plus a further death added to totals that occurred earlier). There are now 4,327 active cases, with 72 in ICU and 232 in other wards.
16 SEPTEMBER 2021
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FORMER CRYPTOCURRENCY FUND MANAGER SENTENCED TO 7½ YEARS IN PRISON
On 15 September, the Wall Street Journal reported that Stefan Qin, 24, a cryptocurrency hedge-fund manager who lied about returns on his $90 million fund and siphoned money from its accounts to cover a lavish lifestyle was sentenced to 7½ years in prison. Prosecutors said he ran the fund, Virgil Sigma Fund LP, like a Ponzi scheme for 3 years until its implosion in late 2020.
GLENCORE: CORRUPT OIL TRADER TURNS ON COLLEAGUES IN AFRICA BRIBERY CASE
On 16 September, KYC360 reported on Anthony Stimler, who left Glencore PLC in 2019, who is now helping a US DoJ investigation into the company and numerous former colleagues and concerning corruption in the extraction and trading of commodities.
FINANCIAL CRIME, PAYMENT FRAUD AND THE ROLE OF DIGITAL IDENTITY
Refinitiv has produced this White Paper which draws on the support of key industry stakeholders and subject matter experts to provide an overview of the current landscape, emerging threats and insights into how fraud controls can be improved. It looks at the current situation and emerging threats, current limitations and new technologies, the role of digital identities, collaboration and data-sharing, and challenges and barriers to combatting the threats.
WHAT’S THE DIFFERENCE BETWEEN BLACKMAIL AND EXTORTION?
On 15 September, an interesting article from Hassan Elhais in the UAE posed this question, and explained how to distinguish between the two types of crime.
DEEP FAKE AUDIOS AND VIDEOS: A HUGE RISK TO ANY COMPANY – “SEEING IS NO LONGER BELIEVING”
On 15 September, a 40-minute video webinar from AML Grey Matters said that some companies have already fallen victim to a fake audio of a CEO requesting significant funds to be wired urgently. With some private banks and wealth managers having policies to arrange wires on behalf of their clients without a second sign-off after a phone call and an email – something which can be easily faked if a client or company becomes a target.
US: 8 PEOPLE CONVICTED OF EXPORT OFFENCES DENIED EXPORT PRIVILEGES
The EU Sanctions blog reported on 16 September, the Department of Commerce’s Bureau of Industry and Security has issued orders denying export privileges to 8 people who were all separately convicted of export violations between August 2018 and February 2020. Those affected have been denied export privileges for periods of between 5 and 10 years from the date of their convictions.
EU PARLIAMENT RESOLUTION CALLS FOR A NEW EU STRATEGY TO PROMOTE DEMOCRACY IN RUSSIA AND CHANGES TO THE EU SANCTIONS ON RUSSIA
On 16 September, a news release from the EU advised that MEP had adopted a resolution saying that the EU must distinguish between the Russian government and the Russian people, step up work with partner countries and civil society to strengthen pro-democracy tendencies in Russia, and impose sanctions, when necessary, counteract the flow of dirty money and support human rights activists.
EU PARLIAMENT SETS OUT ITS VISION FOR A NEW EU STRATEGY ON CHINA
On 16 September, the EU Parliament announced it had adopted a new report on relations with China which, inter alia, said that the EU should address human rights violations in Xinjiang, Inner Mongolia, Tibet and Hong Kong; more resources were needed to monitor and tackle Chinese disinformation; China should allow independent investigation into origins and spread of COVID-19; and, where 5G and 6G networks are involved, one should exclude companies that do not fulfil security standards
UK FINANCE REPORT ON THE FINANCIAL CRIME RISKS FROM CRYPTOASSETS
On 16 September, a release on Mondo Visione advised that UK Finance (a trade association for the UK banking and financial services sector), in conjunction with financial crime compliance firm Plenitude, had released a report looking at the financial crime risk posed by cryptoassets and how to manage it appropriately. It is said that the report aims to support financial institutions as they navigate the transitional period as countries move to regulate cryptoassets’ AML/CFT measures. It also considers how the financial and cryptoasset sectors could partner and work together on a more collaborative basis.
IMF WARNINGS TO VANUATU ON AML/CFT AND EU BLACKLISTING
On 16 September, Market Screener reported that an Article IV report by the IMF on Vanuatu included a warning that risks for Vanuaru are substantial and “tilted to the downside”. This is despite strong receipts of the Economic Citizenship Programs (ECP) and donor support which have helped mitigate the impact of the pandemic on fiscal and external balances. However, recent hurricane and volcano damage, plus the pandemic have seen threats to the economy grow, with growing concerns on risks to the ECP with the recent loss of a key correspondent banking relationship. Lack of transparency and effective supervision framework for state enterprises could negatively affect the business environment and fiscal management. Issues concerning AML/CFT and EU blacklisting related to tax transparency could accelerate de-risking by foreign firms and impede foreign direct investment. These are said to be in addition to the ever-present risk related to further natural disasters.
A reminder that changes have been made to controls on the import and export of cash (of €10,000 or more) following the end of the Brexit transition period. You must declare cash of £10,000 or more to UK customs authorities if you carry it between Great Britain (England, Scotland and Wales) and another country. You must also declare cash of £10,000 or more if you carry it from Great Britain to Northern Ireland – but you do not need to declare any amount of cash if you’re carrying it from Northern Ireland to Great Britain. You must declare cash of €10,000 or more if you carry it between Northern Ireland and any non-EU country, but you do not need to declare cash if you’re carrying it between Northern Ireland and an EU country. You must declare cash of £10,000 or more if you carry it from Great Britain to Northern Ireland, but you do not need to declare any amount of cash if you’re carrying it from Northern Ireland to Great Britain.
[Well, that’s quite straightforward, isn’t it? Just like most post-Brexit arrangements…]
ITALY HAS INFRINGED EU LAW BY EXEMPTING FROM EXCISE DUTY FUELS USED FOR PRIVATE PLEASURE CRAFT, CHARTERED AND USED BY END USERS FOR NON-COMMERCIAL ACTIVITIES
A news release from the EU Courts on 16 September advised of judgment in a case, saying that the fact that the chartering of a vessel constitutes a commercial activity for the person making that vessel available to another does not justify the tax exemption in question.
ARMENIA AND EUROPOL SIGN AGREEMENT TO COMBAT CROSS-BORDER SERIOUS ORGANISED CRIME
On 16 September, a news release from Europol advised that it and Armenia have signed a strategic cooperation agreement to expand cooperation to combat cross-border criminal activities. The agreement will enable both partners to work on some key areas such as migrant smuggling, cybercrime, drug trafficking, asset recovery, money laundering, organised property crime and trafficking in human beings.
On 16 September, the Washington Examiner reported that the DoJ has announced on that the Madoff Victim Fund began distributing $568 million in additional pay outs to those affected by the Bernard L Madoff Investment Securities LLC (BLMIS) fraud scheme, marking the seventh distribution the MVF has made. This brings the total amount of MVF’s distribution to $3.7 billion, with the goal of reaching the approximately $4 billion that victims lost from the collapse of BLMIS.
UK: TOP SPORTS LAWYER DENIES CENTRAL ROLE IN FOOTBALL TRANSFER PAYMENTS
On 16 September, the Law Society Gazette reported that the lawyer said that she should not be held responsible for historic payments made to third parties which allowed football transfers to go through. She is alleged – along with the London firm at which she worked – to have caused the client account to be used as a banking facility for 5 transactions from 2011 to 2013, and was answering the allegations before the Solicitors Disciplinary Tribunal.
On 16 September, the Daily Mail reported that a Kenyan court has sentenced former sports minister Hassan Wario to 6 years in jail, or to pay a hefty fine after being convicted of embezzlement at the Rio Olympics. He was one of 6 Kenyan officials charged with abuse of office and the misappropriation of $545,000 during the Rio Games in 2016.
WHAT DOES THE FUTURE HOLD FOR THE UK’S MONEY LAUNDERING REGULATIONS?
On 16 September, a Commentary from RUSI posed this question, saying that the UK government is reviewing its Money Laundering Regulations, and it is not alone. Around the world AML regimes are evolving – how will the UK’s compare? In In July 2021, a further action was added to the country’s Economic Crime Plan – Action 33, which calls for a review of the UK’s Money Laundering Regulations and the Office of Public Body Anti-Money Laundering Supervision (OPBAS) Regulations.
27 SEPTEMBER DEADLINE LOOMING FOR EU STANDARD CONTRACTUAL CLAUSES (SCC)
On 16 September, an article from Alston & Bird reminded one that on 4 June, the European Commission issued modernised SCC under the GDPR for data transfers from controllers or processors in the EU/EEA (or if otherwise subject to the GDPR) to controllers or processors outside the EU/EEA (and not subject to the GDPR). From 27 September, the modernised SCC will replace the 3 sets of SCC that were adopted under the 1995 Directive that was the predecessor of the GDPR.
UK: NEW EXPERT GROUP TO INCREASE CONFIDENCE AND STANDARDS IN E-SIGNATURES
A news release from the MoJ on 16 September advised of the establishment of an industry working group of experts to improve standards, reliability and security in electronic signatures. It will seek to improve standards, reliability and security in electronic signatures and other means of legally executing documents, and to address best practice in this area.
TAX LOST IN UK AMOUNTS TO £35 BILLION – ALMOST HALF, SAY CAMPAIGNERS, DUE TO FRAUD
On 16 September, the Guardian reported that HMRC has said that said the tax gap – the difference between the expected income for the exchequer and actual receipts – was estimated to have jumped by about £2 billion in the 2019-20 financial year from the period a year earlier. It said the figure represented a 5.3% shortfall of theoretical tax liabilities due, compared with 5% in 2018-19. Campaigners said the amount of tax lost to fraud was at least £15.2 billion, but that billions of pounds more were likely to have been shifted away from the UK to tax havens by multinational companies.
SOUTH KOREA BECOMES TRANSIT POINT FOR MEXICAN METHAMPHETAMINE
On 16 September, Insight Crime reported that a ton of Mexican methamphetamine found in South Korea and suspected of being bound for Australia has shown how Mexican synthetic drugs continue to make inroads in the Asia-Pacific. Korean outlets have reported at least some of the drugs were destined for the domestic market. Mexican methamphetamine is globalizing, with increasingly large quantities appearing not just in Europe but also Australia and East Asia.
NDA BREACH AND PROTECTING YOUR SENSITIVE INFORMATION: WHAT IS THE POSITION AFTER BREXIT?
An article from Eversheds Sutherland on 16 September reviewed the situation, pointing out that a non-disclosure agreement (NDA) only has teeth if the provider of the confidential information is able to get urgent relief to compel the recipient of their confidential information from misusing it. It asks what the apparent loss of interim or final injunctions obtained in England having effect throughout the EU. It sets out some key factors to consider from a dispute resolution perspective when entering into NDA in a post-Brexit world.
TRANSPARENCY INTERNATIONAL ANNUAL IMPACT REPORT AND ACCOUNTS 2020-21
Transparency International’s report includes a focus on corruption in the UK, saying that the organisation has seen momentum growing considerably this year towards achieving our long-term goals of beneficial ownership registers across the UK and its territories, as well as increased corporate transparency. Looking ahead, it says that its objectives in the short term includes advocating for increased corporate transparency, pursuing change that discourages business from facilitating corrupt practices globally, and advancing accountability. It also refers to continuing to work towards transparency, and highlighting the devastating impact of corruption on health care and its dangerous links to conflict and insecurity.
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On 14 September, the human rights group in Switzerland, Public Eye, has developed a satirical handbook for white collar criminals, in an effort to demonstrate the shortcomings of the Swiss systems. Citizens are also invited to “bribe” the Swiss Minister of Finance to convince him to combat corruption.
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advised that the Nationality and Borders Bill contains new maritime enforcement powers, as the Home Office seeks to extend its activity, beyond the UK territory, beyond UK territorial waters, and into international waters and into foreign waters. In so doing it seeks powers to stop, board, divert, and detain foreign ships and ships without nationality. It explains the current legislation allowing immigration action at sea, initially dating from a 2016 Act [I recall a Border Force cutter commander complaining that, at the time, having been diverted from anti-smuggling they had no powers to act against a vessel suspected of carrying illegal immigrants until they or the vessel touched UK soil…].
Currently, broadly speaking, immigration powers – in relation to UK waters – as regards a UK ship, a ship without nationality, a foreign ship, and a ship registered under the law of another British territory (e.g. the Isle of Man) can only to be exercised for the purpose of preventing, detecting, investigating or prosecuting various immigration-related criminal offences.
The new Bill seeks to modify existing maritime enforcement powers and to add new ones. These include the ability to act in foreign or international waters. In addition, the definition of “ship” is broadened so as to encompass even the small inflatable and other flimsy craft that might be involved. The Bill also includes new powers to seize and dispose of a ship and its property where there are reasonable grounds to suspect that it has been used in the commission of a relevant immigration-related criminal offence and the ship is in UK waters or otherwise in the UK.
The author of the article asserts, rightly, that the proposede powers raise issues as to their compatibility with international law commitments by which the UK is bound, such as international maritime law, human rights law, and the Refugee Convention. Those issues are important and deserve discrete consideration.
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On 16 September, following the issue of the mutual evaluation report for Chile, FATF has released an updated consolidated schdule of all AML/CFT ratings to date.
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On 16 September, the Institute for Science and International Security in the US published a paper on a recent case where the German Federal Prosecutors Office issued an arrest warrant for a German-Iranian citizen who is accused of illegally exporting a multitude of laboratory equipment, including 4 spectrometers, in 3 separate cases, to Iran. It says that, given the nature of the items involved, the Iranian procurements violated not only German law and EU sanctions Regulations, but appear to have also violated the regulations of the procurement channel of the Joint Comprehensive Plan of Action (JCPOA). Referring also to earlier cases, it says that the recent case highlights the continued effort of Iran to break trade control laws and sanctions of other countries to procure items for its nuclear and ballistic missile programmes, and that Iran continues to actively recruit sympathetic or persuadable individuals to acquire commodities for its sensitive programmes. It also highlights that Iran continues to lack the domestic capability to produce certain sophisticated measuring equipment and analytical instruments, such as spectrometry systems essential for a uranium enrichment program, and thus, is forced to seek these items elsewhere.
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On 16 September, OFAC announced that it had designated 4 Turkish and an Egyptian national operating in Turkey and who provided a range of financial and travel facilitation services to al-Qaida.
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On 16 September, OFAC announced that it had identified Zulma Maria Musso Torres (Musso Torres) as a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act. Musso Torres (aka “La Patrona” or “La Señora”) is the leader of an international drug trafficking organisation (DTO) primarily based in Santa Marta, Magdalena, Colombia. OFAC has designated members of his organisation, which includes his 2 sons and 2 Colombian entities – Exclusive Import Export SAS and Poligono Santa Marta SAS.
On 15 September, an article from Omni Bridgeway was concerned with a recent case in England involving the question of champerty and of funding assigned claims held in a special purpose vehicle (SPV), possibly owned by the funders themselves. It explains champerty and the associated common law rule of maintenance, saying that a person is guilty of maintenance if he supports litigation in which he has no legitimate concern without just cause or excuse, and that champerty occurs when the person maintaining another seeks a share of the proceeds of the action. It says that people speak of champerty being an aggravated form of maintenance. It explains that the case law regarding maintenance and champerty is really anchored in the decision of the House of Lords in a 1994 case. It observes that champerty and maintenance issues that are specific to the common law are to be contrasted with the approach taken by civil law legal systems, where no such rules exist, but where one relies simply on the more general legal doctrines underlying tortious acts, i.e. fairness and reasonableness.
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On 15 September, BCL Solicitors LLP published this article, explaining that the Law Commission had been tasked with considering options to reform the law on when and how companies should be held liable for criminal offences; and that earlier this year it published a discussion paper and invited responses to 13 questions.
Panama Covid-19 update – while overall, the Rt rate and general statistics continue to fall, there remain quite a few new cases and a handful of new fatalities every day. Today, for example, another 316 new cases are reported and 7 new fatalities, although active cases have dropped to 4,461. 78 patients are in ICU and 215 in other wards. 160 people (again, much down on past numbers) are in the so-called “hospitality hotels”. To date, since the pandemic started in early 2020, 463,086 cases have been reported (more than 10% of the total population) and 7,159 deaths.
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15 SEPTEMBER 2021
ESG IN 2021 SO FAR: AN UPDATE (PART 2)
On 15 September, the Compliance and Enforcement blog from the Program on Corporate Compliance and Enforcement of the New York University School of Law published Part 2 of a 3-part series of posts. Part 1 provided an overview of correct ESG predictions for companies based in the UK and Europe in 2021, and Part 3 will discuss new areas of interest in the ESG field and make new predictions.
UNLAWFUL MEANS CONSPIRACY AND THE QUESTION OF KNOWLEDGE
On 8 September, an article from Weil Gotshal & Manges LLP reflects on a recent Court of Appeal case in London, and a ruling that a claimant does not need to prove that defendant conspirators, who engaged in an unlawful means conspiracy, knew that their actions were unlawful in order to establish a claim in that tort. It explains that the tort of unlawful means conspiracy occurs where 2 or more people act together unlawfully, intending to damage a third party (although that intention need not be the predominant purpose), and do, in fact, cause damage to the third party.
MODERN SLAVERY RISK IN AUSTRALIAN INTERNATIONAL SUPPLY CHAINS
An article from Holding Redlich on 13 September said that the Australian Maritime Safety Authority (AMSA) has issued its longest ever ban of 36 months to the ship MV Maryam for, amongst other things, “serious deficiencies” relating to the working and living conditions of its seafarers – a ban which it says is significant because it reminds Australian businesses that they may be exposed to the risk of modern slavery breaches arising in their global supply chains. AMSA had found that the ship was unseaworthy and that the living conditions on board were in breach of the Maritime Labour Convention 2006. The Convention came into force in 2013 and Australia is a signatory. For businesses in or trading to or from Australia, Australia has also implemented the Modern Slavery Act 2018, which came into force on 1 January 2019. The article considers the Convention and Modern Slavery Act.
On 13 September, an article from Irish law firm Arthur Cox LLP says that the firm has made a submission to the consultation in Ireland on the OECD Tax Proposals. The Irish Department of Finance on 20 July announced a Public Consultation on the international tax proposals and this has now concluded. The firm says that there are a number of elements of the OECD proposals, as currently drafted, which raise concerns, and the article itemises them.
HMRC CONFIRMS PROBE INTO 153 PEOPLE SUSPECTED OF AIDING TAX EVASION
On 13 September, City AM reported that HMRC has confirmed it is investigating 153 suspected ‘enablers of tax evasion’, including unregulated tax advisers. The HMRC Fraud Investigation Service has been given additional resources to recruit more staff and, as a result, the number of investigations into tax fraud enablers is likely to increase. It explains that the definition of ‘enablers’ is wide and includes wealth managers or technology companies that provide software which could potentially be used to distort profits, enabling businesses to evade tax.
On 14 September, Newsroom Panama reported that former Finance Minister Frank De Lima has been convicted of falsifying documents and he and fellow conspirators Giselle Brea and Luis Felipe Icaza have been sentenced to 5 years in prison and, on completion of the sentence, will be barred from public office for 3 years. They had been members of the plenary session of the Gaming Control Board and the case revolved around a contract for a gambling operation.
MACAU: CONSULTATION ON A NUMBER OF MAJOR REFORMS TO THE REGION’S CASINO SECTOR
On 14 September, iGB reported that, in tightening up controls on the sector, changes proposed include increasing the number of licences issued and the possibility of introducing government representatives to licensees. The government has also proposed introducing new rules for those who promote gambling, such as junket operators. The Chinese government has had concerns over money laundering and capital escaping through operations and junkets from Macau.
US: ADDITIONAL SANCTIONS ON RUSSIA UNDER THE CHEMICAL AND BIOLOGICAL WEAPONS CONTROL AND WARFARE ELIMINATION ACT
On 7 September, the US State Department detailed the second round of sanctions imposed on Russia over the poisoning of Alexey Navalny in August. The additional sanctions include the opposition of loan extensions or financial or technical assistance to Russia by international financial institutions; a prohibition on US banks making any loan or providing any credit to the Russian government, except for loans/credits for the purpose of purchasing food or other agricultural products; a prohibition on the exporting of “all other goods and technology” (excluding food and other agricultural products); and restrictions on the permanent importation of Russia-origin firearms or ammunition.
ISRAELI EXTRADITED BY PANAMA 28 YEARS AFTER FLIGHT
On 15 September, the Jerusalem Post reported that Yossi Ben-Ari has been extradited back to Israel. He was convicted of importing nearly 5 kg of heroin into Israel from the Netherlands and was sentenced to 12 years in prison, but he escaped 28 years ago.
STILL NO SIGNS OF RUSSIAN COOPERATION ON RANSOMWARE
On 15 September, the Washington Post reported that that it is nearly 3 months since President Biden demanded President Putin take action against ransomware gangs operating in Russian territory, but the gangs are still operating in the permissive environment that they’ve created there and that there’s no evidence that it’s because Putin asked the hackers to back off.
On 15 September, The Register reported that the Wikipedia Foundation had banned several users over concerns of efforts to gather personal information on some Chinese Wikipedia editors by entities opposed to their activities on the platform. It has banned 7 users in mainland China, cancelled privileges for another dozen, and warned other Wikipedia editors to modify their behaviour.
AVOIDING PITFALLS WHEN EXPORTING AIRCRAFT FROM THE US
An updated article from Holland & Knight on 14 September said that a significant increase in aircraft seizures over the last year and potential enforcement actions have highlighted the need to ensure compliance with US export laws. Part of the problem, it seems, is that determining when and whether there will be a permanent export is not always straightforward. Unlike most goods that move in commerce, when an aircraft is sold or leased to a foreign party, it often departs the US as its own conveyance. The article looks at when an export declaration is needed, who should make one, and what if the foreign buyer is temporarily in the US to accept delivery.
On 15 September, the Hindustan Times reported on the instances of snake venom being seized from many districts of West Bengal since 2017. Labelled as “Red Dragon”, one of the theories considered by investigators suggests that the venom originates from snake farms in Thailand and smuggled through Bangladesh, India and Nepal for its final destination either in China or in European countries.
PRIVATE JETS OWNERS IN NIGERIA INVOLVED IN GOLD SMUGGLING
On 14 September, Sahara reporters reported that the Minister of State for Mines and Steel Development has alleged that owners of private jets in the country are responsible for the high cases of illegal smuggling of gold from Nigeria, with the gold coming from illegal mining.
SEEKING SOLUTIONS TO TRADE MISINVOICING IN MEXICO AND COLOMBIA
On 14 September, Global Financial Integrity said that addressing trade misinvoicing is a complex endeavour as it is considered one of the weakest links in the fight against money laundering, especially in developing countries like Mexico and Colombia, and is one component of trade-based money laundering (TBML). In countries like Mexico and Colombia, drug cartels frequently use low-risk, high-reward methods such as trade misinvoicing to launder money. The article looks at efforts in the two countries to combat the risk. It then makes further recommendations for the countries to improve the situation. These include implementing trade misinvoicing tools such as GFTrade, a risk assessment tool that provides real-time price comparisons.
OECD PUBLISHES LATEST COMPARATIVE TAX ADMINISTRATIVE INFORMATION
On 15 September, Accountancy Daily reported that the OECD has published Tax Administrations 2021. It provides internationally comparative data on aspects of tax systems and their administration in 59 advanced and emerging economies.
CAYMAN ISLANDS: CONSULTATION ON CHANGES RE PUBLIC ACCESS TO BENEFICIAL OWNERSHIP INFORMATION
On 15 September, Wolters Kluwer reported that the Cayman Ministry of Financial Services has launched a consultation on the changes needed to enable public access to beneficial ownership information. It runs until 4 October, with the Cayman Government saying that substantial changes will be needed to the Companies Act, the Limited Liability Companies Act, the Limited Liability Partnership Act, related Regulations, and also consequential amendments to other pieces of legislation, as well as significant changes to systems and processes. The consultation also deals with expanding the scope of reporting to include exempted limited partnerships and limited partnerships.
The Institute of Chartered Accountants in England and Wales (ICAEW) has published on 14 September its response to draft Finance Bill legislation relating to promoters of tax avoidance arrangements published by HMRC on 20 July. It warns that the draft legislation includes subjective terms and tests which are open to interpretation, and says that the terms should be amended or HMRC guidance created to better outline its interpretation.
UK: “MINI-UMBRELLA COMPANY” FRAUD RISES AS TEMPORARY LABOUR MARKET BOOMS
On 14 September, Accounting Web reported that mini-umbrella company fraud cases are on the rise as the temporary labour market grows by 5% over the last 12 months, according to the latest Office of National Statistics (ONS), and the job market is expected to grow further as the UK economy continues to recover. It is explained that umbrella companies employ temporary workers on behalf of an employment agency, dealing with accountancy, taxes and payroll. IR35 changes, which came into effect this year and restrict temporary workers to work off payroll through Personal Service Companies, has seen their use increase. It warns of the dangers of mini umbrella company fraud in the complex labour supply chain – which reduces tax payments, including PAYE, National Insurance and VAT. It explains how a mini umbrella operation works and what HMRC could or should do to crack down on frauds involving such companies.
US: CORPORATE TRANSPARENCY ACT AND WHAT YOU NEED TO KNOW ABOUT MANDATORY BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS COMING SOON
On 14 September, Gray Reed published an article saying that by 1 January FinCEN will publish regulations regarding mandatory beneficial ownership reporting requirements as required by the Corporate Transparency Act (CTA). They will apply to all corporations, limited liability companies or similar entities formed under state law or registered to do business in the US unless one of the limited exceptions applies, and the vast majority of legal entities set up in the US will be subject to the reporting requirements.
IVORY COAST TARGETS POLICE AND GENDARMERIE IN CORRUPTION CRACKDOWN
On 15 September, VON reported that the Ivory Coast has launched several operations against corruption in the public services, particularly the police and gendarmerie, the Minister for the Promotion of Good Governance has announced. It notes that, in a 2017 survey, 1 in 2 Ivorians said they paid bribes to police or gendarmerie officers to avoid problems, 1 in 3 paid government officials to obtain documents, and two-thirds considered reporting corruption to be dangerous because of the risk of reprisals.
REVIVED ENRON UNIT LOSES APPEAL TO CLAIM PROCEEDS FROM NIGERIAN YACHT
On 15 September, BNN Bloomberg reported that a US has dismissed an appeal by a former unit of Enron Corporation that tried to stake a claim to the proceeds from the sale of a luxury yacht to settle a debt owed by Nigeria’s government. The US Government had assumed ownership of $37 million generated from the auction of the Galactica Star. It was alleged that Nigerian businessman Kolawole Aluko acquired it with the spoils of bribery. Enron Nigeria Power Holding Ltd. Said that it is entitled to more than $22 million of the proceeds, and is trying to collect on an arbitration award issued against the Nigerian government for suspending a contract signed with the firm in 1999 to build and operate a power plant. The former subsidiary of Enron, the energy-trading giant that hid billions of dollars in losses and filed for bankruptcy 20 years ago, was bought by undisclosed shareholders in 2004.
On 15 September, the House of Commons Library published this briefing paper provides an overview of some commonly raised issues about land law, including how to trace ownership of registered and unregistered land. It also signposts to sources of further information and relevant case law.
BRAZIL CRACKS DOWN ON ILLEGAL MINING IN AMAZON – FOR NOW
On 15 September, the Guardian reported that the Government is determined to show the world a new, greener face, but activists are sceptical the clampdown will have lasting impact.
CYBER DUE DILIGENCE: A CRITICAL TOOL IN INVESTMENT DILIGENCE
A briefing from Control Risks on 15 September says that bBreaches of sensitive personal data, theft of intellectual property (IP) and sensitive business information, and disruptive ransomware and distributed denial of service (DDoS) attacks can adversely impact companies’ financial results, share value, brand and trust among customers and clients. In addition, it says, companies and investors are increasingly required to disclose breaches to regulators, shareholders and customers, and stringent data protection rules under GDPR and similar frameworks are driving more decisive regulatory enforcement. However, it asserts, a systematic and risk-based consideration of cyber security in the investment lifecycle is still the exception rather than the rule, elevating reputational risks for the investor. The article also argues that the need for thorough cyber due diligence is as relevant for private equity and infrastructure funds investing in other sectors as it is for technology-focused investors. It provides an illustration of the most frequently targeted private sector organisations in cyber attacks globally, September 2020 – August 2021 –
UK: CLARIFICATION ON WHEN BRAND-OWNERS WILL BE CONSIDERED TO BE ACTING IN BAD FAITH BY SEEKING TRADE MARK PROTECTION FOR A BROAD RANGE OF GOODS AND SERVICES
An article from Out-Law on 15 September was concerned with a ruling by the Court of Appeal in the context of the long-running dispute between Sky and SkyKick. It says that trade mark owners are now less likely to have trade mark rights invalidated on ‘bad faith’ grounds.
THERE IS NO REQUIREMENT FOR A COURT TO REFUSE TO MAKE A CIVIL OR CRIMINAL RESTRAINT ORDER WHERE ANOTHER SUCH ORDER IS ALREADY IN PLACE
An article from Eversheds Sutherland on 15 September referred to a recent Court of Appeal decision concerning an appeal against the decision to continue worldwide freezing orders against the directors of 2 companies on the grounds that there was a real risk of dissipation, in circumstances where the directors were already subject to criminal restraint orders.
On 15 September, Eversheds Sutherland published its latest edition of this useful publication – with separate editions covering the UK and US. They summarise key financial crime related legal and regulatory changes expected over the next 18 months to 2 years, as well as providing electronic links to key resources.
DEMOCRATIC REPUBLIC OF THE CONGO SANCTIONS COMMITTEE HOLDS MEETING ON NATURAL RESOURCES
On 14 September, a news release from the UN advised that the relevant UN Sanctions Committee hadheld informal consultations on “DRC-mined gold, tantalum and tungsten: illicit trading in DRC and internationally”. The Committee received briefings by the Group of Experts, the Special Envoy of the Secretary-General for the Great Lakes Region, the Executive Secretary of the International Conference on the Great Lakes Region and the Head of Due Diligence in the Centre of Responsible Business Conduct of the OECD. The Group of Experts outlined efforts by the DRC Government in fighting persistent illicit flows in the gold, tin, tantalum and tungsten (3T) sectors, as well as remaining challenges. It received evidence on the extent of cooperation and coordination with the DRC and International Conference on the Great Lakes Region Member States to reduce the illegal exploitation and smuggling of natural resources. It also heard of the OECD’s current initiatives in the gold and 3T sectors, notably its work with global law enforcement and gold trading hubs, and the organisation’s view on challenges and progress on responsible sourcing efforts in the 3T sectors.
IRISH DRUG GANGS LINKED TO ITALIAN MAFIA IN EU COCAINE BOOM
On 15 September, the Irish Examiner reported that a new UN and EU report says that Irish drug gangs have been colluding with the Italian mafia and Dutch crime groups in supplying a booming cocaine trade in Europe. It says that the report It cites the example of collusion involving Irish, Italian, Bosnian and, Dutch traffickers in Dubai, which has been the base of the Kinahan crime cartel in recent years.
RUSSIAN FOREIGN MINISTER HAS A LONGTIME FEMALE COMPANION WITH OVER $13 MILLION IN UNEXPLAINED ASSETS
An article from OCCRP on 14 September claimed that Sergei Lavrov, Russia’s foreign minister, is linked to Svetlana Alexandrovna Polyakova, an employee of the Ministry of Foreign Affairs of the Russian Federation. She is said to have had a very close relationship with Lavrov, and also has substantial assets that a mere “employee of the Foreign Ministry” would almost certainly not be able to afford. Property records show that she and her family own real estate in Russia and UK worth about $13.6 million. Lavrov is married and has a daughter, and his annual income declarations show that the couple earned between $100,000 and $136,000 annually over the last 5 years. Polyakova’s 26-year-old daughter Polina owns a company in the UK, PPK Investments Ltd, which is registered at a house in Kensington, one of the city’s most expensive districts. The company’s principal activity is said to be buying and selling real estate. In 2016, she leased an apartment in the same building and paid £4.4 million for the lease. At the time, she was just 21.
A JOURNALIST’S GUIDE TO INVESTIGATING DRUG TRAFFICKING
On 13 September, the Global Investigative Journalism Network published an article, being a chapter from a forthcoming guide. It contains a number of case studies, including one about a former Guatemalan interior minister, Mali, and the opioid crisis in the US.
OLAF’S WORK AGAINST WASTE TRAFFICKING HELPS ITALIAN AUTHORITIES STOP ILLICIT WASTE
On 2 September, a news release from the EU anti-fraud office says that the work of OLAF had helped the Italian authorities block the attempted international smuggling of some 800 tonnes of waste. This involved 2 cases and attempts to smuggle plastic waste to Malaysia that was falsely declared as raw material.
PORT CONGESTION: OVER 40% OF SHIPS AT KEY NORTH AMERICAN WEST COAST PORTS REQUIRE TO ANCHOR BEFORE LOADING OR UNLOADING
On 15 September, Hellenic Shipping News reported that the average number of containers requiring loading and unloading per ship call at major global gateway ports has jumped during the pandemic, causing further delay and congestion at an already stretched supply chain. It is reported that higher volume and low productivity results in 40% of vessel calls at the large North American West Coast ports being required to drop anchor before a berth. This compares to 26% in SE Asia, nearly 23% in North Europe and only 12% in north-east Asia. The average anchorage time in North America is 24 hours compared to only 2 hours in north-east Asia.
3 TEXAS RESIDENTS CHARGED WITH FRAUD AND MONEY LAUNDERING CONSPIRACIES TARGETING FEDERALLY FUNDED MEAL PROGRAMMES FOR UNDERPRIVILEGED YOUTH
A news release from US DoJ on 15 September advised that the defendants are said to have controlled and operated a Texas-based non-profit organisation and allegedly caused HOIN to enrol as a “sponsor” in 2 federal programmes for the purpose of providing meals to underprivileged youth. The indictment alleges that the defendants caused HOIN to submit reimbursement claims for hundreds of thousands of meals that were never served to eligible children.
On 15 September, Reuters reported that unit in Afghanistan’s central bank leading efforts to counter illicit funding flows has halted operations, threatening to hasten the country’s slide out of the global financial system. Information on unit’s website indicated the Taliban had been among those in its sights, while staff said the group had been a target since its launch.
EU GUIDANCE NOTE ON THE PROVISION OF HUMANITARIAN AID DURING THE COVID-19 PANDEMIC IN ENVIRONMENTS SUBJECT TO EU SANCTIONS
On 13 August, the EU published this guidance note which contained the general principles and practical guidance, in the form of a Q&A, on compliance with EU sanctions when providing humanitarian aid, in particular medical assistance, to fight the COVID-19 pandemic.
In the latest TRACE podcast, Tom Cardamone, President and CEO of Global Financial Integrity, joins the podcast to discuss the regulatory and enforcement challenges associated with flags of convenience. These range from trafficked labour to environmental violations, and he highlights the inherent tension between substantial tax incentives on one hand and accountability on the other.
NEW ZEALAND: NEW TAX DISCLOSURE REQUIREMENTS FOR OVERSEAS INVESTMENT
On 15 September, International Tax review reported that the New Zealand government has enacted new tax disclosure requirements as part of the consent process for overseas investment in certain New Zealand-based assets. 2 tax-relevant law changes have become effective in 2021: a reworked ‘investor test’ for overseas investors in sensitive assets and a tax information disclosure requirement for overseas investors investing in significant business assets.
US: ‘MASTERMIND’ BEHIND $31 MILLION COUNTERFEIT COUPON FRAUD IS GOING TO PRISON
On 15 September, the Miami Herald reported that Lori Ann Talens, 41, is said to have been running one of the most prolific counterfeit coupon schemes in history. She has been sentenced to 12 years imprisonment, and a judge previously gave her soon-to-be ex-husband, Pacifico Talens, a sentence of 7 years and 3 months for his alleged role in the fraud. Both were ordered to pay $31.8 million in restitution. Lori Ann Talens was the administrator of a Facebook group for coupon enthusiasts and used the platform to recruit customers. Someone in the group eventually reported the Talens to the Coupon Information Center, a non-profit association that fights coupon fraud. The case was then transferred to US Postal Inspection Service.
US: REALITY TV STAR SENTENCED FOR PPP FRAUD AND FOR OPERATING A MULTIMILLION-DOLLAR PONZI SCHEME
A news release from US DoJ on 15 September advised that Maurice Fayne, who starred in Love & Hip Hop: Atlanta, has been sentenced to more than 17 years in federal prison for conspiracy and wire fraud related to a Ponzi scheme, and for bank fraud, and making false statements to a financial institution related a fraudulent Paycheck Protection Program (PPP) loan application. He is said to have planned to use the PPP programme as a cover for his long-running Ponzi scheme,
2 NEW WHISTLEBLOWER AWARDS TAKE SEC PAYMENTS TO $1 BILLION
A release on Mondo Visione on 15 September advised that the SEC has announced awards of approximately $110 million and $4 million to 2 whistleblowers whose information and assistance led to successful SEC and related actions. With these awards, the SEC whistleblower programme has now paid more than $1 billion in awards to 207 whistleblowers, including over $500 million in fiscal year 2021 alone. The $110 million award stands as the second-highest award in the program’s history, following the over $114 million award in October 2020.
MEXICO: GOVERNMENT IS HOLDING A LOTTERY TO GIVE AWAY EL CHAPO’S FORMER SAFE HOUSE
On 15 September, Inside Edition reported that the Mexican government is holding a lottery to give away a modest home in Culiacan which was actually a safe house for the country’s most famous drug lord, El Chapo. He was there when marines surrounded him in 2014 after he spent years on the run following a 2001 prison escape. It featured an extensive surveillance system and access to a network of underground tunnels. Money raised from the lottery will fund the country’s Olympic athletes. The government tried to auction off the home last year but had no takers.
2 MEN INDICTED FOR $13 MILLION SCHEME TO DEFRAUD THEIR EMPLOYER, MONEY LAUNDERING AND TAX EVASION
A news release from US DoJ on 15 September advised that 2 Maryland men had allegedly devised and executed a scheme to defraud 2 companies by making a secret arrangement to receive kickbacks for intentionally overlooking inflated charges that the included-on invoices submitted to the companies.
MILLIONS FROM UZBEK WEALTH FUND PAID TO PRESIDENT’S RELATIVE
On 15 September, Rferl reported that a corporation linked to a relative of Uzbek President Shavkat Mirziyoev has received tens of millions of dollars from the country’s sovereign wealth fund, an investigation has revealed. Orient Group, which is linked to Oybek Umarov – a relative of Mirziyoev – is said to have received the funds through the Uzbek Oman Investment Company (UOIC).
An article on Lawfare on 15 September says that China is amidst a national blitz to digitize its entire economy. For several years, the digitisation of the economy has been mostly a Chinese Communist Party (CCP) talking point reserved for state planning documents. Now it is becoming a reality. It refers to a July report detailed progress in developing the nation’s central bank digital currency, known as the “eCNY” or digital renminbi. It is said that the CCP is piloting new financial technology (fintech) throughout the massive Chinese economy, and Chinese financial and tech firms are innovating. The eCNY is still in the pilot stage, but the pilot has advanced to a product design and implementation strategy for China’s entire financial sector, and the pilot is expanding to support practical daily payment needs. It calls for US policymakers to react, otherwise, the world may evolve into a digital economy with Chinese Communist Party characteristics.
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On 15 September, RUSI published a guidance paper which aims to advise VASP on best-practice compliance when dealing with proliferation financing risk, and directs compliance officers towards relevant publications that may assist in their work. It is said that it will be particularly helpful to those VASP who have not previously thought about proliferation financing or the implementation of targeted financial sanctions related to proliferation as a distinct financial crime or sanctions risk. Mostly focusing on North Korea, it draws on typologies, red flags and best practice that can be found in other types of virtual assets crime, especially when illicit activities are conducted by large criminal organisations that might have comparable expertise and funding to a sanctioned country.
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On 14 September, an article from Lalive says that the first international standard on good organizational governance, ISO 37000, was published on 14 September by the International Organization for Standardization (ISO). It says that this important standard sets out 11 core principles of good governance and the role of senior business and public management leaders around the world in defining and upholding standards relating to purpose, values, performance and social responsibility. The article explains state-of-the-art governance, the “G” of “ESG”. ISO 37000 guidance explains what good governance looks like across 11 mission critical topics –
Purpose: reason for existence from all perspectives
Value Model: the elements comprising value creation and value generation required to fulfil purpose
Strategy: directing and engaging strategies in accordance with the value generation model
Oversight: overseeing organisational performance and ensuring that the organisation fulfils all expectations
Accountability: holding to account those to whom the governing body has delighted authority(s)
Stakeholder engagement: engaging with stakeholders and meeting expectations
Leadership: ethical and effective leadership arrangements
Data and decisions: data as a resource for decision making
Risk Governance: the effect of uncertainty on organisational purpose and strategic outcomes
Social responsibility: transparent decision making aligned with broader societal expectations
Viability and performance over time: remaining viable over time without compromising current and future generations
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Panama Covid-19 update – the Rt rate is down from 08.86 last week to 0.82 this week. There are now 4,632 active cases, with 81 in ICU and 216 in other wards. However, 323 new cases have been added, with 10 more fatalities.
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14 SEPTEMBER 2021
RECORD 56 CONTAINERSHIPS QUEUED AT LOS ANGELES/LONG BEACH PORTS
On 14 September, Seatrade Maritime News reported that there are now nearly twice as many containerships waiting to get into the Ports of Los Angeles and Long Beach (LA/LB) as there are berthed for cargo operations. A record imbalance between import and export volumes is causing a huge pile up of empty containers in Southern Californian ports.
AUSTRALIA: AUTHORITY TO INVESTIGATE THE STAR CASINO AMID AML AND JUNKET CONCERNS
On 14 September, iGB reported that the New South Wales Independent Liquor and Gaming Authority has announced an investigation into The Star Casino in Sydney after concerns were raised about its interactions with junkets and money laundering prevention measures. This follows the inquiry into rival resort operator Crown Resorts.
REPUBLICANS VOW TO BLOCK TREASURY NOMINATIONS UNTIL NORD STREAM II COMPANY IS SANCTIONED
On 13 September, the Wall Street Journal reported that senior Senate Republicans have threatened to indefinitely hold up the nominations of 5 top Treasury Department officials if the Biden Administration doesn’t blacklist the firm managing Russia’s Nord Stream 2 pipeline project, Russia-owned Nord Stream 2 AG – which has not been subject to sanctions as this would affect relations with critical ally Germany and do little to stop the project, given that it was near completion.
MALTA: NOTARY FINED €62,000 FOR OVER BENEFICIAL OWNERSHIP AML FAILINGS
On 10 September, the Times of Malta reported another case in the apparent crackdown in Malta. The notary could not identify the ultimate beneficial ownership of certain financial structures he was involved with, the FIAU said in a notice on its website. He could also not explain the corporate ownership and control structure of some financial structures. In other cases, the details were not comprehensive enough to establish who the real ultimate owners were.
VESSEL IDENTITY LAUNDERING: AN EMERGING THREAT TO MARITIME TRADE
On 10 September, Global Trade Review published an article saying that criminals are fraudulently obtaining vessel registration numbers to evade sanctions on maritime trade, researchers say, warning that illicit export operations are becoming “significantly more sophisticated”. It says that a report from C4ADS said that there are multiple cases where the International Maritime Organization (IMO) has been deceived into issuing “clean” identification numbers to sanctioned vessels. C4ADS argues that the IMO should require complete information on a vessel before granting a registration number. Currently, records “often contain missing data fields” such as a ship’s recorded dimensions
OFAC SETTLEMENT UNDERSCORES SANCTIONS COMPLIANCE REQUIREMENTS THAT REACH BEYOND THE US DOLLAR
An article from Arnold & Potter on 10 September considered the recent case of Romanian bank First Bank SA and its US parent company, JC Flowers & Co. these companies agreed to pay the US Treasury more than $850,000 to settle civil penalties associated with 98 commercial transactions that may have violated OFAC Iran and Syria sanctions programmes. While some instances had involved the use of the US dollar, 28 others were Euro-denominated payments made outside the US financial system and involving Iranian parties and interests. Although US sanctions programs generally do not apply where there is no US Nexus, in this case the transactions took place following US company JC Flowers’ majority ownership interest acquisition of First Bank in June 2018. As a result, First Bank was prohibited from engaging in any activities that would be similarly banned for US persons.
THE O2 SFO INVESTIGATION AND THE IMPORTANCE OF ROBUST COMPLIANCE PROGRAMMES
An article from Keystone Law on 9 September says that telecoms company O2 has revealed that it is under investigation by the SFO for potential breaches of the Bribery Act and that it has made financial provision to cover the costs of the possible violation in its latest financial statement. It also says that other telecoms operators may be watching the outcome of the investigation with interest as the SFO often looks at the activities in the wider sector.
PODCAST: NAVIGATING THE STEPS OF AN FCPA INVESTIGATION (PART 1)
On 9 September, Wilmer Hale says that Part 1 of this Fraud Eats Strategy podcast series discusses how to bring order to the chaos of the early days of an FCPA investigation and avoid mortgaging the company’s future in the process.
On 10 September, an article from ParrisWhittaker says that exclusion clauses can be found within freezing orders (aka Mareva or freezing injunctions) – but it asks to what extent will the courts permit them? The article says that, in an important case1, the Court of Appeal in London had issued a ruling that involved an exclusion clause in the context of freezing orders. This ruling also has important persuasive authority on the courts in The Bahamas. It is said that the Court’s approach to exclusion or exception clauses in the context of freezing orders can be categorised as fair and equitable, and the case illustrates the balancing act between protecting assets from disposal to defeat a judgement, and protecting the genuine business needs of a respondent.
TURKEY’S CLAIM TO MARBLE FIGURE QUASHED BY NEW YORK FEDERAL JUDGE RULING
On 14 September, a post on the Art Law & More blog from Boodle Hatfield said that the judge has decided that a marble figure which is owned by a hedge fund billionaire and which has spent decades on display at the Metropolitan Museum of Art in New York will not be returned to Turkey. The Turkish government sued for the return of the figure in 2017, citing the Ottoman decree of 1906 which asserted that all antiquities found in public or private lands are state property and cannot be taken out the country.
On 14 September, Ship Insight reported that Singapore-based Keppel Technology & Innovation (KTI) has received a verification certificate for a 3D-printed deck mounted type Panama Chock (SWL150 ton) in Singapore. The component is the world’s largest 3D-printed shipboard fitting. It explains that Panama Chocks are large shipboard fittings for towing and mooring, traditionally manufactured by casting, and are welded to a ship as a supporting hull structure.
TRAFFICKERS BUSTED USING ‘NARCO-SUBMARINE’ TO SMUGGLE $95 MILLION IN COCAINE
On 14 September, the Latin Times reported that Colombian drug traffickers have been busted using a “narco-submarine” to smuggle thousands of kilograms of cocaine worth over $95 million to a cartel in Mexico. The defendants reportedly belong to a criminal organisation that builds and maintains narco-submarines used to send cocaine from Colombia into the Pacific Ocean. The cocaine packages are then collected by members of the Sinaloa Cartel in Mexico. 3 such vessels containing cocaine en route to Mexico from Colombia were intercepted by the US in international waters between July 2015 and March 2016. Several men have been arrested in connection with these operations and extradited to the US.
ALGERIA CHARGES EX-TUNISIA PRESIDENTIAL CANDIDATE WITH SMUGGLING MIGRANTS
On 14 September, the Middle East Monitor reported that the Algerian judiciary has charged former Tunisian presidential candidate, Nabil Karoui, and his lawmaker brother, Ghazi, of smuggling migrants and entering the country illegally. It is said that the Karoui brothers have been investigated in money laundering and tax evasion cases since 2017.
MALTA: 4 CHARGED WITH LAUNDERING DRUG MONEY THROUGH SPORTS BETTING
On 14 September, Malta Today reported that 4 men have been remanded in custody on charges of laundering some €21,000 of drug money through sports betting.
EU IS PLANNING TO ASK COMPANIES SELLING PRODUCTS IN THE EU SUCH AS PALM OIL, SOYA OR COFFEE TO PROVE THAT THEY ARE NOT CONTRIBUTING TO DEFORESTATION – BUT LAW OMITS FRAGILE GRASSLANDS AND WETLANDS
On 14 September, the EU Observer and EurActiv reported on leaked documents, saying that the European Commission has pledged to introduce a law linked to deforestation but campaigners said a leaked impact assessment reveals “significant omissions” in the plans, including the exclusion of endangered grasslands and wetlands, as well as products that raise environmental concerns, such as rubber and maize.
IRANIAN TANKER SPOTTED IN SYRIA DISCHARGING DIESEL FOR LEBANON
On 14 September, L’Orient Today reported that an Iranian tanker is discharging diesel in Syria’s Baniyas port which is destined for neighbouring Lebanon. Unable to deliver directly by sea to Lebanon the vessel went instead to Baniyas in Syria for land transfer.
UK NOTICE TO EXPORTERS 2021/12: THE NEW EU DUAL-USE REGULATION
On 14 September, the Department for International Trade published a new Notice to Exporters saying that the new EU dual-use Regulation EU 2021/821 is now in force in Northern Ireland (which, although part of the UK, remains a part of the EU customs territory under the Brexit agreement). New applications for dual-use items from Northern Ireland will need to comply with this Regulation.
On 14 September, the Cabinet Office published an updated guide on how the border with the EU will work after the transition period ended on 31 January. Traders and hauliers must take the steps outlined in the Border Operating Model.
CONSULTATION ON IMPLEMENTING THE UK IVORY ACT: SUMMARY OF RESPONSES AND GOVERNMENT RESPONSES
On 14 September, DEFRA published a summary of responses to the consultation on the implementation of the Ivory Act 2018 (the “Act”). The consultation ran from 9 March to 4 May. This document also sets out the Government’s response to the consultation. Respondents included those involved in the antiques trade, museums and galleries, professional musicians and music sector organisations, and NGO focussed on wildlife and conservation.
ILLEGAL GAMBLING OPERATION ACROSS 28 COUNTRIES SEES 1,400 ARRESTS AND SEIZURE OF $7.9 MILLION IN CASH
A news release from Interpol on 14 September advised that during the UEFA European Football Championship hundreds of specialized officers across 28 countries were targeting organised crime groups looking to earn millions from illegal gambling and related money laundering activities. Operation SOGA VIII (short for soccer gambling) led to thousands of raids and the arrest of some 1,400 suspects across Asia and Europe. Authorities seized $7.9 million in cash, as well as computers and mobile phones connected to nearly $465 million in bets. Participating countries were Austria, Azerbaijan, Bahrain, Belgium, Brunei, Cambodia, China, Croatia, Czech Republic, Finland, France, Germany, Hungary, India, Ireland, Italy, Malaysia, Maldives, Philippines, Poland, Portugal, Romania, Russia, Singapore, Spain, Switzerland, UK, Vietnam.
US CUSTOMS OFFICERS SEIZE $57 MILLION IN COUNTERFEIT DESIGNER WATCHES
On 13 September, WTQV reported that US Customs and Border Protection officers assigned to the Port of Louisville had seized 32 separate shipments containing counterfeit designer watches worth $57.84 million. A total of 2,168 designer watches determined to be counterfeit originated from Hong Kong and were destined for several addresses across the US.
FINNISH CUSTOMS DETECT PROHBITED ETHYLENE OXIDE IN FOODSTUFFS
On 13 September, the Helsinki Times reported that controls by Customs detected ethylene oxide in several foodstuffs. During monitoring, ethylene oxide was found in five lots of seeds and nut products. Ethylene oxide was found in sesame seeds, nut products containing sesame seeds as well as in ecological psyllium powder.
AFGHANISTAN: TERRORIST SANCTIONS REGIME – AN ANALYSIS
On 14 September, an article from the Eurasia Review said that at least 17 of these 33 members of the new interim government are individuals included in the UN Security Council (UNSC) Consolidated List.
SOUTH AFRICA RAISES PROFILE AS COCAINE TRAFFICKING HUB
On 14 September, an article from Insight Crime reported that South Africa has made a rapid succession of large cocaine seizures in recent months, illuminating how the country and region now play a significant role as transit points for Latin American cocaine. It also says that local media has identified the suspected head of the recently dismantled cocaine syndicate as an Israeli national and known fugitive with an Interpol Red Notice issued in Belgium for cocaine trafficking. Most of the cocaine then transits onwards, facilitated by the country’s excellent transport infrastructure, high-level police corruption and resource shortages in the area of drug control.
IS THE DOMINICAN REPUBLIC MAKING GAINS IN ANTI-CORRUPTION FIGHT?
On 13 September, Insight Crime posed this question after the dismantling of a drug trafficking and money laundering network implicating government officials, with the 20 officials arrested including Juan Maldonado Castro, the head of Comunidad Digna (Dignified Community), a government-run organization fighting poverty.
UK DATA PROTECTION LAW REFORM ADVOCATES RISK-BASED ‘PRIVACY MANAGEMENT’
An article from Out-Law on 10 September said that post-Brexit UK Government plans to strip a series of “administrative burdens” from data protection law include a move that would enshrine the concept of more flexible, risk-based ‘privacy management’ into legislation.
SURVEY: ILLICIT ACTIVITY AFFECTS UK BUSINESS CONFIDENCE DESPITE CONFIDENCE IN UK CONTROLS
A release on Mondo Visione on 14 September advised that a survey by Kroll has revealed that companies in the UK are some of the most confident when it comes to their bribery and corruption risk strategies, yet illicit activity persists. Its Global Fraud and Risk Report shows that the majority of UK respondents agreed that bribery and corruption risk was given sufficient board-level attention in their organisation and that they were more confident in their internal record-keeping (only 24% ranked it as their top internal threat compared to 31% globally). Additionally, firms in the UK were more likely to be using data analytics to proactively detect bribery and corruption risk (92% vs. 86% globally). However, they are less likely to have conducted an enterprise-wide bribery and corruption risk assessment in the last 5 years, highlighting that almost a quarter are not capturing the full picture of risks facing their business at any one time.
COLOMBIAN-AUSTRALIAN CRYPTO GROUP SUES COMMONWEALTH BANK OVER SCAM WARNING
On 13 September, the Sydney Morning Herald reported that the bank has been accused of defaming a Colombian-Australian remittance service – Colcambios Australia – using cryptocurrencies, after the bank told its customers using the service they were possible victims of a scam before closing their accounts.
RISK OF DETENTION FOR ANCHORING IN INDONESIAN WATERS
On 14 September, Hellenic Shipping News reported that there has been a rise in the number of vessels detained in Indonesian waters by the Indonesian Navy, particularly in the area east of Bintan Island. These waters are close to major shipping lanes and are sometimes mistakenly taken for the outer port limits of Singapore.
BERMUDA: CRYPTOCURRENCY EXECUTIVE AGREES TO EXTRADITION TO FACE US MONEY LAUNDERING CHARGES
On 14 September, the Royal Gazette reported that an Australian cryptocurrency executive living in Bermuda – Gregory Dwyer, a senior employee at the cryptocurrency derivative exchange platform BitMEX – has agreed to be extradited to the US to face charges in connection with alleged money laundering. An indictment in October 2020 alleged that the firm’s exchange was used by hackers to launder stolen money and by people in countries under US sanctions, including Iran; that it solicited and accepted customers in the US, despite not being registered with the CFTC; and that it continued to try and attract US business after it incorporated itself in the Seychelles in an attempt to avoid US oversight.
US: 14 DEFENDANTS INDICTED, INCLUDING THE ENTIRE ADMINISTRATION OF THE COLOMBO ORGANISED CRIME FAMILY
A news release from the US DoJ on 14 September advised that a federal court in New York has unsealed a 19-count indictment charging 14 defendants, including 10 members and associates of the Colombo crime family of La Cosa Nostra and a member of the Bonanno organised crime family, with various offenses including labour racketeering involving multiple predicate acts of extortion conspiracy, attempted extortion and extortion, extortionate collection of credit conspiracy, extortionate collection of credit and money laundering conspiracy.
GAMBLING STOCKS TUMBLE AS MACAU LAYS PLANS TO INCREASE SCRUTINY
On 14 September, BNN Bloomberg reported that casino stocks fell in the US after Macau laid plans to step up scrutiny of operators and increase local ownership, signalling tighter control over the world’s largest gambling hub amid Chinese efforts to clamp down on money laundering and currency outflows. It says that authorities also proposed increasing scrutiny on so-called junkets that service high-rollers and extend credit to them, including raising entry barriers for junket operators as well as allowing background checks. This is part of an ongoing clampdown on so-called VIP punters in Macau over concerns that the high-stakes betting there, in convertible Hong Kong dollars, can be an illicit channel of currency outflow and money laundering.
UK LAW COMMISSION ANNOUNCEMENT RE DIGITAL TRADE DOCUMENTS COULD BE TIPPING POINT
On 14 September, Insurance Marine News reported that law firm Reed Smith has said that a recent announcement by the Law Commission with regard to the acceptability of digital trade documents could turn out to be a tipping point for the growing acceptance of electronic bills of lading and other shipping trade documents. The statement was made during a webinar on technological developments in the shipping industry – part of London International Shipping Week 2021.
On 12 September, an article on Lawfare says that while the ransomware phenomenon is quite new, ransoms themselves are not new, and, indeed, the US has a long track record on this painful issue. In the article, the Air Force Academy’s Danielle Gilbert examines ransomware with this track record in mind, drawing on the history of hostage-taking to identify ways to manage this problem.
WHERE DID THE $5 TRILLION SPENT ON AFGHANISTAN AND IRAQ GO?
On 11 September, the Guardian carried an article posing this question, and saying that private military contractors outnumbered US troops on the ground during most of both conflicts, while defence industry stocks soared. In Iraq and Afghanistan, the US military relied to an unprecedented degree on private contractors for support in virtually all areas of war operations. Contractors supplied trucks, planes, fuel, helicopters, ships, drones, weapons and munitions as well as support services from catering and construction to IT and logistics. The article says that, by Summer 2020, the US had 22,562 contractor personnel in Afghanistan – roughly twice the number of US troops. Not even the financial crisis of 2008 could interrupt the spending spree.
A COMPLEX COMPLIANCE TASK: MITIGATING UBO RISK IN THE GULF REGION
On 31 August, a blog post from Windward says that, according to FATF, the UAE has 39 different company registries. Many of these exist to help promote economic growth in the various free trade zones (FTZ). However, it says, the expansion of the FTZ and the country’s myriad of company registries have created ample opportunity for exploitation. Complex company structures and unidentified third parties are employed by bad actors to conceal illicit funds and trade-based money laundering (TBML) schemes. It does conceded that countries in the Gulf have recently introduced a range of measures to strengthen their efforts to manage risk, including UBO requirements. The article is concerned with the used of concealed ownership of vessels
A blog post from Windward on 26 August was concerned with a new clause released by BIMCO – one of the largest of the international shipping associations representing shipowners – concerning AIS manipulation. In 2020, OFAC had issued an advisory stating that the shipping industry should develop provisions “in the form of an AIS ‘switch-off’ clause”, with the intention was that it would help shipowners, charterers, and operators to block high-risk business. The new clause is designed to be incorporated into shipping contracts. The clause recognises that there may be legitimate reasons for the interruption of a ship’s AIS signal, so for a charterer to terminate the charter party for a breach of the SOLAS Guidelines on use of AIS by an owner, the charterer will have to prove that there was intent by the owner to hide the signal.
WHO IS ALESKANDR FRANCHETTI, THE RUSSIAN ARRESTED IN PRAGUE AND WANTED BY UKRAINE FOR HIS ACTIONS IN CRIMEA?
On 14 September, Rferl reported that in Prague information about the middle-aged Russian man arrested for his alleged actions during Moscow’s seizure of Crimea in 2014 is hard to come by. However, the article seeks to provide the detail.
3 FLORIDA RESIDENTS HAVE BEEN CHARGED IN MIAMI FOR ALLEGED VIOLATIONS OF US SANCTIONS ON IRAN AND MONEY LAUNDERING
A news release from US DoJ on 14 September advised that Mohammad Faghihi, 52, his wife Farzeneh Modarresi, 53, and his sister Faezeh Faghihi, 50, operated Florida company Express Gene. It is alleged that between October 2016 and November 2020, Express Gene received numerous wire transfers from accounts in Malaysia, China, Singapore, Turkey, and UAE, totalling almost $3.5 million. It is alleged that some of the money received was used by Express Gene and its principals to purchase genetic sequencing equipment from US manufacturers and ship them to Iran without a license from OFAC.
US COURT JAILS GHANAIAN FOR 40 MONTHS FOR INTERNET FRAUD
On 14 September, the People’s Gazette reported that Richard Yaw Dorpe, 37, has been convicted after the FBI indicted him of crimes including money laundering, romance scams and other fraudulent schemes targeted at US senior citizens. He was extradited from Ghana in January.
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A news release from US DoJ on 14 September announced that the defendants, all former employees of the US Intelligence Community or the US military, entered into a deferred prosecution agreement (DPA) that restricts their future activities and employment and requires the payment of $1,685,000 in penalties to resolve a DoJ investigation regarding violations of US export control, computer fraud and access device fraud laws. They worked as senior managers at a UAE-based company that supported and carried out computer network exploitation operations (i.e., “hacking”) for the benefit of the UAE government between 2016 and 2019.
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Torres Law in the US has produced a guide saying that releases of export-controlled items to foreign person employees are deemed to be equivalent to exporting those same commodities to the home country of the foreign person, regardless of where the release or transfer takes place. This concept, commonly referred to as the “deemed export” rule, is most often encountered in the context of an employer releasing export-controlled items, technology, or software to foreign person employees. The firm says it has produced the guide to assist employers in determining whether a deemed export licence is needed for their foreign person employees, and to help them gather the information necessary to complete an export licence submission should it be required.
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The UK Government has announced a change to the timetable for the introduction of full import controls for goods from the EU – and full customs declarations and controls will be introduced on 1 January 2022, although safety and security declarations will now not be required until 1 July 2022.
[One has to wait and see if there will be further delays, as there are doubts that the UK has the resources and arrangements in place, or will have in place, to even meet these target date – and it has been suggested by some commentators that the Government is merely “kicking the can down the road”, to avoid further delays and other problems becoming evidence – particularly around Christmas 2021].
The news release from the Cabinet Office on 14 September claimed that the purpose of the delays was to give businesses more time to adjust to new processes and was due to the Covid pandemic having affected supply chains in the UK and across Europe.
[However, it appears from media reports that only the UK, and more particularly GB, that has been particularly affected – by a combination of Brexit delays and the effects of Brexit on immigration and the shortage of former workers, especially lorry drivers, from the EU, as well as the pandemic].
The requirements for pre-notification of Sanitary and Phytosanitary (SPS) goods, which were due to be introduced on 1 October, will now be introduced on 1 January. New requirements for Export Health Certificates, which were also due to be introduced on 1 October, will now be delayed until 1 July 2022. Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January, have been delayed until 1 July 2022. Safety and Security declarations on imports will also delayed from 1 January to 1 July 2022. However, it is said that full customs declarations and controls will be introduced on 1 January 2022, as previously announced.
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On 14 September, GAFILAT, the FATF-style regional body for Latin America, released the MER for Chile, which had been approved at a virtual plenary in July. The on-site visit took place 6-17 January 2020. The priority actions identified in MER include –
Improved efforts to raise awareness of terrorist financing, with further training etc;
Overcome technical deficiencies identified regarding the money laundering and terrorist financing criminal offences.
Include dealers in precious metals and stones, lawyers, accountants, and corporate service providers as regulated entities and adopt measures to enhance understanding of risks by such DNFBP in general, but particularly notaries and the real estate sector.
Increase the resources of the UAF (i.e. the FIU).
Adapt the existing regulatory framework for beneficial ownership, including the obligation for DNFBP to identify it and adopt measures to allow timely access by competent authorities to accurate, adequate, and updated information.
Improve the application of effective, proportionate, and dissuasive sanctions against entities that fail to comply with AML/CFT obligations.
Adopt the necessary reforms and operational measures to broaden the scope and ensure the prompt implementation of terrorist financing sanctions, including for proliferation financing. Strengthen the effective identification, seizure and confiscation of the proceeds of crime, including their administration and disposal.
The MER concluded that Chile had met 6 FATF Recommendations; mostly met 20; partially met 12, and not met 2.
Chile had previously been placed under the enhanced follow-up process after the adoption of its third round MER in December 2010. However, in December 2013, it was decided to remove Chile from the process.
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On 14 September, an article from OCCRP said that a year after a massive shipment of ammonium nitrate exploded in Beirut, an OCCRP investigation has settled one of the biggest lingering questions: who actually owned the cargo. A trail of documents reveals a decades-old chemical-trading network controlled by Ukrainians, hidden behind a veil of proxies and shell firms, and offshore service providers in Cyprus and the UK facilitated the network’s operations.
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EU Regulation 2021/1472/EU followed the UN decision by removing 28 entities from the list of persons and entities to whom the freezing of funds and economic resources should apply.
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On 13 September, an article from Clyde & Co refers to a recent “Dear CEO” letter sent jointly by the FCA and Prudential Regulation Authority (PRA) in the UK to firms that carry out trade finance business provided a clear and unequivocal message around the expectation of regulators with regards to trade-related financial crime risk assessments. It is reported that the letter said that the FCA and PRA “have found that firms have either failed fully to assess these risks, are unable to evidence the checks they have undertaken, or in some cases discounted them inappropriately” and it sets out the expectation that firms should conduct a robust financial crime risk assessment that covers risks including money laundering, sanctions evasion, terrorist financing and fraud, and contains some suggested steps for firms to consider when performing a trade-related financial crime risk assessment.
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On 10 September, an article from ParrisWhittaker is concerned with a recent High Court case in England, which it says is a useful illustration of what happens when directors take their eye off the ball. It shows that a director who delegates a particular function to another is not absolved from his own duties as a director in respect of those functions. In the case, the judge didn’t think the director involved was dishonest – instead he had acted naively and, in some respects, negligently. It is said that the case demonstrates that directors can’t afford to adopt a passive approach to fulfilling their duties, as individual directors can face legal claims and judicial sanction even in the absence of any wrongdoing on their part.
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Panama Covid-19 update – it is reported that, since October 2020, a total of 1,838 travelers with Covid-19 have been detected and tested positive at Tocumen International Airport, with 218,760 tests having been carried out in the air terminal.
Meanwhile, today’s statistics shows 223 new cases and 4 new fatalities; with 4,865 active cases – 88 in ICU and 213 in other wards.
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13 SEPTEMBER 2021
COMMONWEALTH SECRETARIAT’S TOP LAWYER GUILTY OF £600,000 FRAUD
On 9 September, the Evening Standard reported that Joshua Brien, 48, a dual Canadian-Australian citizen and an expert on the laws of the sea and a former adviser to the Australian Attorney General, was accused of having diverted £140,000 of client payments into his own bank account at the Commonwealth Secretariat. Then, after leaving the organisation and becoming a special counsel at US law firm Cooley in 2017, he siphoned off £493,000. He has been convicted after a hearing in London. It is said that he was able to steal money while at the Commonwealth Secretariat because basic anti-fraud checks were not routinely carried out, this in an organisation dogged by allegations of mismanagement, cronyism and misappropriation of funds. The fraud was eventually revealed in 2018, after he had been sacked for an unrelated disciplinary breach and joined leading global law firm Cooley.
GUINEA JUNTA TELLS CENTRAL BANK TO FREEZE GOVERNMENT ACCOUNTS
On 13 September, KYC 360 reported that Guinea’s military junta, which seized power in a coup, said that it has ordered the central bank and other banks to freeze all government accounts. It is reported that a mining boom had propelled strong economic growth during the deposed President’s decade in power, but surveys suggest Guineans thought corruption has increased in recent years, while dissatisfaction with the economy and living conditions has also risen.
BRITISH AUTHORITIES CONTINUE TO ALLOW TALIBAN TO LAUNDER MONEY IN THE UK
On 13 September, KYC 360 reported claims that UK authorities are still allowing the Taliban to launder its money in the UK 20 years after 9/11, and that Britain missed opportunities to prevent the militant group and its associates from using London as a money-laundering hub, and of preventing donations from sympathisers. It was also said that in 2012 a US delegation to London had begged the UK Government to take the issue seriously.
UK: PUBLIC WARNED OF SURGE IN IMPERSONATION SCAMS AS CASES MORE THAN DOUBLE
UK Finance has reported that the public is being warned about the increase in fraudulent calls, texts and emails as new figures show the number of impersonation scam cases more than doubled in the first half of 2021 to 33,115. These scams resulted in criminals stealing £129.4 million, and in the same period last year there were 14,947 impersonation scam cases which led to £57.9 million being stolen. It explains that, in an impersonation scam, a criminal pretends to be from a trusted organisation such as a bank, the police, a government department or a service provider.
On 9 September, an article from Tenet Compliance & Litigation Ltd said that recent analysis conducted by The Guardian found that 36% of more than 9,000 seafood samples from restaurants, fishmongers and supermarkets in more than 30 countries were mislabelled often resulting in the consumer paying a higher price for low value and sometimes endangered and/or illegally caught species. Other foodstuffs are also mentioned, and the article says that globalisation of the food industry has provided organised crime groups with a multitude of opportunities to infiltrate and exploit legitimate supply chain. The article considered what can you do to prevent your business falling victim to mislabelling within its own supply chains, what you can do if your brand of the target of counterfeiting and how to protect your brand. The matters considered include the recovery of the proceeds of crime.
NGO SET OUT KEY CONSIDERATIONS FOR EU IMPORT CONTROLS TO TACKLE FORCED LABOUR
On 10 September, Mayer Brown published an article saying that there is a trend to increase import controls to supplement human rights and environmental due diligence laws. The European Commission is now assessing the adoption of action and enforcement instruments to tackle forced labour. A coalition of NGO have released a position paper raising some key considerations in the development of potential import control measures in tandem with a mandatory corporate human rights and environmental due diligence (HREDD) obligation. The article lists the considerations put forward in the position paper.
On 12 September, Gulf Today reported that the falcons were found inside a container full of vegetable boxes and that customs officers found birds skilfully hidden in between vegetable boxes.
UK: FRAUDSTERS FOUND GUILTY OF GHOST WORKER SCAM THAT CONNED CANCER CHARITY AND COUNCIL OUT OF THOUSANDS
On 13 September, the Leicester Mercury reported that a pair of council workers who cooked up a ghost worker scam to con £40,000 out of a council and cancer charity have been found guilty of money laundering and fraud. A sister on one of them who lives in Spain and is married to a wealthy businessman, was given a wage by the council for 2 years totalling £38,902, even though she wasn’t actually doing any work. The pair were also members of the board at the Coping with Cancer and decided to pull a similar scam on the charity too, by setting the same woman up as a fake “consultant” for the charity, for which she was paid £3,675.
An article in EU Observer on 13 September posed this question, in the light of retail chains having adopted a cashless payment policy. This is said to be in contradiction to a 2010 EU Commission recommendation and a recent opinion from an advocate general of the EU courts. It is said that EU authorities have made it clear that cash is legal tender within the euro area, but it is up to Member States whether or not they enforce universal acceptance and access to cash, and that the French government is one of the only countries to actually fine companies for not accepting cash payments. It argues that the legal opinion The recent opinion issued by the advocate general clearly states that cash is legal tender in Europe and as a general rule, must be accepted for payment, and that this may push other European countries to follow France’s lead and pass national legislation that outlaws and punishes the refusal of cash payments by merchants.
UK: DEADLINE APPROACHES FOR ANTIQUE FIREARMS LAW CHANGE
On 7 September, a news release from the Home Office reminded one that, from 22 September, owners of certain firearms previously regarded as antique will require a licence.
UK: WOMAN JAILED FOR HER PART IN DEFRAUDING MORE THAN £2 MILLION FROM A RELIGIOUS ORGANISATION
On 13 September, Planet Radio reported that Amanda Arckless, aged 54, from Newcastle Upon Tyne, has been found guilty of fraud by false representation and sentenced to 3 years in prison. She became involved with an employee of Morris Curello World Evangelism in 2013, Stephen Ashton, who was convicted in 2017 for defrauding his employer of more than £2 million.
PODCAST: THE FATF CURRENT APPROACH TO ENVIRONMENTAL CRIME
On 10 September, RUSI released a 26-minute podcast on the increased threat from environmental crime in West Africa and why finance has an essential role to play in countering it.
INDIA: MAN IN AGUSTAWESTLAND CORRUPTION CASE ARRESTED IN BANK FRAUD CASE
On 13 September, India Today reported that Rajiv Saxena, an accused in AgustaWestland Chopper corruption case, has been arrested by the Enforcement Directorate (ED) in a bank fraud case.
On 13 September, Tobacco Reporter carried a report referring to a BBC Panorama programme that suggests BAT may have paid a bribe to Zimbabwe’s former president, Robert Mugabe. It is claimed that the company may have funded a network of secret informants to undermine its competitors in southern Africa, including Forensic Security Services (FSS) of South Africa.
UK SHIPPING “CONCIERGE SERVICE” FOR OPERATORS LOOKING TO ACCESS UK MARKET
On 13 September, a news release from the Department for Transport and others advised that the UK Government has launched the UK Shipping Concierge service, a professional and tailored service that will provide support and guidance for maritime businesses looking to access the UK market. The new team will be responsible for boosting the nation’s maritime sector, by offering a proactive service to any maritime business that needs assistance with navigating government departments.
On 13 September, the MoJ released the government’s response to the consultation on Judicial Review Reform, which ran from 18 March to 29 April. It says that the Government intends to legislate, and it is introducing essential reforms. The outcome report document summarises the responses to the consultation in so far as they relate to substantive (not procedural) law reform and sets out the measures which the Government is taking forward in the Judicial Review and Courts Bill.
UK: SERVICE OF DOCUMENTS IN CIVIL PROCEEDINGS: A LESSON IN GETTING IT RIGHT
On 10 September, Local Government Lawyer published an article which highlights a recent judicial review case in which the claim form was set aside because it was served late, and the court declined to exercise its case management powers. It is described as a cautionary reminder for all litigating parties of the importance of getting the timing and method of service of documents right.
MURDERS OF ENVIRONMENT AND LAND DEFENDERS HIT RECORD HIGH
On 13 September, the Guardian reported that figures from Global Witness for 2020 show violent resource grab continued unabated despite pandemic. It says that 227 people were killed in 2020 while trying to protect forests, rivers and other ecosystems that their livelihoods depended on. Colombia topped the list with 65 deaths and the second deadliest nation was Mexico, with the Philippines third.
COSTA RICA STRUGGLES TO PROFIT FROM SALE OF NARCO-ASSETS
On 13 September, an article from Insight Crime said that in Costa Rica, the seizure of narco-assets presents more of an obstacle than a gift to authorities. Numerous administrative hurdles must be overcome before luxury vehicles, lavish mansions, and other expensive items can be sold off, and the Instituto Costarricense Sobre Drogas (Costa Rican Institute on Drugs – ICD) spends over $3.4 million a year caring for these assets.
SEC HAS CHARGED 3 MEDIA COMPANIES WITH CONDUCTING AN ILLEGAL UNREGISTERED OFFERING OF STOCK AND CONDUCTING AN ILLEGAL OFFERING OF A DIGITAL ASSET SECURITY REFERRED TO AS EITHER G-COINS OR G-DOLLARS
A release on Mondo Visione on 13 September advised that the respondents have agreed to pay more than $539 million to settle the SEC action. It has charged New York City-based GTV Media Group Inc and Saraca Media Group Inc, and Phoenix, Arizona-based Voice of Guo Media Inc.
MODIFYING PLANES TO CARRY DRUGS – ANOTHER CRIMINAL SPECIALITY IN COLOMBIA
On 9 September, an article from Insight Crime said that a gang, which modified aircraft to be able to carry cocaine from Colombia to the US and Mexico, has provided another example of how specific aspects of the drug trafficking supply chain are being outsourced to experts.
DUTCH FREE BRITISH Formula 1 FAN MISTAKEN FOR MAJOR MAFIA BOSS
On 12 September, GMA News Online reported that the Dutch law authorities have released a British Formula 1 fan after he was mistakenly arrested on suspicion being a notorious Sicilian mafia boss. It says that heavily armed police stormed a restaurant in The Hague to arrest him. It had been believed that the man was Matteo Messina Denaro, a leading Sicilian mafia boss on the run since 1993.
US: MAN WHO MADE MILLIONS OVERCHARGING FOR PRINTER TONER IS GOING TO PRISON
On 7 September, Vice News reported that Gilbert Michaels defrauded 50,000 people of hundreds of millions of dollars using call centres to sell printer toner at inflated prices. In one 6-year period alone, Michaels earned $126 million from his business.
NEW BLOCKCHAIN PLATFORM AIMS TO TRACK ONE-THIRD OF ALL SHIPPING CONTAINERS GLOBALLY
On 10 September, Coin telegraph reported that the Global Shipping Business Network has launched a new blockchain-based platform to digitise the shipping process and sought out key partnerships to target the Asian markets. Members of the Hong-Kong-based non-profit consortium GSBN are said to “account for 1 in every 3 containers handled in the world,” and this may soon be verifiable on the blockchain once the platform is fully utilised.
On 6 September, the Global Investigative Journalism Network published a Q&A interview with the co-founder at OCCRP, veteran editor and reporter, Drew Sullivan.
FCA WARNS BANK TRADERS OVER BREXIT FUTURES ‘SPOOFING’
On 10 September, Yahoo News reported that the FCA has rebuked 3 unnamed City traders for alleged market manipulation before and after the Brexit referendum. The FCA said the individuals had ‘spoofed’ futures markets before and after the UK’s Brexit vote in the summer of 2016.
RISK BULLETIN OF THE OBSERVATORY OF ILLICIT ECONOMIES IN WEST AFRICA
On 2 September. the Global Initiative Against Transnational Organised Crime has published the first issue of this new Risk Bulletin. The articles in the quarterly bulletin will analyse trends, developments and insights into the relationship between criminal economies and instability across wider West Africa and the Sahel. In this first issue, articles scrutinise the relationship between jihadist violence and local illicit economies in Burkina Faso and Côte d’Ivoire, the revenue sources of bandit groups behind the upsurge in violence in north-western Nigeria, and the implications of the unlawful temporary release of cocaine traffickers imprisoned for coordinating 2 bumper cocaine imports in Guinea-Bissau. In one it argues that criminal economics were a key factor in Burkina Faso’s Solhan massacre with a disagreement over illegally sourced natural resources.
CIVIL SOCIETY’S ROLE IN DISRUPTING THE ILLEGAL TRADE OF ENDANGERED ANIMALS AND ENVIRONMENTAL COMMODITIES IN VIETNAM AND INDONESIA
On 8 September, the Global Initiative Against Transnational Organised Crime published a report saying that Indonesia and Vietnam are among the world’s most significant markets for illegal wildlife trade (IWT) and other environmental crimes. Both countries act as key hubs for the sourcing, transit and consumption of illegal environmental products such as bear bile, illegally caught fish, pangolin scales, exotic cats and rare timbers. The report argues that civil society has a crucial role to play in the fight against IWT. Through advocacy, outreach, academic research and cooperative partnerships with governments and communities, civil society actors can help enhance the capacity of law enforcement, while also influencing government conservation policy and guiding sustainable environmental management.
ILLICIT ECONOMIES IN EASTERN AND SOUTHERN AFRICA RISK BULLETIN
Issue 20 of the Risk Bulletin from the Global Initiative Against Transnational Organised Crime’s Civil Society Observatory of Illicit Economies in Eastern and Southern Africa includes an article on the largest-ever reported loss of ammunition from civilian or police sources in South Africa, raising fears of increased volatility, and political violence. Other stories in this issue focus on environmental markets, from wildlife to agricultural products. One says that the Malagasy vanilla market has, in some ways, been shaped by criminality. Laundering of profits from illegal logging reportedly contributed to a price bubble that incentivized criminal groups to orchestrate vanilla thefts. Another looks at how regulatory mechanisms aimed at preventing illegally caught fish have been undermined in Somalia by officials abusing their positions of power.
On 13 September, an article from Farrell Fritz PC explains that, basically, a series LLC is an LLC that may create one or more series, each generally having separate assets and liabilities, similar to having separate entities except without the expense and administrative burden of multiple entities. Although most commonly used for investment funds, series LLCs could be useful for any type of business with multiple assets where it would be advantageous to keep the respective liabilities of those assets separate. It uses Delaware as an example of where Series LLC may be set up, and how this is done.
On 13 September, an article from Hogan Lovells says that the UK Government has announced that it will proceed with the phasing out of temporary measures introduced to protect businesses from creditor action during the COVID-19 pandemic, whilst also announcing new measures to protect smaller businesses from winding up petitions. The legislation required to implement these amendments has been laid before Parliament and will come into force on 29 September, and the new measures will be in place from 1 October until 31 March 2022. The changes will apply to all businesses, whatever their size. The article warns that potentially, the changes leave commercial landlords worse off than before.
NEW YORK ATTORNEY GENERAL SECURES JUDGMENT AGAINS COINSEED VIRTUAL CURRENCYTRADING PLATFORM
A release on Mondo Visione on 13 September advised that the AG had said that for years, Coinseed and its CEO have engaged in egregious and fraudulent activities that have cheated investors out of millions. The Office of the Attorney General received more than 175 complaints from investors who were concerned about protecting their assets due to Coinseed’s fraudulent conduct.
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On 13 September, the Basel Institute on Governance has published its 2021 AML Index, the 10th annual edition, which raises grave questions about whether jurisdictions are serious about tackling their money laundering and terrorist financing risks, and what is holding them back. The average global money laundering risk score increased from 5.22 to 5.3 out of 10, as assessed across all 110 jurisdictions in the 2021 Public Edition of the Basel AML Index. Even among jurisdictions whose risk scores improved this year, none managed to improve by even 1 point out of 10. Half of improvements were 0.3 of a point or less.
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An article from Daily Maverick on 13 September says that about 80% of the world’s vanilla is grown in the mountainous regions of Madagascar. Extraordinary price rises in recent years have brought rising criminality including organised and violent thefts, money laundering and related corruption. Now, in response to falling prices, the government has imposed minimum prices for exports, but this has provided an opening for new forms of money laundering and corruption. The article is based on information contained in Issue 20 of the Risk Bulletin from the Global Initiative Against Transnational Organised Crime’s Civil Society Observatory of Illicit Economies in Eastern and Southern Africa.
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On 13 September, an article from Orrick, Herrington and Sutcliffe LLP says that given the billions of dollars made available by MDB (e.g. the World Bank and Africa Development Bank or AfDB) for pandemic containment and recovery efforts over the last 18 months or so, private parties who receive this funding and their contractors should anticipate an upsurge in anti-corruption enforcement by MDB and safeguard against this risk by reviewing and enhancing their own compliance programmes.
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On 13 September, OFAC announced that it had added –
27th SCIENTIFIC CENTER (aka FEDERAL STATE BUDGETARY ESTABLISHMENT 27 SCIENTIFIC CENTER OF THE MINISTRY OF DEFENSE OF THE RUSSIAN FEDERATION; aka “27th NTS”); and
33rd SCIENTIFIC RESEARCH AND TESTING INSTITUTE (aka FEDERAL STATE BUDGETARY ESTABLISHMENT 33 CENTRAL SCIENTIFIC RESEARCH TEST INSTITUTE OF THE MINISTRY OF DEFENSE OF THE RUSSIAN FEDERATION; aka “33rd TSNIII”)
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On 10 September, the Guardian published a report into An0m, which became a viral sensation in the underworld. There was just one problem for anyone using it for criminal means: it was run by the police.
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A report from WWF says that more than a quarter of deforestation results from agricultural commodities, and that one of the key drivers of deforestation and conversion is the clearance of forests for agricultural “forest-risk” commodities like soy, beef, palm oil, cocoa, timber and rubber. The financial sector plays a major role in facilitating the trade of these commodities, both for products bound for the UK and for foreign markets. A study finds that the UK financial sector is still highly exposed to deforestation and land use conversion risks through its investment and lending. WWF says that the UK Government should strengthen the proposed Environment Bill by including all deforestation and conversion of natural ecosystems, extending mandatory due diligence to all companies in the value chain- including financiers. It must also enforce dissuasive penalties, and including free, prior and informed consent (FPIC) provisions for Indigenous communities.
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On 13 September, a briefing from Eversheds Sutherland posed this question said that victims of fraud may assume that what has happened is a crime, and that it is the criminal law that will help them to seek retribution. However, the article suggests that it is the civil law that provides the most direct and well-trodden route towards a Court judgment that can be used to secure the return of misappropriated funds. It says that this decision by the Court of Appeal in London has confirmed that commercial fraud claims are to be determined in the civil courts, and the use of criminal proceedings as a tactic to apply pressure can be abusive and improper.
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EU Regulation 2021/1464/EU advised that the information concerning 19 individuals and 6 entities in Annex I to Regulation (EU) No 269/2014 (concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine) should be amended.
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Panama Covid-19 update – 214 new cases have been reported and 6 new fatalities, but with active cases now at 4,906 – 84 in ICU and 218 in other wards.
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12 SEPTEMBER 2021
US ENERGY COMPANIES CONTRACTED PANAMANIAN BUSINESSMEN WITH MURKY PAST
On 10 September, Univision reported on an investigation into an operation for the purchase of the concession of a power generation project in Panama, and alleged failures in the due diligence undertaken by the US energy company involved, and a company whose main shareholders are 2 businessmen with a murky past.
SRI LANKA: TRANSPARENCY INTERNATIONAL CONCERN OVER TAX AMNESTY FOR INDIVIDUALS WHO VOLUNTARILY DISCLOSE THEIR UNDISCLOSED INCOME AND ASSETS
On 11 September, Colombo Page reported that Transparency International Sri Lanka (TISL) is said to be deeply concerned regarding the new Finance Act that aims to grant tax amnesty for individuals who voluntarily disclose their undisclosed income and assets. It warns that this amnesty scheme could be abused for the purpose of money laundering unless regulatory authorities take extra measures to counter such attempts. It calls on all law enforcement and regulatory authorities to ensure that this tax amnesty is not abused by those who could cause detriment to the country.
ISLE OF MAN LABELLED AS TAX HAVEN BY THE EU TAX OBSERVATORY
On 11 September, Manx Radio reported that the Isle of Man has been labelled a tax haven where European banks are booking abnormally high profits. The EU Tax Observatory, an independent body partly funded by the EU, claims the island is one of 17 jurisdictions which the banks have used.
On 8 September, McCann Fitzgerald published a briefing saying that the Companies (Corporate Enforcement Authority) Bill 2021 was published on 3 September and is expected to be introduced to the Dáil when it returns from recess later this month. The chief purpose of the Bill is to create the Corporate Enforcement Authority (CEA) with additional resources to investigate and prosecute so-called white-collar crime. However, it also proposes a range of changes to companies legislation generally, on which this briefing focusses. These include the requirement that a company secretary, who is a natural person must be at least 18 years old, and that a director will be required to provide the director’s PPSN (or equivalent ID) when presenting certain documents – to ensure that there is no confusion as to the identify of a director where common names are frequently encountered.
HOW US AUTHORITIES BUSTED JAMAICANS BEHIND MARRIAGE FRAUD SCHEME
On 12 September, The Gleaner reported on the US investigation and the Jamaican “mastermind” of a fraud, an elaborate scheme that raked in over $400,000 by arranging over 2 dozen fake ‘weddings’ across several US states.
An Opinion piece from Eurasia Review on 12 September argues that the US healthcare system is broken, and that regulatory capture is a reality, and the pharmaceutical industry is fraught with examples.
On 10 September, the Guardian reported that Italian authorities have seized 500 works of art suspected of being counterfeits, along with cash and other valuables worth about €3 million. 5 people have been charged with criminal conspiracy to authenticate and circulate fake works of art and fraud and money laundering. The main suspect is a collector from Bologna, who had been the subject of 2 different investigations since 2018.
FORMER WILDLIFE RESERVES SINGAPORE EMPLOYEES AMONG 12 CHARGED WITH CORRUPTION INVOLVING OVER $2.4 MILLION
On 10 September, the Straits Times reported that the companies involved in the alleged bribery participated in anti-competitive agreements to rig the bids for tenders and quotations in 2015-16 for building, construction and maintenance services. The Competition and Consumer Commission of Singapore imposed financial penalties of about $32,000 collectively on the 3 companies involved in June 2020.
US: ZACHARY HORWITZ PLEADS GUILTY TO $650 MILLION PONZI SCHEME AND FAKING NETFLIX AND HBO DEALS
On 8 September, Newsweek reported that the actor has made a deal to plead guilty to running a Ponzi scheme worth $650 million. He had been able he was able to convince investors that he had high-budget film deals with the likes of Netflix and HBO through his film company, 1inMM Capital LLC. He admitted he spent seven years falsifying investment opportunities to his investors. He will plead guilty to 1 count of securities fraud in October, instead of the 5 counts of securities fraud, 6 counts of wire fraud and 2 counts of aggravated identity theft he is currently facing.
RANSOMWARE GROUP THAT CARRIED OUT MAJOR ATTACKS REAPPEARS AFTER BRIEF ABSENCE
On 10 September, CNN reported that REvil, a Russian-speaking cybercriminal group responsible for a series of ransomware attacks on major US companies has brought some of its infrastructure back online in a sign that it could be back in business. In July, its ransomware attack on IT provider Kaseya affected an estimated 1,500 businesses around the world.
PRINCE CHARLES’S CHARITIES INVESTIGATED OVER CONTROVERSIAL DONATION FROM RUSSIAN BANKER
On 12 September, The Independent reported that The Prince’s Foundation has launched an investigation into its dealings with Dmitry Leus, 51, after the banker donated £535,000 to The Prince’s Foundation and the Prince offered to meet him in person once the pandemic lockdown was over. However, the ethics committee of the foundation concluded they could not accept the money once they discovered Leus had been convicted of money laundering in Russia, although the conviction was later overturned, but it appears the donation to have been diverted elsewhere.
NIGERIA: CONVICTED LEBANESE FRAUDSTER FORFEITS MONEY AND CAR
On 12 September, Punch reported that a court in Lagos has convicted and sentenced a Lebanese Internet fraudster, Hamza Koudeih, to 1 year’s imprisonment. The judge ordered forfeiture of $240,000 in a Zenith Bank account – although the defendant was given an option of fine.
MEET THE FAR-RIGHT ‘FANATICS’ GETTING HUNGARY’S FOOTBALL TEAM IN TROUBLE
On 9 September, a post from Bellingcat was concerned with the Carpathian Brigade, an umbrella group of hardcore national team fans, which came into prominence after abuse and violence at a recent England-Hungary football match in Budapest.
NIGERIA: FORMER POLICE INSPECTOR-GENERAL AND OTHERS INVITED BY ANTI-GRAFT COMMISSION OVER FRAUD IN NIGERIA POLICE TRUST FUND
On 12 September, Sahara Reporters reported that the 6 are to be questioned over fraudulent activities including alleged procurement of substandard equipment by the Nigeria Police Trust Fund (NPTF) for the police. The former Inspector General, Suleiman Abba, is Chairman of the Board of Trustees of the NPTF. The Independent Corrupt Practices and Other Related Offences Commission (ICPC) had commenced an investigation into alleged procurement of substandard equipment by NPTF officials.
THE WORLD BANK HAS DISBARRED 55 NIGERIAN COMPANIES FOR VARIOUS PROCUREMENT OFFENCES IN THE LAST 20 YEARS
An article from Ripples Nigeria on 12 September said that many of the companies were disbarred from participation in World Bank projects as far back as 2000 with 4 being added this year. Those disbarred are also excluded from doing business with the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development, and the African Development Bank (AfDB).
BREXIT TRADE BARRIERS ADDED £600 MILLION IN COSTS TO UK IMPORTERS THIS YEAR
In its 13 September edition, the Guardian reported that customs duties paid by UK businesses shot up from £1.6 billion in the first half last year to a record £2.2 billion in the same period this year, according to an analysis of HMRC data. It is also said that trade bodies are reporting that some companies find the customs duty rules so complicated that they end up just paying the customs duties for ease of trading. The rise in customs duties paid is directly attributed to Brexit, as they were not payable on goods imported from the EU while Britain was in the EU Single Market. Under the UK/EU Brexit trade deal, goods that are majority made or processed in the EU can be imported without customs duties, with slight variations depending on the product – but products are liable to duty if not sufficiently manufactured in the EU or (as in the well-publicised case of “Percy Pigs” confectionery) a tariff exemption under the deal can fall away as soon as they are re exported.
RUSSIAN WANTED FOR HIS ALLEGED INVOLVEMENT IN THE 2014 SEIZURE OF CRIMEA ARRESTED IN THE CZECH REPUBLIC
On 12 September, Rferl reported that a Russian citizen named Aleksandr Franchetti had been detained at the request of Ukraine. He is wanted for his alleged involvement in Russia’s 2014 seizure of Ukraine’s Black Sea region of Crimea. Just days before Russia’s military occupation of the region, he is said to have created a paramilitary formation called North Wind, which helped seize power lines and gas pipelines. According to media reports, Franchetti has lived in the Czech Republic since 2000, working as a fitness trainer.
SOUTH AFRICA: GLOBAL PLAYERS ENABLED ‘ZUPTA’ CORRUPTION
On 12 September, the Mail & Guardian published an article comprising an article by former UK government minister act anti-apartheid activist Peter Hain, which says that “without complicit fee-clutching global corporates and turn-a-blind-eye governments” the “Zupta” decade of prodigious looting and money laundering could not have happened. He says that it was international actors who helped the Guptas and their associates create complex corporate structures disguising the true ownership of funds and complicating the tracing and repatriation of stolen funds while earning huge fees out of the looting. They also provided refuge to corrupt individuals and the means to continue their activities through less regulated “open” economies such as Dubai and Hong Kong, he says. He gives an example of a transaction that should have been stopped, or at least investigated by the Bank of Baroda South Africa (part of India’s state-owned, global Bank of Baroda). He also accuses the “professional enablers” — lawyers, consultants, auditors/accountants and estate agents — and their role in helping to disguise the source, location and ownership of funds.
In its 13 September edition, the Times of Malta provides a guide to the cap of €10,000 on cash transactions for the sale of property and valuable items, introduced in March, with the restriction aimed at reducing the risk of money laundering and tax evasion. It also says that most EU Member States have a limit on cash payments, which range from as high as €15,000 in Croatia to as low as €500 in Greece. Belgium and Lithuania have a cash transaction limit of €3,000, while France and Portugal have a limit of €1,000. The European Commission is also said to be considering proposing a restriction on payments in cash, with the limit also around the €10,000 limit set in Malta.
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